Innovation must be one of the most highly rated values in business today, which mean it has become a bit of a buzzword. But what is innovation? More importantly, is it worth the hype?
When you look at the mission statements of the world’s top 25 most valuable brands, including Microsoft, IBM and Nike, 25 per cent include the word ‘innovation’. Many companies now have innovation departments, senior innovation leadership positions and specially purposed ‘innovation hubs’. But there is still confusion about what is innovation, and whether or not it lives up to expectations. Is it really as important as everyone seems to think it is?
No point paying lip service
While most companies are busy trying to add innovation into their mission statement, one human resources manager we have worked with convinced her executive team to take it out of theirs. She felt it was not really a defining principle for the way their company operated, and instead they needed to be honest about what they were and weren’t focusing on, or doing effectively.
There is no point simply paying lip service to innovation, but when you understand what innovation is and implement it effectively, it can make a huge difference to an organisation.
Forward-thinking leaders are certainly coming around to recognising its value.
A recent leadership survey of 1500 CEOs by IBM (that covered 60 countries and more than 33 different industries) revealed that 81 per cent of the CEOs surveyed rated innovation as a crucial capability for the future. What’s more, innovative thinking ranked the highest out of all leadership qualities surveyed.
Companies that innovate effectively thrive
The facts are clear: A focus on innovation does lead to better individual motivation and morale, improved employee performance and better organisational performance.
Bain and Company surveyed 450 companies and found that the top ones on measures of innovation had better employee engagement, better productivity (up to 50 per cent more) and better decision-making effectiveness.
Bain’s specific assessment of corporate decision-making effectiveness showed that those in the top quartile were better (in terms of speed, effort involved, quality and yield) at both making and executing decisions. In turn, better decision making impacted strategy, project selection and organisational alignment.
Organisations thrive when they are innovative, and growth typically follows. Companies that focus on innovation usually do well financially. The top 25 per cent of the most innovative companies grow more than twice as fast as the others (13 per cent growth compared with 5 per cent growth). When compounded over five years, this amounts to almost three times more growth.
Authentic innovation makes the difference
What is the message for human resources managers? By all means, focus on innovation, but don’t just pay lip service to the concept – find ways to integrate the value into all levels of the organisation as an authentic value that drives attitudes and actions.
Four ways that human resources can help answer the ‘what is innovation’ question are to:
- Develop innovative thinking through targeted training and development programs;
- Establish innovation processes by introducing and establishing workable models for innovation;
- Encourage innovative practices and outcomes through special innovation workshop sessions; and
- Ensure that innovative ideas are supported and nurtured appropriately from ideation right through to implementation.
Be prepared for more open thinking, more radical ideas, more daring risk taking, and ultimately a more vibrantly innovative and successful organisation.
Gaia Grant is the author of The Innovation Race: How to change a culture to change the game (Wiley August 2016) along with a number of other international bestselling books and resources.