Businesses need great ideas for new products and services. Aaron McEwan, HR Advisory Leader at Gartner explores how HR can take the lead.
Organisations are overlooking innovation as digitalisation intensifies.
The infatuation with digital transformation continues, with around 90 per cent of corporate leaders ranking it as a top priority. CEOs are worried about their organisations falling behind the Amazons and Ubers of the world and are looking to their own digital transformations as a solution.
In fact, digitalisation is seen to be so important to success that businesses are expected to spend US$1.7 trillion on it this year. C-suite leaders, including heads of HR, are charged with digitalising their own functions in order to allow their organisations to remain competitive in the digital business environment.
HR’s role in digital transformation has traditionally been to attract, develop and retain digital talent and to help the workforce adapt to digital changes. These efforts have been challenging for HR as digital talent becomes increasingly hard to attract (demand for digital talent outstrips supply and over 55 per cent of companies say the digital gap is widening), and the skill requirements for most technology-based roles keep changing.
While HR has been busy focusing on the growth of digital talent, they have overlooked what leaders really want. Gartner research shows that what our CEOs are really focused on – and what they really want more of – is to unlock innovation across the entire enterprise.
Don’t forget about innovation
Innovation in the digital age essentially comes down to two things; the first is innovating to improve existing products or services and the second, to create new products and services.
Fast, disruptive, and broad innovation is needed for success. Today’s ‘first to the finish line’ environment, where organisations are in constant competition to be the first to market with new innovations, means businesses need to be able to identify, prioritise, implement new products and services quicker than ever.
Business as usual no longer exists when global reach and new competitors threaten existing growth. This concept isn’t new, after all nearly 90 per cent of organisations have digital initiatives to improve current products and services, and over 80 per cent of organisations have digital initiatives focused on creating new products and services. Despite this, organisations have yet to get innovation right.
To create an environment that fosters real innovative outcomes, organisations need to ignite the ideation process across the entire business, not just in pockets of employees.
Organisations must realise they have access to an enormous amount of talent who have the rich insights and creativity to deliver game-changing ideas, however, if they aren’t nurtured, they may never get the chance to bring them to life. This requires a fundamental shift in the way organisations have traditionally approached innovation, which is to either take an individual or a team-based approach:
Individual innovator strategies – Where employees are given more time to work on their own innovation projects with autonomy. It equips and motivates individual employees to generate and share innovative ideas. Organisations that take this approach have just a one per cent impact on innovation effectiveness.
Innovation team strategies – This idea tries brings crowdsourcing to life in organisations and is where businesses focus on setting up dedicated teams, structures, hubs and centres to generate and drive innovation across the business. This approach has a six per cent impact on innovation strategies.
It’s clear that the traditional methods for innovation are not working fast enough or well enough for organisations to drive the growth and change businesses are seeking. What organisations should be doing is shifting from lone innovator and team innovation strategies to a network innovation approach.
A network innovation approach incorporates both employees and business leaders across the organisation, creating a unified desire to innovate across the enterprise and utilise varying skills and expertise between top line executives and front-line employees.
This type of approach has shown to have a 23 per cent impact on innovation effectiveness, regardless of the level of digital talent and infrastructure in an organisation’s workforce.
Network innovation can be achieved through three key strategies:
- Involve employees in the filtering, not just generation, of innovative ideas: This will increase employee engagement in ideation. It also helps make employees part of the selection process by promoting ideas which they believe should be pursued.
- Equip leaders with shared, not individual, risk taking: Help leaders to determine their risk profile individually and then as a collective group. Leadership development can be undertaken to encourage and prepare leaders for shared risk taking in order to reduce risk aversion.
- Give employees more guidance, not more access, for using networks to innovate: This helps employees develop and build innovation across the network, allowing their ideas to build momentum and not fall through the cracks of a set of constant changing hands. Giving employees a greater understanding of how innovation processes work across the organisation will encourage them become part of it and build networks around it. An organisations innovation structure is not effective unless the entire network can navigate it.
To further support an innovative environment, it’s essential that CHROs and CEOs recognise that building a bigger digital talent network alone is not the answer. Creativity, inspiration and originality come in all shapes and sizes and organisations should complement buying new skills with building the ones that will meet the long-term business goals and objectives.
Innovation today is challenging and often feels like competing in an impossible race. However, if organisations proactively move innovation out of pockets and silos and filter it across the enterprise, they can compete, build their portfolio and achieve their business goals.