The secret to building a truly innovative culture

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0:41We look forward to seeing you there. I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. For one purpose which this nation will never overlook, the survival of the man who first makes this daring flight. But in a very real sense, it will not be one man going to the moon. If we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there. That was US President John F. Kennedy addressing Congress in 1961. A few years later, NASA was abuzz with a driven focus off the back of Kennedy's challenge.

1:27a large swathe of its more than 400 ,000 employees were working on fulfilling the president's dream. So when California Institute of Technology graduate student Gary Flandro arrived at the agency's doors, no one really knew what to do with him. He was stuck in a corner office and given the task of finding the most efficient way to send spacecraft to the outer planets. During his research, he realised that in the 1970s, Jupiter, Saturn, Uranus and Neptune would line up in a way that only happens once every 176 years. Such alignment meant that a spacecraft could use the gravity of one planet to slingshot to the next, therefore saving on fuel and time.

2:10Flandreau realised this opened the door to visiting all four planets in a single mission, something that had never been done before. Thanks to his discovery, NASA eventually launched the Voyager missions in 1977. Voyager 2 took advantage of this rare alignment and visited all four planets, sending back amazing data and pictures. But this doesn't happen without a culture of innovation.

2:43I'm Josh Dornbrack and this is the Business Leader Podcast. Today, we're looking at how you can create an innovative culture within your organisation. We speak to experts from innovative companies of various sizes to find out how to encourage curiosity, foster psychological safety, embrace and learn from failure, and much more.

3:08I think people get scared about innovation because I think they think they've got to create something that the world has never seen before. This is David Keane, the co-founder and CEO of tech firm Aurigo. And that's quite daunting because every idea that most people have ever had, somebody has had that idea before or they're having it at the same time as you. And I think innovation can therefore be quite scary. And people go, oh, I can't innovate. I don't know how to innovate. Well, actually, it's not like that at all. you can be innovative in all sorts of things. Innovation is embedded at the heart of the company, which develops self-driving vehicles for the aviation industry.

3:50And Keane is constantly evaluating opportunities in and out of his business. So the way I do is I look at something and I think, well, first of all, that's really interesting. And do I think that is going to have a business case going forward? And if I think, yes, this could potentially have a business case, I then go, okay, does my company have either the products or the skill sets within the people to enable us to get into that other business? If the answer is yes, and in most cases, actually, it's surprising how much skill set you've got in a company which is untapped or you don't realize that that could be used for something slightly different.

4:36And so taking a step back from your current business, I always think that is a really cool thing to do. Forget what you're doing and what you think about everything. Just stop for a minute and just pretend you don't know anything about this business whatsoever. What do you see and what do you hear and what do you feel about the business? And then you think, oh, that's amazing, isn't it? Because I didn't quite realize we were doing A or B. I know we're doing it for that, but actually that's got much wider reach. And doing that type of constant analysis, and when I mean constant, I mean I probably do that several times a day, because the world moves so quickly that actually to do that once a quarter or once every half year, you're back into dinosaur territory again.

5:28He points to an example of this analysis. And one of the things we do quite regularly with the employees is we always ask them, what do you do out of work? And you'll find it's happened so many times that we have asked an employee who might be on a production line, you know, screwing some things together or making a wiring harness or whatever they're doing. And they say, oh, well, you know, at home I write code. Oh, yeah, what code do you write? oh, I write games. OK, let's just have a look what you're doing. And then suddenly you think, actually, we could move that person into our simulation team.

6:11Another example of a company that leverages this thinking is Ricoh. I'm a huge believer in skills, not roles. This is Nathan Thomas, Director of Innovation at Ricoh Europe. So when we're hiring people, we go, look, this is the job title, but don't think for one second that you're exclusively only doing things in this list. If you are good at something, we will call on you to do whatever it is that you're good at. So if you happen to be awesome at photography, great example, I've been doing a lot of media stuff and I needed a new media pack apparently for headshots and our senior technical architect whose hobby is photography came in and did all the shots.

6:51Rico's environment is deliberately equipped for this thinking. we set up an office in Birmingham and we have a really awesome office right by the canal if you know Birmingham and it's it's designed to be that center of excellence for innovation we specifically designed the office to encourage the way that people think so it's a listed building there's spokes brickworks there's open collaboration spots everywhere so we've got only two meeting rooms it's not a huge office but we encourage open collaboration sessions we've got the kind of best tech setup you could imagine. So the beautiful large monitors that you can work on, everyone's got a MacBook, which sounds crazy.

7:31But loving the machine that you're working on is something that people really forget. Because if you come to work and you open your laptop, you go, I hate this, I hate it. It just doesn't inspire you to actually do your job. If anything's in the way of you doing your job, you just won't do it or you complain about the thing that's in your way. A focus on the shiny new product or service side of innovation loses the smaller ancillary details like Thomas and Rico address in their offices. This is one of the fundamentals of an innovative culture. It starts with your attitude and your mindset as a leader.

