Innovation Culture: Innovation doesn't start with ideas. It starts with permission.

Andy Goram (left) and Stephen W. Hinch (right) discuss what it take to build an innovation culture.

Most organisations don’t have an ideas problem.

People spot opportunities, workarounds and better ways of doing things all the time. The real question is whether their innovation culture gives them permission to do anything about what they see.

Permission to question how something currently works, to suggest something different, to spend time developing an idea that might not go anywhere. Permission to experiment without guaranteeing the result in advance. Even permission to know more than the person managing them.

That’s where innovation really starts. It starts with what people believe they are genuinely allowed to do.

[Read the full transcript that follows this blog]

Most organisations have more ideas than they realise

Innovation is often presented as a search for rare flashes of genius. The breakthrough product. The dazzling new concept. The idea nobody else has had. That creates a convenient excuse. If innovation depends on extraordinary people having extraordinary ideas, the rest of the organisation can carry on as normal while a chosen few disappear into an innovation lab to think clever thoughts.

But much of the potential for innovation is already sitting inside the business. It sits with the person who deals with the same frustrating process every day and can see where time is being wasted. It sits with the customer-facing employee who keeps hearing the same complaint. It sits with the technician who understands why a product doesn’t quite work as well as it could. It sits with the team that can see an emerging opportunity before it appears in a board report. The people closest to the work are often closest to the possibilities. Yet proximity alone doesn’t produce innovation. People can see opportunities perfectly clearly and still decide to keep quiet.

Perhaps they don’t think it’s their place, or their manager likes to have all the answers. Perhaps ideas disappear into a suggestion scheme, never to be seen again, or they’ve learned that challenging the current way of working creates more hassle than it’s worth.

When that happens, the organisation hasn’t run out of ideas. It has trained people not to offer them up.

An innovation culture makes permission visible

It’s easy to say that everyone can innovate. The test is whether anything inside the organisation makes that statement believable. Stephen W. Hinch, a former Hewlett-Packard R&D executive and author of Winning Through Innovation: Lessons from the Front Lines of Business, gave people an explicit invitation to spend 5% of their working week thinking about innovation. In a 40-hour week, that meant roughly two hours. Not an enormous amount, but importantly, it was time that had been deliberately protected.

This wasn’t permission to disappear into a corner and secretly work on a pet project. People were expected to discuss their ideas, involve others, seek support and explore whether there was something worth pursuing. There was no promise that every idea would be funded or taken forward. There was, however, a genuine opportunity to investigate it. That distinction matters.

Permission cannot simply be implied. Leaders may believe people are free to contribute ideas, but if innovation is always squeezed around the edges of an already overloaded job, the real message is obvious: do it in your own time.

If someone is measured entirely on today’s output, criticised when delivery slips and given no time to explore anything else, they haven’t been given permission to innovate. They’ve been given another task. A credible innovation culture therefore has to answer some practical questions:

• What time are people genuinely allowed to spend exploring ideas?

• What resources can they access?

• Who can they involve?

• Where do ideas go?

• How are decisions made?

• What happens when an idea isn’t pursued?

• Will the organisation protect this work when pressure increases?

The final question may be the most revealing. Steve maintained some innovation time even when conditions were difficult because difficult conditions were when the business most needed fresh thinking. Yet pressure often produces the opposite response. Organisations batten down the hatches, focus relentlessly on immediate delivery and remove anything that appears non-essential. Innovation is still described as vital, of course. It just isn’t allowed to interfere with the work.

Innovation culture is shaped by what you measure

Permission isn’t only communicated through words. It’s built into the structure of the organisation and the way success is measured.

This becomes particularly important when distinguishing incremental innovation from disruptive innovation. Incremental innovation improves something that already exists. The people producing the product, delivering the service or working directly with customers are often ideally placed to lead it. They understand the current problems, hear the feedback and can spot opportunities to make things better. Disruptive innovation is different. It may require investment over a much longer period before delivering a return. It can threaten existing products, challenge established assumptions and make short-term performance look worse before it creates anything valuable.

Expecting the same team to deliver both immediate results and disruptive innovation creates a contradiction. Steve described this as the “curse of the corporate business model”. Managers are judged by what they deliver this month or this quarter. An idea requiring one or two years of investment may be strategically important, but it will still damage the numbers they are accountable for today. So, what receives permission? Usually, the thing attached to the current target.

At HP, a senior leader recognised that contradiction and created an internal start-up. The small team, which Steve helped lead, wasn’t measured on monthly profit. It was measured against agreed development milestones and given two years to create a new product for the growing fibre-optic telecommunications market. Existing business units had rejected the idea because they saw it as a drain on near-term performance. The internal start-up was given different conditions.

The resulting product reached the market within the two-year deadline, generated more than a billion dollars in revenue within five years and, a quarter of a century later, remained part of a product line supporting the development of AI data centres. The idea mattered. But the idea alone achieved nothing. It needed a senior leader willing to provide time, funding, air cover and a different definition of success. In other words, it needed permission.

This is why calls for people to “be more innovative” often feel so hollow. If the structures, targets and incentives all reward protecting today, people will naturally protect today. A poster, or email asking them to think differently won’t overpower a performance system telling them not to.

