October 17 , 2017

HR Must Eliminate “Innovation Killers” Within Their Firm

I) – Factors, activities and events that can harm innovation

There are many "corporate events" or actions that can impact a company's culture, processes and ways of doing business.  If HR is to help improve innovation in a corporation, it must identify the corporate events that are likely to have a negative impact on risk-taking and innovation driving activities.  After identifying them, they must me monitored, and every attempt made to eliminate or mitigate the negative effects of them.   

1.      New hiring – when ever you hire people from other cultures, you always face the risk that they are coming from a corporation that doesn't encourage risk-taking or innovation as much as yours.  As a result the hiring of these employees might "dilute" any culture which celebrates innovation

2.      New managers – hiring managers from outside the corporation will have an even greater impact on the culture than hiring an individual contributor.  Hiring key managers with a different "innovation quotient" might send a signal to employees that you want change  i.e. less innovation and risk-taking

3.      Orientation – any orientation program that fails to sufficiently emphasize the need for risk-taking and effective innovation will further exacerbate the already common problem of new hires not understanding or supporting the culture of innovation

4.      Turnover — the loss of internal "champions" of innovation (powerful or influential individuals that emphasize innovation) due to retirement or being lured away by another organization attempting to steel your innovative culture will weaken your culture of innovation

5.      Size – very few organizations have been able to maintain innovation after growing beyond a size that requires the development of bureaucracy to administer the corporation.  This is undoubtedly because systems developed to mitigate the impact of “size” actually dilute the culture and cause confusion about what the actual culture is. Communicating the importance of innovation is also much more difficult as the number of employees grows large

6.      Geographic expansion – one of the most powerful forces diluting a focus on innovation is the hiring employees from other geographic regions.  This dilutes your culture of innovation because employees in other regions and cultures are less likely to understand and appreciate the need for constant innovation. This is especially true in some countries like Switzerland, China, Japan, Australia etc. where rapid change or “tall poppies" (those that stand out) are not always considered heroes

7.      Mergers and acquisitions – industry consolidation is increasing at a rapid rate so it’s important to realize that large-scale mergers are detrimental to maintaining a culture of innovation because with them come literally thousands of individuals that might have a different emphasis on innovation. Many of the acquired individuals will actually resist integration into a culture of innovation so they must be made to see the right way or be eliminated early on. To make matters worse, in addition to acquiring people, the corporation is also likely to acquire "best practice" processes from the other firm.  The selection and adoption of these different processes are likely to have a detrimental impact on risk-taking and innovation

8.      Restructuring or layoffs – these catastrophic events tend to focus individuals on survival and security and as a result, there is often a dramatic decrease in risk taking right before and for at least a year after them.  During these times of uncertainty, HR must increase its efforts to encourage innovation or it will likely fall dramatically

9.      Outsourcing – the decision to outsource or offshore means that some parts of the "work" will be done by outsiders.  It is important for HR to realize that it is highly unlikely that these “outsiders" will be as innovative as your current employees because most outsourcing services provide services at the "average" or "vanilla" level.  It is also unlikely that these "outside" employees will not understand the need for innovation as much as regular employees do.  It turns out that the integration of innovative and non-innovative teams and processes is also quite difficult to say the least

10.  Success limits risk taking – strange as it might sound, success, just by itself will likely be a significant detriment to maintaining an innovation culture.  The problem begins after a number of years of successful innovations and the strong brand that goes along with them. A string of successes can build up employee egos, drive groupthink and contribute to a sense of invincibility.  The sense of invincibility in turn creates complacency because employees develop the perception that “innovations have always come along the past". HR has to work twice as hard in successful organizations to keep "egos" down and to “forget the successes of the past" because your customers and your competitors certainly will

II) – Factors, activities and events that can “kill” innovation

As Part I demonstrated, there are some corporate activities that can harm or reduce the amount of innovation and risk-taking that occurs in an organization.  Unfortunately, many of the activities discuss give birth to secondary barriers to innovation. In fact, if not handled correctly these factors can actually eliminate innovation within a corporation. These secondary barriers tend to squash an individual or a teams innovative juices and willingness to take a risk.  Some of these "innovation killer" factors that should be eliminated include:

