Many mid-cap and large companies long for more innovation to stimulate growth in a challenging, and fast-changing global business environment. A PwC Pulse Survey of 246 CEOs shows that 97% of business leaders see innovation as a top priority for their businesses.

[i] While many executives want to ignite the innovation of their employees, they struggle with taking the steps necessary to create a culture that can foster innovation, while at the same time maintaining a strong focus on operational excellence and the discipline to achieve quarterly sales and profit numbers. In most organizations, the drumbeat to meet this quarter’s financial numbers drowns out innovation.

Business leaders have to do both.

They need to maintain a strong focus on operational excellence and profitability. They also need to strategically align their organizations to foster the innovation that will drive future growth and competitive advantage. They can do both!

Research by Strategian on innovation shows that the leading impediment to innovation in companies is organizational malaise. That is, the organization lacks the mindset, structure and orientation for innovation. Therefore, it is risk adverse, suffers from inertia and settles for the status quo.[ii] Business leaders have the power to change this.

Innovation is tangible and measurable. It is a culture, and a state of mind. Business leaders can manage it. Innovation is not a new strategy in and of itself. Rather, innovation helps business leaders implement strategy by finding new approaches that create value. Executives need to set a strategic focus on innovation, and with it, goals, milestones and project plans—just like they do with operations, marketing, sales and financial plans.

Business leaders have the power to create innovative cultures.

Management research has long shown that employees work on what is most important to their bosses – their leaders set their objectives. Innovation research shows that innovation is more successful when executives set a strategic focus on innovation as opposed to ad hoc approaches.[iii]  If the boss says to make the account receivables process leaner, that is what his team will do. If the boss says to cut budgets by 5%, that is what her team will do.  If the boss says that we need to find innovative approaches to bringing a new product to market, or an innovative adaptation to our leading product to meet an emerging need—that is what employees will focus on.

Setting a strategic focus by itself will not drive innovation.  As with any strategic initiative, business leaders need to speak about innovation with passion and do so repeatedly. In many quarterly all-employee meetings, executives provide a summary of the company’s financial performance released to Wall Street and the top financial performance goals for the remainder of the year. Often, business leaders will also speak about their top five operational objectives for the year. This is a good time to communicate the organization’s focus on innovation.

Business leaders who choose innovation as a focus should speak with passion about how it will help drive financial success. They should highlight the progress and milestones made by their innovation teams. While innovation often requires a certain level of taciturn to protect new intellectual property, executives still need to celebrate their teams’ successes.

In my experience, when business leaders speak regularly about their strategic focus on innovation, the workforce responds positively. Their confidence in the business, their engagement and their morale rises. It’s easily felt throughout the organization and can be measured through surveys and focus groups.

Like any strategic focus, innovation requires investment and attentive management.

To build and nurture a culture of innovation, executives need to invest in infrastructure—not just physical capital (which in my experience is seldom exorbitant) but also employee development. Successful innovative cultures also require experimentation, a tolerance for risk, and continuous learning. The guiding mantra needs to be, “Fail fast, furiously and frequently. What did you learn today? What is tomorrow’s experiment?”

Innovation also requires knowledge management: the cultural encouragement and recognition for expertise sharing and collaboration, and a process for discerning the best innovative ideas from the pack.

Finally, successful innovative cultures require the organizational alignment necessary to take the new innovative product, service, manufacturing process or business model from the design/thinking lab to commercialization. This is no small feat, since busy operations and sales teams are loathe to focus on making an unknown the next big success when it means diverting time and attention from today’s stars.

With the right kind of investment and attention, business leaders can shape a culture of innovation and create sustainable value for their companies while still managing the strategies, financial goals and operating mechanism that drive this quarter’s financial performance.

Have you had success creating a culture of innovation while maintaining current operations excellence?

I would love to hear from you.

Victor Assad is a Managing Partner of InnovationOne and the CEO of Victor Assad Strategic Human Resources Consulting. He works with key decision makers and human resources leaders on talent management, innovation, accelerating change, leadership development, executive coaching, and other strategic initiatives.  Please e-mail Victor at or visit Victor’s website at

[i] “Innovation: A top priority for business,” (2105). Found at

[ii] Dr. Brooke Dobni and Dr. W. Thomas Nelson, Jr, (2013), “Innovation Health Inside the Fortune 1000,” Strategian.

[iii] Ibid.