Leading Innovation

Leading Innovation

For a client of ours, we recently compiled a special edition of The Working Report highlighting the best articles on leading innovation. I’ve selected a few key takeaways for leaders to consider.

The Three Types of Innovation

There are three types of innovation:

  • Incremental innovation: improving existing products/services;
  • Adjacent innovation: expanding products, services, and expertise into new spaces;
  • Transformational innovation: entirely new products, services, business models.

According to the KPGM report on Benchmarking Innovation Impact 2018, the conventional wisdom of 70-20-10 (70% incremental, 20% adjacent, 10% transformational) has been shifting to more of a 50-30-20 ratio, with the largest companies spending even more on transformational work: 25 percent. Of course, in some industries, this trend does not apply, and the majority of innovation still happens at the incremental level, lead primarily by business units.

Additional insights from the KPGM Benchmarking Innovation Impact 2018 report:

Leading with Balance in an Innovation Culture

When leaders talk about innovative cultures it’s generally about all the positive, fun characteristics: a tolerance for failure, willingness to experiment, psychological safety, highly collaborative. But a recent HBR article sheds light on “The Hard Truth About Innovation Cultures” with an important corollary:

“The easy-to-like behaviors that get so much attention are only one side of the coin. They must be counterbalanced by some tougher and frankly less fun behaviors. A tolerance for failure requires an intolerance for incompetence. A willingness to experiment requires rigorous discipline. Psychological safety requires comfort with brutal candor. Collaboration must be balanced with individual accountability. And flatness requires strong leadership. Innovative cultures are paradoxical. Unless the tensions created by this paradox are carefully managed, attempts to create an innovative culture will fail.”

Easy-To-Like Behaviors Less Fun Behaviors
A Willingness to Experiment Rigorous Discipline
Psychological Safety Brutal Candor
Flatness Strong Leadership
Tolerance for Failure No Tolerance for Incompetence
Collaboration Individual Accountability

Creating Psychologically Safe Teams

Google’s research on high-performing teams revealed the importance of psychological safety, the belief that you won’t be punished when you make a mistake.

“They found no evidence that the composition of the team was influential in the outcomes. What they found was this: psychological safety was clearly vital to a team’s success.”

Science has demonstrated three types of psychological safety:

  • Safe to be yourself
  • Safe to speak up
  • Safe to take risks and make mistakes

For each type of psychological safety, leaders must apply a different set of skills or interventions.

Type of Psychological Safety Strategies

Safe to be yourself: Employees have a need to feel free to express themselves authentically, without the need for “covering,” or the concealment of identity, to try to fit in.

Send the right signals: Leaders — and team members — can send rewarding signals to promote inclusion in meetings, check-ins, and while communicating about team projects.

Safe to speak up: People worry about retribution (against themselves or others), or being less liked or valued by the person they are challenging, and feel a paralyzing sense of uncertainty and helplessness.

Manage SCARF® threats: When employees need to challenge another person about their behavior or decision-making, pay attention to SCARF® threats — subtle signals of status, certainty, autonomy, relatedness, and fairness.

Safe to take risks and make mistakes: This sense of psychological safety enables employees to see challenges as opportunities, experiment more, and recognize that skills are improvable — not set in stone.


Promote a growth mindset: In a growth mindset organizational culture, risk-taking is encouraged since mistakes are seen as part of a larger learning and innovation trajectory.

Excerpted from the NeuroLeadership Institute

Six Tips to Create Psychological Safety

In recent years, several in-depth articles have been published on how to create psychological safety. In 2017, the Harvard Business Review published, High-Performing Teams Need Psychological Safety. Here’s How to Create It, with six helpful tips:

  1. Approach conflict as a collaborator, not an adversary. Avoid triggering a fight-or-flight reaction by asking, “How could we achieve a mutually desirable outcome?”
  2. Speak human to human. Underlying every team’s who-did-what confrontations are universal needs such as respect, competence, social status, and autonomy.
  3. Anticipate reactions and plan countermoves. What are my main points? What are the three ways my listeners are likely to respond? How will I respond to each of those scenarios?
  4. Replace blame with curiosity. State the problematic behavior or outcome as an observation, and use factual, neutral language. Engage them in exploration. Ask for solutions.
  5. Ask for feedback on delivery. What worked and what didn’t work in my delivery? How did it feel to hear this message? How could I have presented it more effectively?
  6. Measure psychological safety. Teams at Google include questions such as, “How confident are you that you won’t receive retaliation or criticism if you admit an error or make a mistake?”

Creating a Culture of Psychological Safety

The Gallup News article, “How to Create a Culture of Psychological Safety” includes a case study where the author shares four questions designed to create a culture of psychological safety:

  • What can we count on each other for?
  • What is our team’s purpose?
  • What is the reputation we aspire to have?
  • What do we need to do differently to achieve that reputation and fulfill our purpose?

The order is as important as the questions themselves. The first question speaks to strengths and is fundamental for establishing individual security before diving into the broader team challenges.

“Team and individual safety are both essential, but individual safety must come first in the process of building psychological safety. And it must come first for any hope of improved engagement and performance. That’s what the answers to the four questions gave to the individuals on the team — a safety net to trust and be open with each other. It allowed them to be vulnerable enough to be engaged. Exploring those four questions can do the same for any team or organization that wants to create a culture of psychological safety.”

The best innovation teams are also cognitively diverse. The Straight Talk survey is a helpful tool to assess the cognitive diversity of a team. It reveals the primary communication style for each individual, which influences how we think, prefer to work, and approach conflict.

Bottom line: Most innovation happens at the incremental level by teams. Leadership support is the biggest enabler of innovation. Leaders must balance the fun and less fun behaviors of an innovation culture. The most innovative teams are cognitively diverse and psychologically safe.

Download the PDF — The Innovation Checklist: Organizing for Innovation

Leading Resources, Inc. is a Sacramento Management Consulting firm that develops leaders and leading organizations. Subscribe to our leadership development newsletter to download the PDF – “The 6 Trust-Building Habits of Leaders” to learn more about how to build trust with your team.

Eric Douglas

Eric Douglas is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. For more than 20 years, Eric has successfully helped a wide array of government agencies, nonprofit organizations, and corporations achieve breakthroughs in performance. His new book The Leadership Equation helps leaders achieve strategic clarity, manage change effectively, and build a leadership culture.

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