How to design a workplace that fosters innovation

Melbourne Business School Assistant Professor of Management Rohit Piplani explains that without the right environment, even the most promising ideas won’t survive.

Leaders often want employees who think outside of the box and challenge the status quo.

Yet those same leaders can unknowingly create environments that stifle innovation.

Research shows when employees come up with creative or innovative ideas, managers are more likely to reject them, instead of embracing or implementing them, due to risk aversion.

Melbourne Business School Assistant Professor of Management Rohit Piplani says without the right environment, even the most promising ideas won’t see the light of day.

“When people come up with really novel ideas, which haven’t been tried before, it can lead to quite a lot of uncertainty and managers usually don’t like uncertainty because it feels strange and unsettling,” he said.

So, what separates innovative organisations who aren’t afraid of disrupting the status quo, from those that play it safe?

1. Start with the problem you’re trying to solve

According to Assistant Professor Piplani, most organisations fail with innovation when they don’t have clear goals.

The first step, is to start with the question: What problem are we trying to solve?

“Unless you know that, you can’t allocate resources to solve those problems,” he said.

Organisations need a clear goal setting or problem identification process where leaders sit with employees or the leadership team to figure out the critical challenges they are facing and which ones are worth investing in.

The next step is to get middle management who are running the day-to-day operations involved, to come up with novel solutions to deal with those problems.

“That process of brainstorming could then help you understand how to effectively dedicate resources to solve the problem,” he said.

2. Treat innovation as a social process

Assistant Professor Piplani said creativity was not an individual process but rather should be viewed as a social process.

“Creativity is not a feature of a lone genius or one smart person coming up with something radical,” he said.

The best ideas come from building knowledge on the shoulders of others, after starting with a rough and raw idea.

“If you look at history, all the major ideas people have come up with that have solved great problems went through a process of collaborating with others and asking for their input,” Assistant Professor Piplani said.

Once you have an idea, refine it, develop it and when the idea is mature it’s time to pitch it to the gatekeepers in an organisation, which is where the biggest challenges start to occur.

3. Don’t shoot down ideas too early

Leaders play an important role in fostering a culture for innovation.

Assistant Professor Piplani’s advice is to let ideas play out and avoid critiquing ideas too early before they’ve had a chance to grow.

“The leaders set an example by shooting down ideas too early and this can lead employees to think in the future it’s going to be rejected by leadership so why bother?” he said.

“Give some time for people to toy with ideas, experiment with them, talk to other individuals to make it better so they can develop and evolve over time.”

Assistant Professor Piplani explained that humans don’t have the full cognitive capacity to understand how ideas might work in the future.

It’s therefore important we don’t dismiss ideas simply because they feel foreign and haven’t been done before.

“We evaluate new ideas on existing frameworks and the existing lens we have,” he said.

“When the founders of Airbnb came up with the idea of people allowing others to rent rooms in their house, people challenged them and said are you going to feel comfortable sleeping in somebody else’s house?”

But over time the norms changed, and people don’t think twice about staying in someone’s home.

4. Give people time and resources to experiment

Innovation doesn’t happen if every minute of an employee’s day is spent on business as usual.

Assistant Professor Piplani says the world’s most innovative companies deliberately provide space for experimentation.

“One of the best-known examples is Google's 20%-time policy,” he said.

"Google encouraged employees to spend up to 20% of their work time developing ideas outside their core responsibilities. Rather than simply encouraging creativity, the company fostered intrapreneurship by giving employees the time, autonomy, and resources to explore ideas they were passionate about."

Assistant Professor Piplani said that mindset became part of Google's culture.

“Throughout his career at Google, CEO Sundar Pichai championed ambitious ideas, encouraged teams to experiment, and supported calculated risk-taking,” he said.

Pichai played a key role in developing and scaling Google Chrome and later helped drive Google's cloud ecosystem, including Google Drive. His leadership demonstrates how giving talented employees the freedom and support to pursue bold ideas can translate into breakthrough innovations.

"The lesson for leaders isn't that every organisation should copy Google's policy exactly," Assistant Professor Piplani said.

"It's that innovation is more likely when employees have the time, autonomy, and psychological safety to explore new ideas without fearing they'll be penalised if those ideas don't work out."

By proactively creating a culture of psychological safety leaders can provide employees with the right environment for ideas to flourish and grow.

5. Seek out diverse perspectives and backgrounds

Innovation thrives when people bring different perspectives to problem solving.

Organisations tend to hire creative stars, the people known for coming up with great ideas and with great CVs.

“They are valuable to have in your organisation but just relying on creative stars itself won’t help you to achieve your goals,” Assistant Professor Piplani said.

“If you want a culture of innovation in your organisation, you need to allow these creative stars to work with people who bring different skills, experiences, and perspectives to the table. Bringing those different strengths together often provides the insights needed to solve complex problems."

Companies may also hire people from similar backgrounds, job functions and cultural backgrounds which can be problematic for creativity.

“This leads to an echo chamber where everybody has a similar perspective and people are singing the same song.”

By intentionally hiring people with diverse backgrounds, you can access different ideas and competing viewpoints to foster greater creativity and innovation.

6. Find idea champions

Innovation isn’t just about what you know, it’s also who you know.

“The process is political because you need sociopolitical skills to convince people to buy into the ideas and why it deserves resources to be implemented.”

Mapping out informal and formal networks can help individuals realise who the influential people are in an organisation with high status.

“They might not have power or formal rank within an organisation, they could be mid or junior level, but people respect them because they are perceived as competent and knowledgeable,” Assistant Professor Piplani said.

Having mentors who will constructively critique ideas and provide developmental feedback is also important.

“Stress testing is so important for innovation. Until you put it to the highest level of scrutiny, you’re not going to make the idea better or make it work.”

Dr. Rohit Piplani is an Assistant Professor of Management at Melbourne Business School, University of Melbourne. Rohit teaches Managing People and Business Essentials on the Full-time and Part-time MBA programs at MBS.