Innovative organisations are successful ones. Lisette Howlett explores how innovation can become part of your HR department and organisation’s DNA.
As companies wrestle with the never-ending challenge of finding new sources of growth in stagnant or declining markets, the pressure to innovate is higher than ever. But can companies learn how to innovate? Or is innovation the preserve of a few lucky entrepreneurs, with the right ideas at just the right time? I believe that innovation is a matter of structure, process, people and corporate mindset or culture.
This is supported by a study of 1,000 public companies by consultants Booz, Allen & Hamilton which found absolutely no correlation between business performance and the size of the R&D budget. They concluded that superior results are delivered by companies which operate superior innovation processes. I would take this one step further and say that it requires an innovative culture.
A specific kind of organisational culture has to prevail within your company if it is to become a successful innovator. The key is to remember that innovation is something which comes from inside somebody and is not something that can be demanded of them. Therefore, the process you use to engage the organisation behind the quest for innovation is critical. It needs to be nurtured from within the organisation and not imposed from above.
The best place to start the journey is an innovation and culture audit. Conducting the audit is fairly straightforward. However, learning from the results and taking action is where the skill lies. This process itself as well as the outcome needs to establish an appropriate vision at the same time as opening minds to new ideas and new ways of working, encouraging collaboration and breaking down internal organisational barriers. To quote Dr Stephen Covey: “We need to engage the whole person – mind, body, heart, and spirit,” if we are to be successful in our quest to be a truly innovative company.
The engagement of the whole organisation behind the vision is critically supported by well designed infrastructure and processes. These are enablers. Ideas generation is almost by definition an unstructured process: however, innovative companies routinely employ a number of approaches which acknowledge the importance of open internal and external networks. Consider also internal venture funding mechanisms to efficiently manage innovation projects and provide employees with access to development and funding of innovative ideas. You also need new and different skills and behaviours; indeed, it will often be necessary to unlearn something first in order to release potential and the ability to do something different. Individual, HR and management paradigms need to shift if innovation is to become a driving force within an organisation. In addition, innovation time horizons are typically a lot longer than the normal business cycles – annual results, five year plans – and need to anticipate major technological and socio-economic shifts.
Successful innovative companies adopt a portfolio approach to the selection and management of their innovation projects. Selection criteria will vary from one company to the next, but will generally involve some form of review of fit against a checklist of criteria, economic value judgement based on payback time, NPV, etc; and/or assessment of risk vs. reward. Identifying the right portfolio of innovation projects is absolutely critical to long-term success. The selection process requires an ability to see how the project can create value for end users, an appreciation of costs and benefits to the company and an ability to identify and eliminate projects where there is limited potential for commercial return. Cross-functional collaboration is, therefore, critically important: selection of innovation projects should not be only by R&D. Most selected projects will fit with current business strategy and competence, but innovative companies will also place bets on a few risky, ‘off-piste’ projects. The aim is to achieve a balanced portfolio.
The way the inevitable failures are viewed and managed is a distinguishing characteristic of innovative cultures. A company that reacts to failure by seeking to allocate blame cannot experiment, and a company that is afraid to experiment cannot innovate. Innovative companies organise for rapid experimentation, in the laboratory and in the marketplace. It is important to avoid mistakes, but the right attitude to failure is critical. The company must be ready and willing to fail – early and often. Acknowledge the importance of ‘positive failure’ and be ready to learn from projects that don’t work.
Innovative companies tend to see their people as part of the solution, not part of the problem. They will typically engage all staff in ‘high involvement innovation’. Managers will listen to all ideas derived from employees – regardless of job title or position – creating the advantage that the more people that are involved in promoting innovative change, the more receptive they are to change itself. Furthermore, these companies do not underestimate the importance and value of their scientists and technologists. The most successful, innovative companies have managed to put innovation at the heart of their corporate culture; innovation becomes ‘the way we do things around here’. Managers, and indeed HR, should position themselves as enablers.
Alignment of objective setting, recognition and reward is crucial if a high innovation culture is to be sustained. This requires the ability to deal with cross discipline project working, ‘blue sky’ research or skunk work, non-annualised results and fast failure, to name but a few. Typically, traditional HR practices are not geared up to this way of working. Thus organisations that are serious about innovation need to look at the full range of HR infrastructure to see what is getting in the way and what needs to be changed. In addition, traditional or hierarchical structures tend to stifle innovation which requires fast ideas flow and the breaking down of silos and internal barriers. Highly matrixed organisation structures require new skills but are more suited to fostering innovation.
Finally, fostering innovation is all about releasing the natural potential of all your people. For many organisations, especially large ones, this is the greatest leadership challenge – yet I would argue that the rewards (personal and commercial) make the effort worthwhile.
Lisette Howlett has worked at a senior level for a number of global companies. As well as successfully launching and running her own human resources consultancy (www.mlhconsulting.co.uk) she is also behind the first ever website that enables employees to rate their experience of using recruitment agencies, http://www.HireScores.com