8:03Having a light bulb moment around mindset changed the course of Rigo's journey, as told by David Keane. When a camera came out on a mobile phone, I'm bearing in mind I'm a technology person, I said out loud, that is the most ridiculous thing I've ever seen what is the point of having a camp that's no reason whatsoever and that's just for sake of doing it and very shortly afterwards I realized what a hell of a mistake I'd made and that is one of the turning points in my life where I also looked and said Dave if someone is doing something or trying something don't ever put it down go and have a look at it and work out why they've done that and actually work out how we could exploit it.

8:56And I think drilling that into everyone to say, I made a big mistake in looking at that, and yet I corrected that big mistake, and now I try not to make that mistake again. So anything that's put out now. In fact, in teams where someone says to me, someone will say, oh, have you seen this? It looks absolutely ridiculous. I always say, hang on, OK, guys, hang on, stop. Let's just check whether it is ridiculous or not. Don't assume anything and check everything out and then find out how we can exploit it. Richard North, president of toy manufacturer WowStuff, gives his team permission to innovate by leading by example, even with the smallest of actions.

9:39I will say something really stupid, sometimes deliberately so, But often just because my brain is thinking weirdly, what if we could create a toy that did this, this and this? And then you might get laughs. I don't mind. And nobody does anything maliciously. I think you've built that culture that you don't. Because over time, what we've recognised is that a stupid idea morgues into something brilliant through teamwork. This is an example of psychological safety. the idea pioneered by Amy Edmondson in her book, The Fearless Organization. She uses seven statements to gauge an organization's level of openness to innovation and provide a baseline for tracking progress.

10:23Edmondson encourages leaders to set the stage by establishing clear expectations about failure, uncertainty, and interdependencies. Be clear about what's at stake, why your work matters, who benefits, and why. The aim of this is to create shared expectations and meaning. At Travel Company on the beach, the company's innovative culture is embedded in the belief that if something is easy, everyone would be doing it. Zoe Harris, the company's chief marketing officer, believes that to differentiate, businesses must keep trying and pushing what's possible. She shares an example of psychological safety from a previous role.

11:03So when I was at Reach PLC, so it's the publisher of the Daily Mirror, We launched a new newspaper called The New Day, which was developed from consumer insight and the fact that newspapers hadn't really changed for 120 years. And it closed after six weeks, I think. It was very difficult and it felt very embarrassing. I was personally embarrassed. The company spent lots of money. And at the time we'd done it, internally and externally, lots of people had said we were mad and stupid and all the rest of it. There are a couple of things that were interesting. One is that it was hard to transform the mirror because it had been going for 120 years, so much DNA ingrained, so much risk to making change there.

11:40So in part, the new day was not only a new product for customers, but a new way of making a newspaper. And so at that time, instead of doing it with, I don't know, 200 people, we did it with 30. And we had different production processes, different ways of making content, different ways of borrowing content from around the group. And so the point was that at the start, whilst it was set up definitely to try and introduce a new revenue stream and maintain the readers that were churning out of traditional papers in the Daily Mirror and the Daily Express. It was also set out clearly at the start, the things that we were trying to prove, like a different way of production and different type of content and different people working on it.

12:18And so through that, at the end, there was some learnings that could be taken back into the wider group. And although commercially it was not a success and it was, you know, something that we'd been very hopeful about and it was disappointing when it hadn't worked. The support of the CEO, Simon Fox, and at the time, the CFO, Vijay Fadella, was just phenomenal, right? So they were very alongside us. When we closed it, they were there talking to the staff with us. They afterwards put internal and external messages out about the need to try new things, the need to be disruptive, the need to innovate in order to protect brilliant journalism for future generations.

12:58And the other thing that happened off the back of that actually was both myself and Alison Phillips, who was the editor, were given bigger jobs off the back of it. Psychological safety allows people to try things and push boundaries, but it also informs your approach to failure and risk. Not everything that you do is going to hit the mark the first time, and I think that's OK. This is Andrea Morgan-Vandome, the Chief Innovation Officer at supply chain software provider Blue Yonder. And I think you've got to say that that's fine. I'll learn from it. And you have to drive that culture not only for yourself but others as well.

13:34Because if you don't do that, that's what gets people stuck and then they become risk-averse and they don't want to do it. So you have to eliminate that. Morgan Van Doen's other piece of advice for maintaining a culture of innovation is having a laser focus on one thing in particular. You've got to stay close to what your customers want. What does the market want? How do you really drive this and think about this from the challenge, the value, what will drive the needle the most. Often, working with clients directly can aid innovation. David Keane shares an example from his business. If you look at what we're doing with airports, where we're doing this automated vehicles for baggage and cargo, you've got a situation where the airports don't actually know what they want because they've never seen the tech before.

