Innovation culture is powerful. It’s the sort of environment where problems get solved. Just ask Facebook, Autodesk or others who foster cultures of innovation, leap ahead of their competition and take home the profits because of it. Companies with a strong innovation culture massively outperform others of similar size on just about every measure of success, from revenue to growth to market share.

via Suzie Prince – @pm_suzie

The graph above shows how Google, Netflix, and Amazon are massively outperforming others on the S&P index. This is because their innovation culture has helped them to adopt a way of working that reduces risk and the chance of failure, and increases their chances of landing on successful initiatives. 

Innovation culture goes beyond product management: innovation should be thought of holistically and inclusively, not just in the domain of people who wear the product management or R&D hat. Everyone in the company has a role to play. 

But establishing a culture of innovation is tough, it calls for transparency, executive buy-in, and the involvement of the entire team. Much of the value of a good innovation culture comes from how it enables different groups to work together towards the same goals, rather than against each other. This is why I call it a team sport.

So what really makes up a healthy innovation culture?

Formula for strong innovation culture

I’ve talked about the formula for strong innovation culture in my blog on product leadership. In that, I explained about this little formula that looks at the key ingredients you need and how they work together.

You need Alignment, and you need Autonomy. But as you can see, Psychological safety is a multiplier. Good psychological safety can launch a team forward, while bad psychological safety can have a huge drag factor. 

To really maximize alignment, autonomy and psychological safety, it’s important to work as a team. Each of these important elements can only be realised when everyone works on them together.

Creating Alignment: Start with your Vision

Alignment involves setting and communicating a clear direction and objectives, so that everyone heads the same way and knows what success looks like. And it starts with your vision.

If your vision isn’t agreed with your teams, go back to the drawing board.

You might recognize the above template as an elevator pitch template from Geoffrey Moore’s Crossing the Chasm, but it asks the right questions for a product vision too. Ask who are you building for, and what will set you apart?

Having a clearly communicated vision is key to alignment.

Get started with your own vision statement with our FREE vision template builder.

Continued Alignment with Objectives and Key Results

Next, outline objectives, or rather what’s important to the business? What makes it tick, and what does success look like to your company or your business unit? 

These objectives aren’t meant to be prescriptive, as that would stifle innovation. Instead, they are meant to frame the innovation work to be done. 

Objectives are often expressed as “Objectives and Key Results”, or OKRs. OKRs allow the business to see what important objectives and metrics need to be moved in order to be successful, and they keep everyone pointing in the right direction and within reasonable guardrails. 

OKRs mean each team is able to use their collective knowledge to work out how they’ll contribute to meeting the objectives. It often results in outperforming goals, and spotting gaps that otherwise go unnoticed.

Specific steps to be taken shouldn’t come as top-down instructions because this only uses a fraction of the knowledge of the team – your middle management. The real insights come when you give your team the ability to propose new ways to solve problems, using their collective resources and intelligence. After all, you’ve built an army of knowledge workers, let them use their knowledge. 

It means you’re not limited by the time and insight available at the top level, and instead have a way to unlock considerably more collective intelligence from the organization as a whole. 

Stay Aligned by Collaborating on you Innovation Strategy

Because you make the most of your team’s knowledge, good collaboration becomes key to unlocking insights. 

In this fast changing world, we all know nothing is fixed. Your strategy and objectives are only as good as your last review. You can’t just set them once, and expect them to provide everlasting alignment. 

You’ve got to be ready to adapt and learn. Fortunately, we can take a page from a well-worn book on this – Prototyping.

Prototyping is key to learning and adapting

To get and keep alignment on objectives, and to make the most of the team’s collective expertise, teams should engage in what is essentially prototyping, but at the strategic level. 

Prototyping is a well-known and much-used process to lay out assumptions and to learn quickly, so that adaptations can be made. 

It’s usually applied in software or hardware in the form of sketches or models. 

The prototypes themselves aren’t worth that much – they usually get scrapped after enough testing and feedback has been collected. 

The value is in the prototyping process, in the conversations and the learning that comes from putting pen to paper, or being able to hold and see a representation of what the final version will be. It’s a hugely powerful tool in the Lean toolbox.

Roadmapping is prototyping for your strategy

This prototyping shouldn’t just happen at the product or feature level. A team can use their roadmap to prototype and test their strategy.  

Your teams will work together to lay out their understanding of the terrain ahead, with the top-level objectives and company vision in mind – what challenges and opportunities do they each spot? What problems likely need to be solved? Their assumptions are laid out and serve as a kick-off point for discussion and learning. You get a deeper understanding of the problems your business faces from this process, and can spot new opportunities. It pulls collective knowledge to the forefront so that the resulting strategy becomes more robust, and the team gains a shared understanding of the steps ahead. 

It’s not a one-time exercise – the best teams adapt regularly as an ongoing exercise. They execute the immediate strategic steps, and regularly share insights and get feedback about near and long-term strategic steps. Objectives and roadmaps are artifacts that are meant to be reviewed regularly, with new insights fed in from knowledge workers across the business, regularly adjusting course.

It’s as if the business has thousands of eyes and ears, and is built on the collective knowledge of many many smart people, while still driven towards and by the top level objectives set by the business. 

The ultimate goal is aligned autonomy. High alignment, high autonomy, where the team can work out how to collaborate and find the best solutions to meet their goals. 

How do you get Autonomy?

Next up in our formula is Autonomy – giving the team some valuable space to find solutions to the problems in front of them.

