The Surprising Relationship Between Company Culture, Judgment, and Innovation

Any company can say they encourage and invite innovation, but innovation involves taking acceptable risks. Taking acceptable risks involves using judgment, and using judgment means loosening the reins and trusting your employees.

How do you encourage a climate of acceptable risk and innovation? It all starts with your company culture and its relationship with judgment and innovation.

Do I have a Leadership Problem?

A lack of innovation within a company often has a surprising cause; leadership problems. Instead of getting out of their employees’ way, some leaders seem to always find ways to create roadblocks, stifle creativity, and discourage employees from taking acceptable risks. You may have a leadership problem if…

  • If your meetings consist only of you talking at your teams and no voluntary employee participation.
  • If your employees don’t even want to place a lunch order without your approval.
  • If your employees are only productive when performing routine work.
  • If you can’t recall the last time an employee came to you with a pitch.

And if you have a leadership problem, you have a culture problem.

Backward Engineering

First, let’s discuss what company culture means. It’s more than just a vague statement about your organization’s mission and values. It’s identifying what you want to create, how you want to create it, and how you want to fulfill your mission.

What do you want to encourage your employees to do every day? Do you value quality, quantity, or an even balance of both?

Getting to the bottom of a culture disconnect starts by working backward. In other words, your culture doesn’t define your leadership; your leadership defines your culture.

Encouraging Innovation

As a leader, just how comfortable are you with allowing employees to take risks? Not a risk like taking your company credit card to the casino, but acceptable risks like thinking outside the box and taking a chance on a unique idea.

Employee risk-taking can be supported by your company culture and policies, or stifled by them. Employees who have to follow strict rules, frequent check-ins, and micromanagement styles of leadership become fearful of risk and less likely to make judgment calls on their own.

A company full of employees who are afraid of the consequences of taking acceptable risks is not an innovative company. The more fearful of negative outcomes your employees are, the less likely they will be to take the acceptable risks that lead to innovation.


Exactly who owns company culture? You may think it’s all about your employees, but not understanding the relationship between leadership and culture means missing the most crucial piece of the puzzle.

If you don’t think leadership plays a huge part in defining culture, you’re losing the chance to create a company that truly welcomes innovation. There is a straight line from leadership to culture, and one cannot be defined without the other.

How do You Create a Culture that Encourages Acceptable Risk?

Culture leads to people using judgment, which leads to innovation.

It begins with creating an environment where employee opinions are valued, and where reasonable risk is acceptable. Acknowledge and celebrate risk-taking. Again, we’re not talking about wearing a blindfold to cross a busy street; we mean using judgment to try a different approach to an old problem or identifying a new way of doing something.

Let people do their jobs. Were they hired to follow rules or to perform a job? Did you hire them to micromanage them, or to give them the freedom to use good judgment and take acceptable risks?

Sometimes risk means failure, but not taking one means an ultimate failure in creating a truly innovative company.

Are You Prepared to Lead a Truly Innovative Company?

A company’s culture is only as good as the leadership behind it, but what if you’re not exactly “feeling it” anymore? It’s not uncommon for a leader who had been flourishing to begin to feel disconnected from teams and coworkers, the role, and even the company itself.

Are you ready for a positive change that will lead to more impactful leadership of your company and your teams? Ask yourself:

  • Am I leading with intention, or just winging it?
  • Do you find yourself thinking “There must be something more,” more often than not?
  • Are you building the life you wanted to build when you moved into leadership?
  • Are you ready to invest in yourself but have no idea how to get started?

If you’re ready to make the changes that matter, I’m here to help you. Contact me and let’s get started.