14:21So what happens is, is you rock up and then they go, oh, actually, could you make it slightly shorter because we need to get under that bridge? Or can you add two robotic arms? Because if we had that, we could load and unload containers. And if you look at some of the advancements on the vehicles we've got, we didn't think of those advancements because we're not in the airport game. So together, we sort of developed the product, but neither of us knew the ideal solution. This means that a focus on adoption has to be baked into the process of innovation. Morgan Van Dome again. We did this survey and we sort of 83 % of like wasn't just our customers, not our customers, it was a broader group, right, that we looked at, said that they are really looking and embracing AI.

15:12But when you drag into like the newer technology of Gen AI, it's less than 40%. And so again, when I talk to a lot of people, some of the time it's like, how do I get started? Like a nervousness of, and this is where you almost have to break it down and iterate on getting it there. So we had these, give you an example, you would never think about like, how do you take Gen AI into a warehouse? So one of the things that we did pretty quickly was to say, okay, what are the challenges people are having in the warehouse with our customers? And we built agents to really help them. They don't have the time to go and look at all the reports there and easily know how to get to the root cause.

15:54They don't easily know what are the recommendations. And if you'd gone and you'd sort of said, oh, a couple of years ago when we started it, oh, here it is and built it and gave it to them, I think that adoption would have been lower. So instead, we kind of said, what's the challenge? How do you do the value? And then everyone wanted it. On the Beach leans on customer insight for its innovation. Zoe Harris gives an example of a trend the company noticed this year. We would say we're a customer-led tech business. And so our customer insight was telling us that consumers were holding off booking because they had a greater sense this year that January wasn't a good time to book because the prices were going to get cheaper and we knew from our own data that that's not the case january is a brilliant time to book a holiday and tends to be the cheapest prices outside of like really late distress stops you know four weeks before you fly and of course we can tell people and everyone does but now january blah blah but but it's it's wallpaper isn't it and there was this real consumer instincts that that wasn't the case for some reason this year and so we developed a price drop protection which is if the price of your holiday reduces between the time you book and 60 days before you travel we'll give you a credit for the difference in price we delivered that through marketing messaging to start with so on-site messaging email social and then if the customer found the holiday cheaper they had to go online and fill in a form and it was manually done by the finance team and when we saw that get traction so it resonated really well with our customers we then productized that so the products and tech teams built that into our app so now you You can go into the app, into your account, press one button.

17:30Automatically, it will tell you if your holiday's got cheaper. Automatically, it will give you that credit note. So we've taken away all of the manual and all of the friction and all of the need to communicate it. And so I think that's how we try and do it. So we take a customer insight. We take some innovation. What's a creative way of reassuring the customer around this and giving them peace of mind at the time of booking the price won't go down. And then test it in lo-fi ways, really. So in this case, email and on-site messaging, and then put some tech and product resource behind it to build it into a much better customer experience.

18:01Thomas and his team at Ricoh adopt dual-track agile methodology. It's a way of working in product development that helps teams be both innovative and efficient, split into discovery and delivery. So we bring some of the core team and people who think will have a valuable input or would be interested, and we openly discuss and collaborate on it. and then we'll break out let's say one of the designers will go just go away and think about it for a week no one's going to come and ask you what you're doing how you're doing it go and prototype some stuff in figma it's not going to cost us anything other than your time let's go away figure it out and then they'll come back and go this is what discovered and that enables us to move way faster than it would be if we try to sit down and get a project functional specification like the past and then go through things and fully define it.

18:49We don't know what it is, so we'll just go away and figure it out. And if it's terrible, we look back and go, we're not thinking in the right way. It helps us move faster, which means we shouldn't fail at the stuff that we know, but we can fail before we know what we know. The company even has a budget to cost in time for designers to spend on innovation. Thomas admits that to those not involved, the aforementioned collaboration meetings may seem like arguing. However, all employees are primed with a very simple message. Your ideas aren't you. So if someone hates your idea, it's not you that they hate.

19:27It's just they don't like the idea. So try and separate yourself from the things that you say and the things that you think because it's not a reflection of you. It is hard. It was even hard for me years ago where I come up with something great and I've done all this work and I come over and I go, yeah, I hate everything at that. and I think I've failed but you haven't felt the idea this wasn't great and maybe there are things that you can take away from it and I also think putting the right mix of people in so when we have in these discussions like I'm I'm on the extreme side of saying stuff that's insane and directly being confrontational when I want to challenge so that they they do better or think more and I'll always be the guy going but why but why and they're going I don't know but then there's a few other people we put in with completely different personalities so um i had a design dean he is the most chilled person you'll ever meet i don't think i've ever seen him angry upset tired it just it's the same no matter what so he'll put that level head and then there's other personalities that our one of our ux experts ruth she is she's skeptical about absolutely me everything and wants to know more detail.

