Creating an innovation culture requires new leadership skills, new people skills, new processes, and a focus on opportunity.

Much has been written about what constitutes an innovation culture. Defining what that means may seem relatively simple, but is much more difficult to both define and achieve than one might think.

To begin the definition for an individual organization, start by understanding how the senior management team deals with ambiguity and risk. If an organization is extremely risk averse, it is unlikely to be very innovative. All companies deal with risk; there is risk in doing something, and there is risk in doing nothing. Risk is a part of being in business, and how the organization is prepared to manage risk is a leading factor in its ability to move into new competitive arenas.

The need to be innovative is derived from market pressures. The leadership team must feel a degree of angst about the future, or some paranoia about outside forces that makes them uncomfortable. Innovation is driven by the belief that a firm’s competitive advantage is fleeting and that it must always be reinventing itself in order to survive. Hubris is anathema to innovation.

An innovation culture requires advances in processes for discovery, experimentation, and developing portfolios of options. These new process will, in fact help mitigate risk exposure as opportunities and solutions are better defined. Better definitions will reduce ambiguity and uncertainty.

Organizations require new process to research their customers and discover new patterns in customer attitudes, and market and technology evolutions. Firms need to create ways to recognize new, emerging patterns in key areas and develop new business concepts to meet these new realities.

Business leaders need to allow their people to experiment more and develop prototypes that fail before going to market so that new innovations are more likely to succeed in the long term. Ultimately, new processes need to be developed to create deeper understanding about customers and deliver more of what customers want, even though customers are not likely to articulate these needs precisely.

With new process needs comes a need for new people skills and abilities. Organizations need to develop and support a different type of person than the typical functional specialist. An innovative culture will allow people be more flexible, with an unquenchable curiosity about the outside world. People with a tolerance for ambiguity and an ability to envision what is possible, and sustain these abilities with a balance of passion and objectivity need to be supported and protected.

While process efficiency and increased productivity will always be a business focus, companies need to become more opportunity focused if they want to create an innovation culture. In addition to traditional functional specialties, business leaders must foster a future-orientation and add this to their mix of business competencies.

The biggest leadership challenge is move from a “manager” view of doing things right, toward a “leader” view of doing the right things and moving forward into new, uncontested waters. Moving from functional control behaviors to economic growth behaviors is probably the biggest challenge to creating a true innovation culture.