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Will Hutton

Will Hutton

Principal, Hertford College, Oxford University and chair of the Big Innovation Centre

Friday 09 Aug 2013
HR: Tried and tested or something new?

HR: Tried and tested or something new?

Ask employees of any large organisation to outline the 'corporate messages' they are most used to hearing and many will list somewhere in the top 3 the notion that "innovation is the lifeblood of our business."

Doing something new, or offering something different, is widely touted as the key ingredient in the battle for competitive advantage and long-term success. Yet saying and doing something are two entirely different things.

All too often leaders tackle innovation according to established patterns that became entrenched during the times of easy growth, prior to 2008.

How they go about it often revolves around giving the responsibility for innovation to a select few in the business and either punishing, or at best, ignoring failure.

Many consider experimentation as a waste of money, instead focusing on the few things they believe are guaranteed to succeed. More often than not they make sure that the people who 'do innovation' are the 'creative ones', probably sitting in the R&D function and the same leaders also make sure that these individuals don't disrupt the smooth operations of the day-to-day business.

However, innovation success does not appear to be intrinsically linked to a company's R&D budget. The idea that corporate success, economic growth and increasing market share are all dependent on the scope of a business's R&D activity should be dismissed as Twentieth Century thinking.

KPMG research suggests that the most successful corporate innovation strategies are the ones that focus on the management of people across the enterprise.

In other words, innovation is best driven by finding and engaging key talent for innovation, meaning that HR teams, not those in R&D, are often best placed to lead a business into trying something new. It is, after all, HR that is responsible for incentivising employees and HR who is at the forefront of developing the sort of entrepreneurial and risk skills that are needed to ensure innovation is more than wishful thinking.

Certainly one overriding theme emerges from studies of successful innovation strategies: It is that winning companies first and foremost have developed cultures where innovation is seen as everyone's responsibility and where innovative practices are embedded as an objective for employees at all levels.

Culture, it seems, is key to sustainable innovation and while culture is everyone's business, from the leadership team to the front line; it is the HR function that has a number of the levers at hand that can shape, enable and embed an organisation's desired culture.

And here lies HR's big opportunity. The people management function is perfectly placed to develop and sustain the kind of cultural transformation needed if companies are to truly become innovative. I believe that HR's time is 'now' because it is fortunate enough to be responsible for many of the drivers of corporate innovation.

For example, HR can design and configure systems, processes and practices that still give some reward for honest 'failure' (in the right circumstances), make sure that customer facing employees talk directly to the leadership team about what they are experiencing and hearing from customers and encourage people to rip-up their job descriptions and collaborate across the value chain of the business.

HR can also replace the ritual of annual appraisal with meaningful, in the moment, feedback to cross functional teams that are solving business critical issues and replace highly geared individual incentivisation with team based bonuses, based on gain-share principles.

An HR function can choose to do these things and more. Alternatively it can stick to the tried and tested assertions that it has always lived by and fail to make an impact on an organisation's need to innovate and achieve competitive advantage.

The days of 'easy growth' are long gone and long-term financial success is dependent on agility, forward thinking, managed risk and innovation.

The organisations that are most likely to prevail are those where entrepreneurialism and risk taking is recognised and celebrated by leaders and where honest failure is viewed as a learning experience.

In other words, a 'true culture of innovation' that goes beyond the 4 walls of the R&D department. HR is perfectly placed to lead this charge, or risk themselves and their business being left in the 20th Century.

Robert Bolton (pictured), partner in KPMG Management Consulting and global chairman of the firm's HR centre of excellence