'The overlooked cultural aspect of a genuinely innovative culture', by Rakesh Sharma, member of RCK’s Innovation Advisory Council

One of the biggest misconceptions about innovation is that it starts with technology or large R&D budgets.

In reality, innovation usually starts with people.

More specifically, it starts with creating an environment where people feel confident enough to think differently, challenge the established ways of doing things, and to pursue ideas that may not necessarily work.

Over the course of leading a FTSE 250 technology business, I saw repeatedly that some of the most valuable innovations did not begin through structured innovation programmes. They started as simple ideas in someone’s head. Take, for example, one of the technologies we ultimately went on to patent and led to significant commercial value for the business. The original idea came to a technical director while he was in the shower one morning and was taken from there.

At that point, the idea itself cost absolutely nothing and what mattered was what happened next. We had built a culture where people felt able to bring forward ideas without fear of criticism if they failed. Ideas could be explored, tested, challenged and developed without the expectation that every experiment needed to succeed first time. In my experience, this is often the part of innovation many companies get wrong. I was intentional about building this culture during my time at Ultra.

Too often, businesses say they want innovation while simultaneously creating cultures where failure carries reputational risk. If failure is demonised, people will stop experimenting altogether, and any potential innovation quickly disappears. The businesses that innovate successfully are usually the ones that understand experimentation and failure are inseparable. Not every idea works. In fact, if almost everything in your R&D programme succeeds, you are probably not taking enough risk. I found the key to be understanding how to fail intelligently.

Strong innovative cultures are not built around a handful of major projects but instead around continuous experimentation, small tests, and rapid learning cycles. The opportunities generated by AI will be important in supporting innovation. Human conceptualisation and creativity will remain front and centre, at least in the short term,

but the acceleration of the developing and testing of the innovation will be accelerated via AI use and the pace of innovation will progress.

As innovation is uncertain by nature and naturally, some ideas work and some do not. During my time as a CEO, R&D tax credits were instrumental in enabling Ultra to innovate and to support financially during our projects as the credits can be claimed on unsuccessful projects. The relief acted as a safety net that makes businesses more comfortable investing in experimentation, knowing they will recover some of that investment along the way.

A simple framework I used to consider R&D investment is broken down below:

1. Around 60% of this was directed to projects that supported our current-year performance and customer delivery: i.e. the improvements that kept the business competitive in the immediate term.

2. Another 20% focused on medium-term capability: technologies and developments that would help secure future contracts and strengthen competitiveness over the next two to three years.

3. The final 20% was devoted to higher-risk ideas: these were ideas that may not work at all, but if they did, would be revolutionary to our clients, business and the market as a whole.

In tandem, this helped Ultra maintain a strong pipeline across all three horizons.

As mentioned, maintaining that pipeline requires more than budget allocation alone. It requires people throughout the organisation to feel empowered to want to contribute their ideas.

To give an example of this in practice, one of the initiatives we introduced internally at Ultra, was a company-wide innovation programme. Anyone could submit an idea, whether it was a rough paragraph on a single sheet of paper or a fully developed proposal. It didn’t matter whether the idea required £1,000 or £100,000 in early funding. If someone believed they had a good idea, we wanted it on the table and in consideration.

What followed was often remarkable. One engineer proposed a completely new approach to fuel tank inerting technology. We initially committed around £100,000 to explore feasibility and build an early prototype. As confidence in the concept grew, investment increased; first to around £500,000, and eventually to more than £1 million to take it through full development.

This highlights that very few ideas begin fully formed. Most start small, evolve gradually, and improve through experimentation, feedback and iteration. Those ideas only surface when organisations create cultures where people feel safe enough to share them.

Importantly, innovation does not always come from major breakthroughs; sometimes the most commercially valuable ideas are deceptively simple.

I remember one engineer developing a relatively modest mechanical solution that allowed wiring to move reliably between a static and rotating arm. On the surface, it looked like a small improvement. In practice, it solved a long-standing reliability issue and ultimately became part of a much larger commercial opportunity.

Sustained competitive advantage and innovation projects are rarely built on one transformational moment. More often, they come from continuous smaller improvements that compound over time. That is even more relevant today as technologies increasingly converge. Artificial intelligence, for example, is not a single technology. It is a combination of multiple capabilities working together. Increasingly, innovation comes from combining existing technologies in new ways or applying them differently to existing problems.

The organisations that succeed are usually the ones constantly asking a simple question: what could we do differently? The mindset to ask this question and to challenge the existing needs to be embedded throughout the organisation.

The companies that outperform consistently are those where people feel trusted to experiment, encouraged to challenge convention, and supported when pursuing ideas that may not be a success.

That is where R&D tax credits matter most. They don’t eliminate risk, but they give businesses the confidence and means to continue taking risks in the pursuit of innovation.

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