Innovation Culture: It’s in the Mindset – Full Guide

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Culture Change

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Everyone seems to know that culture is foundational to innovation, citing principles like willingness to experiment, co-creation, tolerance for failure, non-hierarchical structures, and team spirit. But even though innovation culture is important, many companies fail to achieve it.

Culture lies at the root of what makes a company successful, and yet it can be hard to grasp or define, much less actively cultivate. In many ways it is like the air we breathe, crucial to our survival, but invisible at the same time.

Another reason that innovation culture efforts fail is that companies repeatedly try to change their culture at a superficial level, assuming that innovation will occur if they offer espresso, lush benefits, climbing walls, ping pong tables, and sushi lunches. But that’s just scratching the surface of what culture is all about. Again, culture is like the air we breathe; we are not aware of it, even though it is crucial to everything we do in life. Frankly less fun behaviors keep the business alive.

The experts at Digital Leadership have some ideas about developing your company’s innovation culture. As innovation leaders, we believe in some key principles to achieve success that supports innovation and new ideas. We provide Innovation Consulting service, cultivating an innovation culture that harnesses emerging technology opportunities. It includes tailored strategies, venture launches, and fostering positive relationships to drive innovation, transformation, and business growth, benefiting overlooked consumers.

What is Innovation Culture?

An innovative culture is defined by an atmosphere that supports innovative thinking and the implementation of a development process that promotes creativity. A truly innovative culture recognizes that new ideas come from throughout the company’s structure, not merely from top management. Team members throughout the hierarchy are expected to own ideas and pursue innovation at every opportunity.

Innovation culture succeeds when tensions created to push the re-evaluation of the status quo. With strong leadership, a successful company can achieve excellence by creating an environment that favors risk-taking.

Modern companies are sometimes criticized for promoting “fun behaviors” over the rigorous discipline some favor. A culture of innovation doesn’t just add table tennis to the lunchroom; it doesn’t just insist on easy-to-like behaviors. Instead, innovation culture establishes the space for different perspectives that interrogate a company’s processes, products, and services.

Innovative Culture Drivers

The global digital network is shifting the paradigm of markets, business models, organizations, cultures, society, thought, and behavior at an exponential rate. In other words – is changing the way we view the world. In order to keep up, we need people who change their thinking. It’s the only way to change our future.

The source of complexity is interconnectedness. It’s the cause of, as well as the answer to complexity. More complexity requires more thinking in terms of awareness, emotional intelligence, adaptability, and creativity.

Innovative Culture Drivers of Change from Inside
The UNITE Evolutionary Drivers from Inside
Designed by: Susanne M.Zaninelli

The second wave of the industrial culture is about uniformity and reducing complexity while the third and fourth waves are about tapping into diversity and complexity as a natural resource for organizations.

Successful innovation culture inspires innovative ideas by recognizing opportunities. In particular, technology can turn your business into an innovation lab as carefully managed projects push your existing models in new directions. Innovation projects become an incubator for new ideas that can inspire cultural change or incremental innovation.

The Mindset Spectrum – Stages of Individual and Organizational Development

Our individual mindset as well as our cultural mindset, though invisible, are like windows through which we view and evaluate the world. Both determine the way how we perceive and interpret life. They are the hidden and secret motivators for our individual and collective decisions, actions, and reactions.

The worldview shared by a team is expressed and manifested in visible aspects such as organizational structures, rules, and processes. Similarly, our inner personal worldviews are visibly conveyed in our specific individual behavior.

Evolutionary Drivers of Culture Changes
Evolutionary Developments – People, Culture, Organizations & Economy
Design by: Susanne M.Zaninelli

To understand what drives culture, we first need to understand how our perception of the world, our mindsets, our worldviews, as well as our values and beliefs, evolve. The Mindset Spectrum is an overview that depicts our individual evolution, as well as our team, culture, organizational, and overall business development.

Research into the development of mindset has found that all humans go through developmental stages of inner growth that transform the way we view the world. We develop emotional and cognitive capabilities that allow us to interact with the world in increasingly complex and nuanced ways. Commonly, individuals and organizations that operate based on a particular mindset see that way of looking at things as real, objectively true, and unquestionably fixed. And yet these same people are able to reach a new stage when they are pushed to do so either by internal motivation or by external circumstances.