11.  Restrictive policies — developing corporate rules and policies that manage to the lowest common denominator employee in the corporation can cripple innovation.  For example, because some employees (usually less than 5%) would steal or misuse "open all the time" equipment rooms, most equipment rooms are kept locked during off hours.  As a result, individuals that want to utilize equipment or information to work on an innovative idea after hours would be hampered in their efforts.  Just as limiting Internet access or long-distance phone calls might save a few dollars from those that would "abuse the system" but these policies also limit information gathering by those seeking to benchmark new approaches from outside your industry. I recommend that if you want innovation, that you develop a healthy "disrespect" for policies and procedures.  I recommend that you develop rules and policies utilizing the "mature adult" standard that was pioneered by Sun Microsystems.  Utilizing this approach, you minimize rules and restrictions that hinder innovation.  If someone cannot act like a mature adult, it's better to terminate the relationship or fix that one individual versus tying everyone down with onerous rules

12.  Funding only "sure thing" ideas — a budgeting and time allocation system that allocates resources almost exclusively to “sure things” (low risk ideas) will have the effect of killing risk-taking.  For example, if the criteria for funding new project ideas includes requiring a high percentage success rate (over 75%) you, in effect ,are killing innovative projects before they get started by sending the message to innovators that you won't fund large risks.  Such a policy has this negative impact because historically, the best innovations have almost invariably carried the greatest risk of failure.  incidentally, rather than discouraging failure you might want to consider actually encouraging it because failure is the world's best teachers, as long as the risk is calculated and there is rapid learning from the failure. Remember, if you don't fund and celebrate failure, you miss your opportunity to make dramatic improvements and to learn from your failures

13.  Punishing failure — punishing "failure" is unfortunately quite common in organizations.  For example, most forced ranking performance management and promotion systems have the net effect of "punishing" failures because invariably people with one win and no failure get a higher performance rating than someone with two wins and one failure. Managers seem to have "total recall" when it comes to remembering employee errors and failures.  No matter how well planned out your innovation process is, if employees sense that poor results are career limiting, you will invariably develop a risk adverse culture. Incidentally, even though some corporations have found that individuals lose their innovativeness as their tenure at the company increases, that loss of innovativeness is not totally due to aging but instead the reduced innovation is caused by the fact that long-term employees have learn that the punishment for a failed innovation, program or idea is much greater than failing to produce a single innovation.

14.  Voting on ideas – innovative ideas are, by definition, quite different from the status quo. As a result, it’s not surprising that when new ideas that emanate from a group or team are put to a majority vote, they generally lose. If Columbus had asked a group of ship captains in 1491 to vote on whether he should take a voyage… he would have stayed in Spain. If fact, if you are going to take a vote… you can probably identify the most innovative ideas because they are the ones that are most likely to generate a heated debate and they are also the ones that are likely to lose! You can improve the process slightly by making the votes anonymous but given the strength of corporate politics, even speaking up on an unpopular issue prior to a vote makes it clear to your detractors how you voted.  One last thing that you might find also is that teams in general and voting in teams in particular take away all "accountability" for decisions

15.  Consensus decision making – even worse than majority voting is consensus decision making. Requiring a consensus almost guarantees that any truly innovative idea will be watered down so much that the “edge” will be taken off. And if the initiator of an innovative idea insists on keeping it in tact (rather than compromising), they are often labeled as not being a “team player”

16.  Punishing critics – whenever anyone suggests a radical idea about a current process or product, the person that designed and currently runs the process frequently views that criticism as you saying directly to them … “you are a failure” and you haven’t done your job. As a result of this affront, it is quite common for the political mafia in corporations (generally the old school people) to verbally lash out at critics. Even though "criticism is the engine of change" … those in power generally label innovators as “negative people”, when in fact “people that don’t like anything” are in fact the real heroes of innovation

