5 Key Ways to Create an Innovation Culture Here are five ways to ensure innovation is a part of your business.

By Steve Arizpe

Opinions expressed by Entrepreneur contributors are their own.

In today's business climate, innovation is more than a buzzword. It is a necessity for businesses that want to stay competitive. In a June 2020 report on "innovation in a crisis," McKinsey found that 90% of executives believed the COVID-19 crisis would fundamentally change how they do business in the next five years. Yet, only 21% reported having the expertise, commitment and resources to accomplish the necessary changes.

While the crisis has passed, forward-thinking leaders need to understand how to prepare for the next crisis by embedding innovation into their corporate culture today.

Related: Your Company Needs an Innovation Culture, Not an Innovation Team

1. Empower employees

In an innovative culture, employees believe that all ideas matter and will be seriously considered by leadership. To create that kind of culture, management needs to be proactive. Cultures that empower employees will recognize workers' contributions, even for simple ideas, welcome input in the appropriate setting and reward risk-taking, even if results are not as hoped.

While leadership's actions will set the tone, remember employees typically interact with their supervisors daily. Workers will not voice innovative ideas if they fear failure or backlash from their team lead. With that in mind, managers should receive training on how to receive and incorporate feedback, create a supportive environment and encourage employees to grow.

Related: 5 Ways to Empower Your Employees

2. Embrace a culture of upskilling

Since learning and innovation go hand and hand, teaching employees new ways of completing their duties encourages innovation. The concept of upskilling describes a culture that develops employee capabilities and employability by instilling the knowledge, skills and attitude workers need to improve job performance. Define the key skills employees need to remain competitive, create training programs and support employees to learn alongside their regular duties.

In addition to building goodwill among employees, upskilling fosters innovation and technological adaptation. According to PWC's 23rd Annual Global CEO Survey, more than half of CEOs of more advanced organizations agreed that their upskilling programs led to greater innovation and accelerating digital transformation. In the same PWC survey, only 15% of CEOs of beginning upskilling organizations said the same.

That means a successful culture of upskilling requires a long-term mindset and provides increasing returns over time. Realize the benefits of upskilling may not arrive immediately and remain patient.

Related: The Best-Kept Secret to Cultivating Creativity and Innovation

3. Adapt quickly to lead change

To innovate successfully, businesses need to stay nimble. Though following policies and procedures remain key to company values, leaders should react thoughtfully but act quickly in response to changing conditions. Whether that change is a new idea from a worker or a major global event, innovation thrives in a culture where employees have faith their organization can evolve.

Beyond economic trends, digital transformation has reinforced the importance of adapting to new skills and technologies. Organizations should track developments in their industry and act quickly to access cutting-edge tools to improve productivity. Employees who automate time-consuming tasks gain more time to brainstorm, collaborate and innovate.

Few changes happen overnight, so businesses must embrace trend-watching and expert consensus over conventional thinking and refuse to become complacent. Significant changes will take time and energy to integrate into company culture, so preparation and planning are critical to staying ahead. On the employee level, create comfort with change by encouraging cross-department collaboration, introducing rotational positions and minimizing burnout, so employees can adapt.

4. Provide constructive feedback

Innovation does not typically strike by lightning. Instead, innovation occurs when employees receive on-the-spot feedback, prompting them to find a creative solution. To give effective feedback, concentrate on the idea, not the individual presenting, and be specific, timely and realistic.

When delivering constructive criticism, leadership and managers may hesitate to speak truthfully. However, a culture of innovation begins with a growth mindset at all levels of an organization. Employees will embrace constructive criticism if leadership adopts an attitude of continual improvement, mixes constructive criticism with an affirmation of quality work, and accepts employee feedback on corporate policies.

Remember to share positive feedback and suggestions for improvement or risk alienating teams. A LinkedIn survey found that 69% of workers would work harder if their efforts were better recognized. If employees do not feel appreciated for their ideas, they will struggle to find the motivation to innovate successfully.

5. Encourage open communication

For employees to exchange ideas, the lines of communication need to stay open, both between leadership and workforce and between workers themselves. Both internal and external communication should strike a consistent tone that celebrates initiative and innovation. Likewise, leadership should speak transparently about successful ideas and disappointments and celebrate initiative over results. For employees, communication workshops can facilitate better conversations and teach teams how to problem-solve systemically.

Open communication also increases the likelihood of successful ideas. After a change, successful or otherwise, convene teams to evaluate what went well and what could have run more smoothly. The more comfortable employees feel communicating, the more honest and effective the analysis. Implement this analysis to improve future innovation.

Businesses that wish to encourage innovation should choose an approach that empowers employees, values agility, emphasizes a growth mindset and prioritizes open communication. In doing so, leaders can prepare for the future and build resiliency for the next crisis.

Related: 6 Communication Tips to Strengthen Your Company's Culture

Wavy Line
Steve Arizpe

Entrepreneur Leadership Network Contributor

President & COO for Insperity

Steve Arizpe is president and COO for Insperity (NYSE: NSP), a leading provider of HR and business-performance solutions. He provides strategic leadership and guidance throughout the organization to ensure success for its small and mid-sized business clients.

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