Some psychology research

Children discover their ego around age 2 to 4. Overwhelmed by it, they repeatedly test its range, power, and influence. Consequently, our emotions are difficult to control and quite volatile. In this phase, the main concern is personal safety.

Between the ages of 4 and 7, is about learning the group- centered-conformist mindset in order to integrate and adapt our ego into a community with rules and norms. We learn to develop feelings of shame and guilt when we do not conform to these expectations. The biggest priority now is feeling a sense of belonging.

Between the ages of 7 and 12, children begin to develop rational-analytical skills. They start to analyze, compare, measure, and understand complicated things. At this stage, we strive for the predictability.

During puberty, the mindset desires autonomy and self-confidence. Our ego development reaches its peak. We begin to focus on creating and pursuing our own goals and gaining both self-determination and recognition. We rely on the capabilities developed in the beige and blue stages to shape our lives. We are able to reflect on ourselves and are busy with our self-optimization. The most important need now is to achieve status through recognition and admiration in our peer group and even beyond.

As we evolve, our developed ego can step back, and therefore understand the benefits and richness of diversity. We can express our feelings in a clear, descriptive way and address the feelings of others. We want to feel connected to others, to contribute to and experience inclusion. Because we are in touch with ourselves, we start looking at the world with compassion and empathy. We become aware of our own subjective mindset filters, and how they shape our view of the world.

As such we can also understand how others may be shaped by different filters and thus have different viewpoints. We celebrate individuality in its many multifaceted forms. What previously seemed to be given is now seen as relative. The most important basic need in this state is to live and work according to one’s values.

In the mindset of autonomous connectedness, we are ready to take full responsibility not only for our actions but also for our thoughts, feelings, and inner states. We no longer blame other people or circumstances for the way things are. We respect ourselves and other people in their uniqueness and autonomy and are constantly aware that we construct reality ourselves with our mindset perception.

At this stage, we recognize the complex, paradoxical nature of systems and humans, and yet can create balance and integrate their contradictions and opposites. We are non-judgmental, able to recognize nuanced, interconnected relationships, include context, and nurture the potential of others. Because we recognize that others are also “right” in their point of view, we are less identified with the values and beliefs of our mindset, and the available solution space expands many times over. The essential purpose of this stage is the integration of all previous mindsets.

Understanding that we all go through these stages, and sometimes slide between stages during the course of the day, can help you ensure psychological safety for your customers and your employees. In fact, since so much of customer and employee satisfaction is psychological, all companies would be wise to understand the key characteristics of each mindset, whether or not they were interested in innovation culture.

The Mindset Spectrum – Stages of Individual and Organizational Development

Individual Development

Cultural change is first and foremost about personal development. On the one hand, individuals are shaped by the environment into which we are born, and our mindset is shaped by the institutions and societies in which we live. On the other hand, individuals need to expand their mindset past those foundational structures in order to enable change, both in themselves and in their organizations.

Thus, in explaining the Mindset Spectrum, we first consider our personal development, to better understand ourselves. Then, we show how these mindsets are also found on the collective level in teams, organizations, and societies.

How to Create Innovation discusses some activities for interrogating mindsets if you’d like more information.

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Team Development

Your team is made up of people. To engage in the types of self-management, open and non-judgmental communication, and navigation of uncertainty that is required in an innovation context, you need a person who has been and continues to be able to expand their ego- development.

Get to work asking yourselves what culture you currently have and what culture you need.

As you are working to describe your current culture and the culture you hope to build, notice the language the team is using. It may seem silly to pay so much attention to words, however, words are visible indicators of how we think, perceive, and understand the world around us. The right language encourages creative thinking and innovative cultures thrive on it.

You are likely more interested in having a dialogue with your colleague than in a debate. One situation feels co-creative, the other confrontational. To take ownership of our feelings and needs, and to ask for what is beneficial and fair for everyone involved, is a mindset and dialogue skill that must be practiced regularly. However, don’t fall into the trap of policing others’ language. Instead, consider developing a lexicon that expresses and amplifies your culture. Together, formulate keywords that support the way of working together that you want to actively promote. Engage in dialogue about which words no longer fit your culture because they are expressions of a previous, less inclusive mindset.