17.  Seniority – most organizations reward seniority, sometimes subtly but most of the time directly. The problem with seniority is that over time, people that have been at an organizational a longtime become defenders of the status quo. It is also generally true that, since these people helped build the existing systems and processes, that they are also the most likely to fight any innovative suggestions that would alter them.  In addition,  rewarding and promoting people based on the number of years they have worked sends the wrong message and does little to reward or recognize innovation

18.  Unions — in addition to encouraging seniority, most union contracts allow for no individual reward for performance or innovation.  To make matters worse, the "us versus them" attitude of many union members makes them unwilling to make suggestions to "help management".  One final issue with both union and nonunion shops is that some workers view innovation as a process that has the net effect of eliminating jobs

19.  The corporate culture – an organization’s culture has the net effect of maintaining the status quo. As Robert Eaton, the former chairman of Chrysler Corp once said, "any culture, by definition, exists primarily to prevent change, to set in stone the lessons of the past”.  Long-term or old school employees are the most likely to be staunch defenders of the existing “culture” because they are comfortable operating under it. It is often used as a “weapon” (i.e. that’s not the way we do it here!) against critics and innovators. One of the worst aspects of some corporate cultures is the NIH attitude. This is where a "groupthink like" attitude develops so that ideas or practices from outside the company (or department) that were "not invented here" are automatically rejected because they don't "fit our culture" or because "we are different"

20.  CFO’s actions – CFO’s and their notorious hiring freezes and budget cuts have the net effect of limiting resources which have the net effect of eliminating a department's or companies ability to "innovate out" of the doldrums.  It turns out that often you have to spend money if you want the driving force behind a major turnaround effort to be innovation rather than the more traditional cost-cutting. In a similar manner, across-the-board IT cost-cutting also limits hardware and software purchases, which are often at the heart of any new innovation. Although many accountants don’t grasp it, you increase revenue by spending money not by cutting costs 

Part III – Common problems that can occur after you build a “culture of innovation” and risk-taking

Instead of a piecemeal effort, strategic HR departments should try to develop an overall innovation plan with the ultimate goal to be the development of a companywide "culture of innovation". Even though the benefits of having an “innovation culture" are many, there are downsides.  If you are going to be an innovative company like Apple Computer (a company that constantly innovates with new product features, and introduces category killers like the iPod), you are going to have to understand the common problems associated with having an innovation culture . Some of the potential problems you might encounter include:

21.  Innovation builds resistance – innovation, almost by definition means continuous and significant change, and HR professionals are well aware that such change makes some employees uncomfortable. Constant change requires HR to develop new approaches and tools to help managers identify, understand and eventually overcome resistance to change

22.  Innovation requires new skills — because innovation requires processes, products and services to undergo quantum change, it also requires consistent evolution in the skill base needed by the organization.  It is accepted that many new skills needed will not b present inside the company, dictating a need for external recruitment and new training program development.  The recruiting function will need to identify individuals that are both innovative and that possess the skill sets that the innovation demands

23.  Us vs them conflict — when you make innovation a KPI and then recognize and make innovators "heroes,” you can unfortunately develop an "us versus them" mentality between areas where innovation is easy and those business areas where it is more difficult. You might also find jealousies between highly innovative and non-innovative employees

24.  Potential burnout — although many individuals learn to thrive on and look forward to innovation, others find the constant pace of change frustrating and draining.  The net result may be higher stress levels, more accidents and more employee turnover. The companies "external brand" may also be tarnished if the word gets out that you run a “mental sweatshop” driven by constant innovation

25.  Becoming a target for recruiters — there is one thing that you can be sure of, an innovative company will certainly get you "talked about" in the press and among all of your competitors.  The net result of this is that your firm will no longer “fly under any recruiter's radar". If your firm wins best place to work and innovation awards, you can expect to be constantly targeted by recruiters from companies seeking to innovate as fast as your firm 

Conclusion

Even though CEO's constantly rant about the need for innovation within their organizations, few HR leaders have accepted a role in driving innovation.  Because no department or function actually "owns" corporate wide innovation, there is no one to fight with over who should run innovation initiatives. The time has come for HR to step up to the plate and to become the manager of innovation.  As this article has highlighted, the best place to start is by minimizing or eliminating some of the existing barriers that discourage innovation and risk-taking.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.