What does a culture of innovation really look like?

Innovation is a lot like obscenity: hard to define, but you know it when you see it. Consider, if you will, the Snuggie. Obviously, the Snuggie did not represent the first time we humans thought to drape fabric over ourselves to stay warm. Nor was this the world’s first introduction to polar fleece (or sleeves, for that matter). The Snuggie wasn’t so much an invention as it was an iteration. But was it innovative to make a sleeved blanket that you lay across your front instead of wrapping around your back? You bet it was.

Innovation doesn’t always manifest as mind-blowing new products. It might not even be something your customers can see. Innovation can be as simple as a process improvement that paves the way for customer-facing ideas to get out the door faster.

The defining factor isn’t whether an idea is the first of its kind or whether it’ll have an impact on all of humanity. It’s whether an idea is original and useful within your environment. Is it different from what you’ve done before? Does it solve a problem? Will pursuing it involve some level of risk? If the answers are yes, then it’s innovative.

Over our 20+ year history, Atlassian has built a strong culture of innovation using five ingredients:

• Clear goals that give innovation a strategic focus.
• A diverse and inclusive workforce that brings different perspectives to bear on a problem and creates space for everyone to contribute to the solution.
• Free-flowing information that gives everyone visibility into what’s already been tried, what’s a priority, and what’s not.
• Autonomy so people can thoroughly explore a problem space and solve for it in whatever way they see fit.
• Dedicated time, with just enough structure, so people can fully immerse themselves in creative thinking without feeling like they’re shirking their day jobs.

Our mission to unleash the potential in every team starts at home, helping our own teams unleash their potential. I want to share how we do this so you can bring these practices to your team and build a culture of creativity within your business.

What is a culture of innovation?

First and foremost, it’s a belief that innovation is everyone’s job – from the CEO to the intern who started last week. That’s a radically different mindset from relying on the creativity of a (mythical) “lone genius,” and it comes with equally radical implications.

First, because innovative ideas can come from anywhere, you have to be listening everywhere. The moment you establish an “innovation council”, your goose is cooked. Not only is your attention now focused on a handful of blessed individuals, but you’ve also sent the message that the rest of the company doesn’t need to bother with dreaming up new ideas, because hey: the innovation group has that covered.

A culture of innovation means the executive leadership team has an “open door” policy. It means dedicated time for teams to experiment and chase down the wild ideas they’ve been kicking around. It means open, ad-hoc forums where employees can bounce ideas off one another and share what they’ve been working on.

An all-hands-on-deck approach to innovation also requires a workplace that allows for fearless creativity. People have to feel like they’re free to collaborate across departments and divisions; share work that’s still in progress; ask “dumb” questions; challenge the status quo; take calculated risks; learn from their mistakes without being shamed.

Fostering a culture of innovation is not about providing ping-pong and free beer. And it’s certainly not about top-down pressure to work longer hours in the misguided hope that inspiration will strike if only you’ll just power through past 8 pm. Our best ideas come to us when our minds are relaxed (like when you’re in the shower or out walking your dog) and our bodies are healthy. People need space to have a life outside the office, explore the world, fall in love, fall out of love, play, stumble, get back up, and just live.

With that in mind, let’s take a closer look at the five ways Atlassian bakes innovation into our operating model.

1. Clarity around goals and mission

Nothing gets people thinking creatively like a crisis. Consider the case of the 33 Chilean miners who found themselves trapped underground after a collapse near their worksite in 2010. A cross-functional group of specialists from the mining company, the Chilean government, the Chilean Navy, geological organizations around the globe, and even NASA assembled virtually overnight. They worked around the clock for over two months until every miner was reunited with their family.

The clarity of the team’s mission gave them the mental freedom to dream up novel solutions to the problem. Fortunately for the rest of us, the stakes aren’t usually so high.

Atlassian uses the Objectives and Key Results (OKRs) framework to set and share goals, starting from the company level and cascading down to the team level. This provides guardrails around innovative thinking and ensures whatever we’re exploring is aligned to a larger strategy.

Regardless of how your organization sets goals, your team can build their strategic innovation muscle by making small improvements based on a theme: how the team works, how the team engages with customers, enhancements to a product or service, etc.

We’ve seen exercises like this generate solutions to lingering problems that were bound to bite us in the butt eventually. Plus, empowering a team to improve their working environment or product instills a sense of ownership and accountability.

2. Diverse and inclusive teams

Every leader wants their teams to have strong interpersonal connections. But did you know there’s such a thing as being too in sync? In Atlassian’s recent State of Teams study, we found that such teams are 9% less likely to come up with innovative ideas. Here’s what lead researcher, Dr. Mahreen Khan, has to say about it:

“Team members in very cohesive teams may shy away from voicing ideas that could potentially rock the boat. That is, these they may avoid constructive conflict because they don’t want to cause friction between each other. They may also be too quick to accept random ideas generated by their team, as opposed to brainstorming to find the most effective or original idea.”

