3 Leadership Disconnects Around Supporting a Culture of Innovation
February 22, 2023 | By Lis Russo and Amanda Ramos
If innovating were as easy as telling employees to “be innovative” and “fail fast,” companies would be disrupting the market left and right — but we all know that’s not the case. Despite innovation being a strategic priority for businesses across industries, it’s not always well supported in daily work-life. What makes one organization innovative and another not-so-much? The difference isn’t due to posters on the wall that say “innovate” or a ping pong table among a sea of workstations. What sets consistently innovative companies apart is their culture.
There are many factors that shape culture, but one aspect that’s foundational for systemically enabling innovation is an organization’s leadership. Leadership’s importance in achieving innovation may seem like table stakes; however, one of the top findings from Gensler’s Culture of Innovation research revealed that in the U.S., major disconnects between senior leadership and staff exist about whether innovation is supported within their organizations.
Disconnect #1: Incentivizing Risk-Taking
The first disconnect is that executives are more likely to believe their organizations incentivize risk-taking; however, the majority of staff don’t report being empowered to venture into new territories or take chances with new ideas or initiatives. This disconnect is sizable: 65% of executives report that their companies incentivize risk-taking, compared to only 37% of professional/technical staff believing the same — a large gap.
This disconnect comes as a revelation to leaders in many organizations. One company in the design industry that conducted Gensler’s Culture of Innovation Diagnostic was surprised to find that staff do not believe their company incentivizes risk-taking, despite leadership being united in their expression to take chances and try new things. The diagnostic revealed that the organization did not put action behind leadership’s words. Leadership communication was being undermined by several organizational practices, such as the company not tangibly supporting innovation with resources (i.e., not adequately providing time for new product/service development, permission to work on innovation initiatives outside of core job responsibilities, or investment in bringing new ideas to market). In addition, their performance evaluations and rewards structures actively hindered risk-taking; by measuring and rewarding performance based mostly on positive outcomes and efficiency, leadership was inadvertently signaling that failure will be punished, which significantly discourages the pursuit of innovation.
When leadership’s words don’t match an organization’s actions, innovation flounders. With the fear of failure driving decision-making, innovation takes a back seat and risk-aversion runs the show.
Disconnect #2: Spending Time Innovating
Non-managerial staff also report differing experiences when it comes to involvement in the innovation process. Our research found that 72% of executives and 63% of directors/managers report being able to spend part of their work time developing new ideas outside of core job responsibilities, while only 50% of professional/technical staff and 42% of support staff report the same.
In short, non-managerial staff are less likely to be able to spend time developing new ideas. Without spending time developing new ideas, value creation is limited to necessary daily tasks. This limits innovation to incremental improvements at best and even puts companies at risk of becoming irrelevant in the market in worsened circumstances. In addition, the ability to spend time innovating is associated with higher employee engagement, with 91% of the most engaged employees reporting the ability to spend part of their work time exploring new ideas.
Spending time on new initiatives is good for business as well as talent retention. When a variety of stakeholders aren’t included in the generation and development of new ideas, engagement falls, and innovation stagnates.
Disconnect #3: Distributed Decision-Making
Lastly, non-managerial staff are less likely to report feeling empowered to make decisions in their organizations. While 71% of directors/managers believe decision-making authority is distributed (i.e., not exclusively top-down), only 51% of professional/technical staff believe the same.
One client in the real estate investment industry was having trouble activating innovation in their organization and was unaware of the impact overly bureaucratic decision-making processes had on innovation. When conducting Gensler’s Culture of Innovation Diagnostic, they found that only 20% of directors/department heads believed that decision-making authority was distributed. With a staggering 80% of directors reporting that their organization had top-down decision-making, a lack of autonomy and empowerment were key factors inhibiting innovation. This finding provided leadership teams with the information needed to transform their processes and better support innovation systemically.
With decision-making being exclusively top-down, leadership teams risk creating echo chambers and falling victim to decision-making biases that limit forward progress. Furthermore, not only is decentralizing decision-making key to freeing up leadership for strategic ventures, but it also empowers staff to develop new products/services and enables a variety of perspectives to be shared, mitigating blind spots in decision-making.
For innovation to thrive in an organization, leaders must implement activation strategies that align everyday actions with the vision for innovation — putting action behind words is what can lead to success. Creating a culture of innovation comes down to intention; without intention, culture is left to chance and can have a significant impact not only on innovation, but also on employee experience and the bottom line. Leaders that scale and systematize innovation practices to increase access across their organizations create the most suitable environment for breakthroughs to occur.
Contact to learn more about this multi-year, mixed-methods research effort. Our framework can serve as a tool for diagnosing your organization’s culture of innovation.
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