Fostering a culture of innovation is the hallmark of great corporations today.

That's because these enterprises recognize the value of cultivating an environment that encourages team members company-wide to experiment on an ongoing basis. Consider how these companies created their innovation cultures:

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• Lilly continues to pour resources into research and development in North America and Europe. The pharmaceutical company has built state-of-the-art facilities that empower its R&D teams made up of scientists, biotech experts, and life sciences leaders on the front lines of medical discovery to conduct a variety of tests.

• Nvidia's focus on transparency and speed with its innovation efforts have enabled the organization to become the premier semiconductor chip and hardware provider. The fabless company has notably become the tech driver that is powering artificial intelligence development and advancements globally.

• Apple redirects a lot of balance-sheet capital to innovation budgets to create a startup-esque company culture within the business. The Silicon Valley titan has embraced an "ever-evolving organizational model" that supports its many VPs and directors to innovate in a structured, cross-functional manner.

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These well-known organizations clearly have successful innovation initiatives and frameworks. But you don't need to be a Fortune 500 company to create a culture of innovation that generates near- and long-term value.

Building a culture of innovation just requires executive leaders to know how to set employees, innovation leaders and teams, and — in the case of open innovation programs — outside partners you work with up for success.

Why building a culture of innovation matters

Look at the most innovative companies operating today, and you'll see they crafted world-class cultures that:

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• Motivate employees to take on new work and empowers them to be bold and outgoing
• Established a work environment that inspires their employees to think outside the box
• Help them adapt to uncertain and disruptive market conditions and new business goals
• Enable more intelligent and collaborative problem-solving across the entire organization
• Leverage the expertise and experience of diverse employees of different backgrounds
• Engage existing employees and inspire outside workers to want to join the company

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Arguably the biggest benefit of this kind of culture, though?

The big-picture competitive advantage it provides businesses by simply looking beyond the horizon, so to speak, and aiming to future-proof their organizations. (This is especially an edge for companies when others in or adjacent to their industry or vertical don't have a dedicated innovation strategy.)

Despite this potential upper hand corporations can gain, the lack of a proper innovation infrastructure and diversification of initiatives can derail these companies' efforts to gain a market edge. In other words? Corporate leaders need to implement a balanced approach to innovation that involves projects tied to:

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• Core innovation: Improving existing products (e.g., software updates/upgrades)
• Adjacent innovation: Identifying new markets to penetrate with new offerings
• Transformative innovation: Exploring new business models and launching startups

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Only with this setup can enterprise executives foster a culture of innovation that helps them drive their companies forward (i.e., generate more revenue from existing customers through product advancements, and future-proof the business by testing new ideas away from core business operations.)

What a strong culture of innovation looks like

The results of building an innovative culture can be transformational:

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• A 2023 McKinsey & Co. report found 45% of corporations with "strong" innovation cultures didn't see any of their digital transformation programs stall at any point during the year. That compares to 79% of enterprises with "weak" cultures of innovation who did see their initiatives hit roadblocks.

• Macroeconomic conditions also don't impact continuous innovation efforts for scaled organizations. Nearly seven in 10 (69%) innovation leaders surveyed by Fast Company in 2024 noted an "economic slowdown would not have a chilling effect" on innovation agendas or R&D investments.

• A 2023 Boston Consulting Group study of corporate innovation heads found organizations with highly innovative cultures that "embrace risk, foster collaboration, and grant autonomy to their teams," per the consultancy are 60% more likely to be considered innovation leaders in their space.

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Despite these benefits, though, a culture of innovation isn't built overnight. It requires thoughtful planning and coordination to ensure internal teams have the buy-in and bandwidth to explore innovation avenues.

However, that's not all that's required.

High Alpha Innovation CEO Elliott Parker noted corporate leaders must also embrace a startup mindset that allows for experimentation, action, learning, and mistake-making, which can help them discover new insights.

"[Startups are] optimized for capital inefficiency, which sounds funny to say," Elliott explained on the Inside Outside Podcast. "But they're very inefficient by design because that’s how they learn. And they stumble into new growth trajectories. And so inside of [scaled] organizations, you’ve got to find a way to break out from your existing system, set up a new system where this can be done well."

After adopting this mentality, corporations then need to turn to the logistics of creating highly impactful innovation cultures. Specifically, they must:

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• Institute an innovation leader to champion innovation teams. Marketing, sales, and other business units have strong leadership. Why shouldn't innovation functions? With a director who has experience running innovation programs for other enterprises, innovation teams can get the guidance needed to keep their work focused.

• Create a framework that allows for quick, cheap testing. Constraints can actually be a good thing for innovation programs. That's because it can give innovation teams clear 'rules' to follow (e.g., "Come in under X dollars"; "Develop Y number of concepts") and ensure they ultimately balance speed with breadth and depth of research.

• Provide psychological safety to innovators and time to execute (and fail). Thomas Edison famously declared he never failed. Rather, he simply "found 10,000 ways that won't work." Corporate C-suites who know the value of experimentation empower innovation teams to fail fast and pivot projects based on data from action.

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The common thread among these steps? They "[remove] the barriers to communication within a company," as BCG leaders recently put it. This enables all innovation stakeholders to move swiftly and remain in sync on initiatives.

How to strengthen your innovation culture

Let's fast-forward with an enterprise example. The company's innovation engine is humming. New ideas are evaluated weekly (if not daily). The best ones move forward to discovery. Concepts are tested and validated. There's a balance between product innovation and disruptive innovation, and the desired results are being realized.

Yet there's always room for improvement.

The best ways corporations augment their innovation cultures to improve processes and ROI often include:

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• Recognizing and rewarding all innovative endeavors. Whether an innovation program unearths a new growth avenue for the business or not, rewarding innovators' efforts and findings will only entice them to want to take part in future innovation initiatives.

• Knowing not every idea will have an equal impact. Not every innovation endeavor will unlock growth and transformation. But that doesn't mean the next big idea isn't around the corner. Commitment to continuous testing is critical.

• Evangelizing employees with passion for innovation. Some workers won't participate in innovation projects. That's fine. But it's vital for executives to discover employees with enthusiasm for innovation work to bring into the fold for future programs.

• Hiring those with innovative mindsets and ambition. Similarly, enterprises can proactively recruit and hire individuals with innovation experience (or at least aspirations) to onboard employees who can bring fresh eyes and perspectives to the table.

• Diversifying their corporate innovation initiatives. As noted, there are different kinds of corporate innovation methods worth employing today. Whether you abide by the '70-20-10' innovation model or not, each 'flavor' merits attention and resources.

Growing revenue, retaining business, lowering costs: These are all rightfully priorities for corporations.

But culture really does 'eat strategy for breakfast.' Building an innovative culture and refining it over time is the only way enterprises can find new growth and transformation opportunities that can help them become more resilient.