How to stimulate innovation without impacting productivity?

Innovation is essential for any software team that wants to stay ahead, but it often takes a backseat to day-to-day tasks. Between sprint deadlines, bug fixes, and stakeholder requests, finding time for new ideas can feel impossible. Yet, the most successful teams are not just the ones that ship features efficiently but the ones that continuously improve, experiment, and explore.

The challenge is clear. How do you make room for innovation without slowing down delivery? The answer lies in structured approaches that integrate creative problem-solving without disrupting core work. I have seen this through quarterly hackathons, design sprints, and dedicated innovation time within sprints.

In this article, I’m exploring how engineering leaders can balance innovation and productivity effectively.

Why innovation matters in software teams

A team focused only on execution becomes reactive. Without space for new ideas, teams risk building on outdated assumptions, ignoring better solutions, and slowly losing the excitement that drives great work.

Innovation is not just about inventing new products. It is about improving workflows, optimizing processes, and rethinking how problems are solved. Some of the best technical advancements come from teams experimenting with ideas that were not originally part of the roadmap.

Beyond business value, there is a human factor. Engineers want to grow. They want to solve interesting problems, test new technologies, and step outside their usual constraints. A culture that encourages innovation keeps teams engaged and motivated.

Balancing innovation with productivity

One of the biggest mistakes companies make is treating innovation as an extra activity, something to do “if there is time.” In reality, innovation needs to be planned and prioritized just like any other part of the development process.

This does not mean dedicating full weeks to brainstorming or pausing all core work. Instead, it means setting aside structured, time-boxed opportunities for teams to explore. This allows for innovation without disrupting delivery cycles.

Some teams dedicate a percentage of each sprint to exploratory work. Others run hackathons where engineers step away from their normal tasks for a couple of days. When there is a specific challenge to tackle, design sprints allow teams to quickly validate solutions before committing to full development.

The key is consistency. If teams know they will have time to experiment regularly, they will not feel the need to squeeze in innovation in ways that disrupt productivity.

Structured methods to encourage innovation

I used to organize a two-day hackathon every quarter where engineers worked on whatever they wanted. Sometimes, the entire cross-functional team joined, but most of the time, it was an engineering-only event. Small groups formed organically, and people got to spend time on projects that excited them.

What worked well was the energy it brought to the team. Everyone was excited to have two full days to explore new ideas, experiment with technologies, or just step away from routine work. Some of these projects ended up making it to production because they solved real problems we had never prioritized. It was a great way to surface unexpected solutions.

But not everything went smoothly. The completely open format led to some teams working on projects that were either irrelevant or just an excuse to catch up on unfinished work. While it was great to give people freedom, the lack of structure meant a lot of effort went into things that had no impact. Another issue was that once a year, our company ran a separate hackathon with a different format, and some people on my team were confused about how the two events were different.

If I were to improve it, I would introduce some level of structure. Instead of making it a free-for-all, I would define broad themes or problem spaces to guide projects. That way, engineers would still have creative freedom, but the results would be more relevant to the company’s goals.

For teams looking for a more structured approach, design sprints are another great option. Unlike hackathons, which are open-ended, design sprints follow a five-day process to rapidly prototype and test solutions. Design sprints can sometimes save months of development time by allowing to validate ideas before committing resources. They work best when the team is facing a major unknown, needs to align quickly, or has a complex problem to solve.

How engineering managers can foster innovation

Innovation does not happen just because a company says it values creativity. It happens when leaders actively create the right conditions for it. Engineering managers play a critical role in making sure that innovation is not just encouraged but also productive.

One thing I have done to help teams be more innovative without slowing down delivery is making innovation a regular habit. Quarterly hackathons were a good start, but I also encouraged smaller innovation spikes within sprints so that creativity was not limited to once every three months.

Another important factor is making sure experiments lead to action. If teams spend time on innovation but never see their ideas implemented, they will lose motivation. After each hackathon, I started holding short review sessions to evaluate which ideas could move forward. Some ended up on the backlog, and a few made it into production.

Setting expectations is also crucial. Open-ended hackathons led to a mix of brilliant ideas and completely useless projects. Introducing themes or problem spaces helped focus the creativity while keeping the excitement. I also made sure my team understood the difference between our engineering hackathon and the full-company hackathon to avoid confusion.

As a manager, you need to strike the right balance. Too much structure kills creativity, but too little results in wasted effort. The goal is to give engineers the freedom to experiment while ensuring their work connects to real problems.

Innovation is not a luxury, it is a necessity

Great teams do not just execute. They evolve, experiment, and challenge assumptions.

The companies that thrive are the ones that give their engineers the space to explore and learn without sacrificing productivity. Whether through hackathons, design sprints, or innovation spikes, structured time for experimentation leads to better products, stronger teams, and a culture where creativity is valued.

The best ideas often come from unexpected places. The question is, does your team have the time and space to find them?