Of course, we don’t want teams that bicker, either. You have to balance personal connection with cognitive diversity. The way Atlassian goes about this is by hiring for values alignment. Traditionally, companies have hired for “culture fit,” which breeds homogeneity because that mindset biases us in favor of people who share our interests and/or backgrounds.

However, thanks to a growing body of research, we know that demographically diverse teams tend to generate more creative solutions and stronger outcomes. Experts suspect that this is because demographic diversity acts as a pretty decent proxy for cognitive diversity. So our goal is to have people with a variety of identities, life experiences, and skills on each team. And because we’ve made sure those people share fundamental values around work and collaboration, their relationships will be grounded in mutual respect no matter how different they look or think.

That paves the way for a psychologically safe workplace where people can share out-there ideas, ask the “dumb” questions, and engage in respectful dissent without fear of reprisal. I absolutely cannot overstate the importance of psychological safety. Punishing failure and ridiculing people for letting their imaginations run wild will destroy a culture of innovation before it even has a chance to flourish.

3. Free-flowing information

Transparency within an organization is an essential ingredient for the kind of strategic innovation that will make a lasting impact. In addition to knowing what the company’s top priorities are (and aren’t), transparency also breeds trust. Trust, in turn, breeds both engagement and personal connections. Taken together, they encourage not just creative thinking but also the confidence to share those ideas and work with teammates to bring them to life.

At many companies, you’d have to be acquainted with another person to know what their team is working on or whether they have the skills to help you bring your idea to life. At Atlassian, that information is available to every person in the organization from their very first day.

Instead of putting strategies and plans in Word docs tucked away on a private network drive, we put them on Confluence pages that are open for anyone to discover, read, and comment on. The same goes for backlogs in Jira and Trello. Putting all this information out in the open allows us to stay aligned as we scale and avoid duplicating efforts. Essentially, transparency makes us better entrepreneurs.

4. Autonomy over how work gets done

Knowledge work has traditionally been organized the same way factory work is organized, with lots of regimented processes. On the upside, this frees up brainpower for creative tasks that can’t be standardized. The trouble is that too often, leaders aren’t willing to give their teams control over creative tasks, either.

Research Atlassian conducted found that autonomy, mastery, and purpose are strongly correlated with better performance. Yes, giving employees agency over how they work is less efficient than laying out a plan where every task is already defined. But it’s more effective for breeding creative thinking in the long run.

Atlassian embraces a leadership style that is more directive than prescriptive. We set goals for individuals and teams, then step back and trust the people closest to the work to figure out the best way to achieve them.

As Pink laid out in his landmark book “Drive”, tapping into humans’ innate desire for independence boosts employee morale and engagement. And it doesn’t take a genius to figure out that engaged, happy people are the ones most likely to bring novel ideas forward.

5. “Just enough” structure

The idea behind structured innovation is to add a small number of constraints that actually make you more creative. What?! Yes. Research shows that we get the most creative when we’re constrained – necessity is the mother of invention, and all that. As discussed, Atlassian uses alignment with company strategy as a constraint. But we also use time.

The result is two rituals: “ShipIt”, a 24-hour company-wide hackathon held each quarter, and innovation weeks, which are ad-hoc spikes with smaller groups from within or across teams. The constraints of topic and time limit provide enough freedom to think of wild ideas that would be impossible to implement, along with a sense of urgency around converging on ideas that are feasible.

Each deserves its own article (and we got a start here, explaining how we adapted ShipIt to be remote-friendly), but these videos tell the story best.

Structured innovation works differently in every company depending on your industry, history, local traditions and rituals, and your work environment. For companies like ours, spread across several continents, the innovation culture in one office will be just a little bit different from that of other offices. That’s why having a strong set of values is so important for innovation: they are the foundation for successful collaboration.

Innovation = cognitive diversity + curiosity + freedom + focus

When you build a culture of innovation, your teams start to take on the impossible. Your business starts to feel like a laboratory that celebrates experiments, generates new ideas, seeks feedback, and nimbly evolves to delight your customers and squash your competitors.

None of this is easy. And to be fair, Atlassian hasn’t entirely cracked the code on all of it. But we’re far enough along to share some valuable lessons learned. That’s why we created this guide designed to help leadership teams foster creativity. Inside, you’ll find:

• Essays on creating a fertile environment where fresh ideas can grow. We’re sharing what we’ve learned through trial and error at Atlassian, as well as wisdom from some of our customers like Slack, Amazon, Hubspot, and ANZ Bank.
• How-to articles that walk you through the rituals Atlassian and other companies have adopted to encourage innovation – from all-company hackathons to an internal incubator program that brings customers in as collaborators.
• A toolkit of thought exercises, templates, and worksheets that will give you and your teams “just enough” structure as you put the ideas in this guide into practice.

Ready? Let’s do this!

Special thanks to Sarah Goff-Dupont for her contributions to this article.