Everyone wants a culture of innovation. So what does it look like?

But leaders often think of innovation as the latest buzzword that’s just good public relations without practical business applications—a paint job to tell the world that the firm's still got it. Other organizations consider innovation simply another desirable "thing" to acquire. Even for companies that realize the value, investing in innovation during a challenging economic moment feels like a luxury. At Google, we see innovation as happening on a scale from incremental changes to radical changes.

Innovation can manifest in a variety of ways, each of which are unique to the company and culture undergoing transformation. A culture of innovation means that everyone within the organization—from the CEO to the most junior associate—constantly pursues something better. It’s relatively easy to give lip service to innovation, but much harder to actually put it into action on a daily basis across every aspect of an organization. Businesses with a culture of innovation not only stay ahead of rivals, but often significantly cut expenses. 

In 2022, we conducted a worldwide survey of C-suite leaders at companies that incorporated after 2000 with approximately 1,000 employees to understand the new considerations and evolutions of how innovation can happen. Our researchers at Google talked to leaders in industries, including consumer packaged goods, banking and payments, capital markets, insurance, manufacturing and supply chain, healthcare and life sciences, telecommunications, and media and entertainment. 

Our biggest takeaway from the survey was that senior leaders resoundingly want a culture of innovation. More than four out of five business leaders already have an innovation strategy in place. Leaders understand the importance. However, 20% do not feel that their organization’s innovation strategy is well defined and effectively communicated. They struggle to actually create the culture in the daily life of the business.  

We want to not only share the survey results with you, but also tell you about our own experiences throughout our culture at Google. Our goal is for you to have the data and practical ideas to take innovation from something you talk about to something you do. We take great pride in helping companies like yours create their cultures of innovation through smarter decisions by bringing together data, artificial intelligence (AI) and machine learning (ML), and software. 

Technology, such as workplace collaboration tools, is one mechanism that helps to drive a culture of innovation. However, change management and processes must also be audited and adjusted to complement the collaboration technology in order to implement a true innovation strategy. Senior leaders can start by carefully looking at the business to identify innovation successes and areas for improvement. They can then design a strategic innovation strategy that helps the organization begin its journey toward a streamlined and forward-thinking approach to business where opportunity is easy to capture and learning from mistakes is commonplace. 

Innovation is not an easy journey. You can’t achieve it with a single initiative or process. But a culture of innovation is achievable for any company. Getting there requires purposeful organizational values combined with a thoughtful and strategic approach. Through our experience at Google and conversations with leaders across industries, we’ve identified four keys to creating a framework—intention, infrastructure, influence, and implementation. 

Innovation is first and foremost an attitude of how a company intends to operate. However, businesses need a foundation in place before implementing and measuring. That's why for a culture of innovation to be effective, it must be clearly communicated throughout the entirety of the organization. Only 14% of survey respondents strongly agree that their training programs are well aligned with their innovation strategy.

Only 41% of business leaders agree or strongly agree that their employees are encouraged to flush out information to direct innovation. Everyone must buy in, from the C-suite to frontline employees. Intentionality turns innovation from just an exciting idea into an effective business tool.

Live innovation each day

Almost two-thirds of the businesses surveyed by Google told us that they had an agreed-upon definition of innovation in place. However, only 17% strongly agreed that their definition was clear and well communicated, which is a big problem. We feel strongly that core values must be lived every day and that the definitions of core values should be shared openly with a willingness to revisit and add to them.

Encourage new ideas

Colleagues and team members must feel that they have something to gain from embracing innovation throughout their workflow. Everyone should encourage new ideas. And each person should feel they can make a difference within their role, the team, the line of business, and the company. 

Embrace failure

But innovation isn’t just about succeeding. It’s often more about failing, and then taking a second chance at the idea with knowledge that only comes from making mistakes. When people are supported and even celebrated for failures, they begin to feel safe taking risks and sharing new ideas. 

Create psychological safety

A psychologically safe work environment allows employees to feel comfortable and confident enough to work on their projects as they see fit, and thrive in their roles. When we looked at key teams at Google during an internal study, Project Aristotle, we found that our most successful teams reported that they felt safe taking risks. In these teams, members are encouraged to ask for help, support each other, and confidently question directives that don’t make sense. 