Permission doesn’t mean saying yes to everything

There is an understandable concern behind all this. Organisations cannot fund every idea. Some suggestions will be impractical, badly timed or simply not very good. Creating permission does not mean surrendering judgement. It means creating an honest process through which ideas can be heard, explored and responded to.

The response is important because one of the quickest ways to kill an innovation culture is to invite contributions and then allow them to disappear into a black hole. People generally don’t expect every suggestion to become the organisation’s next big priority. They do expect some sign that it was considered, however. If they repeatedly offer ideas and hear nothing back, they’ll draw their own conclusion. Innovation matters, but apparently not enough for anybody to respond.

A “no” with a clear explanation can do more for innovation than an enthusiastic “great idea” followed by silence. It respects the person who contributed, helps them understand the organisation’s priorities and makes it more likely that they’ll speak up again. Permission needs boundaries, but those boundaries should help people contribute more intelligently. That begins with clarity about what the organisation is trying to achieve. Senior leaders have a responsibility to set and communicate a compelling direction. Managers then have to translate that direction into something meaningful for the people doing the work. Without that context, employees may generate plenty of ideas, but they’re left guessing which problems actually matter.

Clarity doesn’t restrict innovation. It gives it somewhere useful to go.

Managers don’t need to have all the ideas

Innovation can feel threatening to managers who believe leadership means knowing more than everyone else.

If that’s the job, inviting ideas creates risk. Someone might expose a problem you haven’t seen. They might understand something better than you do. Their suggestion might challenge a decision you made. So, managers hold tighter. They solve problems themselves. They wait until they have the answer before asking for input. Without ever formally banning ideas, they create an environment where people learn to defer to them.

But the manager’s most valuable contribution to innovation may not be the idea itself. Steve described coaching a team that could see how to redirect a struggling business towards a growing market. He didn’t have the technical expertise to make it happen. His role was to give the team latitude, secure time from senior management and protect their ability to carry the idea through. The result of those actions became another billion-dollar product.

That story challenges the heroic view of innovation. The leader wasn’t the lone genius who spotted the future. He was the person who created the conditions in which other people’s expertise could be used. This promotes a very different leadership question. Not, “Can I solve this?” But, “What do my people need from me to explore what they can see?”

That might mean providing resources, removing obstacles, connecting people across departments, making the case upwards, asking better questions, or simply having the humility to admit that the person closest to the problem probably understands parts of it better than you do. Managers don’t need to be the source of every idea. They need to make it possible for ideas to surface, circulate and develop.

AI makes human permission more important, not less

The rise of AI has made this leadership challenge more urgent. Organisations want people to use AI, adapt quickly and help create the future. At the same time, many employees are experiencing FOBO, the fear of becoming obsolete. They’re being asked to contribute to innovation while wondering whether the technology they’re using will eventually replace them. That tension cannot be resolved with another presentation about embracing change.

AI can be a hugely useful tool. It can search, organise and combine existing information at a speed no individual could match. It can help people write code, examine possibilities and understand what is already being developed. But, as Steve argues, AI works from what it already knows. Ask it for a radically new form of transport and it can present existing concepts such as Hyperloop or suborbital travel. But it cannot reach beyond its available knowledge and hand you a Star Trek transporter.

AI can support the innovation process. It cannot replace the human ability to notice, imagine, question and connect ideas in a genuinely new way. That should elevate the contribution people can make. But only if the culture invites that contribution. If AI is introduced purely as an efficiency tool, with all the conversation focused on doing more work with fewer people, fear is hardly surprising. If it’s positioned as something that can remove drudgery, accelerate research and give people more capacity to investigate possibilities, a different relationship becomes possible.

The technology may be the same. The permission surrounding it is different.

The real test of your innovation culture

Every organisation wants the benefits of innovation. Fewer are willing to create the conditions it requires though. Because permission has consequences. It means accepting that useful thinking takes time. It means allowing people to challenge how things currently work. It means funding exploration without knowing exactly what it will produce. It means protecting ideas from performance measures designed for a different purpose. It means giving managers the confidence to enable expertise, not compete with it. It means responding honestly when an idea won’t be pursued.

Most of all, it means ensuring that innovation is something people experience in the everyday culture. Your people already see things. They notice where customers struggle, where processes fail, where opportunities are being missed and where technology could help. Whether that insight becomes innovation depends on what happens next.

What does your innovation culture actually give people permission to do?

Read along to the full transcript of Episode 152 of Sticky From The Inside, Innovation Culture: Where Everyone Believes Their Ideas Matter, below.

Why Innovation Culture Starts With Leadership, Not Technology

[Andy Goram] (0:11 - 3:15)

Hello and welcome to Sticky from the Inside, the podcast that explores how to build stickier, competition smashing, consistently successful organisations from the inside out. I'm your host Andy Goram, and I'm on a mission to help you turn the lights on behind the eyes of your people, light the fires within them, and help more of us lead successful, fulfilling work lives. This podcast is for anyone who believes that's worth going after and is curious about what really drives people, culture, and performance.

Each episode, we dive into the ideas and conversations that help create what I call stickier businesses, places where people thrive and love to work, and where customers stay, recommend you, and love what you do and why you do it. So, if you want to take the tricky out of being sticky, listen on. Okay then, when was the last time you had a great idea at work that you decided for some reason to keep to yourself?