Autonomy is closely linked with Alignment. After all, people need to know where they are headed, to be able to effectively find their own path there. 

The presence of a good innovation culture means that the team is empowered to create their own solutions to problems presented. It means they are using their entire collective knowledge to solve problems, instead of having solutions handed to them. 

To enable autonomy, remember that as a product person, it’s not your job to come up with all of the solutions. It’s your job to ask great questions. Surround yourself with your teammates who have insights into areas of the business you don’t, and give them space to share their take on how they would tackle challenges. 

Autonomy looks like this: Rather than the team members being responsible for the output matching the requirements of some solution conjured up elsewhere, they are responsible for managing their process of experimenting and finding the _best_ solutions to problems they are assigned. They are measured on outcomes, instead of output. 

Crushing autonomy

Nothing crushes innovation quite like micromanagement.

And there’s one sure sign of micromanagement in companies everywhere: 

The timeline roadmap 

This format has been around for years, but it sets teams up for failure! 

Because of that timeline, everything you put on the roadmap always includes a due date and a time estimate. 

Everyone knows that the release dates on roadmaps are made up, but not everyone thinks about the knock-on effects: These made-up release dates force developers on stressful marches to launch on time, they leave your salespeople and customers with expectations you can’t meet, you end up distracted from seeing the opportunities in the market as you’re too busy building the wrong things.

It leads to unproductive and stressed teams. 

To learn more about how to tackle this particular problem, read our guide on How to Ditch your Timeline Roadmap.

What about Psychological Safety?

Taking risks and winning in the long run requires you to build psychological safety.

It’s about making people feel more comfortable speaking up, reporting errors, and pitching in to help with the product.

How do you start to build psychological safety in your team? 

Remember, you know nothing.

As a product manager, it’s not your job to have all the answers. Instead, focus on asking the best questions, and creating a safe space for everyone to contribute.

As product people, it’s often tempting to fill in the blanks and jump to conclusions, 

but this leaves out the opportunity to explore other potential outcomes and points of view. 

Frame your thinking in a way to include others’ perspectives and insights. 

Phrase questions to begin with “How might we…” 

It turns the issue into a collective problem. 

It SUPPOSES instead of ASSERTS, and it works really well in conjunction with: ‘I bet’. 

As a product manager, you’re going to be wrong, a lot. “I bet” gives you permission

to fail and try again. After all, it wasn’t YOU that was wrong – it was your hypothesis.

And now that you know what DOESN’T work, you’re free to test the next bet.

It’s subtle, but these shifts in language set the stage for psychological safety.

Back to the Formula!

All of these elements need to be present for a strong innovation culture: 

Alignment, Automation, and Psychological Safety

This is present and visible in companies that have a clear vision and objectives, allow for self-paced work and ownership of solutions. And those that create space for experimentation and validation.

Innovation culture is less wasteful.

Some might be thinking that this whole innovation thing is going to cost a lot of money and maybe come up with very little benefit. 

But done right, a strong innovation culture means fostering a culture that avoids unnecessary wastage. 

In a traditional organisation with siloed divisions, every division is measured as either 

a profit center or a cost center. 

Management’s goal is to squeeze just a little more revenue out of sales and marketing,

and to push down costs in areas like support, tech and operations.

Do you know where product and innovation sits? We’re usually seen as a cost center. 

We’ve historically reported into a tech function whose job it was to keep a close eye on costs. Which gets the product and development team trapped in this old pattern of writing finely detailed specs, breaking them into points, and being measured on ‘velocity’, or how quickly the team can ‘burn down’ that stack of points.

This model might control costs, but it optimises for building features, not for solving problems.

And there’s nothing as wasteful as spending your time building the wrong things! 

These old vanity metrics lead companies to be misled about their productivity. After all, the engineering team is constantly busy, but are they working on the right stuff? 

It’s why you can have two companies in the same space, and one is much larger, and theoretically much more capable of delivering more value, and yet lags behind a smaller, nimbler competitor. 

Innovation culture is more profitable

I’ve seen companies who put immense effort into getting their engineering teams absolutely swimming, churning out all sorts of stuff. And yet these teams still don’t produce much value. 

They put out mediocre launch after mediocre launch.

This is because, as good as their engineering team might be on the delivery side, their product processes leave something to be desired. They’re often still stuck in an IT project mindset, rather than embracing an innovation culture.

A strong innovation culture makes sure that the right things are built in the first place. 

Lots of effort has already gone into smoothing out the delivery side of the business. But your innovation work sits upstream from that, in the strategy and discovery spaces. 

A sign of a strong innovation culture is that company level goals are always in mind, and that the problem space is deeply explored before diving into the solution space. This ensures that the work that actually goes to delivery actually is of value, and that lots of different viable options have been explored, and the team knows they’re likely heading down one of the best paths, not just the first one they stumbled upon. 

Innovation is a Team Sport

These aren’t things that happen overnight, a strong innovation culture evolves.

It’s something you can measure, and learn from, and build upon, through training and tools and team retrospectives. Much like when you Build, Measure, and Learn on your own products every day. 

Whether your team and processes are particularly innovative or not is something you could measure as a baseline. I’ve given you some ways you might frame those measurements in this blog.  

Over time, you could make adjustments to the way people work (through training and tools and some of the techniques discussed here), to facilitate and build a stronger culture of innovation.

And as such, I’d say that innovation culture is the most important product you’ll ever work on.

And it’s something that you work on as a team.

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