Too often, organizations treat “knowledge” as something to be managed rather than created. They are missing the deeper opportunity to empower employees as innovators through “knowledge flows”. An idea-centric firm integrates Knowledge Management and Workplace Innovation to turn promising ideas into new knowledge, better work, and sustained organizational performance.
For more than two decades, organizations have invested heavily in Knowledge Management (KM) systems designed to identify, capture, curate, and codify employee knowledge, usually in the form of “lessons learned” databases. Yet despite significant investment, many firms still struggle to link their KM strategy to tangible business value or to the deeper experience and know-how of their employees in the course of their work.
“If we just look, we can see the distinctive stuff that modern economies are made of; it is ideas.”
A recent research article by Cohendet et al. on Knowledge-based Approaches to the Firm: An Idea-driven Perspective1 prompted me to think more deeply about these issues. The authors point out that most firms still treat “knowledge” as something to be managed, rather than created and actioned. Knowledge becomes a commodity to be stored, not a living process of discovery. In doing so, organizations overlook the real engine of value creation: the employees “ability to generate, refine, and apply ideas in ways that continuously advance both the business of the firm and the quality of work for the firm’s employees”.
From Ideas to New Knowledge
Cohendet and colleagues (2025) propose a shift from viewing firms as “knowledge processors” to viewing them as idea processors, whose purpose is to generate, nurture, select, and implement ideas which support the mission and the business goals of the Firm while creating a sense of collective purpose amongst employees. In this model, knowledge is not a static asset but a by-product of focused and intentional ideation.
This insight resonates deeply with what we’ve seen across industries: organizations that foster idea-centric cultures, where employees are encouraged to explore, question, and build upon each other’s thinking, are consistently more innovative, resilient, and adaptive.
Employee-led innovation thrives in such environments because the motivation to innovate is intrinsic, not imposed. Employees move beyond simply doing their jobs to collectively advancing the firm’s understanding of how things can be done better. The focus shifts from compliance to curiosity, from best practice to next practice.
“In idea-centric organizations, knowledge isn’t managed - it’s made.”
In contrast, traditional KM models remain too task centric. They are built around efficiency, not on effectiveness or exploration. They emphasize codifying existing knowledge rather than enabling the creation of new knowledge. As Cohendet et al. (2025) note, management of knowledge in most firms remains “mostly top-down,” with employees expected merely to operationalize decisions made by senior management .
If innovation is to be continuous and sustainable, this model must change. The firm’s competitive advantage lies not in how well it captures knowledge, but in how effectively it mobilizes this knowledge, leveraging the collective intelligence of its people, to produce new knowledge.
Workplace Structures and Processes that Enable Creativity
Idea-driven innovation does not happen by accident. It requires structures, systems, and incentives that allow employees to move ideas through the firm, from concept to prototype to implementation.
In practice, this means creating both the space and the permission for ideation. Physical and virtual environments (not tools) where employees can safely test and evolve ideas are critical. Just as important are governance structures that legitimize experimentation, allowing employees to pursue promising ideas without having to justify them solely through the lens of short-term productivity or quarterly returns.
In idea- and knowledge-centric cultures, alignment is key. People, Processes, and Technology must work in concert. Firms need to ensure that workplace structures such as on-boarding, off-boarding, mentoring, professional development, performance appraisals, rewards and recognition programs, succession planning, and project management are aligned and reinforce the behaviours associated with an innovation mindset, as well as with the performance goals of the organization. When these systems are aligned, they signal to employees that innovation is not an extracurricular activity — it’s how the organization works and learns. In essence, it becomes part of the workflow for all employees.
“Every idea - even the one that doesn’t land - adds to the firm’s creative slack and strengthens its innovation culture.”
One Canadian firm we worked with developed a structured “innovation pathway” that allowed employee teams to advance ideas through three stages: Ideation, Refinement, and Application. Each stage was supported by KM practices for knowledge sharing, evaluating ideas, and supporting cross-functional collaboration. Even ideas that didn’t reach implementation created what Cohendet et al call creative slack, a reservoir of insights that enriched the company’s innovation culture.
Structures alone aren’t enough. Firms must also align their incentive systems with desired innovation behaviours. Traditional reward models based on individual output can discourage collaboration and risk-taking. Idea-driven firms instead emphasize collective recognition — rewarding the group for its contribution to advancing an idea, not just the individual for executing a task.
These organizations measure success not by the number of ideas submitted, but by the quality of learning that those ideas generate and the degree to which they advance the firm’s strategic capabilities.
Building a Culture of Continuous Knowledge Creation
At the heart of this transformation lies a powerful principle: employee-led innovation is the natural outcome of a strong knowledge culture. When employees see that their insights matter and that they can shape the way the organization learns and adapts, they experience a deeper sense of purpose and engagement.
Well-designed KM practices create the conditions for this kind of culture. They ensure that ideas are captured, shared, and built upon through things like communities of interest, communities of practice, collaboration environments, and organizational storytelling.
In one engineering firm, a knowledge-sharing platform was paired with an internal recognition program. Teams who contributed high-value lessons or innovations were given time and space to develop them further, as well as visibility across the organization. Over time, this approach embedded innovation behaviours – collaboration, experimentation, reflection – into the fabric of daily work.
“Innovation does not come from the top - it comes from the culture you build underneath.”
This aligns with the model that Cohendet and colleagues (2025) describe in which “the firm as a bundle of interacting communities”, is sustained by shared beliefs and informal cooperation. The management challenge, then, is not to impose innovation from above, but to design the enabling conditions for it to emerge from within.
When firms link these cultural elements to their KM systems and strategy, the result is a continuous cycle of ideation, learning, and application of a knowledge engine that simultaneously improves performance and enriches the quality of work.
Toward the Idea-Centric Enterprise
The idea-centric firm represents a new way of thinking about both knowledge and innovation, one that sees employees not as operators of processes but as active contributors to the firm’s evolving intelligence and institutional memory.
In this model, KM and workplace innovation are not separate disciplines. They are two sides of the same coin:
KM provides the infrastructure - the mechanisms for idea sharing and for ensuring knowledge flows across the organization.
Employee-led innovation provides the energy that drives knowledge creation and application.
Firms that integrate these capabilities — embedding idea-driven KM practices into the everyday work of employees, will find themselves better equipped to navigate uncertainty, adapt to change, and sustain both performance and purpose.
The result is more than increased productivity or profit. It’s a richer, more fulfilling workplace, one where employees feel empowered to shape the future of their organization, and where the creation of new knowledge becomes a shared endeavour.
When knowledge creation becomes everyone’s job, innovation becomes the firm’s way of life.
End Notes
Cohendet, P., Dupouët, O., Llerena, P., Naggar, R., & Rampa, R. (2025). Knowledge-based approaches to the firm: An idea-driven perspective. Industrial and Corporate Change, 34(3), 479–501.
Phelps, E. S. (2013). Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change .Princeton University Press.