Give old ideas new life

Elements of old ideas are often the most fertile ground for new ones. But businesses won't have brilliant old ideas lying around if potential innovators aren't encouraged to be comfortable with the risk of failure. Alphabet's moonshot wing—known as "X"—turned failed big projects into different groundbreaking products, such as moonshot compost, a once-shelved laser beam initiative that now connects people to high-speed internet up and down the Congo River. 

Promote diversity in thought

Supporting different individuals who hold different perspectives—especially among members of the company leadership—also contributes to a culture of innovation. If everyone inside an organization is too rigidly aligned, it becomes difficult for new approaches to rise to the surface. Yet, only 16% of respondents strongly agreed that their own C-suite was diverse in its thinking and held different views about how things should be done. 

Know when to hold steady

Balancing clear direction and overt openness to change isn’t easy. But strong leaders know when to stick or twist with a decision or strategy. Whichever direction is chosen, they let team members with new ideas know that their views are valued and vital. 

Set a benchmark 

At Google, our employees are empowered to explore unconventional ideas within their roles. But these ideas should hold the potential for 10x improvement. Many businesses duel with competitors for minor 10% gains, which means leaning on existing tools and frameworks. But 10x totally flips the paradigm upside down. You can only see these leaps with radical ideas, such as when one of our teams devised 3D-printed alternative proteins an entire decade ago. Risky but high-reward projects are then preferred over low-risk, low-reward incremental improvements. With the freedom and power to create big changes, employees are no longer executors on their projects, but instead product owners and visionary technologists.

Having the right intentions and wanting to instill a culture of innovation serve as the philosophical foundation. Our survey found that 84% feel their organization could do more to flow ideas through smoothly and swiftly to commercialization. To turn this into reality, you must create cultural infrastructure of concrete practices to support the culture with training, education, hiring, and retention.

Instill confidence 

Training someone to have their own ideas is a little paradoxical. You must also show confidence in their ability to come up with fresh solutions, which goes beyond helping them feel accepted and comfortable at work. Employees need the time and space to develop their skills and interests within the workspace to improve the business at the right time. 

Implement the 20% rule

We encourage Google employees to dedicate a portion of their time—the specific percentage should be determined by Googlers and their managers—to working on something unrelated to their core responsibilities with potential to benefit the company in the long term, which led to industry-leading products, such as AdSense and Gmail. However, AdSense founder Paul Buchheit says the real value of 20% is not the time but rather the license and rare freedom to work on things that “aren't important.”

Encourage cooperation over competition 

Competition helps when it happens between businesses and products—not within the same team. Cloud collaboration tools make it easier to collaborate, but you also need a culture shift. Individual employees won’t share good ideas with the rest of their team and department if they feel their teammates are their rivals, often a bigger problem at smaller organizations with fewer opportunities and limited budgets. Only 7% of smaller businesses reported a culture that "cares for each other's growth" compared with 19% of those with over $500 million in annual revenue.

"Territorial thinking—a belief that power comes with control and withholding information from others—is utterly outdated," says Nadine B. Hack, CEO of beCause Global Consulting. "True leaders engage and respect all stakeholders fostering trust and a shared sense of ownership of processes and outcomes. With that foundation, active co-creation leads to more innovative, positive results."

Provide transparency 

Within Google we promote a "sharing consciously" mantra to avoid territorial thinking. While this approach means transparency about objectives, progress, and the problems employees face, we also apply it to senior leadership. At our all-hands meetings, employees can ask the C-suite about anything on their minds.

Hire “better” than yourself  

You should only hire new team members who add to the culture, not detract. Leaders and hiring managers must let go of ego and the fear that the person being brought into the team threatens someone else's job. Executives should consciously hire someone "better" than themselves, which is a key maker of openness to innovation. 

According to CxOs surveyed by Google, 90% of those in companies with between 1,000 and 5,000 employees agreed with the principle of hiring someone “who is better than me.” However, only 77% of companies with over 10,000 employees supported the principle, which may point to the more highly specialized nature of roles within larger organizations. 

