In today’s business landscape, the innovation gap is a pressing issue that demands immediate attention. Despite the widespread recognition of innovation as a strategic imperative, a significant disparity exists. McKinsey’s global surveys reveal that 84% of executives view innovation as crucial to their growth strategy, and only 6% are content with their innovation performance. Similarly, PwC’s Innovation Benchmark found that 54% of organisations struggle to align their innovation and business strategies. This disconnect is not just a statistical anomaly but a fundamental challenge in how organisations approach the culture necessary for innovation.
After years of working with organisations worldwide on innovation strategy, leadership, and culture, I still see the same fundamental flaw in traditional approaches to innovation leadership. I still experience that “innovation theatre”—displaying the right posters on walls, using the correct terminology, and perhaps establishing innovation labs—is still fairly prevalent, failing to address the core elements that enable innovation to thrive.
The Need for a Paradigm Shift in Innovation Leadership
Traditional leadership approaches to innovation have failed primarily because they ignore a critical psychological reality: Our brains are naturally programmed to feel the pain of potential losses about twice as intensely as the pleasure of equivalent gains. This phenomenon, known as loss aversion, was first documented by Nobel Prize-winning psychologists Kahneman and Tversky and has profound implications for innovation leadership.
This ancient survival mechanism causes people to instinctively avoid risks and stick with the status quo, even when potential benefits significantly outweigh the risks. According to research from the Corporate Executive Board (now Gartner), 60% of employees have chosen not to pursue an innovative idea specifically due to fear of negative consequences. When organisations punish unsuccessful experiments or create environments where risks feel personally threatening, they supercharge our natural tendency toward caution, effectively shutting down the innovation they claim to want.
The neuroscience is clear—innovation requires us to work against our brain’s natural wiring. Leaders who understand this fundamental challenge recognise that building an innovation-focused culture isn’t about slogans and initiatives, but about creating environments where our innate risk aversion is counterbalanced by psychological safety and appropriate encouragement.
The Innovation Spectrum: Finding the Sweet Spot
For far too long, organisations have oscillated between two extreme approaches to innovation, neither delivering the cultural transformation they seek. The first approach, incremental innovation, represents the comfort zone for most organisations. It focuses on operational efficiency, internal improvements, and small-scale changes with minimal risk. While Deloitte’s research shows that 80% of innovation resources are typically dedicated to these incremental efforts, they rarely create meaningful competitive advantage or transform organisational culture.
At the opposite end lies radical or disruptive innovation—the alluring “moonshots” that promise industry transformation. Boston Consulting Group’s research indicates that companies focusing exclusively on breakthrough innovation underperform the market by 27%. However, the mythology around pursuing radical or disruptive innovation persists. The hard truth is that radical innovation, despite its appeal, is fundamentally unsuitable for scaling innovation capability and culture across organisations. Due to its scale, cost, and risk factors, it remains constrained to small, elite groups, usually at the organisation’s top.
The critical gap—and the area where I’ve found true competitive advantage and innovation-led cultures are built—is what I call Differentiated Innovation. This middle ground is where we focus on the customer, pursue higher-value opportunities, and create a genuine culture of innovation. It is characterised by competitive advantage through customer focus, medium-scale initiatives with justifiable cost and manageable risk, multiple collaborative teams, and frequent activity with significant impact. The potential for competitive advantage through differentiated innovation is immense, inspiring leaders to explore this approach.
Accenture’s research supports this approach, showing that companies that excel at balanced innovation portfolios outperform their peers by 3.5x in five-year returns to shareholders. The middle ground is not a compromise—it is precisely where innovation capability scales across organisations, where more people can meaningfully engage, and where sustainable culture change happens.
The Crucial Role of Middle Managers in Innovation Implementation
One of the most overlooked elements in building innovation-led cultures is the crucial role of middle managers. These leaders form the essential “DRIVE” layer that translates leadership’s innovation ownership into organisational action. According to research by Quy Nguyen Huy published in the Harvard Business Review, middle managers are critical to innovation implementation because they can balance change with continuity, making them “the most effective agents of transformational change” (Huy, 2001). Despite this critical role, innovation initiatives often bypass them entirely.