You can use Digital Leadership’s UNITE Culture Canvas in a number of ways in this endeavor. We recommend that in the first step, you can have each team member fill in the boxes of the Culture Canvas individually, and then pin the collected results on a blown-up canvas together in a workshop. Then, you can start the group dialogue. What organizational culture type are your team members used to? What mindsets do they represent?

Organizational Culture Canvas
The UNITE Culture Canvas
Designed by: Susanne M.Zaninelli & Stefan F.Dieffenbacher

Organizational Development

Just as the Mindset Spectrum evolves and exists within an individual, it also applies to societies and companies. After all, companies are made up of individuals; employees shape the collective culture and vice versa.

Let’s start by considering the observable aspects (or memes) of culture, such as behaviors, practices, and structures. Meme was a word developed by the late biologist Richard Dawkins in his book The Selfish Gene (1976) to describe self-replicating units of culture. Just as a gene is the fundamental unit of our DNA, he argues that memes are the fundamental unit of culture; the cultural evolution of humans is shaped by memes.

Both genes and memes are units of information. A meme acts as a unit for carrying cultural ideas, symbols, or practices, and they can be transmitted from one mind to another through writing, speech, gestures, rituals, or other imitable phenomena with a mimicked theme. Rituals connect people and communicate mindset, purpose, values, and identity. They are as important as principles and rules for solidifying an innovation culture. They can be particularly effective at transforming the invisible parts of culture.

Memes determine mindsets, beliefs, behavior, and values and form the basis for every form of culture. Unfortunately, in recent years, “meme” has come to mean a piece of media, often humorous, that spreads virally through the Internet, especially on social media. Even with its misappropriated label, the concept is helpful when considering innovation culture.

As you go through the visible and invisible aspects of culture, you can use Digital Leadership’s Culture Canvas to note some of the mindsets that are currently present in your organization. As an individual or organization expands its mindset, it grows its repertoire of capabilities, increasing its potential to understand and deal with more and more complexity.

Related: The UNITE Organizational Culture Canvas – Identifying Organizational Culture Critical Elements

Economic Development

We are in the midst of a paradigmatic transition – a fundamental change in how we do business – from Industry 3.0 to Industry 4.0. This latest industrial revolution may perhaps better be termed an “information revolution,” since in the past 10 years, the global economy has swapped oil for data. No matter what sector you operate in, you can’t afford to ignore the presence and power of information. At the same time, as the service and data sectors grow, the traditional industrial sector has eroded to less than a quarter of global GDP.

The 4 Waves of Industrial Revolution
The 4 Waves of Industrial Revolution
Designed by: Susanne M.Zaninelli & Stefan F.Dieffenbacher

Innovation culture demands that we embrace changing business models. Either we build a culture of innovation that leverages new ideas, or we get washed away by it.

Innovation Development Drivers

These waves of economic development are driven by invention, most of which is enabled by technological breakthroughs. So, what technologies are creating the acceleration we currently see?

One of the dominant features of the economy over the past 50+ years has been a massive growth in computing power. To understand the exponential evolution of computing power we can look to Moore’s Law, the idea that computing performance doubles every two years while costs remain the same. American inventor Ray Kurzweil calls this The Law of Accelerating Returns and shows that doubling patterns in computation extend all the way back to 1900, far earlier than Moore’s pronouncement, which occurred in 1965.

Cultural Shift

To evolve, we need to become aware of our own mindset, the window through which we view the world, the unconscious filter we have acquired to decide what is right and wrong. Views and skills we acquired in earlier stages of mindset cannot be skipped or erased. As our abilities to understand and process expand with each mindset development, we are increasingly able to deal with complexity and better understand how different things relate to each other. We learn to sense, identify, and deal fruitfully with our own feelings and needs, and those of others. In this way, we integrate the qualities of previous mindsets, which makes the window through which we view the world wider and wider and our view more and more expansive.

This type of individual personal development is critical for the evolution of culture within organizations. Individuals are the foundation of culture. Our personal abilities stem mostly from what we subconsciously learned in our childhood and limit not only what we can do as individuals, but also what we can achieve as organizations. Changing the organizational culture thus requires personal internal work.