20:36So then when you put us together in a group, we end up doing something really good because we're all playing the different roles that the team really needs. If there was 10 of me in a discussion, it would be awful. We'd never get anywhere. We'd go on forever and nothing would ever really get done. Something else that is key to innovation is diversity, both of background and thinking. Thomas speaks regularly about what diversity really means in business and it's noticed a part of the conversation that often gets missed. You know I think I take it for granted now because I used to do a lot of talks around what diversity really meant in the business because people would always go we need to be diverse so we need more women or we need more Asian people.

21:17I go if there was a woman an Asian Persian a white person next to me and we're all living in the same area with the same background the same thoughts and feelings. Is that diversity? I don't think it is, but we're all the exact people. We just look different. So I've always been a huge believer in true diversity and diversity of thought and thinking and feelings and backgrounds. And I think we've got an incredible mix. If you would come to our office, you would see people from all walks of life. And it's really, it's absolutely essential. The race to develop AI has thrust a spotlight on the importance of having diverse teams working on projects.

21:55Siri and Alexa were much maligned for their inability to understand different accents when they were first launched in 2011 and 2014 respectively. This was pinned on the lack of diversity in the tech's training phase. Diversity extends outside of race and gender. Age, socioeconomic background, disability and accessibility need to be considered when building teams or developing projects. Having a broad range of lived experiences doesn't just mean that you get different ideas and different viewpoints, it also makes good business sense. In 2024, Microsoft reported record revenues of$245 billion, with the company's chief diversity officer, Lindsay Ray McIntyre, stating,

22:44Another element to being innovative is shared by North. It's great being first to market, but you need to be first into the minds of the consumer. In 2012, we had a hip toy called Fair Swimmers. It was a giant, four or five foot long, helium filled balloon, three foot wide. It was in the shape of a shark, great white shark. We launched it in America because Toys R Us, we were at a show, Toys R Us, saw this in America when they were around. They said, oh my God, best toy I've ever seen. We want to buy all your stock. So they did. They sold it in America, their number of toy of the year. They thought, great, my God, this is going to go huge globally.

23:31But because we'd sold the first year's stock entirely to these guys in America, Toys R Us, when we tried to get product after a year scaling up, bring product into Europe, the retailers said, oh no, no, we don't want to copy. We just buy the original called Sky Shark and then copied our product and made it worse. And because we were smart and we got scientists at the core of this business, Wealthstuff, we were really good on the patents. The company won a seven-year legal battle that went all the way to the Royal Courts of Justice, which stood by Wealthstuff's product patent. But the damage was done and the lesson learned.

24:11What other tips do our experts have for building an innovative culture? Zoe Harris again. to check in on ourselves on what's exciting us on our to-do lists and making sure we don't get into that bau marginal gain stuff too much so of course that's the big part of the day job and of course we need to do those things but at the point that's all we're talking about and all we're doing then we're not doing what we're really there to do which is as i say like how do we accelerate the growth of this business and i talked to the team about giving me ideas that will keep me up at night in terms of it was twofold a bit nervous and a bit excited do we feel a bit nervous about this and if we do that's when we start to know that we're pushing on boundaries that might give us a disproportionate amount of success and we're very aware that in taking risks you'll get bigger rewards and so finding those those considered risks for sure but you know finding them is is like they're like the crown jewels and when we find one of those ideas to treat it with I need to use the word respect and sound a bit silly, but how can we make this happen?

25:16Let's not just have an idea and let it die because it's a bit difficult or it's a bit scary. What do we do to mitigate the risks? How can we make it happen? How do we do those things which other people would put in the too difficult box because that's where we'll get a disproportionate level of growth? Andrea Morgan-Vandome shares hers. I think you have to measure. If you don't measure, and it's measure many things, measure the success, measure what you learnt in the failures, Measure how much time you actually give to this. I mean, if you don't do those things, you lose your way. But this is arguably the most important tip and the key to building an innovative culture.

25:54For me personally, you've got to be excited about what it is that you do. You've got to draw inspiration from it because you can't innovate in something you don't love or you don't believe in. One thing you've got to have if you do innovation is you've got to have people who are enthusiastic. David Keene again.

26:39an innovative mind, that sort of gets infectious across all the people. As the psychologist Carl Jung said, the creation of something new is not accomplished by the intellect, but by the play instinct arising from inner necessity. The creative mind plays with the object it loves. You've been listening to the Business Leader Podcast with me, Josh Dornbrack. For more business masterclasses and case studies, please check out businessleader.co.uk.

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