Maybe you thought it wasn't your place to share it. Maybe you assumed somebody more senior would know much better than you, or perhaps you were just worried that it might get rejected in the first place. Now, consider this.

We live in a world where organisations constantly tell us that innovation is the key to staying alive and competitive. And at the very same time right now, artificial intelligence is making many people wonder whether they'll even have a place in the workforce at all. It's no wonder so many people are experiencing what is fast becoming known as FOBO, the fear of becoming obsolete.

So, how do organisations continue to innovate when their people are worried about becoming irrelevant? Now, my guest today believes the answer isn't simply investing in more technology or crossing your fingers and waiting for the next breakthrough idea, but instead it starts by creating an environment where every single person in the organisation believes that their ideas matter. Stephen W.

Hinch has spent decades leading innovation at Hewlett Packard and helping organisations turn ideas into successful revenue driving products. But what fascinates me about Steve's approach is that he doesn't spend all his time thinking about what's the next great idea. Instead, he asks a far more important question.

How do we build organisations where innovation becomes everyone's responsibility? So, today we'll explore why innovation is much more about leadership and culture than technology, why AI can help us innovate but mustn't and can't replace human imagination, and what leaders and managers need to do a little differently if they want people to stop fearing the future and start creating it. Steve, welcome to the show, my friend.

[Stephen W. Hinch] (3:15 - 3:18)

Hi, Andy. Thanks. It's great to be here.

[Andy Goram] (3:18 - 4:13)

And this should be a fun discussion. Steve McLaughlin I think so. I mean, the topic of innovation, we've touched on it a couple of times over the years on the podcast, some about systems and some about other bits and pieces.

But I think in today's marketplace, it's perhaps even more relevant when we think about the two challenges we mentioned in the introduction, the need for innovation, and I'm really fascinated to get your insights and experience based on that need, but also this interesting situation we've got right now with the rapid change in support technology and AI, and how that's affecting a workforce, which is where we're supposed to get our ideas from.

So, I'm fascinated to tap into that with you today. Andy Wilson Great. Thank you.

Steve McLaughlin What I would love you to do before we sort of get stuck into all that, Steve, is do you mind just giving us a brief introduction to you and this fascinating career you've had? Andy Wilson Oh, thank you.

Innovation Isn't a Department—It's Everyone's Responsibility

[Stephen W. Hinch] (4:14 - 5:45)

So, I've spent my entire career in the high-tech industry, starting right after getting bachelor's and master's degrees in engineering from Harvey Mudd College in Southern California. And my first job was as an engineer at Hewlett Packard Company, and I stayed with HP and its spinoff company, Agilent Technologies, for 35 years. My career spanned leadership positions in manufacturing, research and development, and marketing, before I took on the role of general manager for an entire division of the company.

Now, in the Great Recession of 2009, I took advantage of an early retirement program that Agilent was offering, and I left the company to start my own business. It was the Northern California office of a national company, TeamLogic IT, and my office provided support to small and medium-sized businesses throughout the San Francisco Bay Area. And I sold that business a few years ago, and today, I serve as an executive consultant to businesses in high-tech.

And throughout my career, I've always known that being innovative was critical to success, and I've tried to create organizations that help innovation flourish. I've personally led teams that have launched new businesses that have contributed actually several billion dollars of revenue to the companies I work for. And these days, I focus on sharing my insight on how companies can be innovative through my consulting work and through my new book, Winning Through Innovation, Lessons from the Front Lines of Business.

[Andy Goram] (5:45 - 6:31)

I love that. I also love the way that you just cast off, yeah, the innovations I've helped companies with just raised several billion dollars. You know, just another few zeros in there, Steve.

Yeah, well, I'm nowhere near a trillionaire. There's only one or two people that are, my friend, right? I mean, that's for sure.

So this topic of innovation, I mean, it's been central to a lot of your career, R&D, even marketing, all those sorts of bits and pieces, you know, searching for innovation. I said in the intro that innovation is perhaps one of the principal things that organizations compete on today. Do you believe that to be the case?

Do you still think that innovation is, you know, a primary driver of advantage?

[Stephen W. Hinch] (6:33 - 7:28)

Absolutely. For maybe not every industry, but almost all the industries, certainly a wide variety of industries, innovation is critical. And I think it has to do with basic human nature. We all get excited about new things, whether it's the latest high-tech gadget or a rocket ship to the moon or something as simple as a new restaurant with a menu that's different from everyone else's.

And that's not just a modern trend. It stretches back at least to the beginning of the Industrial Revolution. Things like, you know, railroads, the telegraph, the telephone, and the automobile have made people more productive.

And, you know, today it's driven by things like computers and smartphones and now the emergence of artificial intelligence. And it all comes down to this. Companies are driven by profit.

And in many industries, you pick up profitable customers by being good at innovation.

[Andy Goram] (7:29 - 7:47)

I mean, being good at innovation, I hope we'll get into what that takes and how we drive that. Your role has been central to do with innovation. What is it about innovation itself that lights you up inside, Steve?

Why have you stayed in innovation for so long?

