Navigating Disruption: Building a Culture of Innovation in a Rapidly Changing World
The pace of change is accelerating like never before. Generative AI disrupts industries (and itself) on a weekly basis. Supply chains break from today’s unpredictable geopolitical stress. Consumer sentiment can shift in a single viral post. Executives know that innovation is their only renewable source of competitive advantage, yet budgets dedicated to innovation are either frozen or killed altogether when sh*t hits the fan. In a world where the duration of volatility is unpredictable and the next shock is always around the corner, the organizations that thrive are those that treat innovation not as a side project but as a cultural imperative.
In fact, in a world so volatile, the only risk is not taking any risk at all. Stay with me, now.
Why innovation cannot wait for calm
Top innovators generate almost twice as much revenue from innovation (be it new products, services, business models) compared to their peers ¹. These leaders link innovation to their growth aspirations, pursue multiple pathways to create value and invest proactively in the capabilities that power creative problem‑solving. Crucially, they continue to invest even during downturns because they get that waiting for stability means ceding ground to more resilient competitors who are behaving scrappy to enact growth. Innovation generates its highest ROI when uncertainty is high. That’s when new markets are created and laggards are left behind.
Balancing core and future bets
A culture of innovation balances the needs of today with the possibilities of tomorrow. When we talk about portfolio management in innovation academia, we often cite the 70‑20‑10 rule— the golden ratio for resource allocation. Roughly 70% of resources to core businesses, 20% to adjacent opportunities and 10% to experiments that could be transformational. Companies that adopt similar portfolio strategies outperform peers by 10–20%, with returns inversely proportional to investment ¹. For example, core innovations might deliver a 10% return, while small bets can yield exponential gains. Framing your work around distinct horizons encourages teams to explore adjacent markets without shutting the taps off to the business models that keep the lights on.
Psychological safety: the engine of creativity
Strong innovation leadership often comes with a prerequisite of dedicated funds. That being said, what good is a budget if people don’t feel safe to take risks with it? Psychological safety, defined as a shared belief that it’s safe to take interpersonal risks, is the bedrock of a creative culture. When we reframe failure as a “learning opportunity”, people are more willing to share unconventional ideas, admit mistakes and flip orthodoxies (conventional pieces of wisdom that goes unquestioned, putting blinders on strategic thinking). Leaders and facilitators nurture psychological safety by demonstrating respect and empathy, encouraging the expression of incomplete or unpolished thoughts and celebrating incremental progress. In an innovation workshop, simple practices like listening without judgement and asking questions from a place of curiosity, can transform group dynamics to amplify the good.
From change‑ready to change‑seeking
The next frontier is moving from change‑ready to change‑seeking. Survival in an AI‑driven world must put proactively scanning for opportunities, challenging these orthodoxies, and making experimentation available to everyone, at the centre of success. A change‑seeking culture fosters psychological safety and embeds feedback loops so that insights from experiments flow back into strategy. It’s actually really easy to model this: be a visible champion of experimentation and ensure that any innovation efforts align with your organization’s strategy (efforts shouldn’t be unhinged or random). Building AI fluency among employees and giving them the tools to test ideas quickly enables the entire organization to contribute to innovation.
A case in point is Moody’s adoption of generative AI to produce risk reports. Rather than outsourcing the initiative to a small technical team, Moody’s invested in training employees across the organization, built transparency into the process and empowered staff to experiment ². The result? Risk assessments that once took a week now take just an hour, and employees feel ownership over the technology rather than fearful of losing their jobs. Goldman’s top banker, David Soloman said that 95% of an S1 filing can be completed with AI in just a few minutes. He went on to say that the last 5% of this task will be the true differentiator ³… and this step is uniquely human.
Practical steps to build a culture of innovation
Anchor innovation to strategy. I tell my grad students all the time that Innovation and Strategy are always holding hands. Don’t treat this as a license to be random. Set clear growth targets and cascade them through the company. Innovation is part of the scorecard.
Invest through the cycle. Maintain or even increase your innovation budget during downturns. This sounds crazy, but history shows that those who invest during uncertainty capture more value when the recovery comes. Kellogg in the Great Depression ⁴, Apple in the ’08 crash ⁵, Microsoft in ’09… I could keep going.
Adopt a balanced portfolio. Allocate resources across core, adjacent and transformational initiatives. Adapt the 70‑20‑10 rule to your context. The riskier your business, the more you should be dedicated to adjacent and transformation.
Foster psychological safety. Encourage risk‑taking and open dialogue. Celebrate small wins and make it safe to challenge assumptions.
Democratise experimentation. Provide tools and frameworks so that teams across the organization can test ideas and gather data quickly.
Learn the language of AI. As generative AI transforms strategy work, ensure that leaders and employees understand its capabilities and limitations. Use AI as a thought partner and simulator, but keep human judgement at the centre. The last 5% will matter the most.
Conclusion: Innovating at the edge of chaos
Disruption isn’t an excuse to hunker down. It’s an invitation to innovate at the edge of chaos. Companies that commit to innovation as a cultural practice, balance their portfolios, cultivate psychological safety and embrace a change‑seeking mindset will not only weather volatility but shape it to their advantage. By embedding foresight and radical curiosity into everyday routines, leaders can help their organizations anticipate the future rather than react to it. The path is neither linear nor easy, but the rewards—resilience, growth and a workforce energized by possibility—are worth the journey.
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Work Cited
Internal research done by some really smart people at Doblin/Monitor Deloitte, a global consulting firm dedicated to innovation and business strategy (I used to work there).
Harvard Business Publishing. “Readiness Reimagined: How to Build a Change-Seeking Culture.” Harvard Business Publishing, 2024.
Fortune. “Goldman Sachs CEO David Solomon on AI and IPO Prospectus Filings.” Fortune, 17 Jan. 2025.
Packer, George. “Hanging Tough.” The New Yorker, 20 Apr. 2009.
Fortune. “Steve Jobs’ Playbook: How Apple Invested Through the 2008 Crash.” Fortune, 10 Apr. 2025.