HR leaders need to be better, bolder innovation advocates to ensure money spent on fostering ideas gets the desired results.
By Larry Keller
At Shell, a chemical engineer leads meditation and breathing exercises as part of its innovation initiative.
Cosmetics company Coty gave iPads to a few dozen workers hoping to help them share creative ideas.
Red Gate Software sent engineers to a coastal getaway to inspire them to envision new products.
Ad agency Grey New York presents a quarterly "Heroic Failure Award" to employees whose bold, innovative ideas fail.
Many organizations are spending time and money on innovation initiatives, but most say they aren't deriving a competitive advantage, seeing profits from their investment or being generally effective in their efforts. Experts say that's often because they lack a coherent plan or culture to make innovation work.
The news isn't all bad, though. Some companies say they've tried new approaches and enjoyed success.
Promoting innovation is nothing new. 3M began encouraging employees in 1948 to devote 15 percent of their working time to their own projects. IBM has hosted "jams" -- enormous online brainstorm sessions -- for more than a decade. But lately, innovation has been crossing organizations' radar screens with increased frequency as they face rapid changes and challenges due to globalization, shifting markets and advances in technology.
"It's a competitive marketplace in every industry," says Seymour Adler, a partner in the talent practice at Aon Hewitt in Lincolnshire, Ill. "The bar keeps rising in customer and consumer expectations. It requires innovation to remain competitive."
Companies recognize this, but are struggling to make it happen. In a survey conducted last November by Accenture, a global-management-consulting firm, 93 percent of 519 executives at large U.S., U.K. and French organizations said their company's long-term success is dependent on its ability to innovate, but only 18 percent said their own innovation strategy was producing a competitive advantage. Still, 51 percent said their companies had increased spending for innovation initiatives due to market volatility.
Similarly, 77 percent of 327 business leaders representing a variety of industries, global locations and organizational structures and sizes said in a survey published this year by the Institute for Corporate Productivity -- i4cp -- that innovation is more important now than five years ago, and 83 percent said it will be more important in the future.
In that survey, Human Practices That Drive Innovation, only 28 percent said their organizations were effective at innovation to a high or very high extent, while 34 percent said they were effective to a small extent or not all.
So what's the problem?
"One reason is that the culture in most organizations is risk-averse," says Jay Jamrog, co-founder and senior vice president for research at i4cp. "For every great innovation, there are 10 failures. It only takes one time for one person to take a risk and fail and find their desk in the parking lot" to dissuade colleagues from proposing bold new ideas, he says.
HR leaders can help the innovation process by examining policies and processes to determine if they are helping or hindering innovative thinking, Jamrog says. "That drives culture. That drives leadership behavior."
Whether it's a breakthrough innovation or the improvement of existing products or processes, innovation initiatives are doomed unless the organization communicates clear expectations and develops a culture and infrastructure that continually reinforce its importance via leadership sponsorship, training for managers and employees, and rewards and recognition programs, says Amy Sung, director of talent and rewards at New York-based Towers Watson.
"No. 1, the company has to define what it means by innovation," Sung says. "Innovation cannot be a one-time campaign. To be truly successful, employees need to regard it as a normal part of doing business."
Gary Hamel concurs. "I think there's an enormous gap between innovation rhetoric and innovation reality," says Hamel, author, visiting professor at the London Business School and director of the Management Innovation Exchange website.
"A lot of companies built three-tenths or nine-tenths of an innovation engine," he says, "but the rest of the components that are missing have rendered that engine useless. The challenge for organizations is to take a systemic look at this. There's nobody better positioned to do this than HR leaders."
Because so many areas of an organization may be ripe for -- and may thrive on -- innovative ideas, an interdisciplinary approach is required, and that makes HR's role important, says Adi Alon, a managing director in Accenture's Boston-based innovation and product-development consulting practice and co-author of its innovation survey, Why Low-Risk Innovation Is Costly.
"HR . . . can include innovation and collaboration skills as part of evaluating employees," Alon says. And if some training is required to hone these skills, "HR can play an important role in developing those curricula for innovation."
Since every company is different, experts hesitate to prescribe a particular organizational model to ensure innovation succeeds. They do, however, praise the creation of employee-innovation teams. "It's more art than science," Alon says, alluding to the fact that there's guesswork involved in trying to figure out who will be effective on an innovation team.
That said, he adds, when putting together such teams, "look for those [employees] who have an interest and passion -- those who raise their hands." Employees on a career path to become future executives are good candidates, he says.
