Competitive advantage and positive employee morale are best cultivated in an innovative corporate culture. However, companies often find it difficult to innovate when employees and managers must wade through numerous channels, protocols, and business rules to accomplish anything.

Despite these challenges, there are ways to incorporate innovation in your company that can foster great ideas and new solutions for company products as well as internal operations.

1: Allow employees to take direct action on their innovative ideas

Suggestion boxes and employee-of-the-month programs are nice, but what's more effective is initiatives in which employees are expected to present fresh ideas and then take immediate action on them.

For instance, a logistics and distribution company wanted to improve its sustainability performance in its warehouses. Employees were encouraged to find ways to improve sustainability. They installed sensors to automatically turn down lighting when human or machine traffic was detected, reworked warehouse operational flows so that less effort and energy were required, and even came up with new packaging designs that economized how goods were packed and shipped. The employees identified and designed metrics that showed a reduced spend for energy consumption, and also paybacks for recycling and more eco-friendly packaging. Warehouse times to complete pick-and-pack operations from shelf to dock were reduced.

"The employees embraced the sustainability initiative and challenged themselves as a team to find better ways to run the warehouse," said their manager. "Working on a daily basis in the warehouse, they already knew where change would make a difference. They came up with fresh ideas. This was far more effective than hiring a sustainability consultant. Employee morale and teamwork was also elevated because employees could see directly how they were making a difference with their own ideas for the company and for the environment."

2: Budget time for innovation and allow for failure

No organization can afford continuous failure, but companies that want to encourage innovation and creativity must accept that not every experiment will lead to positive results. This is why companies that encourage innovation create budgets and cultures that give employees time and the opportunity to work on creative projects that can either fail or succeed.

In one case, an equipment fabrication company set aside time and budget for engineers to create an innovative new product design on the manufacturing floor. The product ended up being unsuccessful, but research derived from the project produced new processes that were subsequently incorporated into existing product lines that improved product performance.

In another case, a major data services company gave a team of data scientists the flexibility to 'try out' different algorithms against big data repositories so they could identify new combinations of data that would deliver competitive breakthroughs for their enterprise clients. "Not all of our big data analytics experiments are successful," noted the general manager, "but we have the know-how on these innovative teams so that we understand when to pull the plug on our unsuccessful ventures, and when to continue research in the pilot work that looks promising."

3: Consider a corporate spinoff

Several years ago, a large Midwestern bank created an extremely well-orchestrated banking platform and a world-class data center. When word spread about the new platform, smaller banking institutions in the same geographical area that didn't have the IT resources or budget but had the same regulatory and customer IT requirements as the large bank approached the larger banking institution about becoming a software-as-a-service (SaaS) business. Initially, the large bank wasn't interested in the idea. The concern was that spinning off a cloud-based SaaS business would detract from its primary business of serving customers' financial needs.

Despite the initially cool reception to the idea from management, the bank's CIO persisted. The CIO presented a business plan that showed how a separate spinoff operation might be created with existing IT personnel and assets -- without diluting the IT needed to support the bank's primary business. He showed how the spinoff would be wholly funded with monetary commitments from smaller banks that were eager to become customers. The new revenue would not only create profits, it would also aid in offsetting the expenses of the large bank's data center.

A new spinoff business that is independently operated from the bank was created, and it is still driving down data center costs nearly six years later.

4: Collaborate with local universities and build a farm team

Based on data from the National Federation of Independent Business, the shortage of skilled workers in smaller businesses is at its worst since 2006. McKinsey says that the US faces a shortage of 140,000 to 190,000 people with analytical expertise and 1.5 million managers and analysts with big data/analytics skills.

The skills shortage has prompted large enterprises in particular to take a more active role in partnering directly with universities and colleges in their local areas to develop curricula that directly address the areas where trained workers are needed. Enterprises even send guest lecturers and teachers to these institutions to teach students and staff in critical skills areas so that graduates can enter the workforce with the right kinds of skills for the thousands of jobs that remain unfilled.

One major Midwestern agribusiness company works so closely with a local university that the university has become a 'farm team' for the enterprise sponsor -- producing IT grads that readily flow into the enterprise's workforce because the individuals are already 'prescreened,' thanks to their internship projects.

5: Join forces with competitors

Regulatory compliance, security breaches, and sustainability are just some of the areas in which companies that normally compete head-to-head with each other have a common interest. These companies also have a common problem when it comes to meeting needs in these areas: a shortage of internal resources. To get around this issue, some competitors are joining forces to plan and execute innovative projects. These collaborative teams share ideas and often come up with innovative approaches to solving age-old problems.

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