How to Drive Innovation: A Practical Guide for Forward-Thinking Leaders
Everyone says they want innovation, but they never want to change the way they've always done business.
According to McKinsey data, 84% of executives say innovation is important to their growth strategy, yet only 6% are satisfied with their innovation performance. The reality is, most companies aren't failing because of a lack of ideas. They're failing because their leadership hasn't built the systems, culture, or accountability to turn ideas into outcomes.
In this guide, we'll show you exactly how to drive innovation in your business in six simple steps.
Step 1: Redefine Innovation
Innovation doesn't always come in the form of ground-breaking tech, billion-dollar ideas, or a "genius moment." At its core, it's about solving real problems in new, better ways. That could be faster, cheaper, smarter, or more sustainable than before.
Most teams think they have to launch the next iPhone to be considered "innovative." In reality, it's often much simpler, and it happens at multiple levels:
Incremental Innovation: This involves making small, continuous improvements to existing products, services, or processes. That could be shaving minutes off a customer onboarding flow or reducing product returns by tweaking the packaging. Around 98% of innovation efforts are incremental.
Adjacent Innovation: This refers to leveraging existing solutions in a new market or for a new audience. For instance, a B2C platform retooled for enterprise use.
Disruptive Innovation: This is the rarest and riskiest type of innovation. It's when you reinvent the rules of the game entirely, as Uber did by turning personal vehicles into public transportation infrastructure.
Here's a tip: innovation isn't just the responsibility of your R&D team. Some of the best ideas come from frontline employees, customer service reps, or even finance teams. If you're only looking for innovation in one department, you're missing 90% of the opportunities.
Step 2: Build a Culture Where Innovation Can Happen
You can't drive innovation without first making it safe to speak up. If your team is afraid of being wrong, they'll default to playing it safe, and safety kills originality. Take the right steps to create psychological safety: the ability to share an idea, ask a question, or admit a mistake without fear of embarrassment or backlash.
This is actually the single most critical factor in team effectiveness. An analysis of 180 Google teams found that psychological safety, more than talent, skillset, or even diversity, predicted high performance, innovative output, and engagement levels.
However, safety alone isn't enough. You also need to reward curiosity and celebrate experiments (even failed ones) that deliver insights. If your culture only praises outcomes, people will hide the process.
Next, get rid of silos. Innovation rarely occurs in a vacuum, which is why your teams must always be communicating effectively. Companies that employ effective cross-functional teams can achieve up to a 25% increase in innovation success rates compared to those that do not.
Step 3: Set Clear Innovation Goals and Metrics
If your innovation efforts aren't strategic, they'll just be a distraction. Real innovation drives measurable business outcomes, including growth, efficiency, and customer retention. If these efforts aren't aligned with your core goals, they won't survive the next budget cut.
Start by setting clear, trackable metrics that show progress, not just activity. Here are just a few that matter:
Percentage of revenue coming from new products or services
Time-to-market for new ideas or updates
Number of experiments run per quarter, and how many lead to action
Customer adoption or satisfaction scores linked to innovations
However, it's also important not to make it all about reaching a certain number. You need to strike a balance between structure and freedom. Give teams room to explore, but hold them accountable for learning fast and moving with purpose.
Here's a tip: build an Innovation Scorecard. This will allow you to assign ownership, track outcomes, and review them in leadership meetings. Apple is a great example of this, using the Balanced Scorecard methodology to align its product development efforts with customer needs, financial goals, and internal processes.
Step 4: Empower the Right People
If innovation has to go through five layers of approval, it's already dead. Flat hierarchies move ideas faster. The people closest to the problem (your frontline staff, support reps, and engineers) should have the power to propose and test solutions without waiting for permission.
Too often, gatekeepers can smother innovation by defaulting to "no" or demanding perfection. You need intrapreneurs: employees who act like owners and think in experiments. Find them and support them.
Keep in mind, talent isn't enough without training. Train your teams on design thinking for human-centered problem-solving, lean startup for rapid testing and iteration, and agile development for building, learning, and adjusting in short cycles.
Look at what companies like 3M and Atlassian do: they give employees 10–20% of their time to work on passion projects. No micromanagement. That "free time" has led to real products and patentable ideas.
Step 5: Systematize the Innovation Process
Innovation is not "organic," and there certainly isn't any luck involved. If you want consistent results, you need a repeatable system, just like you would for product launches, marketing campaigns, or hiring. Otherwise, ideas get lost in translation, momentum dies, and nothing gets executed.
That's where structured innovation funnels come in. Break the process into four clear stages:
Ideation: Encourage submissions from across the organization, not just the usual teams.
Validation: Test assumptions through research, prototypes, or stakeholder feedback.
Pilot: Build a minimal version (MVP) and release it to a small segment.
Scale: If the pilot works, roll it out with full resources.
It's crucial not to waste months on a "perfect" idea. Instead, run quick experiments, such as low-cost MVPs, A/B tests, quick surveys, and customer interviews. Track what works, and eliminate what doesn't.
Conclusion
If you want to be an innovative leader, waiting for a genius idea to come to you won't suffice. You need to build the conditions where innovation becomes inevitable. That means committing to clarity, speed, and the systems that drive real impact.
Of course, your job isn't to have all the answers. However, if you follow these steps, you can create an environment where bold questions get asked, tested, and scaled.
If you're ready to take this mindset deeper with your team, book Sheri Jacobs for a session on how to drive innovation.
Sources:
Table of Contents