Employees on innovation teams are usually overseen by a director. Who that is varies depending on the size of the company, its product or service and its culture, Jamrog says, adding that "there is no one answer."
Experts also emphasize the need for diverse thinkers on any innovation team, and usually from different departments. "The really bright ideas come from lower in the organization," says Adler, an organizational psychologist.
Creating innovation teams and communicating how the process works lets employees know that it's done fairly and that "it's not something cooked up in the back room," Jamrog says. It's common, he adds, for several teams to be created for one project -- one to generate an idea, one to shepherd it to final approval and one to market it, for example. "There will be handoffs at different levels" of the process, he says.
Hamel adds that organizations need an innovation-peer-review process with ideas not evaluated solely by those with an emotional stake in old business models. Ideally, this would involve a system of rotating peers doing the evaluating.
Shell, with U.S. headquarters in Houston, has incorporated this in its innovation-program structure, called GameChanger.
Its innovation group meets weekly to review initiative and investment ideas submitted by employees via a web portal or through workshops focused on specific topics. A sponsor is assigned for each proposal submitted, and arranges for two members of the GameChanger team to hear a brief summary of the idea. They decide on the spot whether it is worth developing into a formal proposal. If they think it is, they can authorize a modest stipend to do the work necessary for creating a more extensive proposal.
After it is developed, the investment proposal is pitched to a panel of three GameChanger members, plus at least three experts familiar with the technology and business the idea addresses. The experts are chosen by the proposal's sponsor. They can make recommendations, but the decision on whether to invest in the proposal is left to the GameChanger members present. Once a project passes initial proof-of-concept stage, it's moved to an appropriate division for implementation. Shell generally aims for about 25-percent turnover annually on its GameChanger team to maintain fresh thinking.
"I don't think one single structure is the answer," Alon says. Many organizations find that forming a small core innovation group works well, he says, and sometimes will create additional teams to work on solutions to specific initiatives. Others have created incubators or labs dedicated to innovation. And still other companies have formed virtual or ad-hoc teams to search for innovative solutions for a specific period of time in a particular area.
At Whirlpool Corp., headquartered in Benton Harbor, Mich., the home-appliance company has designed its innovation initiative around a global "center of excellence" consisting of one global director and four innovation consultants. This team's responsibilities include providing consulting support for innovation projects and identifying and developing top innovation talent, and may or may not include HR. The HR function does come into play around the training of employees and managers regarding innovation, and the creation of a culture -- through communication and leadership -- that promotes innovation.
The Whirlpool structure also includes regional centers of excellence in North America, Latin America, Europe and Asia consisting of two to six innovation experts each. Each of these regions has a unit in charge of incubating non-core and non-product initiatives, usually working with a regional center of excellence.
Cisco, the IT giant based in San Jose, Calif., has organized its innovation unit as a "services-innovation-excellence center." The team has formal sponsorship from four executives and includes an innovation facilitator and trainer, a project-management professional, a veteran of Silicon Valley start-ups and an organizational-behavior expert. An extended team of "ambassadors" comprised of business leaders and senior technical employees also provides input into the needs of each business area.
Cisco has, among other things, provided innovation training and workshops to employees in five countries, and has begun six-month rotations for promising employees to focus on innovation in their part of the business.
Not all ideas are generated by employee teams. Some organizations are utilizing social media to solicit new ideas from customers, stakeholders and others. Doing so gets more ideas and it generates them more quickly than relying only on employees.
"The more you can get people talking, the more it stimulates your own thinking," Jamrog says. His firm has found a high correlation between using external sources for ideas and being successful at innovation.
Regardless of the organization, "those that are successful at innovation feature several widely agreed-upon elements or combinations of them," Jamrog wrote in a 2011 i4cp report. They start with generating the idea, determining its feasibility and deciding whether or not to proceed further. If the idea goes forward, development, production and marketplace stages follow.
A number of organizations do report success in their innovation initiatives. Edmunds.com is one of them. In February, the online automotive-information resource tried something new in its innovation efforts when it conducted a "Hackomotive" at its Santa Monica, Calif., headquarters.
The event brought together more than 100 consumers, dealers, manufacturers, designers and technologists to suggest solutions to four "problem spaces" -- research, shopping, retail and ownership. About 20 teams of five to seven people split up to discuss these areas.
Prizes of $10,000, $5,000 and $3,000 were awarded to the top three ideas. The judges included executives from Honda and Ford. They awarded two first-place prizes of $10,000 each, and a second-place award. Edmunds.com employees were invited to an opening-night reception and the closing ceremony, says Karren Fink, senior vice president of human resources.