[Stephen W. Hinch] (7:48 - 8:35)

Well, I guess it's sort of because I was born an engineer and I love inventing new things. You know, I was one of the first to get the English version of a Meccano set, which was called an erector set here. And I created a motorized sort of truck kind of thing from Meccano when I was like six years old and it was driving all over the room.

And so, you know, I'm naturally excited about innovation because it's fun for me to do new things. That's my role in innovation. Take that energy and enthusiasm and instill it in others.

[Andy Goram] (8:35 - 8:54)

I was going to say, because it is, I can see your eyes light up when you talk about, even when you use the word innovation and ideas. And I guess that it's trying to infuse that enthusiasm and energy, like you say, within an organization rather than it being a, we must do this. There has to be a passion and excitement for it, right?

[Stephen W. Hinch] (8:54 - 10:20)

Right. History is littered with examples of companies that have failed because they missed the emergence of innovative technologies. Yeah.

Again, this is not something that's new. You know, nearly 100 years ago, manufacturers of steam locomotives missed the industry's transition to diesel powered locomotives and not a single manufacturer of steam locomotives survived that transition. Right.

The Fear of Becoming Obsolete in the Age of AI

You know, manufacturers of typewriters, they missed the transition to digital word processing. And today everybody is concerned about whether their job is going to be replaced by AI. We call that a fear of becoming obsolete.

And it's real, but I'm convinced that it's overblown and certainly many jobs will change because of AI. And some will go away entirely, just like in earlier times. You know, how many people do you know today who serve as telephone company operators or blacksmiths?

You know, times change, but the big fear people have of AI is that they really don't understand what it can do and what it can't do. And it's not being helped by all these people that are hyping AI because they want to get rich, not because they see a true value in the technology. And now don't get me wrong, AI can add real value in many ways, but especially in the realm of innovation, it can be helpful, but it's not going to replace the person who has the innovative idea.

[Andy Goram] (10:21 - 11:10)

I think this is a really interesting thing to explore. Your background in innovation and then this, maybe like you say, overblown perspective of the fear of becoming obsolete. You said something to me when we were having a chat before we decided to kind of do this conversation.

You said something fascinating to me about AI and innovation. I'm sure I will get the words wrong. I will misquote you, so I do apologize for that.

I'm an expert at misquoting people, Steve, so please put me right. But it was something like AI builds answers from what it already knows, and innovation is about going way beyond what we already know. Have I got that sort of right?

If I have, maybe you could expand on that for me, because I think that's a lovely little phrase there.

Why AI Can Support Innovation—But Not Replace Human Imagination

[Stephen W. Hinch] (11:10 - 14:10)

Yeah, yeah. Well, in my book, I share an analogy that might help you understand this. Okay.

So imagine that you are a person with a photographic memory. You can remember everything about everything you have ever read. Now, your friends know this, and they come to you whenever they need answers to their questions.

And so one day, a friend of yours who's writing a term paper asks you what the gross domestic product of the country of Bolivia was in 1953. Now, you've never read anything with that exact answer, but you did read a World Bank report saying that the gross domestic product across all of South America was $35 billion in 1950 and $50 billion in 1955. And you also read a Wikipedia entry that said Bolivia was one of the poorest South American countries and accounts for less than 2% of the total South American GDP.

So you take what you know, and you process it to come up with your best guess at Bolivia's GDP in 1953, and you pronounce it to be $632 million. Now, that may be nowhere near the truth, but it comes across as absolute. That's the same kind of challenge you have to deal with today when you rely on AI for answers.

And a key point here is that AI can only come up with answers based on what it knows. If you asked ChatGPT to come up with an innovative idea for replacing jet airliners with another form of transportation that was half the cost and twice as friendly to the environment. And by the way, I actually did ask ChatGPT that very prompt.

ChatGPT came back and told me about things like the Hyperloop tunnel that SpaceX proposed to transport people between LA and San Francisco. And it told me about companies that are working on suborbital transportation systems. But these are all things that companies are already working on.

ChatGPT is not going to tell me something like how to invent a Star Trek transporter, because there's nothing like that in its database. And that's a key limitation of AI. It can't tell you how to invent the next innovative idea, but it can be useful for doing things like searching its entire database to tell you the kinds of things that are already being worked on.

So AI can be great at quickly extracting existing information that may take you days or weeks or even years to find yourself, but it can't give you the final answer. So that's sort of a view of what AI can and can't do, especially in the realm of innovation. Now, you know, there's plenty of other ways besides innovation that you use AI or can use AI.

I'm not going to cover all of those here, but as for how you can use AI to help innovate, just remember it's a tool, but it's not the final answer.

[Andy Goram] (14:10 - 14:29)

Yeah, I think that's what I'm interested to sort of get your perspective on, really. When we're dealing with the topic of innovation, with the limitations you just talked about, actually practically, how do you see AI really helping organizations get a grip of and actually move their innovation forward? How should they best be using it?

Different Types of Innovation Need Different Leadership

[Stephen W. Hinch] (14:29 - 17:00)

So it depends on what you're trying to do. And maybe the first thing to understand is there are different kinds of innovation. And the best way to set up an environment for nurturing that innovation is different depending upon what kind of innovation you're trying to drive.

And how you use AI to help you could be different. I mean, AI already is doing very powerful things like, you know, software programming is completely different than it was five years ago. You can have AI write code.