These managers operate at the perfect intersection to leverage differentiated innovation. They have sufficient authority to mobilise resources and create momentum, understand strategic priorities and operational realities, directly influence the most significant portion of the workforce, and facilitate the cross-functional collaboration required for customer-focused innovation. A study published in the Journal of Product Innovation Management found that middle managers contribute to innovation success through four key roles: championing ideas, synthesising information, facilitating adaptability, and implementing deliberate strategy (Kuratko et al., 2005).
Research from the Academy of Management Journal demonstrates that middle managers who act as “knowledge brokers” between different organisational units can increase innovation implementation success rates by 17-22% (Shi et al., 2009). Additionally, a longitudinal study by Steven W. Floyd and Peter J. Lane published in the Strategic Management Journal found that organisations with strong middle management involvement in strategic innovation initiatives had significantly higher implementation success rates than those relying solely on top-down directives (Floyd & Lane, 2000).
I’ve spent most of my career helping senior teams understand how to lead for innovation. The shift to differentiated innovation cannot succeed without correctly enabled middle managers. According to Rosabeth Moss Kanter at Harvard Business School, “The most innovative organisations consistently promote middle managers who excel at creating connections across different parts of the company,” emphasising their role as integration experts for successful innovation (Kanter, 2004).
The challenge is that these managers require different mindsets, actions, behaviours, approaches, tools, frameworks, and governance than what works for incremental innovation. They need psychological safety from above to take calculated risks, authority to allocate resources, and capabilities beyond their operational expertise. Ignoring these needs creates the “frozen middle” that many organisations blame for innovation failure when, in reality, the leadership approach to middle management is flawed.
The ODC Framework: A New Approach to Leading for Innovation Culture
From my work with organisations globally, I have developed the ODC Framework that clarifies the roles of different organisational layers in building innovation-focused cultures. Unlike traditional approaches focusing primarily on senior leadership directives or grassroots ideation, my framework recognises the distinct contributions needed from each organisational level.
At the executive level, leaders must OWN the innovation agenda by setting direction, creating supporting structures, and modelling behaviours. This ownership goes beyond mere sponsorship to include active engagement in creating conditions for innovation to flourish. Ownership means articulating a compelling innovation vision, establishing appropriate governance, allocating dedicated resources, and demonstrating personal commitment through visible actions. It’s about owning the system that innovation requires.
The critical middle layer of management must DRIVE innovation by translating strategy into action and enabling their teams. A 2018 McKinsey study found that companies with strong middle management engagement in innovation initiatives were 38% more likely to report successful innovation outcomes than those that marginalised middle managers in the innovation process (McKinsey, 2018). These managers require trust built through warmth, integrity, and competence from senior leaders, psychological safety to experiment, and appropriate resources and authority to implement innovation initiatives.
Front-line employees CONTRIBUTE to innovation through their direct engagement with work and customers. Research from Gallup shows that when employees feel empowered to contribute to innovation, organisations see 59% less turnover and 21% higher profitability. This contribution level requires different support than the other layers—specifically, frameworks for experimentation, permission to share early work, and recognition systems that reward learning alongside outcomes.
Organisations must address three critical dimensions for this framework to function effectively for each layer. First, the psychological dimension determines what safety means and how it’s created for each group. Second, the physical dimension covers the required resources, spaces, and tools. Third, the mental dimension encompasses the skills, capabilities, and behaviours needed for each group to fulfil their role in the innovation ecosystem.
From Incremental to Differentiated: A Leadership Imperative
In my experience, organisations frequently make the mistake of chasing radical innovation as their primary strategy, creating an “end-of-rainbow” pursuit. Research from Innovation Leader and KPMG shows that 78% of corporate innovation programs fail to deliver expected results, with the majority citing unrealistic expectations around breakthrough innovation as a key factor.
This approach concentrates innovation capability in a small elite group, creates a feast-or-famine innovation culture with infrequent high-stakes bets, fails to build broad-based capability, and overlooks the significant competitive advantage available through differentiated innovation. It manifests what Harvard professor Clayton Christensen termed the “innovator’s dilemma,” where organisations chase disruption while ignoring more accessible opportunities.
By enabling middle managers to drive differentiated innovation, organisations create a fertile middle ground where innovation becomes a cultural norm rather than an exception. Customer-focused thinking permeates multiple teams; competitive advantage accumulates through frequent, significant impact and innovation capability scales across the organisation.
The true measure of innovation leadership is not in launching occasional “moonshots” but in systematically enabling the middle management layer to drive differentiated innovation throughout the organisation. This approach aligns with research from the Stanford Innovation Review that found sustainable innovation cultures share a common trait: they make innovation “how we do things around here” rather than a separate function or occasional initiative.