Look at the environment in our new hybrid world 

Water coolers once served as the location of choice for a quick catch-up and brainstorm. Today, the definition of “environment” has changed to hybrid, meaning employees need both physical—including open spaces and micro-kitchens—and mental communal activities to encourage the potential for spontaneous and unpredictable interactions that might trigger otherwise untapped ideas. 

Learn from other firms

A culture of innovation doesn't exclusively mean encouraging your own creations. You can take inspiration from others. Being open to outside opportunities often leads to more value than prioritizing "creativity" in the abstract. 

Start internal incubators

Instead of waiting to acquire a hot new startup and painfully integrate it into an existing operation, many businesses directly fund their own spin-offs to quickly prototype new projects at a relatively low cost. For example, Alphabet's X exclusively focuses on cultivating and prototyping massively ambitious moonshot projects. Then, when a moonshot company is ready to "graduate," a whole new potentially revenue-generating division exists under the corporate umbrella, such as the driverless car startup Waymo.

Provide the right tools and the guidelines to use them

A full suite of cloud collaboration tools provides the increased agility and flexibility that allow businesses to quickly pilot, iterate, and scale new products. However, if a business has yet to fully embrace the smorgasbord of services and technologies deployed by modern companies, then it may fall behind the competition. No matter how many “principles” such a business might have in place, it doesn’t have the ability to make the most of the ideas. 

How do you actively shape the culture to drive rapid returns? Directing innovation toward direct value creation becomes even more critical when cost-saving efficiencies feel more critical than extreme growth. 

Listen to your customers 

In a product-oriented business, customers provide the most reliable source of inspiration. When you listen to and learn from customers, you get new developing ideas for successful new products and features; we refer to this as “focus on the user.” Such an approach goes far beyond the adage "the customer is always right" by assuming humility and the responsibility to solve any issue a customer might face. For us, whether designing a new internet browser or tweaking the homepage, this means making sure that every change benefits the customer first—ahead of less tangible internal metrics.  

But smart businesses gather information and don’t just take what the customer proposes as the solution at face value. Legend says that when Henry Ford developed the first commercial motor car, he said, “If I had asked the people what they wanted, they would have said faster horses.” Customers may not always know the best solution to their issues, but they know their problems and challenges.  

Collect the right data and provide data literacy to employees

Understanding the market and conducting in-depth research into an organization's knowledge help uncover and provide new solutions and products. Often you discover industry-wide shifts and trends before they become common knowledge. For example, you may learn why a disruptive competitor is expanding into a specific category and what question they’re asking their customers that hasn’t been asked internally. Because all smart modern businesses ask the same question, you need to apply the data very quickly, which gives nimble, digital-first organizations an edge. Additionally, data literacy—education and understanding of controls—enables employees to do more to support your business objectives.

Increase the number of touchpoints

You often get new ideas outside of usual channels. When you have more interactions for potential sources, you get more opportunities to think of a solution from a different perspective. Each person you interact with opens up new opportunities to learn about a new challenge or potential solution.  

"A vast number of innovations actually come from the wider supply chain, including both suppliers and customers," says Jens Roehrich, Professor of Supply Chain Innovation, School of Management, University of Bath. "Regular formal and informal opportunities for engaging with supply-chain partners are needed to exchange information and solicit ideas."

Empower employees 

Team members dealing directly with customers daily often provide sharper insight into their needs and wants than the senior manager who reads the results of a CX survey. Consider creating company policies that empower employees to solve customer issues by providing more ownership over customer accounts. While adopting such a policy was customary in 90% of the companies we profiled, there was also a high degree of variance by sector. In the media industry, for example, only 7% of respondents strongly agreed that leadership encouraged taking ownership of customer problems. 

Providing employees with an arena—be it a space or place—to raise comments and queries with crowdsourcing support helps to foster ideas being heard and brought to life. At Google, the use of DORY encourages Googlers to feel a sense of responsibility to their community and to help action feedback.

Manufacturing and other technology and research and development led businesses showed more confidence in their approach, possibly because informal policies may not provide the high level of product quality required. For example, 98% of manufacturers agreed that "their employees actively search for new ideas and innovations at all stages of product or service development to add value for clients." However, only 87% of those working in consumer packaged goods agreed, the lowest value of all the surveyed industries.