You have to be careful because you never want to release code that's been generated by AI without having somebody that knows what they're doing review it. But it can take a lot less time to achieve a specific result using AI than without it. So software programming is an area where AI is really good.

And the reason it's good is because it's taking things that it knows. You know, it knows how to do C++ coding. And so you're not asking it to invent something entirely new.

That same idea applies across other realms as well. If you just, again, imagine that the way AI can help you is by pulling from information that it already knows. Now, in the next several years, AI might get even better.

A couple of years ago, the big news was generative AI. And now it's a genetic AI, which, you know, generative AI sort of takes what it knows and tells you answers to your questions. Genetic AI can actually go one step further and say, well, this is what I better do to fix this problem.

But that's, again, a different way to use AI that may not be very helpful for you in innovation. But it's just something you need to be aware of because, you know, eventually you've got to take that innovative idea and move it into where it's not just in the lab anymore. It's something that's out in production.

And that's where you've got to think about how AI can help you once you launch that product into the world. And that may be different than how it's helping you when you're inventing that product.

[Andy Goram] (17:00 - 17:42)

Absolutely. And we are some way from places like DeepMind and all their general AI from being practical things that we can use in the workplace, right? We're miles away from some of those things.

I mean, incredible stuff that they're doing, but miles away from the practical stuff. I want to pick up on what you said there about the environment stuff, because I know you're big on creating the environment. And this whole idea of creating an environment where brilliant ideas are allowed to emerge, if you like.

What does that environment look like? Are there sort of some key principles that you have in mind that that's what that environment needs to either be made up of or function on?

[Stephen W. Hinch] (17:42 - 22:43)

Yeah. And so let me get back to, you know, I talked about the concept that there are different kinds of innovation and the way you structure your organization is different. So at a high level, I classify innovation as falling into four categories.

Now, other experts classify it as as many as 16 different categories, but my job is to simplify things. And so the four categories that I classify innovation, it's either product innovation or process innovation. It's either incremental innovation or disruptive innovation.

Nice. Let's just talk about those last two right now. Incremental innovation is where you are improving products that you already sell to existing customers.

The gasoline powered automobile industry, for example, has been in this phase for decades. The cars that they sell today have been improved in many ways over the last 20 years, you know, with features like anti-lock brakes or airbags or crash protection, but they still sell to the same customers that they always have. Disruptive innovation is where you introduce something so different from what currently exists that it completely changes the market.

The Curse of the Corporate Business Model

Companies that were market leaders could be left behind if they don't adapt. And the rise of digital photography is a good example of disruptive innovation. You know, Kodak and Polaroid were once the photography market leaders, but they both ignored the trend of digital photography until it was too late.

And although both of these companies still exist, they're only a tiny fraction of their former size. And both Kodak and Polaroid were victims of something that I call the curse of the corporate business model. It's something that almost all large corporations suffer from to some extent.

And that's because if you're a manager in the corporate world, you are measured by how well you have delivered results over the last month or the last quarter. That's what Wall Street demands. And funding innovative ideas that may take a year or two to hit the market don't align with that expectation.

So, corporate managers are reluctant to invest in anything that's going to make their near-term results look worse. And that's why a lot of disruptive innovations are developed in small venture capital-backed startups, because those startups are not yet being measured on quarterly results. Now, that doesn't mean large corporations can't drive disruptive innovation.

It just means that they have to structure the organization correctly. And I can give you an example from my days at Hewlett-Packard. The vice president in charge of HP's test and measurement business, which at the time was about a $5 billion a year business, felt that HP was not doing enough to really drive innovative breakthroughs.

And he wanted to fix that. Now, he understood the curse of the corporate business model, so he created a small organization to deal with that challenge. And he called it an in-house startup.

And he measured it not by how much it contributed to near-term results, but by how well it was delivering truly innovative ideas. Now, like a startup, it was small, only a dozen people or so, and I was the R&D manager for that team. Now, this was back near the turn of the century when fiber optic telecommunications was growing exponentially due to the rise of the internet.

And our team had an innovative idea for how HP could capture a large share of that growing market. It was going to take some investment to do that, though. And so, we tried to sell that idea to HP's existing businesses because they had the money to fund it.

But they just saw it as a drain on their near-term profits, and they wanted nothing to do with it. So, we finally sold our idea to the vice president, and he gave us the funding necessary to invent that product ourselves. He told us that we had two years to introduce it, and during that time, he would not measure us on whether we were delivering a monthly profit, but by how well we were meeting our milestone commitments.

So, we met that two-year deadline, and we delivered a product that completely captured this emerging fiber optic market. And within five years, that product had delivered over a billion dollars of new revenue to that company, to HP. And today, a quarter of a century later, that product line that no one else in HP wanted is still in business, still generating billions of dollars of revenue as one of the key products that engineers now use to develop AI data centers.

And that's a product that would never have existed if our VP had not known how to deal with the curse of the corporate business model. Disruptive innovation can't be done by the team that's measured by delivering monthly results. It's got to be a separate organization.

[Andy Goram] (22:44 - 23:11)

That's what's interesting because I think that's where a lot of friction comes when it comes to the topic of innovation. There's always, we must innovate, we must innovate. But there's this kind of like, well, we want to do something completely new, and by the way, it needs to guarantee success.