Remember, individuals, need to have their basic needs met before they can move into more complex spaces. If team members feel unsafe, judged, and controlled, it will be difficult to embrace complexity and build the corresponding abilities. Thus, to be truly effective, change needs to happen in all four quadrants (individual and collective, visible and invisible) simultaneously. So, change organizational and communication structure and the practices and rules that govern the team at the same time that individuals are working to transform their mindsets.

Changing and consolidating a mindset is a process and a critical one. Changing your mindset means personal transformation and confronting the resistance you might feel to seeing the world in a different way. Remember that culture is a process that involves a feedback loop between the individual and the collective. Individuals shape culture and culture shapes individuals. The main ingredients for a successful innovation culture are a strong commitment to self-reflection and open communication in a safe environment, and a willingness to change.

Horizontal Vs. Vertical Learning

New impulses such as cooperative leadership, agile and co-creative teams, Holacracy, Sociocracy 3.0, circular structures, design thinking, etc. originate in an individual mindset of personal attitude and the collective mindset of our culture. A high level of change readiness combined with inner stability and resilience is more important than ever.

Interconnected collaboration and innovation competence primarily build on self-leadership, agility, autonomy, systemic contextuality, creative integration of polarities, uncertainty tolerance, etc. Mindsets that successfully integrate such competencies require a radically new way of thinking and a substantially more holistic view of humanity. How can this be achieved?

Through understanding and working with Horizontal and Vertical Learning.

Horizontal Learning happens through information, which means we pour ever-increasing amounts of knowledge, experience, and competence “into a particular form,” similar to a vessel that has a limited load capacity. The world view remains unchanged. This kind of learning lends itself to continual improvement, optimization, and perfection.

However, in times of paradigmatic changes, “more of the same” no longer leads to solutions.

Vertical Learning leads to transformation, meaning that I transform from a narrower form of a worldview to a more expansively evolving form that requires a new thinking vessel with more holding capacity. I leave behind outdated thinking and behavior and arrive at new shores. The world view changes in conjunction with positive emotional experiences.

It’s not about right or wrong attitudes – all acquired attitudes are equally valuable. Rather it’s about having an adequate contextually relevant attitude available.

Closing Thoughts

Developing a strong innovation culture is everyone’s responsibility. An innovation culture values creative thinking that results in breakthrough products and new ideas. Such a culture requires strong leadership that understands that innovation requires failure, and failure requires patience.

To a point.

Fail fast. Stay knowledgeable about new technologies. Identify which of your company’s products are ripe for innovation. Communicate expectations for your innovation process, and watch as your team thrives.

The UNITE Business Model Framework

How to Create Innovation includes a number of canvases that focus on value creation and finding the right business model to meet your customer segment and customer needs. The framework is built to inspire drastic changes that help you find a competitive advantage. Our hope is that your company grows through business model innovation, and so we again encourage you to look deeper into our website and the book.

Here is a summary of the key ingredients of the framework:

The UNITE Business Model Framework
The UNITE Business Model Framework
Designed By: Digital Leadership AG

Business Models

The centerpiece is the Business Model Canvas, which covers the six main areas of a Business Model (the Operating, Value, Service, Experience, Cost, and Revenue Models).

The eXtended Business Model Canvas adds the immediate business context, including Business Drivers, customers, and the team, as well as the Unfair Advantage.

Detailed Models

A Business Model can be broken out into its numerous aspects. Depending on what challenges you face, you can zoom in on your area of interest using an appropriate tool or canvas:

  • Your Business Intention and objectives as well as your Massive Transformative Purpose summarize your drivers and give direction to what you do.
  • The Value Proposition Canvas details the central components of your offering (the product or service).
  • To dig into your Customer Segments, work with data-driven Personas.
  • The JTBD Customer Job Statement and Job Map frame the JTBD of your customers.
  • The Business Model Environment puts your Business Model in a market context composed of emerging trends and disruptive forces.
  • The Innovation Culture Canvas helps you understand and consciously shape a culture that supports innovation.
  • The Innovation team structure enables you to draft a team structure for your innovation initiative.
  • Using learning and growth metrics, you can measure progress at the initial stages of development. These metrics help you focus on what really matters instead of creating a detailed business plan that will not really help you. Later on, you can expand the financial aspect of the Revenue and Cost Models with a full business case.
  • The Operating Model Canvas helps you think through the Operating Model.

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