Research-Backed Leadership Behaviors That Drive Innovation Culture
What specific leadership behaviours build innovation cultures? Beyond the theoretical frameworks, decades of research offer clear direction. Google’s Project Aristotle identified psychological safety as the most important factor in team innovation. At the same time, Amy Edmondson’s research at Harvard quantified that teams with high psychological safety are 67% more innovative than their counterparts.
Leaders who successfully build innovation cultures exhibit several consistent behaviours. They create environments where appropriate risk-taking is encouraged rather than punished. Research from Deloitte found that organisations with a “fail forward” culture—where failures are treated as learning opportunities—are 2.7 times more likely to be high-performing innovators.
These leaders also demonstrate vulnerability and share their innovation attempts, including failures. Studies from the NeuroLeadership Institute show that when leaders model vulnerability, it reduces team threat response by 74%, creating the conditions where creative thinking flourishes. Furthermore, effective innovation leaders challenge the status quo and champion novel ideas from all levels. According to research published in the Journal of Leadership Studies, leaders who actively advocate for employee ideas increase innovation implementation rates by over 40%. They also deliberately allocate resources for experimentation. Bain & Company research shows that organisations that dedicate at least 10% of resources to innovation experimentation outperform their industries regardless of market conditions.
Most critically, these leaders recognise that enabling innovation is fundamentally about changing behaviours rather than structures or processes. They understand that culture is not something you have—it is something you build through thousands of daily decisions and interactions.
Bridging Innovation Rhetoric and Reality
As we look to the future, the most successful organisations will recognise the critical importance of the middle ground between incremental and radical innovation, empower their middle managers to drive innovation and create the conditions for a thriving innovation culture across all levels.
Research from McKinsey shows that companies with strong innovation cultures see 3.4 times greater total returns to shareholders and consistently outperform industry peers regardless of market conditions. However, the gap between rhetoric and reality persists—companies continue proclaiming innovation as valuable without creating the psychological, physical, and mental conditions it requires.
Building a culture of innovation is neither quick nor easy. However, the rewards—regarding organisational capability, employee engagement, and business results—make it worthwhile. Organisations that successfully embed innovation in their cultural DNA position themselves to thrive in an increasingly dynamic business environment. They recognise that innovation is not about occasional initiatives but transforming daily work.
Key Takeaways for Innovation Leaders
- Acknowledge psychological barriers: Recognise that loss aversion and risk avoidance are hardwired in human psychology. Innovation leadership requires actively counterbalancing these tendencies through psychological safety and appropriate incentives.
- Focus on differentiated innovation: The middle ground between incremental and radical innovation offers the most significant competitive advantage and cultural transformation opportunity. This is where innovation can scale across the organisation.
- Empower middle managers: These leaders are the critical “drive” layer that translates innovation aspirations into action. They need capabilities, psychological safety, and resources different from those of either executives or front-line employees.
- Implement the ODC Framework: Clarify the distinct roles of those who Own, Drive, and Contribute to innovation. Address the psychological, physical, and mental needs of each layer.
- Measure both behaviours and outcomes: Track leading indicators of culture change (experimentation rates, cross-functional collaboration, learning from failure) alongside lagging innovation performance indicators.
- Model desired behaviours: Demonstrate vulnerability, champion novel ideas, allocate resources to experimentation, and respond constructively to failure. Leadership behaviour shapes organisational culture more powerfully than any stated value.
A Call to Action: Moving Beyond Innovation Theater
Innovation culture is not built through slogans, posters or temporary initiatives. It requires a systematic approach that addresses the psychological barriers to innovation culture and the structural enablers of sustainable innovation capability.
Suppose your organisation is ready to move beyond innovation theatre to build genuine innovation capability and culture. In that case, I invite you to explore how my approach could be tailored to your specific challenges and opportunities. Together, we can develop the innovation strategy, leadership, and culture required for your organisation to shape the future.
About the author
Cris Beswick is a strategic advisor and recognised global thought leader on innovation culture. The co-author of the bestselling book Building a Culture of Innovation, he believes every organisation can become truly exceptional if it makes innovation ‘part of how we do things around here’. Cris works with executive teams worldwide on the strategy, leadership, and culture required for innovation-led growth.
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