And it mustn't be a drain on current resources, and we still need to keep BAU going, and we're frightened if it goes wrong. I mean, that's a real tension, right, that exists in organizations when it comes to innovation.

[Stephen W. Hinch] (23:11 - 23:49)

Absolutely. And if I get back to, I talked about disruptive innovation now. The company needs to set up typically a small organization, think of it as a startup inside the company, that has the authority to go off and spend a year or two or whatever it takes to invent a new product without being saddled with, you've got to deliver these quarterly results or you're going to be out of business. And it can, and that, my example was where HP actually did that.

They're not so good at that anymore, but I haven't worked with HP for a while.

[Andy Goram] (23:49 - 23:53)

That's because you're not there now, Steve. I mean, there's a correlation in here somewhere, right?

[Stephen W. Hinch] (23:53 - 25:16)

Maybe, I'll take credit for that. But now, incremental innovation is something different. Incremental innovation is where I'm selling automobiles today.

I'm responsible for a product line of specific automobiles. And I need to continue to improve that so that next year and a year later, people still think that I've got a product that is worth buying. And I've got to add incremental innovation capabilities to it, put better airbags, more crash protection, improve the warranty period from, it used to be one year, and now I'm going to make it three years or four years and attract more customers.

I'm not basically changing the concept of what it is. I'm not saying now we've got to go invent an EV-powered vehicle. I'm just, how do we make these gasoline-powered vehicles better?

In that case, incremental innovation is best managed by the team that's actually delivering the product because they hear from customers, they know what those customers wish that your product did better, and you know what your competition is doing. So it's really different between innovation that is disruptive and innovation that is incremental in how you structure the organization.

Creating an Innovation Culture Where Everyone Believes Their Ideas Matter

[Andy Goram] (25:16 - 26:03)

And this leads, I think, into this piece again, my piece in the intro here about, I think you often talk about trying to almost democratize ideas and innovation within organizations, right? That it's not just for engineers and R&D departments to be able to innovate, which is, you know, you've said in specific times here, disruptive, we might need specific teams to do this, right? In a different organization to counter the fear and that balance of results versus innovation.

But when we're talking about making an organization and the people within it feel like everybody's ideas matter and that they have a place in that organization, how does that work? What has to change in environment for that to happen, Steve?

[Stephen W. Hinch] (26:03 - 28:02)

So you need to understand the whole process of innovation, it involves everybody from the senior leaders to the lowest level in the organization. Everybody has the opportunity to contribute to innovation if they believe that. And so it starts at the top with the leaders of the organization.

They're the ones that have to craft a compelling business strategy and communicate that strategy throughout the organization. Because people won't be able to innovate successfully if they don't understand what the company is all about and what the leadership's priorities are and what employees can do to help achieve those objectives. Then as you propagate down the organization, you've got the senior leadership, the C-suite, developing the strategies.

And then you've got probably for large companies, several layers of management between them and the people actually doing the work. And those management layers have to take what the senior leadership is promoting, what the company is all about, and turn that vision into what my organization needs to do in order to achieve that. Because in a company with thousands or tens of thousands of employees, there's only so much that the C-suite can do.

And really, my view is that mid-level managers are the ones that really turn a vision into reality. The business press talks all about the Elon Musks and people like that. It would be really interesting to know because I believe that Elon can do only so much and he needs to rely on the organization below him to actually turn his vision into reality.

But that level doesn't get the press. It's him that gets the press.

[Andy Goram] (28:02 - 29:36)

Absolutely. And we've got plenty of companies that have big figureheads that take the press. And I guess though, that personality and the sort of, I'm not going to put Elon Musk in this category, but the CEO in the respect of being the chief evangelist officer, the person who talks about the future of the business and what the business stands for and where its focus should be. And as you say, that drips down the organization.

There still needs to be the environment facilitated by that management to encourage, elicit, pull ideas from people who need to feel, like you used the word believe, that it's okay to have ideas. And actually, their suggestions and thoughts are welcomed. And there's a whole big feedback loop in how that must be gathered and fed back on.

Because if you have people in your organization who, let's say they do believe that message that they can contribute and they make suggestions, and let's just say are way left field and they're not going to get seen through. There needs to be some sort of feedback as to why an idea or a suggestion isn't going to be taken through. Otherwise, ideas are just thrown into a black hole.

And as an employee, you're like, on one hand, they say these things matter, but I've given loads of suggestions and nothing's ever happened. And that can quickly go into, I don't know, what's the point? What they say isn't really true.

[Stephen W. Hinch] (29:36 - 32:58)

And that's a big problem that managers have to deal with because you can't fund every possible innovative idea. And you've got to have some sort of process that allows you to sort out the best from the not so good ideas. And you're not always going to be right.

Sometimes the idea that you choose not to fund turns out to be the one you should have funded. And again, when I first started at HP, it wasn't Steve Jobs, it was the other guy at Apple that came up with the idea for a personal computer. And HP said, there are probably only 10 people in the world that's going to want a personal computer, so no, we're not going to do that.

And so he left HP and helped start Apple. And they turned out okay. They've not done bad.

They've not done bad. And so he was one that took it to upper management. It was a neat, innovative idea, but they made a decision that doesn't fit with our company.

