Skip to content

Improving innovation

Increase profitability and staff retention with an innovative culture.

On this page

  • What innovation will bring to your business
  • How to develop an innovative culture

Innovation is often associated with the introduction of new products or services in your business; however, it can also be about changing the way you do business. 

Innovation embraces new uses of technologies, improved industry methods, meeting changing customer demands or needs, and better systems and processes.  To be successful, innovation will need to be supported by you, your staff and all other business partners.


If you develop a focus on innovation in your business, you will ensure everyone in the business is working towards better business practices and improving business efficiency and performance. 

Some of the other benefits include:

  • increased competitiveness – higher efficiency with lower costs and higher quality products
  • more efficient use of all resources
  • improved staff retention – staff like to work in innovative and challenging jobs that promote team work and problem solving
  • proactive approach to business – your business model is continually matching changing conditions
  • greater attraction of new customers by improving existing, or offering new, products or services or entering new markets
Your approach to innovation will be driven by your business strategy, capability, market understanding and commitment to the process. Often, these processes will add capacity to your business with little or no additional costs. Your business competitiveness and survival is directly linked to your ability to innovate.

Engaging your employees in innovation

Your employees are one of your most productive assets in your business. By creating an environment within your business that encourages innovative thinking and action you will inspire your employees to share their knowledge, experience, skills, suggestions and recommendations. Here are ten different ways you can look to create an innovative environment in your business:

1. Encourage an innovation culture

Employees should be honest and open, encouraged to share ideas and able to explore initiatives without fear of retribution. There should be a recognition that not trying anything new is often the biggest risk.

2. Hire people with different perspectives

Look for employees who understand your vision and align with your culture but aren't necessarily the same as you. Look for those that may have different perspectives, diverse backgrounds, passions, and capabilities. Having employees with an alternative set of ideas and problem-solving approaches will easily generate an innovative approach.

Checklist: Recruitment process

3. Lead by example 

By open and approachable to new ideas. Ensure that each employee is encouraged to share new ideas. This can be supported in numerous ways such as specific new ideas, meetings, suggestion boxes, suggestion area on the internal intranet, dedicated times and/or rooms. Many large companies often provided allocated time for their employees to break from routine roles to inspire new thoughts – this could be an employee retreat, allocated time each day or a day out of the office.

4. Have a process  

Ensure that there is a process which everyone understands for assessing each new idea. Employees will be encouraged to make suggestions and recommendations if they are confident that the idea will be appropriately considered. This must be supported by acknowledgement and feedback in a timely manner.

5. Implement quickly   

Where possible, implement ideas quickly. Employees will be extremely motivated to continue to share ideas, work towards the success of the idea and encourage productivity of other employees when they see that they are in fact influencing the direction of the business.

6. Reward employees   

Even if the idea is not implemented, the employees should be encouraged to suggest all ideas.  Rewards can be for individuals or even teams or for the whole workforce – the important thing is that employees see that you appreciate their efforts to improve the business.

7. Create opportunities   

Create work practices to encourage new initiatives. Have regular job swaps that foster new perspectives from different employees. Develop cross functional teams (employees from different parts of the business) to brainstorm improvements to processes and other areas of the business. Introduce a new ideas or "what if?" section to regular meetings.

8. Have a collaboration space

Have a dedicated area within the business that will promote interaction with employees. Often informal discussions lead to improved employee relationship and trust which can embrace collaboration that can lead to innovation. In large companies, they often have open spaces where employees can sit and chat in a relaxing environment.

9. Offer training

Offer training to employees that will inspire new thoughts and approaches to the business. Employees will gain additional experience and the business will benefit from possible new ideas and approaches that the employee has learned.

10. Invest in resources

Allocate appropriate resources to innovation in your business. Innovation is an investment in the future of your business, not an everyday expense. Resources must include appropriate time, finances, employee support, leadership and most importantly of all, actions.

By implementing a culture of innovation in your business that is supported by work practices to encourage employee participation, your business will move forward in line with customer demand, industry best practice and benefit from improved profitability that is a result of considered growth. Most importantly of all, you will have highly motivated employees that will be dedicated to your business vision and inspired to contribute to the success of your business.

Looking for assistance?

The Victorian Government Future Industries Fund could help your business become more innovative.

Case study: How to motivate your employees

'Moving from being a micromanaging small business owner to an empowering team leader is a journey, and it was very hard ... I'm pretty sure that's why a lot of small businesses don't grow past a certain point.'

Tristan White, The Physio Co.

Read more

The happy staff from Physio co.