People culture vital to innovation breakthroughs in business
Businesses should ditch ‘20th century’ notions about the importance of a research and development function and replace it with a more dynamic approach to people culture, a new study has claimed.
The call, from KMPG, in its report ‘HR as a driver for organisational innovation’, said there is no evidence that the size of an organisation’s R&D budget has any bearing on financial performance or innovation.
Instead, it argues people culture is king, and that companies most likely to succeed are those where innovation is seen as being everyone’s responsibility.
“Creativity tends to occur when employees feel safe and positive,” said report author, Robert Bolton, co-leader of KPMG’s Global HR Transformation Center of Excellence.
“Yet research suggests only 47 per cent of employees are allowed to take controlled risks, and only 52 per cent report that their manager is good at listening to new ideas.”
The centre identified 11 factors it believes are common to established innovators such as Pixar, Google, Apple and Tata, and which more companies should use.
These factors include structural elements such as ‘connectivity of networks’ and ‘room at the top’ (involvement from the CEO), but the researchers said that HR has the biggest influence around many of the other areas enabling innovation. These feature HR's ability to create a culture where it’s ‘OK to fail’ and be leaders around the view that the ‘current world is not enough’ (and where stretch goals are needed).
Bolton said HR directors face a choice: “They can continue to pursue arguably generic models and ‘best’ practices in the hope that this way of working will deliver their leadership’s desires.
“Or HR can use its unchallenged ownership of a diverse range of key levers, to uniquely configure processes and practices and deliver a best fit (rather than best practice) approach to innovation.”
Only through the second option, he suggested, will HR be able to generate “breakthrough innovation on a continuous basis”.
Bolton added: “The days of ‘easy growth’ are long gone and long-term financial success is dependent on agile forward thinking. Organisations that are most likely to prevail are those where entrepreneurialism and risk taking are recognised and celebrated by leaders and where honest failure is viewed as a learning experience.”