"From my perspective, employees didn't see it as exclusionary, but rather expanding our boundaries," Fink says. "It was a sense of Edmunds being a part of a larger community . . . and inviting a larger community to participate. We feel this was a tremendous first event."
The Hackomotive was an outgrowth of several earlier internal hackathons -- events where computer programmers and others typically brainstorm software-development projects -- that Edmunds.com conducted. "They provide an avenue for employee idea sharing and ideas come forward that would not otherwise," Fink says.
The Red Gate Experiment
In Cambridge, England, Red Gate Software has driven innovation on a different course. The company has nearly 300 employees, including 30 in the United States, and produces software tools for technology professionals worldwide.
In 2009, four Red Gate engineers were dispatched to a barn that was converted to a cottage on the coast for a week to see if they could "produce something cool," says Alice Chapman, people operations and employer brand manager. Red Gate paid their expenses -- including a modest beer allowance.
The group came back with the concept of a product called SQL Search, a free add-on to a special-purpose programming language of the same name. It was available three months after initial development.
Red Gate decided it wasn't practical to keep sending employees to the cottage, but the experiment inspired Down Tools Week in 2010. Three times a year, employees can, alone or in teams, and at work or elsewhere, devote all their time to creative product development and improvements to internal systems. Participation is voluntary, but so far, about 70 percent of workers who've been able to do so have joined in.
The company's head of product development facilitates the initiative. "He steps in where necessary, but you don't feel like he's running it," Chapman says. At the end of each Down Tools Week, participants have a "show-and-tell" session at which they share what they worked on. Red Gate's initiative has produced eight new products and 30 improvements to internal systems, Chapman says.
Red Gate has tried other innovation initiatives too, including something called "9 Postcards." Employees were given nine virtual postcards -- three to suggest ideas for improving their own performance, three for how their department could improve and three for ideas on how or where the entire company could improve. The responses were reviewed by CEO Simon Galbraith and company managers. The comments resulted in an increase in staff assigned permanently to work on the company website.
For now, 9 Postcards is inactive. "It was successful when it happened, but we don't necessarily need it every year," Chapman says.
Red Gate has seen a secondary benefit to its innovation programs. "We have a highly engaged workforce," Chapman says. "I think people enjoy having a say, and lots and lots of ideas come out of it. People are comfortable with having an opinion and expressing it ... and that's because of the company culture."
The same seems to be true at at Coty Inc., the New York-based global cosmetics company. Leaders there concluded that ongoing innovation efforts in its supply chain had plateaued by 2011, says Darryl McCall, executive vice president of supply chain.
Coty then asked for volunteers from among 3,600 employees from manufacturing, distribution and other points in the chain who were spread over several countries to persuade fellow employees to suggest changes. From more than 120 responses, 32 people were picked for an innovation-leadership team.
McCall and his own leadership team then embarked on a global road show, visiting manufacturing and distribution sites in numerous countries. They told employees of their desire to include them in finding ways to be more efficient. They stressed a sense of urgency and the need to employ speed and agility to drive out waste.
And they left a video -- translated in the appropriate language for each country -- making the same points for factory workers and others toiling on overnight shifts who they missed on their visits.
It worked. "People were identifying solutions they knew they could implement and were willing to do," McCall says. "Small ideas, big ideas."
From May 2012 to this year, McCall points out, Coty got 450 "quick wins" from the initiative, borrowing from the jargon of the consultant it retained, Kotter International.
One example: Coty uses the solvent acetone to clean some of its factory equipment. The company had been disposing of it after using it. But one employee knew of somebody who would purchase it from Coty. Not only can the company recycle the acetone, but it makes money doing so.
"It's an example of the employee getting the idea," McCall says. "It has paid off. We can find a concrete link to the bottom line."
After the first year, Coty sought more volunteers to replace the first core innovation-leadership team. The company wanted "fresh eyes, fresh perspectives and it keeps things going," McCall says. This time, a more manageable group of 24 was selected. As with the initial team, they came from different departments and countries.
Like their predecessors, this group was comprised of volunteers and given no financial incentives for participating. Coty did provide this second group with iPads to facilitate communications with each other.
"It wasn't a gift or reward ... but a tool," McCall says.
The employees who served on the first team -- the "alumni group" -- also were given iPads so they can advise their successors, if need be, McCall says. "There's a lot of talent in an organization that is just untapped. If you ask employees for suggestions on how to solve a problem, they usually will. We are now listening to our employees differently."