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3 Ways to Cultivate a Culture of Innovation (& Why You Need To)

5th Nov 2021
Brought to you by
tax cloud
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Statistics show that companies generate around 35% of their revenue from products that didn’t exist 5 years ago. And, when you compare the Fortune 500 lists from 1955 to 2017, you’ll see that only 60 companies managed to stay ahead of the curve and remain on the list the entire time.

These two pieces of information demonstrate the crucial role that innovation plays in the success or failure of a company.

Despite this, only 18% of business owners feel that their investments in innovation are paying off and around 46% have become more risk-averse when considering new ideas.

So, where are these businesses going wrong, and what can they do to start capitalising on innovation?

They need to cultivate a culture of innovation.

And this is how…

What is a culture of innovation? 

A culture of innovation is a workplace environment that encourages creativity and inspires ideas. It drives creative thinking, it accelerates change, and most importantly it supports the innovation that’s needed to produce new or improved products, processes and services.

Organisations with a culture of innovation find that innovation becomes a natural part of day-to-day tasks. This creates a workforce that has a continuous improvement mindset which keeps the business performing at its most competitive, efficient and effective level at all times.

Keeping improvements to products, processes, and services constantly flowing helps stay ahead of problems and ahead of the competition.” – Plan Box

Employees working in this type of positive, innovative environment feel empowered to think independently and are motivated to find new ways of solving problems and improving processes, products and services.

Why do you need a culture of innovation? 

Innovation used to be something that only start-ups and tech companies from Silicon Valley embarked on to keep pace with rapidly changing markets. But these days, all companies, regardless of their size, age, or industry face this type of rapid change. Therefore, simply maintaining the status quo is no longer enough. To stay ahead of the curve and the competition, companies need to prioritise innovation.

But, as we established earlier, 46% of businesses fear the risks involved with deploying new, radical ideas and 18% find that the process of innovation is ineffective and not worth the time, money or resources needed to achieve it.

These organisations haven’t created an effective culture of innovation and are most likely to be traditional conglomerates that have strict hierarchies, siloed departments and standardised processes. All of which stifle innovative thinking.

Predictability and control used to be valuable, but the new economy is neither predictable nor controllable. Organizations that want to stay relevant must keep up - and to keep up, they must foster and maintain a culture of innovation.” – Innov8rs

Building a culture of innovation will help your workforce to continuously develop original concepts, solve problems, penetrate new markets, and gain an edge over the competition.

How to build a culture of innovation

As we’ve established, developing a culture of innovation is key to the continuous flow of innovative ideas that will increase profits, encourage employee engagement and improve the overall health of your business.

But how do you go about fostering this type of culture?

Tip #1: Create a culture of innovation by encouraging collaboration

Great leaders make smart decisions, but they also know they can’t — and shouldn’t — do it all alone.” – Talent Cultures

In traditional organisations, innovation tends to be hierarchical. Ideas come from the top and are dictated down the hierarchy. The lack of autonomy that this archaic approach brings to the workforce stifles creative thinking. It leaves employees feeling flat, uncreative and unsupportive. 

Plus, if innovative ideas are coming from just one department, team or person it prevents new thoughts, ideas and suggestions from coming into the business from other areas. Different people from within the company will have different perspectives, experiences and skill sets that they can bring to the table to help the flow of innovative ideas.

For example, if you’re looking to improve customer service, out of Charlie the CEO or Christina the customer service rep, who deals with customers every day and can, therefore, offer a true representation of what customers need?  

Regardless of role or rank, if you allow your employees to collaborate, they can share their knowledge, experiences and perspectives and come up with a steady stream of different thoughts and ideas that will lead to improved products, processes or services.

Innovation can come from anyone in the organization - not just from the top down. It’s a collaboration between the organisation and its employees, based on trust, transparency, inclusiveness and communication.” - Innov8rs

Tip #2: Create a culture of innovation by embracing failure

It’s impossible to create something new without experiencing some sort of failure. For instance, research shows that it takes around 3,000 ideas to find just one successful product. That means, to get to one successful product, you need to have failed 2,999 times.

Which sounds like a lot of costly failures, right? But as Mr Edison once famously said:

I haven’t failed. I’ve just found 10,000 ways that won’t work” - Thomas Edison

If we are to develop a culture of innovation, we need to re-address how we approach failure. If mistakes or failed attempts are punished, your workforce will have a fear of failing. This fear (known as an ‘innovation crippler’) will zap confidence and stem the flow of truly innovative, out-the-box ideas that might fail, but might also lead to huge success.

Failure is a part of innovation, and it's important to accept and learn from failures. By encouraging a positive outlook on failure, you can help your employees embrace it rather than fear it, which can help them feel comfortable being creative.” - Indeed

Start to see failure as an opportunity to learn and improve. Failure helps us see what works and what doesn’t. As long as we learn from the mistakes we make, it’s perfectly ok to get it wrong because each mistake or failed attempt will move us closer to success.  

"It's fine to celebrate success, but it's more important to heed the lessons of failure. How a company deals with mistakes suggests how well it will bring out the best ideas and talents of its people, and how effectively it will respond to change." – Bill Gates

Tip #3: Create a culture of innovation by securing an R&D budget 

In a culture of innovation, it's also important to have the ability to fund new ideas and turn them into real things. Make sure your organization has an innovation budget, so you can move ideas off the whiteboard and into use.” - Innov8rs

To foster a culture of innovation, you need to show your employees that you’re serious about prioritising innovation. You need to give them confidence that if they come up with these radical, new ideas, you will put your money where your mouth is when it comes to rolling them out. You need to be able to turn their ideas into reality, otherwise, they’ll think: “Well, what’s the point?

But it can be difficult to prioritise a pot of money just for R&D work. It can feel like you’re throwing money away, into a black hole, because who knows if these ideas will come to fruition or not?

So, what’s the answer?

R&D tax credits. This government-funded incentive allows organisations to claim up to 33% of the costs associated with their R&D projects. The project doesn’t need to be successful to secure the R&D tax relief and you can claim for as many innovative projects as you like.

To secure these R&D tax credits, you have two options:

Option 1: You could hire R&D tax specialists like Myriad Associates who have been filing R&D tax credit claims for over a decade. Myriad Associates have a 100% success rate and know exactly what to do to get the maximum amount of R&D tax relief for each claim they submit.

Option 2: You could use a self-service R&D tax credit portal like Tax Cloud. Tax Cloud will guide you through the entire claims process and, because it’s supported by the R&D tax team at Myriad Associates, you’ll have expert help and advice at your fingertips the whole way through. Plus, they’ll also check your R&D claim report before it gets submitted to HMRC to make sure there are no mistakes, and you are claiming for the maximum amount that you’re entitled to.

Speak to Tax Cloud today on 020 7360 4437 or drop them a message here to find out more.

Conclusion

To continuously solve problems, enter new markets and gain a competitive edge over the competition, you need to continuously develop original ideas and concepts. To do this, you need to develop a culture of innovation. Replace a top-down hierarchy with a collaborative workforce. Stop punishing mistakes and start welcoming failures and show your workforce you’re serious about innovation by securing an R&D budget that allows them to turn their ideas into realities.