Innovation has become fundamental to the success of companies in knowledge economy.
Many companies rely on innovation to create a competitive advantage. Shareholder value, growth, and return on investment tend to be higher for highly innovative firms than for less innovative firms. It is important to keep in mind that solely emphasising productivity tends to drive out the capacity to engage in innovation. High performance comes from innovation combined with productivity. As the ability to innovate has become crucial, leaders of all business functions need to ask themselves how they can foster innovation. HR leaders are no exception here. HR should actually be a major player in the process as most successful innovation strategies have been shown to predominantly focus on people. As we well know, attitudes, behaviors and skills of employees can be influenced and shaped through HRM practices. HR can drive innovation mainly through helping create organisational culture that supports innovation.
Innovation-friendly organisational culture
From research, we know that an unsupportive culture is considered as the number one obstacle to innovation. Therefore, it is crucial to pay attention to developing a culture that nurtures innovation. Innovative people have been shown to engage in questioning, observing, networking, and experimenting behaviors to spark new ideas. HR needs to work closely with line managers to create organisational culture that champions these behaviors.
Managers at all levels must be open to new ideas and should encourage their team members to question and challenge the status quo. Asking questions to understand how things are, why they are that way, and how they might be changed drives innovation. Questions provoke new insights, connections, and opportunities. Good questions should be valued at least as highly as good answers. One of the measures of innovative culture is the willingness of managers to welcome and support ideas different from their own. Great ideas can be generated by anyone, regardless of their job title or position in the corporate hierarchy. Managers need to recognise and reward those that suggest innovations and improvements. It is important to also recognise efforts as it takes many efforts before any results can be achieved. Some research indicates that true creativity happens after idea fourteen. Therefore, it is crucial to acknowledge ideas and not to kill them too soon. In addition, it is vital to do something with those new ideas. It is necessary to explain why some ideas will be implemented and others will not. Employees want to understand the rationale behind it.
HR’s major role in this process is to have regular conversations with managers and challenge them on these kinds of things. In addition, we should have informal chats with employees from different teams to see how they perceive it.
Here are some key questions that help you assess how well your company is doing on the questioning part:
● Do we have our “Saint Cows” that nobody should ever question or challenge?
● How could we encourage employees to question and challenge the status quo?
● Do managers welcome and support ideas different from their own?
● Does everyone have an equal opportunity to voice their opinions and to be heard?
● Are we open to hire for diversity, not only for the same old mindset and experience?
Innovation also tends to be associated with observation. Innovators are intense observers. They carefully watch the life around them- including customers, products, services, technologies, industries, and companies. Observations help gain insights into and ideas for new ways of doing things. Job-shadowing, rotational assignments and short-term postings are examples of observations. All these enable employees to learn how other units and teams operate. It is also a great opportunity to meet people with different backgrounds, experiences and perspectives. These kinds of observations are especially productive when employees rotate to high-performing teams. They get a valuable experience that they will bring back to their original teams. HR’s role is to help identify high-performing teams and link rotations to those teams. HR should also take an active role in helping arrange visits to other companies. Visits should be organised to companies from various industries and at different stages of development. It gives employees a broader understanding of how different companies do their work and approach problem solving. It provides a great opportunity to collect new ideas and see things from a fresh angle.
Here are some key questions to help you assess how your company is doing in terms of observation:
● Is it fairly easy to arrange rotational assignments and mentoring programmes?
● How do we stimulate cross-functional collaboration on a daily basis?
● Do we create opportunities also for back office employees to interact with customers?
● What processes are in place to identify new trends in technology and the market place?
● How do we collect and use the input received through employee observations?
Innovators like to spend a lot of time finding and testing ideas through a diverse network of individuals. Professionals network with other professionals regardless of what you do. The key is to systematically create networking opportunities for them both in your own company and outside of it. HR should play an instrumental role in this. We should contribute to creating both informal and formal networking opportunities. The informal part of networking has to do with creating a community within the company. Email lists, groups and clubs fall under informal networking. HR can also stimulate informal networking through shaping a physical environment so that employees could easily meet up and connect with one another. For instance, microkitchens and cozy rest areas draw people from different groups together. At minimum, you get some great conversations between people. It is also possible that they will hit on some new ideas concerning products, technologies or customers.
As far as formal networking, HR can help start a speaker series where scientists, business leaders, politicians, writers, actors, professional athletes, and other thought-provoking figures are invited to speak. Employees should also be encouraged to attend idea conferences and forums where experts from various fields share cutting-edge ideas. The ability to connect seemingly unrelated questions, problems, or ideas from different fields is central to innovation.
Here are some key questions to help you assess how your company is doing in the networking department:
● Do we have regular networking events in our company?
● What links does the organisation have with trend-spotting gurus and think tanks?
● How do we share knowledge and experience in our company?
● Do we improve our employees’ networking skills through training?
● How could we improve our workplace layout to better support socialisation and collaboration?
As far as experimenting, a rule of thumb is the higher the number of experiments you try, the higher the number of innovations you produce. In other words, to get more successes, you have to be willing to risk more failures. It basically means that employees need to be encouraged to try out new ways of doing things, work on challenging projects, and develop new skills. High achievers, however, often let anxieties about their performance compromise their progress. As high achievers are afraid to show their limitations, they tend to shy away from assignments that will truly test them. They rather focus on activities they know they can do very well in order to preserve their successful image. When high achievers avoid trying out new ways of doing things and taking risk, it hurts the company’s ability to innovate and change. This in turn will have a negative impact on the company’s competitive edge and financial performance. When people hold them back, they will not grow or achieve their full potential. Underdeveloped talent inhibits the company’s ability to utilise new business opportunities.
HR should coach line managers on how to respond to failure. If managers punish employees for taking risk and not succeeding the first time, they will stop trying new ways of doing things. Instead, managers should encourage employees to analyse their mistakes to make it a rewarding learning experience for future endeavors. HR should also assist with finding good mentors to help their high achievers deal with fear, uncertainty and incompetence. Good mentors are supportive, but give honest feedback.
Here are some key questions to assess your organisational culture from the experimentation perspective:
● How do we encourage employees to experiment and try out new things?
● Do we organise work around looser role profiles rather than narrowly defined job descriptions?
● Is our organisational culture based on ‘coach and solve’ rather than ‘tell and do’ approach?
● How do we recognise and reward great ideas?
● What processes do we have in place to review mistakes and learn from failure?
In conclusion, innovation has become more important than ever for long-term business success in knowledge economy. Therefore, all business functions need to be able to contribute to new ideas and ways of doing things. However, HR’s role in stimulating innovation in organisations is pivotal. HR should act as a leader in building and retaining organisational culture that nurtures innovation. Questioning, observing, networking, and experimenting behaviors have most been associated with innovation. HR needs to work closely with line managers to create organisational culture that champions these behaviors.
Indrek Lepner works as an HR Business Partner at Danske Bank, Estonia Branch. He holds a Master’s degree in Human Resource Management from Rollins College, Florida, in the United States. He has also served as a visiting lecturer in Estonian Business School.
This article appeared in the February 2018 issue of HR Future magazine.
Annunzio, S.-L., & McGowan, S.-S. (2004). Contagious Success: Spreading High Performance Throughout Your Organization. New York: Penguin Group
DeLong, S. & DeLong, T.-J. (2011). The Paradox of Excellence. Harvard business review, 89 (6): 119-123
Dyer, J., Gregersen, H., & Christensen, C.-M. (2011). The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators. Boston: Harvard Business School Publishing