But they let him go take that idea and start his own company. And so it worked out okay for him. And HP eventually came back and started competing with him.

And so what can I say about that? So it gets back to sort of, okay, how do I sort out the best? And how do I make people feel okay about things?

Giving People Permission to Innovate: Steve's 5% Rule

And here's how I used to do it. When I was a general manager at HP and Agilent Technologies, I would tell my teams that I want you to take 5% of your work week and spend it on thinking about innovation. Not figuring out how to do my current job more, but getting away from what your current job is and focus on innovation.

Now, 5% of your time in a 40-hour work week is two hours per week. Sometimes people would do a little more than two hours, sometimes less. But I also stressed with them that this was not a period of time that you could go off and think in secret, a black hole kind of thing.

This was something where you need to be talking with your idea, get support for it, be able to pull in resources. And I would stress, I can't promise that we will go anywhere with this idea that you're working on, but I'm at least going to give you time to think it through and come back with a vision for where it could go. And by giving them explicit permission to do that, and with them knowing we're not going to be able to fund every innovative idea, that helps them.

It's not like, well, we came up with all these innovative ideas and nothing ever went anywhere, because I was giving them at least some support and some time and some resources and even some funding to go off and do some initial experimentation to see if they could turn this into something that was really practical. So, that's one of the things, one of the ways that I avoided this, we give our ideas into a black hole and nothing happens to it, is give them that visual support for their idea.

[Andy Goram] (32:59 - 34:23)

Yeah. And I think there is a genuine thing around open and honest communication about this sort of stuff. I don't think anybody in their right mind thinks every idea I'm going to have is going to suddenly be the next focus of the organization, but it's nice to get feedback about what's happening with those ideas.

But I think that giving the permission and making it a specific element or time of their job is a critical thing. For me, it almost matches up nicely to that thing around building trust in organizations, around enabling people to do a certain element of job crafting, as in picking the things they'd like to do that are interesting to them, and maybe spark a bit of imagination and a bit of creativity and a bit of passion in them, and maybe setting up different projects around your structure of product, process, incrementality, those sorts of things, and allowing people to kind of say, you know, I fancy having a little dig into that. Not that they're spending 100% of their time, you know, doing lovely, fun, innovative stuff, but they are allowed that proportion in a month or whatever it is to dedicate to, well, where could this idea go? And could I do a bit of research on it?

And could I involve some other people in that idea? And keeping that sacrosanct, I know that's quite a big thing at Google, that kind of like 20% time that they have to sort of think about new products and new ideas. But that's what you're talking about, right?

[Stephen W. Hinch] (34:23 - 34:48)

It is. And 20%, I mean, I've heard people say 10%, 5%, and giving them any percent is better than nothing. And that's what I could afford.

And, you know, if times were good, I would do more than that. And if times were bad, I'd still try to keep them at least a little bit thinking about innovation because when times are bad, that's when you need the most innovative ideas to get out of them.

[Andy Goram] (34:48 - 35:18)

And that's the tension again, isn't it? Because when times are tough, there is a tendency in quite a few organizations to batten down the hatches, to stick to the knitting and just like survive. And history will tell us that in those situations, companies that have probably prospered and thrived are the ones who dug in and innovated and bought something else to stimulate growth in the market or in their company and off they went.

[Stephen W. Hinch] (35:18 - 36:29)

Yeah. Yeah. And there's certainly examples from my career I would be happy to share at some point. Probably don't have time to go into them now, but, you know, I was able to take a business that was almost ready to be shut down. Let me rephrase that.

I didn't do it. I coached the team. The team had a great idea for how to get out of this business that had no future and redirect it into a business that was really growing.

And it was not a business I understood, but they understood it. And my job was to give them the latitude to go off and get us out of this mess that we were in. And my job was then to go to upper management and say, look, we've got this great idea.

Give us time to get it onto the market. But I was not the one that had the technical expertise to carry it out. I was the one to give the team the ability to have the time to carry it out.

And it turned out to be another a billion dollar a year product.

Leadership Isn't About Having the Best Ideas

[Andy Goram] (36:29 - 37:13)

And that's the crucial thing. I think that some people are scared by the innovation thing because they can't think of the ideas themselves. Well, it's not necessarily as a manager really your job to have all the ideas.

Your job is to create the environment where people can have the courage to circulate the ideas that they have. And often it's people closest to the product sometimes, right, that can see where the opportunities are, particularly in the incremental pieces. You know, this bit doesn't quite make sense and we could just change it a little bit.

Maybe even in the process piece, you know, people doing the same thing every day. Well, there's a shortcut to this that could save us hours, you know, that these are the things that are right in front of them. They need to be given the environment and permission to bring those ideas forward.

[Stephen W. Hinch] (37:14 - 37:23)

Let me give you one more example. I'm using a lot of examples from my own career. I'm not trying to brag, but I know what these examples are.

[Andy Goram] (37:23 - 37:25)

You've done a lot of stuff, Steve. It's okay to share it, my friend.

[Stephen W. Hinch] (37:26 - 39:29)

Okay.

And, you know, you talk about the role of the manager is not necessarily to be the expert on things. It's to give people the opportunity to really carry things through that they know. Well, the first two decades of my career I spent in manufacturing engineering and as a senior manager in R&D.

