Often spoken of in rarified terms, the word "innovation" makes ears perk up and eyes roll.

But innovation is attainable and desirable for every company, because it means only to create a new way of doing things. Every organization and every employee can innovate, even if they are not tasked with something as daunting as creating the next iPhone.

Rather than being a project, innovation can become a part of how an organization functions, to the benefit of customers and employees. This is particularly poignant for insurance organizations. Homeowners' insurance and business owners' packages may not change too much from year to year, but how employees handle policies, communicate with insureds and execute small tasks is ripe for innovation.

This puts innovation within the reach of insurance organizations of all sizes. But for that to be true, it is not enough to make "innovation" a vague goal; it must be a part of the culture.

Here are four steps that set up a culture of innovation:

What are the intangible assets that make up innovation at your company? (Photo: iStock)

1. Get in the right mindset

To become an innovative company, you must first establish this culture of innovation. That is different and distinct from being innovative. A company with an innovative culture looks for ways to innovate every step of the way; it brings innovation to every activity, no matter how small. We have to move beyond fixed ideas about what innovation means.

For example, often innovation is thought of as buying new technology solutions or developing new products. These are big investments usually made by a small group of senior managers or a project team. Creating an innovative culture means giving the tools, training, support and encouragement to every person in the company, especially the front line talent to improve the process or implement new ideas.

Organizations cannot build a culture of innovation from the perspective of monetization. Instead, they need to first build the culture and identify the skills employees need. Later, they can determine how this fits into your pricing model. This helps align innovation, employee motivation and the customer's best interest, ensuring the model is effective before the customer must assume any related costs.

There can be a tension between production and productivity — you get paid for what you produce, not how you produce it. But to increase productivity in delivering to customers, organizations must find a way to value productivity internally. You can work with your clients directly to build better models of production that emphasize productivity. Everyone benefits, from the customer to the employee to the company as a whole.

Let's look at an insurance example of that. There are frequently address mistakes on insurance documents, from ZIP codes to street mispellings. One employee in our company found a way to check the address on the Internet, and they shared this with a group of employees. Subsequently, another employee found a way to pull addresses into a database from PDF files, and our tech team helped automate the checking of address in Excel with the website. Each step had a small improvement, but the integration of the three steps had a much larger impact.

The middle ground allows intentional growth and development rather than constant reactions to small shifts in markets. (Photo: Shutterstock)

2. Find the balance between disruptive and incremental innovation

As insurance professionals, we are embedded in an industry not thought of as innovative. In many ways, innovation does not seem like something that would be rewarded in insurance, but it is necessary for the future of the industry. Organizations can empower employees to think outside the box even when working within the box.

In management thinking, there is a war between people who believe continuous improvement can be innovative and those who do not. But this is a false dichotomy; there is a middle ground between disruptive and incremental innovation. With incremental innovation, we do not see any of the big wins we see in disruptive innovation (e.g., the development of the affordable, personal computer). But there is a great deal of diversity in what is being changed.

The power of incremental innovation is in how it scales. Middle managers can communicate with employees to develop niche products based on conversations, or an employee may change how one piece of information is collected from insureds. But if you take that employee's one little improvement and combine it with all of the little improvements made by their colleagues, the scale can be amazing. Small wins may be creating a new process that shaves 30 minutes off a 90-minute task. But this mindset snowballs through the ranks of employees.

The middle ground between disruptive and incremental innovation allows intentional growth and development rather than constant reactions to small shifts in markets and technology. Most companies want to create stable careers for employees, but they also need to turn a healthy profit. The culture of innovation can help your staff make the small changes that add up to cost savings, justify price increases or uncover new revenue streams.

By emphasizing productivity alongside production, managers can get out of the way and allow employees to come up with ideas. (Photo: iStock)

3. Fostering a culture of innovation with ongoing engagement

A culture of innovation is built slowly but deliberately. To begin, management must include all employees in conversations on innovation and set up channels of communication just for discussing innovative ideas. Employees may need training to support their participation in the culture.

Though it sounds paradoxical, you can think of this as standardizing innovation. Companies identify best practices for a reason; the explanation is in the name. But best practices and company standards should be challenged from time to time. To do this efficiently, you need to create a mechanism to encourage people to argue against best practices and provide support for their arguments. This helps people understand why management is making decisions, but does so from the perspective of building solutions.

Sometimes managers can be an obstacle to innovation. They are tasked with ensuring employees are producing. But they can also be empowered to free up resources for changing how things get done. By emphasizing productivity alongside production, they can get out of the way and allow employees to come up with ideas. Eighty percent of an employee's average workday may be occupied with assigned tasks, but with the rest of their time they can put their minds to work on innovation.

This is not a one-time initiative, to be introduced and forgotten. It requires ongoing engagement from various levels of management. Managers can provide incentives for innovation and create regular opportunities for sharing ideas. They can also routinely observe and report back on whether or not the culture is translated into innovation — looking for opportunities and restraints on innovation.

This all doesn't mean breaking up any teams working on disruptive innovation — those employees have a unique skill set. But people can be regularly rotated out of and into these working groups to bring in fresh ideas.

Eighty percent of an employee's average workday can be assigned tasks, but the rest of their time should be put to work on innovation. (Photo: Shutterstock)

4. Know that innovation motivates, excites and sells

I think what is fascinating about this process is the sense of excitement it brings to an organization. In my experience, employees usually engaged in repetitive or clerical tasks are more energized to come to work when innovation becomes a part of their job descriptions.

Customers, too, are blown away by the results. They do not expect innovation from an insurance organization. But if you can make it happen, the customer is excited and that empowers your team. If the model is right, employees and clients can share in the value created by innovation, and your company can invest in that value.

It is not all smooth sailing, and my thinking on innovation changes constantly. In trying to create this culture, we may come up against as many questions as answers, but it is those questions that define a truly innovative company.

Matthew Bruno is chief operations officer and founder of New York City-based ReSource Pro.

Related: Innovations with ACORD

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4 steps that foster a culture of innovation

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