From voice-activated assistants to email clients, there are dozens of options in the market and many more ideas that never made it to the product stage. Bold ideas that become reality transform companies and turn a product from average to excellent. Ideas are great, but execution is king. 

Focus on speed with an empathetic design thinking process

The first product of its type on the market almost always gets praised as the most innovative. By setting up internal structures to operate at speed, you reduce the lead time between idea generation and product shipping, making it hard for competitors to keep up. Even releasing a copycat product or features means a significant amount of time with the original product as the only one on the market. 

At Google, we believe that moving at speed and maintaining that momentum is often far more effective than fine-tuning details too early in the product-building process. Our empathetic design thinking process uses Google’s culture as the base, and shifts the archetype of disruption from "move fast and break things" to a more inclusive mantra for innovation, "move fast and build things." If something works, it sticks. And if it doesn’t, you waste less time and learn more by moving quickly. 

Measure everything with objectives and key results (OKRs)

Being able to deploy, react, and make decisions at speed requires a large stream of data. As Vint Cerf—one of the fathers of the internet—wrote in this blog post: "A culture of measurement results in a collection of anecdotal information and quantitative data. Both are necessary to inform change." At Google, we use the concept of objectives and key results (OKRs) to set ambitious goals and track progress.

Despite businesses being aware of how important healthy data policies are, according to our research, only 65% of senior leaders agree that their organizations actively measure the impact of innovation on business performance. Only one in seven strongly agreed that their company did so, which is a concerning statistic. Many of the respondents from smaller companies in particular (40%) struggle with measuring the impact innovation has on the bottom line. However, smaller businesses were more likely to agree that the flow from concept to commercialization was "smooth" and "swift," likely due to their greater agility. 

"With an innovation, do you seek to create economic or social value? Does the innovation create value for you as a firm, for you and your immediate suppliers, for you and your customers, or for you and the whole supply chain?" asks the University of Bath's Jens Roehrich. "The whole innovation process is like a funnel in which a lot of ideas go in and very few will be realized. Not all measures should be cost-based. Therefore, developing measurements for each innovation phase and stage is vital."

The extent to which senior business leaders feel their organization effectively measures innovation:

Launch, iterate, and continue innovating

Such granularity is hard to achieve without a comprehensive digital product suite—but it’s key to closing the loop between idea and implementation. Even if a business is still on its digital transformation journey, that innovation doesn’t stop once the product is shipped. Continue looking for new ways to solve existing problems. Being agile, taking comfort in the ability to build off great things to make them greater, and being aware of every potential metric and item of feedback is critical. Each time you measure data, you measure the innovation itself. 

Innovation is not a single moment or achievement. But instead, a culture, a holistic attitude, a vector of thought that turns into an approach to every challenge a business faces. With a culture of innovation, organizations hold an unrusting tool that allows decision-makers to react rapidly to new opportunities. 

You can encourage, measure, and hire for innovation. But you should not view it as something with a beginning or an end. Innovation must be lived daily through every business decision and every product deployment. 

However, as we've shown, businesses struggle to establish the connection between encouraging new ideas and putting them into place in a measurable fashion. Many organizations turn to the Google Cloud suite of products, from virtual machines to relational machines, to accelerate their adoption and integration of a culture of innovation.

The next few years—as most of the world's largest businesses pursue their digital transformations against the backdrop of serious economic challenges—will lead to new trends in the innovation space. The companies that we surveyed shared a wide range of approaches and actions planned for the next five years to help boost innovation. Such investment shows a positive trend among mature businesses but also highlights the necessity of adopting those best practices—from infrastructure to education and data measurement—as soon as possible.

Actions businesses are taking in the next five years to boost innovation:

Transformation outcomes are fluid. For some companies, innovation will be more incremental, and others will have space to upend or change an industry. On the continuum of innovation there are many stops along the way.

Zooming out, this widespread adoption of cultural innovation is a good thing. Competition creates a reinforcing loop, a feedback cycle of new, successful products. Customers are happier. Revenue increases. The business grows. But you can’t wait. Each day means you fall further behind your competitors. Make today the first day in your journey toward a true culture of innovation.