In today’s business environment defined by volatility, speed, and surprise, organizational culture determines whether innovation becomes a superpower or an Achilles’ heel. This is as true for the startup run out of the home as it is for the century-old enterprise. Artificial intelligence is transforming how work happens, consumer expectations evolve almost weekly, and competition is no longer constrained by geography or industry boundaries. Innovation isn’t something organizations do occasionally, it’s something they become and embody. And adaptability is the difference between thriving and irrelevance.
Culture is the invisible operating system of a company and manifests in specific behaviors: how teams respond to new ideas, whether failure is treated as an opportunity for learning, and how quickly decisions get made. Organizations that innovate successfully cultivate psychological safety for honest feedback, encourage curiosity about customer needs, foster collaboration across departments, and maintain focus on execution rather than endless planning.
One particularly powerful but underutilized practice of innovation is «friction hunting» – the systematic identification and removal of organizational barriers that frustrate employees (and customers) and slow progress. These barriers might include laborious approval processes, unclear decision rights, or fear of stepping outside established procedures. This approach has transformed innovation capability even within large, complex enterprises where change typically moves slowly.
Based on my work with leading organizations across industries, I have identified key traits that define the world’s most innovative organizations. These traits are not abstract ideals to be printed on office posters. Instead, they are lived behaviors: they manifest in how meetings are run, how decisions are made, how leaders behave under pressure, and how employees respond to failure. Psychological safety, curiosity, collaboration, and an execution mindset are just a few of the traits that, when embedded deeply into an organization’s way of working, create the conditions for innovation to flourish.
Let’s be clear: innovation does not come from ping-pong tables or occasional hackathons. It stems from behaviors such as how people are encouraged to speak up, from how leaders respond to mistakes, and how learning is woven into the everyday. Startups have the advantage of setting these behaviors from day one, creating something intentional and aligned. Larger, older companies have to unlearn before they can relearn – but that doesn’t mean it’s not possible. Organizations of all types can develop these innovation-enabling traits, and effective friction hunting plays a central role in removing the obstacles that prevent these behaviors from taking root.
When establishing a new venture, the question of when to focus on culture has a simple answer: it’s happening from day one, intentionally or not. Culture is not something to design once a company reaches the 100-employee mark; it is being shaped from the very first moment, with that first hire, the tone of the first team meeting, or how leaders respond to their first mistake.
Startups have the luxury of speed, simplicity, and proximity. This advantage should be used wisely. Make experimentation part of everyday life. Hire people not only for their skills but for their mindset: their openness to change, their curiosity, their resilience. Reward those who try something new, even if it doesn’t work out. And allow roles, structures, and practices to evolve as the company grows. One founder I worked with called Ollie Bell, who founded ClutchCo for online education services, ended every all-hands meeting with three simple questions: “What have we tried? What have we learned? What will we do next?” That ritual embedded a rhythm of reflection and experimentation into the company’s DNA.
Organizations should name their culture. Don’t let it be the unspoken force in the room.
This startup advantage creates an opportunity to design systems that prevent organizational friction before it can take root. Rather than having to remove barriers later, new ventures can establish streamlined decision processes, transparent communication channels, and adaptive structures from the beginning. These foundational elements create a culture where innovation flourishes naturally, without the resistance that often develops in more established organizations.
While startups build culture from scratch, established companies face different challenges regarding building culture. It’s a myth that large, established organizations can’t be innovative. For example, at Santander, one of Europe’s largest banks, where I led cultural transformation efforts, change was successfully implemented across a sprawling, complex organization. This wasn’t starting from scratch – rather, it involved navigating legacy systems, hierarchies, and deeply embedded ways of working. And yet, the organization moved forward. Progress didn’t come through sweeping restructures or flashy campaigns. It came through small, deliberate actions: micro-innovations with macro potential.
These were modest changes that sent powerful signals: encouraging teams to run experiments so small they could be described in a single sentence; creating spaces for employees to share not just success stories but the lessons learned from failed attempts; using project retrospectives to reflect on behaviors, not just outcomes.
Friction hunting emerged as one of the more transformative practices in this context. Rather than accepting organizational barriers as inevitable, the approach involved systematically identifying and removing them. The key question was simple yet powerful: what makes it hard for people to innovate here? By addressing the specific frictions unique to Santander’s environment and culture, the organization could tap into innovation that it may have been previously constrained.
One of the best examples of friction hunting came when employees flagged that the bank in the UK was being slowed down by a web of complexity – with over 4,000 telephone and fax numbers in use. The reality was that customers were using just a handful, and so we reduced it down to 1, saving the bank tens of millions of pounds in technology costs and service complexity. Customers also had an easier, single phone number to contact us on for any query, which helped satisfaction rise by 10%.
We were persistent in hunting down frictions and heard feedback that internally there were too many committees needed for approval of new products and services. With that feedback, we took out over 30% of scheduled recurring meetings and committees and sped up the product approval process from around 12-18 months to as little as 3 months. Less waterfall approach and more agile.
Regardless of company size or history, several practical steps can help build an innovative culture. First, organizations should name their culture. Don’t let it be the unspoken force in the room. Talk about it. Define it. Use language everyone understands. Then model the behaviors needed. Leaders must be visible role models of curiosity, humility, and urgency. It’s not enough to say “we want innovation”; the executives and leaders within the organization must show what that looks like.
Permission is another key ingredient. Innovation requires autonomy and psychological safety. If people are afraid of being punished for failure, they will never take the risks required to innovate. Build feedback loops, regular opportunities for people to share what’s working, what’s broken, and what needs to change. And when people do share, act on it. That’s how trust is built. Celebrate micro-innovations: small wins that often go unnoticed but cumulatively move the organization forward. And finally, remove friction through systematic hunting. Not once a year, but every week. Make it a leadership habit that becomes routine and regular.
Beyond structure and process, however, innovation ultimately lives in mindset. Successful innovation cultures nurture teams that are comfortable with ambiguity, that reframe failure as growth opportunities, and that find purpose in what they do. High-performing teams can start every week by sharing “one thing we tried that didn’t work.” At first, this feels risky. But over time, it becomes natural. The ritual creates safety, and that safety creates momentum.
Companies with a culture of innovation don’t just move faster. They become more resilient, more engaged, and more attractive to talent. They create conditions where people can be bold, take ownership, and think long-term. And they do it not through grand gestures but through consistent, human actions.
Organizational culture is being shaped every day, whether we recognize it or not. The real question is whether you’re designing it deliberately or letting it drift into a default. The good news is that fostering innovation doesn’t require a big budget or a change program to start. It needs intention, commitment, a little bit of effort, and a lot of consistency.
For founders, the message is simple: be clear, be consistent, be curious. For those in established organizations: start small, hunt friction, and signal change through behavior. Innovation is not a fixed trait. It’s a learned behavior. And cultures, just like people, can adapt – sometimes with surprising speed when the right conditions have been created.
© IE Insights.
