Atif Sheikh: Five steps to create an innovation powerhouse

HR Review, Tuesday 3rd June, 2014

How HR professionals can help their organisation bridge the Disruption Gap.

By Atif Sheikh, ?What If! European Business Leader

When I started work at Unilever 15 years ago, we used to debate whether innovation would need to deliver 5% or 10% of our growth for that particular year. Fast forward to ?What If!’s Eyes Wide Shut study launched this Spring and 23% of finance leaders think that more than 50% of their business’s revenue will come from new products and services in 2014.

The rules of business have changed – this is an age of disruption. Barriers to entry are lower than ever. Cost reduction and process engineering are almost exhausted. A new generation of employees have vastly different expectations, while customers’ needs are in a permanent state of change. And the pace of disruption is only accelerating.

In fact our study shows an alarming disconnection between the challenges being faced by businesses and their response. More than a quarter of top executives think their current business model will not be sustainable beyond three years – an astonishing statistic.

HR professionals own some of the critical levers needed to power innovation. Here are five to focus on:

Get Your Story Straight

Far from popular depictions of innovation as an activity centered mainly around beanbags and brainstorms, most of the journey is in fact one of hard yards and disciplined experimentation. The barriers are many, the naysayers seemingly everywhere. Successful innovation often involves several rounds of failure. It is much easier and less risky to sit back and doubt than it is to throw yourself into the fray.

So if you want your people to get innovative then it is critical that they understand why. Leaders of the most innovative companies work hard to ensure that there is clarity around innovation’s financial contribution to delivering the overall growth strategy, and also that there is an inspiring ambition that will drive people to innovate day in, day out. Googlers bring every ounce of their ingenuity to “organising the world’s information”; at Ikea the crusade to “build a better everyday life for the many people” stretches to the way employees think about everything from curtain displays to customer experience.

But passion without direction is a dangerous thing. Innovation opens up the possibility of endless time wasted, and undirected innovation effort can create more frustration than none at all. It is interesting that Google has begun to move away from its famous 20% time policy. HR must work with business leaders to ensure there is a clear expression of what kind of innovation is wanted and what projects lie in and out of scope.

Finally the business’s innovation story must come off the page, and begin to live in the way leaders behave, the way they react to new concepts, the way they make decisions. Our study found 57% of UK business leaders don’t think their board is leading effectively for innovation. People will take their cue from what their leaders do, not what they say. We, are after all, a primate species – everyone looks up.

Recruit Big Company Innovators, Not Entrepreneurs

It is always exciting to meet those on the cutting edge of the age of disruption. They are optimistic, full of energy, unaware that there ever were any rules, let alone being afraid to break them. But the reality is that these people cannot teach us much about how to deliver innovation in a large business.

Unilever experimented for a while with a competency framework which included “entrepreneurial spirit”. Most of those that scored highly on that competency left within a few years to join smaller, more nimble businesses. Diageo on the other hand celebrated a core competence I have rarely seen in large businesses – “edge”. If you put yourself in the shoes of a lone innovation warrior trying to make new and uncomfortable things happen in a large business, you quickly start to see how important edge can be.

At ?What If! we’ve interviewed over 3,500 innovators over the past 10 years, and helped our client partners select somewhere in the region of 5,000 innovation champions. As we have honed our understanding of the skills and qualities of the very best innovation people it has become clear that big company innovators share only some of the traits of entrepreneurs. For example – they may need to be capable of great feats of lateral thinking, but it is critical that they have intuitive maths skills. How else to quickly size an opportunity and distinguish whether it is a path to the pot of gold or a dead-end?

Innovation is a human contact sport. Best make sure you have the right humans on board if you want to win.

Build A Culture Of Customer Obsession

As innovation becomes more central to the growth agenda, the level of customer intimacy required increases exponentially. Many organisations talk in a slightly limp fashion about “customer centricity”. But customer obsession is what is actually required in a world where needs are continuously changing, and where expectations increase dramatically with every new app launch.

Too often attempts to build a stronger culture become self-serving. The customer seems to get lost. Those in head office end up without a clear line of sight to how their role delivers for the end customer. Leaders spend less time thinking about the customer than thinking about remuneration. Building a customer culture requires insight, time, experimentation, and enormous stretch for the most senior people in the business.

It cannot be an initiative or an intervention – but instead must become a way of being. At Method (the cleaning products company scaring the pants off the big boys) you can’t get away from the customer even if you try. From the daily-updated infographic in reception, to the chaos of hand-written notes from customers that cover almost every inch of wallspace – the customer affects every thought. What percentage of your employees’ daily thoughts start and end with the customer?

Structure For Continuous Collision

True – some people have a natural gift for creative thought and problem-solving; but the success of firms from Pepsi to Cisco is not based on hiring more creative people than any other organisation. Instead they structure for the lifeblood of innovation – the collision of multiple different perspectives. From how many parking spaces there are, to how many toilets; the most successful innovation companies plan and structure for collision.

The best are clear that collision can unleash the innovation potential of their people – and are investing strategically and creatively to guarantee those collisions will happen every day.

Get Stuck In!

Last but not least – remember that innovation is at its heart a game of doing, not of thinking. James Dyson didn’t lock himself away in an office for five years to think through the design of the vacuum cleaner that would treble the price a customer would happily pay. He iterated his way through hundreds of prototypes.

Of course the creation of a powerful innovation ecosystem involves a harmonious balance across everything from strategy to reward, to belief systems to key processes. But the best way to work it out is to get out there and innovate – and learn your way to what works best. Not only will this approach create immediate momentum, it will also begin to generate belief and confidence.

What better way to get innovation going in your business than to get stuck in yourself? In the age of disruption, many of the foundational approaches in the world of HR too are up for grabs. Time to jump in and lead from the front.

FROM the greenhouse