In an increasingly competitive world innovation is the key to having an advantage, says Paul Sloane. Whether you are leading a large or small organisation, you have to develop creative talents. It's a challenging prospect. Here are his ten top tips to help unleash the innovation potential in your team.

1. Have a vision for change

You cannot expect your team to be innovative if they do not know the direction in which they are headed. Innovation has to have a purpose. It is up to the leader to set the course and give a bearing for the future. You need one overarching statement which defines the direction for the business and which people will readily understand and remember. Great leaders spend time illustrating the vision, the goals and the challenges. They explain to people how their role is crucial in fulfilling the vision and meeting the challenges. They inspire men and women to become passionate entrepreneurs finding innovative routes to success.

2. Fight the fear of change

Innovative leaders constantly evangelise the need for change. They replace the comfort of complacency with the hunger of ambition: "We are doing well but we cannot rest on our laurels – we need to do even better". They explain that while trying new ventures is risky, standing still is riskier. They must paint a picture that shows an appealing future that is worth taking risks to achieve. The prospect involves perils and opportunities. The only way we can get there is by embracing change.

3. Think like a venture capitalist

VCs use a portfolio approach so that they balance the risk of losers with the upsides of winners. They like to consider a large number of proposals. They are comfortable with the knowledge that many of the ideas they back will fail. These are all important lessons for corporate executives who typically consider only a handful of proposals and who abhor failure.

4. Have a dynamic suggestions scheme

Great suggestion schemes are focused, easy to use, well-resourced, responsive and open to all. They do not need to offer huge rewards. Recognition and response are generally more important. Above all they have to have the whole-hearted commitment of the senior team to keep them fresh, properly managed and successful.

5. Break the rules

To achieve radical innovation you have to challenge all the assumptions that govern how things should look in your environment. Business is not like sport with well-defined rules and referees. It is more like art. It is rife with opportunity for the lateral thinker who can create new ways to provide the goods and services that customers want.

6. Give everyone two jobs

Give all your people two key objectives. Ask them to run their current jobs in the most effective way possible and at the same time to find completely new ways to do the job. Encourage your employees to ask themselves: What is the essential purpose of my role? What is the outcome that I deliver that is of real value to my clients (internal and external). Is there a better way to deliver that value or purpose? The answer is always 'yes' but most people never even ask the question.

7.Collaborate

Many CEOs see collaboration as key to their success with innovation. They know they cannot do it all using internal resources so they look outside for other organisations to partner with. A good example is Mercedes and Swatch who collaborated to produce the Smart car. Each brought different skills and experiences to the team.

8. Welcome failure

The innovative leader encourages a culture of experimentation. You must teach people that each failure is a step along the road to success. To be truly agile, you must give people the freedom to innovate, the freedom to experiment, the freedom to succeed. That means you must give them the freedom to fail too.

9. Build prototypes

People's Bank has a refreshingly original attitude to new ideas. 'Don' debate it, test it' is the motto of this innovative American financial services organisation. Try the new idea at low cost in a section of the marketplace and see what the customer's reaction is. You will learn far more in the real world than you will in the test laboratory or with focus groups.

10. Be passionate

Focus on the things that you want to change, the most important challenges you face and be passionate about overcoming them. Your energy and drive will translate itself into direction and inspiration for your people. It's no good filling your bus with contented, complacent passengers. You want evangelists, passionate supporters; people who believe that reaching the destination is really worthwhile. If you want to inspire people to innovate, to change the way they do things and to achieve extraordinary results then you have to be passionate about what you believe in and you have to communicate that passion every time you speak.

Paul Sloane is the founder of Destination Innovation. He writes and speaks on lateral thinking and innovation. His book, The Innovative Leader, is published by Kogan-Page. For more information go to: www.destination-innovation.com