The most successful organizations (companies or teams) create breathtaking products we all love by having an environment where innovation thrives. These organizations have built a culture that encourages generating and pursuing new ideas and rewards experimenting with new approaches. The results are unmatched value for customers and unmatched profitability for organizations.

Think, for a moment, of the most innovative companies in the world. No matter which companies made your list, every single one of them is on your list because innovation is central to its mission. At these companies, innovation is core to everything the organization does, not relegated to a special innovation team or Chief Innovation Officer.

The companies that don’t have this environment, the ones that lack an Innovation Biome, are plodding down a different path towards irrelevance. The first step on that path is stagnant growth. Over time, the company falls by the wayside, wondering what went wrong. These organizations become case studies for how not to run a business because they have failed to keep up with changing dynamics in the marketplace; they haven’t built an environment that is conducive to innovation.

Growth or Irrelevance?

How can you tell what path you are headed down? You can’t use standard business metrics, such as market share or profitability, as those will not be a true gauge of your long-term success. For instance, on one hand your current market strength and financial reserves have the potential to help you innovate and create new customer value, but on the other hand being deeply wedded to your current profitable ways might prevent you from trying new things outside of your business model. That moment is when you become be a candidate for being disrupted– the classic innovator’s dilemma.

The business landscape is filled with scores of companies (largely irrelevant today) who believed their market position and business model would be their driver of long-term value. Companies like Kodak, Blockbuster, Borders, Blackberry, and Nokia were highly admired for their success… right before things started going south.

So, if your current market position is not a good measure of long-term value, how about innovation investments?

Unfortunately, many companies invest in innovation in the wrong way. They often build an innovation department or an innovation center, or outsource the innovation process to consultants, or implement one-off initiatives like hackathons. These approaches, while popular and easy to implement, are often counter-productive because they give you the illusion of being innovative. In reality, most one-off initiatives serve to restrict innovation to a few chosen people rather than making innovation accessible to the entire organization.

Measuring your Innovation IQ

The best indicator to help you determine whether you are headed down the path of growth or irrelevance is to assess whether you have an environment that supports innovation. You need to measure whether employees in your organization believe they are empowered to innovate and have the tools, knowledge and organization support to try new things.

What follows is a list of ten simple questions that I’ve developed with Dr. Brad Berens, one of my colleagues at the Center for the Digital Future at USC Annenberg.

Asking yourself these questions will help you not only determine your Innovation IQ, it will also show you the specific areas where you can improve if your desire is to create an Innovation Biome, a sustained environment where innovation thrives.

Keep track of the number of times you answer “yes.”

  1. Does your leadership team believe that innovation is critical to the continued success of your company? Yes/No
  1. Does your company have a process for testing, developing and advancing new ideas? Yes/No
  1. Is innovation part of your job? Yes/No
  1. Does your company encourage everybody to innovate? Yes/No
  1. If you have a great idea at work, do you know what first steps you would take to make it real? Yes/No
  1. Is your company open to testing, developing and advancing new ideas whenever they arise? Yes/No
  1. Do people freely share new and innovative ideas across the organization? Yes/No
  1. During the last three months, have you worked to refine new ideas with people who have different skill sets than yours? Yes/No
  1. Does your company emphasize making products that provide value to customers? Yes/No
  1. Does your leadership team accept that failure is sometimes part of the innovation process? Yes/No

 Interpreting your score

Recently, someone asked me, “how do I ensure my company does not become the next Kodak?” One way to find out is to administer this survey. The number of times your organization responds “yes” is a good indicator to determine whether you are indeed the next Kodak.

 8-10: If you believe the majority of your organization would answer “yes” eight or more times, then your Innovation IQ is high, and you have built an Innovation Biome. You work in an environment where innovation has the best chance of success, and you have mobilized the power of your entire organization to create new customer value.

1-4: If you believe the majority of your organization would answer “yes” four times or fewer, then you are in trouble. You don’t have a culture of innovation. Regardless of your current market position, you are headed down the path of inconsequence.

5-7: If you are somewhere in the middle, then your organization has the potential to go in either direction, but it isn’t there yet. It’s time to dig into why you answered “no” to three, four, or five of the questions above.

Of course, taking this test on behalf of your entire organization will only give you a self-diagnostic of how well you think your organization innovates. To get an accurate understanding, administer this survey to a representative sample of your organization, across levels and departments. Only then can you assess the real innovation IQ of your organization and know how you can improve it.

Many executives are surprised by the results from their organizations. More interestingly, what many executives believe will be the outcome is often quite different from what the larger employee base believes.

Once you know how your organization responds, you can use this Innovation IQ test as a tool to understand your path forward, where you are strong and where you need to improve.