Human Resources can make significant contributions toward improving a company’s innovation, especially with mature or fast-growth post start-up companies. Human Resources can engineer the organization’s talent management and culture so that it is more innovative, while also maintaining the excellence and reliability of its current operations. They all are needed to drive today’s profitability.
We hear a lot in the innovation press about developing new technology and applying it to current applications and new business models. We also hear about mature firms acquiring new technology firms to drive innovation. These are all solid business strategies, but their failure rate is often above 70%.[i] The failure rate for start-ups is widely regarded as 90%.
Some of this is inherent in the nature of innovation. It often takes 100 trials of a new technology or product before it is ready for commercialization. That includes a lot of failure and learning before the innovation is ready for prime time. There are a couple of things you can bet on. One is that the status quo is a failing business strategy. Second, if a company does not have the right talent management practices and a strong culture of innovation, their probability of success diminishes precipitously.
For decades, empirical research has shown that strong organizational cultures of innovation[ii] and strong talent management practices lead to higher profits.[iii] The research has also shown that strong cultures of innovation lead to higher employee commitment to company mission and levels of discretionary effort on the job.
Many companies have “leaned-out” their large, repeatable processes in manufacturing, supply chain and accounts receivable in order to drive out non-value added work, reduce rework and lower costs. These efforts have driven value for shareholders and often led to better outcomes for customers. Unfortunately, the dedication to and cultural support for innovation was also driven out, leaving companies with inadequate innovation systems and processes to create future products, services and business models to profitably grow the business.
Enter Human Resources. Technology and financial engineering aren’t enough to grow a business. The tools of Human Resources are critical as well. Below are seven strategic steps Human Resources executives can take to drive organizational innovation and profitable growth.
- Shape executive communications on the strategic direction of innovation and how employees can become involved. HR is in a unique position to influence how executives communicate to their workforce about innovation. Communication should also include the exciting innovation projects employees can work on, and how they can get involved. I have always found that communicating about innovation strategies builds excitement and increases retention among high potential employees. It is also important to continually provide updates on how the projects are doing and recognize innovative teams and employees at all-employee forums.
- Develop dynamic cultures of innovation that allow employees and teams to ideate, collaborate, and quickly decide on the best innovations to move forward. HR’s organizational development professionals can significantly improve the effectiveness of innovation teams by developing the skills and behaviors that support innovation. Empirical research shows that smart and successful teams have members who display empathy and collaboration. While intelligence, expertise and professional competence are important; it is empathy and collaboration that drive innovation, speed, and success.[iv] Teams are also more successful when they have access to internal and external experts and information that informs their work. What’s more, teams that have strong understanding of roles, information flows, and decision rights are more effective. HR inherently understands these dynamics and can influence the organizational culture.
- Advocate technology investment that promotes innovation. That’s right, HR can be the technology advocate for collaboration, wiki storage, project management and analytics software that enhances analysis and project management skills for innovation projects.
- Recruit employees who fit into an accountability and innovation culture. Companies that rededicate themselves to innovation find that the skill profiles for new hires changes. Often, they now need to recruit employees with new technology expertise and the collaborative behaviors and skills that enhance innovation. This changes how HR sources, recruits, and onboards talent.
- Promote your company’s innovation brand. Many HR leaders have come to realize the importance of promoting the company’s mission and higher purpose to prospective employees. I suggest that you take it a step further by communicating across social media your strategic areas of innovation and the leading-edge projects new employees can work on. It is a powerful attraction!
- Change performance management and reward systems to support accountability and innovation. Companies won’t succeed with innovation if they have a tops-down command and control performance management system because that system rewards compliance. Instead, companies need to reward the behaviors and skills that support innovation, while retaining a focus on accountability and results.
- Measure progress on how your HR initiatives are working and driving profitable growth. The goal of innovation is to develop new products, services, internal processes, and business models that drive profitable growth. As with any business strategy, HR’s strategies to drive innovation need to have predictive and end-result measures to determine what is working and where changes are needed.
HR’s role in improving innovation is to engineer the talent management practices and organizational culture that drive and reward it. It is exciting work, and HR has the tools to do it. To learn more, I invite you to download my free white paper, “The Six Mistakes Company’s Make When Trying to Improve Innovation”.
What has been your experience with driving your company’s innovation? Join the conversation.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on innovation, talent management, developing agile leaders and teams, and other strategic initiatives. Questions? Please e-mail Victor at email@example.com or visit www.victorhrconsultant.com. For innovation visit www.InnovationOne.io.
[i] Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck, (March 2011) “The Big Idea: The New M&A Playbook,” The Harvard Business Review; and Donald Sull, Rebecca Homkes, and Charles Sull, (March, 2015), “Why Strategy Execution Unravels—and What to Do About It,” The Harvard Business Review.
[ii] Dr C. Brooke Dobni and Dr. W. Thomas Nelson, Jr. (2013) Innovation Nation? Innovation Health Inside the Fortune 1000. Available for free at InnovationOne.US; and Dr. C. Brooke Dobni, (2011), “The relationship between innovation orientation and organisational performance,” The International Journal of Innovation and Learning, Vol 10, No.3 Pages, 226-240.
[iii] “Best Places to Work.” Glass Door’s Employees’ Choice Awards 2016. Found at https://www.glassdoor.com/Award/Best-Places-to-Work-LST_KQ0,19.htm; and “Why Tech is Winning the War for Talent,” Fortune. January 26, 2016. Found at http://fortune.com/2016/01/26/tech-is-winning-the-war-for-talent/.
[iv] Anita Wolley, Thomas W. Mallone and Christopher Chabris (January 18, 2015) “Why some Teams are Smarter than Others.” The New York Times. Sunday Review, pp 5; and Alex “Sandy” Pentland (April, 2012) “The New Science of Building Great Teams.” The Harvard Business Review.