I had never spent a day in any kind of marketing job. And I only had the vaguest idea of what marketing was all about. So I was very surprised when our division general manager approached me and asked me to take on the job of director of marketing for a 100 person marketing organization for a $300 million a year business.

But he had already interviewed several candidates who had years of experience in marketing and decided none of them were ready for the job. And he sold me on it by stressing that my job wasn't to be the best marketing engineer. We had plenty of people on the team who could do that.

My job was to give that team the guidance they needed to be successful. And he told me, marketing types tend to make their decisions by the seat of their pants. You probably know that.

And my boss wanted me to bring a level of management discipline to the team that he knew that I had from my experience in R&D. And it worked. And we were successful even during the dot-com bust of the early 2000s because the team knew how to innovate.

And they refocused our business on a new market that was growing. And it was not a market I knew anything about, but I was the one that took that vision to senior management and gave the team the time and the resources that they needed to deliver this innovative product. And that's an example of, the senior manager in marketing, me, was not the marketing expert, but he could bring skills to the organizations that that team needed.

[Andy Goram] (39:30 - 40:49)

Listen, there are too many things connecting us, my friend, because as a marketer, I was asked to cover IT once in my career. I think the IT team might remember that period for all the wrong reasons. But yeah, I definitely had a different view on some bits and pieces.

But I think that's, the power is always within the people. It's the great skill of managers and leaders to liberate, I think, all of that latent potential that's within people. And sometimes that's taking a humble pill, sitting back and going, look, I've got an issue.

I don't know how to solve it. I'd love to get your thoughts on those sorts of things. And then, poof, see what happens coming back.

Sticky Notes: Three Principles for Building an Innovation Culture

As most of the topics that we do on this podcast, we sort of scratch the surface of them. And it leaves me going, oh, I've got so many more questions. But what I would love to do is, we've reached this point in the show I like to call Sticky Notes.

If we think about this, whether it's overblown or whatever, this fear of becoming obsolete and the AI stuff coming in, but really at the heart of it, we're trying to create some kind of culture where innovation lives. And what would your practical advice be, Steve, for the people listening, that perhaps you could fit on three little sticky notes to help them move forward with this stuff?

[Stephen W. Hinch] (40:49 - 41:39)

Okay. So number one, everyone in the organization can be an innovator. You know, it's not just for some people off in a blue sky area that can spend all their time innovating.

Everybody needs to understand they can be an innovator. Two, AI can help me innovate, but it can't replace me. Use it to help you, but it's not going to be the thing that tells you what the next great idea is.

And number three, I am responsible for growing my own career so I don't become obsolete. I can't depend on leadership to say, this is what you need to go do. Um, you're responsible for growing your own career.

[Andy Goram] (41:40 - 42:07)

I love that. I, and that last one really resonates with me because a lot of the rooms that I go into, oftentimes people are waiting for the things to happen to them. And the message has always got to be very rarely do people give you stuff.

You've got to go and grab it yourself. So I absolutely love that, Steve. That's brilliant.

It's been fab having you on the show, Steve. I'm sure people listening will want to find out a little bit more about you, check out the book and all that kind of stuff. So where could they track you down, my friend?

Where's the best place to find you?

[Stephen W. Hinch] (42:08 - 42:34)

So I have my own website. It's, uh, Stephen, S-T-E-P-H-E-N hyphen W hyphen H-I-N-C-H dot com. And that tells all about me. And it also is a way to, um, link to, to my book that you can get on Amazon or your favorite bookstore.

They probably won't be in stock at your favorite bookstore, but they can definitely order it for you. There we go.

[Andy Goram] (42:35 - 42:37)

And can people track you down on LinkedIn and stuff like that?

[Stephen W. Hinch] (42:37 - 42:58)

Uh, LinkedIn, I'm on LinkedIn. Just do the search for Stephen W. Hinch.

Yeah. So I spend a fair amount of time on LinkedIn and, and, uh, I don't post something every week, but I try to post fairly insightful. And then my website also, uh, I have a blog that I post, uh, thoughts on, uh, somewhat regularly.

[Andy Goram] (42:59 - 43:13)

Brilliant. Well, we will put all of those links in the show notes so people can track you down, my friend. Listen, thank you so much for coming on and being so generous with your time and the stories from your past.

I'm sure they will help people build a better future going forward. Thank you so much, my friend. Great to meet you.

[Stephen W. Hinch] (43:13 - 43:14)

Thanks, Andy.

[Andy Goram] (43:14 - 43:54)

Okay, everyone. Well, that was Steve Hinch.

And if you'd like to find out a bit more about him or any of the topics that we've talked about on today's show, please check out the show notes. So that concludes today's episode. I hope you've enjoyed it, found it interesting, and heard something maybe that will help you become a stickier, more successful business from the inside going forward.

If you have, please like, comment, and subscribe. It really helps. I'm Andy Goram, and you've been listening to the Sticky from the Inside podcast.

Until next time, thanks for listening.

Andy Goram is the owner of Bizjuicer, an employee engagement and workplace culture consultancy that's on a mission to help people have more fulfilling work lives. He's also the host of the Sticky From The Inside Podcast, which talks to experts on these topics from around the world.