innovation management

A Detailed Look at Innovation Culture for SMEs


Innovation management in the company 

It has a lot of positive effects when you bring innovation management into your company. Actively applied innovation management can for example lead to the following: (1) better products, processes and services, (2) improved communication and motivation in companies, and (3) higher profits thanks to more efficiency.


As discussed in detail in our blog post Innovation Management – Part of Today’s Companies, successful innovation management can be depicted as follows: 


successful innovation management

As you can see above, a pronounced innovation culture is an important basic requirement for successful innovation management in your company. Therefore, it is important to take a closer look at the concept innovation culture and to think about how it can be applied in your own company. 


What exactly is innovation culture? 

The Gabler Wirtschaftslexikon defines “company culture” as follows: „the entirety of all shared values, norms and attitudes which shape the decisions, actions and the behaviors of those that make up the company.” Innovation culture is a kind of company culture that promotes innovativeness. There are many definitions that try to describe the concept of innovation culture.


A working group of the Fraunhofer Institutes summarizes it very fittingly as follows: A corporate innovation culture reflects the aspiration “to organize structures, processes, and behaviors in such a way that it continuously supports the development of new products, new services, and new business models. 


How do you recognize a successful innovation culture? 

More important than the definition itself are the elements that an innovation culture is comprised of. According to the working group of the Fraunhofer Institutes, these elements are: 


  • Participation 
  • Appreciation 
  • Common goals 
  • Identification 


A company should involve and actively try to inspire all employees to get excited about innovations. Innovative efforts and people themselves should be appreciated. The company should deliberately set common goals and establish role models. 


How can you implement a successful innovation culture? 

The INKNOWACTION blog summarizes the features of an innovation culture by providing some concrete examples and thus provides leaders with a good idea of how an actively applied innovation culture could look like in their companies: 


  • Innovation and creativity have a high strategic and managerial priority 
  • Openness and optimism when it comes to new things and changes 
  • Courage for the unconventional and the new 
  • Heterogeneity within the teams 
  • Trust in the employees 
  • Freedom and individual responsibility given to employees 
  • Readiness to take risks 
  • Tolerance when it comes to mistakes; failing is seen as an opportunity to learn 
  • Incentives to support innovations 
  • Access to information and limitless communication 
  • Collaboration, focus on the team and networking 
  • Structures that support innovativeness such as flat hierarchies and effective and fast decisions 


Very important and in no way to be neglected is a pronounced culture of dealing constructively with mistakes. According to an article by the RKW Kompetenzzentrums such a “mistake culture” is simply the way in which “an organization deals with mistakes, risks created by mistakes and the consequences of mistakes.


The article provides great suggestions that allow you to implement a culture of constructively dealing with mistakes in your own company which in turn supports innovations:


  • Create an atmosphere of trust. 
    • You can achieve this by appreciating and respecting your employees and not penalizing mistakes, but instead penalizing delayed reporting of mistakes. 
  • Look forward. 
    • Analyze what caused the mistake and develop countermeasures instead of looking for justifications. 
  • Limit the damage. 
    • Inform whoever needs to be informed and do what you can to limit the damage. 
  • It’s all about the solution. 
    • After analyzing the mistake, concentrate on the solution in order to prevent problems in the future. 
  • Talk openly and clearly about mistakes and their consequences. 
    • Employees have to understand that mistakes that happen because of a breach of duty and gross negligence are not acceptable. 
  • Be positive! 
    • Concentrate on limiting the damage and solving the problem and not on the trouble a mistake caused.  


Innovation culture also for small and medium-sized companies 

At the beginning, it can seem difficult to implement an innovation culture at a small or medium-sized company. However, it is totally doable despite having maybe less resources and less employees. Certain steps make it much easier. The Volksbank Lüneburger Heide for example has the following suggestions: 


  • Innovations come from all employees 
    • Innovations don’t have to come from experts alone. All employees of a company are asked to start with themselves and their own environment and look for possible improvements there – on a small scale as well as on a larger scale. 
  • Cooperation with research institutes and universities 
    • Without having to spend a lot and without asking a large number of employees to work toward something, small and medium-sized companies can invite an undistorted and unbiased viewpoint into their company. 
  • Innovations thanks to clients 
    • If you listen to your clients, you can quickly find out what their hopes are when it comes to new products. 
  • Networking 
    • Many municipalities and cities offer a lot of opportunities particularly to small and medium-sized companies to interact with people from different fields or companies from within their industry. Such conversations can lead to great ideas. 


A Swiss portal for SME has these additional suggestions: 

  • Support communication and cooperation 
    • Information sharing and open communication between employees and between employees and management should be supported within the company. You can achieve this by providing educational opportunities to your employees about good communication (e.g., listening attentively and concentrating on one topic or goal at a time) and by designing the corporate infrastructure appropriately (e.g., many meeting points, spaces for a shared breakfast/lunch, events, intranet). 
  • Incentives and rewards 
    • Some of your employees might already have a pronounced entrepreneurial spirit that is very conducive to innovations. Other employees have to be encouraged more in that regard. You can do this by offering material incentives (e.g., rewards, bonus payments, perks) and intangible incentives (e.g., promotion, honoring ceremony, better working conditions) for innovative behavior and innovations. 


As you can see, if you make small changes and take small steps it doesn’t have to be difficult to implement a great innovation culture in your company. Feeling inspired? Get in touch if you have questions or feedback and share your successful strategies with us in the comments or on Twitter 

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