What do corn flakes, microwave ovens, saccharin, and Viagra have in
Each was an innovation breakthrough we now take for granted.
Before we reveal their other common bond, a word on the trend
Over the past 10 years, operations and process efficiency dominated
the change landscape for increasing competitiveness in business.
But in an age of increased global competition, process improvement
is becoming the land of diminishing returns.
Research shows executives are counting on innovation for the next
big wave of growth. According to a Boston Consulting Group study,
72 percent of companies will increase spending on innovation in
2006; 41 percent will increase spending significantly. Similar
results are reported in recent studies by IBM Research Group and
Booz Allen Hamilton.
However, nearly one out of two companies is unhappy with its return
on innovation spending.
Lack of metrics to measure innovation and an over-reliance on
outsiders are two culprits. But the most serious roadblock to
organization-wide innovation is a corporate culture that singularly
demands, rewards, and reinforces the opposite of innovation:
conformity, complacency, and cost-reduction.
Remember those corn flakes and microwaves? Each of these products
was discovered by accident while trying to create something else.
Great discoveries are frequently made through error. But
in a Six-Sigma, no-tolerance-of-mistakes environment, perpetuated
by an innate fear of the unfamiliar, how can HR help leaders
balance the risk/failure equation, stimulate people's inherent
creativity, and increase innovation?
Innovation: Big Payoff or Just Another Failed
Every HR executive would love to play a major role in making his or
her company more innovative. In fact, the trend data indicate this
might just be the leadership opportunity of the decade for HR.
The caution: Given that 75 percent of change efforts are doomed to
failure, the odds are against innovation being able to save the day
unless a very deliberate approach to culture change is employed as
part of the strategy.
Following are three remedies HR executives should consider in
partnering with their leaders to support innovation:
Success Factor 1: Why Innovate?
Too often, the call for innovation is broad, random, and
unrealistic, with an expectation of short-term payoff.
If you clearly define the opportunity innovation provides to the
business, the strategic outcome, creativity and innovation become a
process to manage and aim toward that defined outcome. As
a result, people more effectively align their personal motivations
with your organization's goals.
To begin, you must define the relative importance of three primary
- Improve the customer experience.
- Create breakthrough products and services.
- Align internal operations to better support the first two
While you must succeed at all of these, emphasizing one will create
a stronger message, a more focused effort, and a clearer platform
from which to engage people.
Improve the Customer Experience. This innovation
strategy means changing a key element of the business model for
how, where, and when customers do business with you.
Examples: Netflix astonished the video industry with its
convenience factor; Starbucks made grocery shopping a more
Create Breakthrough Products and Services. It's
not just about branding; it's about renewing or expanding demand
for a product by changing the business model or partnering with
marketing, sales, distributors, end users, and maybe even
competitors. Example: iPod transformed the way music is
bought and listened to.
Align Internal Operations. Good design principles
aren't just for the product-development group any more. They apply
to internal support systems, structures, and operations.
Example: Home Depot used innovative methods to re-tool its
entrepreneurial culture and make operations more disciplined. That
shift resulted in revenue growth from $46 billion to $80 billion in
three years; at the same time earnings per share doubled.
Success Factor 2: Balance the failure/risk
Innovation is the output of creativity. But creativity can't occur
in an environment where fear of failure reigns. Initiate an honest
dialogue with your senior leaders and spend time observing how
these four innovation predictors show up in your organization:
- Define failure. What does the failure really mean in
your organization? What happens when someone makes a mistake or a
- Clarify risk. How do you define risk-taking in your
organization? Where can people afford to take risks? Where can you
not afford to take risks? Are people visibly and publicly rewarded
for taking chances?
- Eradicate fear. Is it safe to speak out in your organization?
Is there a process in place to manage healthy conflict and debate?
Do people trust leaders and each other?
- Allow creativity. Does your organization make time and room for
the creative process?
Balancing the risk/failure equation will require conversations
about these issues from the top-down.
Success Factor 3: Create safe havens for
There are two significant leverage points from which innovation can
- Most leaders and managers were once promoted because they
demonstrated innovative behavior. But the vast majority of leaders
do not adequately speak the language of innovation in meetings. A
simple and powerful strategy to increase innovation is to change
meeting language so people speak openly without fear of
- HR leaders are an untapped gold mine for how their company can
better support innovation. The challenge: HR is often not a partner
in the development of innovation strategy. HR executives need to
develop a strong business case for the move to innovation, which
includes business trend data. Next, they need to demand and develop
a relationship with a strong business leader who knows that
re-tooling culture so innovation can thrive requires planning,
assessing, measuring, and managing it as you would any critical
business strategy. And lastly, they need an honest view of how the
organization tolerates risk, fear, and creates safe havens for
innovative behavior to blossom.
Following this yellow brick road to innovation is not easy. But it
pays off by giving the best and brightest talent a good reason to
call your company home.