Four Ways to Create a Culture Where Innovation Will Thrive

This article was originally published on CEO.com, and is also available on Medium and LinkedIn.

At Spotify, failure calls for cake. Rewarding those results might sound unorthodox to the executive of the past, but it’s exactly the mindset an agile company should adopt.

Agile companies are the future of business. Notable names such as Airbnb, Facebook, Uber, and Netflix all began as agile startups. Adopting that agile mindset allowed them to mature into today’s industry leaders by delivering innovative, exciting products and services for their customers.

Their cultures have a lot in common: They are anchored by three core ideas — trust, autonomy, and collaboration. This philosophy isn’t just carried out in software development, but also across the entire organization. This enabled those companies to adapt to change and explore new approaches without fear of failure, which made them hugely successful.

The shift toward an agile culture starts with management. Only the executive leadership of a company can foster surroundings where failure is not only accepted, but even encouraged.

What does an agile culture look like?

After visiting many of the digital innovators in Silicon Valley, I learned that their cultures had a lot in common:

  • A clear purpose: People at these companies take ownership because they are united around shared ideas and clear, (transformational) purposes.
  • Leadership that trusts and empowers its employees: Executives create a safe environment to fail and learn. They allow employees to take on new initiatives and give them the freedom to autonomously pursue ideas, which can lead to unexpected innovations.
  • No ego culture: Mutual respect is a must, and every member of a team should be valued. Internal politics have no place in an agile culture.
  • Data-driven experimentation: Agile companies provide experiment-friendly environments. Teammates don’t spend hours arguing about what option is best. Instead, they test different variations, learn from each attempt, and let the data decide the best course of action. At Google, it’s common to never trust HiPPOs (Highest Paid Person’s Opinion), but rely on data instead.

What are the benefits of an agile culture?

Today’s marketplace moves faster than ever, and it’s only by staying agile that a company can adapt to these changing conditions. Even larger legacy companies now recognize the benefits. ING Bank — one of the largest banks in the world — recently transitioned toward an agile organization to keep up with the increasing digital expectations of its customers, and with good reason. A Hewlett Packard survey revealed 49 percent of customers report a rise in satisfaction following a shift to agile.

But the agile methodology doesn’t just help a business react to client needs. By encouraging traits such as creativity, teamwork, craftsmanship, and personal growth, it will make an employer more attractive to potential hires.

How can I make my company more agile?

An organization that adopts an agile culture can offer a lot of opportunities, but it isn’t an easy process. For this change to take shape, senior executives need to develop a clear vision of where their companies needs to go, why a culture change is needed, and how this translates into new behavior.

Some leaders decide to take a radical approach. For instance, one client we worked with removed all the senior executives who didn’t believe in the agile transition to ensure full alignment. Not every business will require such a sweeping measure, but here are four simple steps most can adopt to ensure a successful cultural transition:

1. Define ‘awesome’

Start by defining and communicating the culture you’d like to have. Some great examples are BufferSpotify, and Airbnb. These companies post their culture statements throughout the building to remind employees what is expected of them and to help them to challenge each other.

As Amazon CEO Jeff Bezos says, “You have to be deliberate about creating and investing in culture.” Clear examples and storytelling will boost comprehension, as will engaging employees by framing changes in the “Instead of that, we expect this” model.

2. Recruit agile minds

Hiring people already versed in agile culture allows a company to get its new initiative up and running quicker and easier. We created an agile mindset assessment for one client to use in interviews to ensure candidates would fit with the culture. Strategies such as this quicken and simplify the whole process.

And be prepared to let some of your best people go, too. If somebody doesn’t fit the new company mindset, he or she should be let go so the culture change isn’t too easily undermined.

3. Have a team dedicated to reinforcing cultural values

Companies like Spotify, for instance, have dedicated people who reinforce the agile culture. They do this through agile coaches and “people operations” teams, which work daily with people and teams to improve company performance and employee engagement.

4. Embrace agile at the executive level

This new culture cannot be introduced from the bottom. It needs to come from the top, and that means executives must also embrace agile and model the behavior they want to see.

Change your leadership style by showing you trust your people to discern how the work should be done, and encourage collaboration between people instead of handing down orders. Be open and transparent about your challenges to teams, start cutting through red tape and listening to their needs to help them grow.

Transitioning to agile won’t always be a smooth ride, especially when it’s rolled out team by team. Steve Denning compares the difficulties of partially fixing an organization to the way an immune system operates. Each one tends to transform back to its original state when it encounters change — or a virus — that messes with the status quo.

Implementing an agile culture helps businesses stay responsive to employee and customer needs (and helps to set them up for future success). It’s about time more companies start eating cake.