Business leaders face a variety of challenges. A CEO of a financial services firm, for instance, might still be cutting through the opaque complexity of government regulation enacted following the financial crisis. Meanwhile, leaders of previously lean technology companies are likely to grapple with scaling operations as they transition to public corporations to match the growing demand from investors and other emerging stakeholders.
Despite these differences, business leaders of every ilk are also battling the same uphill climb: the need to drive growth. This challenge appears even more daunting given today’s economic landscape of uncertainty in developed markets and the rise in competition in emerging ones.
Furthermore, as these pressures grow, firms in both private and public sectors are looking for new ideas that can lead to innovative products and services. “Innovation” has become somewhat of a buzzword, but it is undoubtedly an essential element of any company looking to stay relevant.
The ability to innovate is not necessarily a singular skill but something that requires the totality of an organization — from the application of technology to the development of new products and services, from marketing to day-to-day operations.
Across the world, talent managers need to challenge how well their organizations are equipped for innovation. Specifically, do they have the talent in place to drive innovation as a competitive advantage?
There are at least three conditions needed for organizations to realize effectivereturns from innovation. First, they needprocesses to stimulate, support and translate the investment in innovation into tangible value. Second, they need the socio-economic conditions that promote and support innovation. And third, they need people with the right skills.
The last area of human capital — the right skills — deserves further examination, especially given how today’s work environment is structured.
Much has been written about innovation processes. Global indices such as those produced by graduate business school INSEADhave been developed to give organizations a clear idea of the geographic landscape in terms of economic and social conditions for innovation. Understanding in detail the human aspects behind innovation is essential for promoting economic development and richer innovation-prone environments locally.
Such indices, however, provide a very narrow view of human capital by focusing mainly on factors such as graduation rates within a country. Those factors indicate whether countries have people with one aspect of the know-how to be an effective innovator: the knowledge to generate ideas.
Research published in 2012 by member-based research and advisory firm Corporate Executive Board Co., or CEB, on innovation points to two other critical types of knowledge: the knowledge of how (the know-how to get things done) and the knowledge of who (the know-how to network, collaborate and influence others). (Editor’s note: The authors are CEB researchers.)
To find true innovators, talent managers need to first know what they are looking for — what are the behaviors that characterize an innovator? Then once they know whom to look for, they need to know where to look for them — is the talent readily available in their location?
While these questions are important to all business leaders, human resources and talent management both play an important role in identifying and cultivating the type of talent required to produce innovation.
When asked to think of innovations in recent years, many people think of Apple Inc.’s products and its former CEO Steve Jobs — a man who reached iconic status and has been labeled as an innovator. Yet Jobs would have more than likely pointed out that effective innovation calls for more than just coming up with new ideas.
Effective innovators need the intellectual capability to see new possibilities and the analytical skills to interpret and translate market and customer data into specific offerings. They must be able to focus on goals, yet also persist in the face of failures and make quick turns in thinking. They need to be skilled at articulating needs and persuading, influencing and selling ideas to others. It is also critical that they work collaboratively and manage through potential conflict.
Innovation is more than just being creative and intelligent. But what are the talents that mark the true innovator?
CEB conducted research in an attempt to answer that question.Overall, the work points to two key clusters of behavior that drive innovation.
The first, focus and insight, addresses the individual’s ability to bring ideas together and pinpoint important information from disparate data sources. This cluster also emphasizes the importance of a person’s willingness to take calculated risks, persistence to achieve goals and ability to link solutions to clear customer needs.
The second cluster of behaviorsfocuses on networking and collaboration, which is about more than just how a team collaborates to achieve a shared purpose and outcome. The behaviors in this cluster include listening, consulting and proactively communicating with important stakeholders across a business. CEB research shows that true innovators not only leverage networks effectively to capture information and identify those with insight, resources and influence, but they can also sell their ideas to gain the support and funding they need, as well as work through potential conflict.
Based on these behaviors and 2012 analysis of 2.7 million people in CEB’s global talent database, only 1 in 17 — or 5.9 percent — of graduates, professionals and managers globally have the needed set of competencies to be a true innovator. This talent is in strongest supply in mature economies like Australia, Canada, Denmark, Germany, the Netherlands, Singapore, Sweden, the United Kingdom and the United States.
The same 2012 CEB data provide an interesting view on the workforce when cut across industries. Out of 17 sectors, the technology industry is able to attract and acquire the strongest supply of innovator talent. Other industries ranking high on the scale include professional services, food, beverages and tobacco, and retail and consumer goods. The public sector ranks in the middle.
Industries with weaker bench strength for innovators include oil and gas, engineering, telecommunications and banking. The issue in these sectors, the research suggests, is that they do not have a clear lens on the people component of innovation and the methods in place to identify those with the talents needed to deliver effective innovation.
To drive more innovation, firms should foster a culture of idea creation from the top of the business. Talent management professionals have an important role to play in re-engineering HR recruiting processes and development practices to surface and engage innovation potential in the workforce. To do this, they should focus on three vital contributions.
First, it’s critical that HR teams understand not only the technical skills and knowledge required for a role, but also the behaviors that drive effective innovation — like focus and insight, and the ability to persuade and mobilize internal networks. These behaviors are an important factor assessed when sourcing, acquiring and developing employees to be innovators.
It is also critical to reward and assess innovators’ performance. Some companies are now incorporating these two innovator behaviors into behavior-based interviewing techniques, which simulate an innovation challenge and ask the interviewee to detail how they would approach it.
In other words, applicants with an “unfocused” or “do it alone” tendency are quickly weeded out. In redesigning rewards and recognition, other companies are now rewarding innovation “networks” rather than just a single individual; in this way, they recognize the broad base of contribution required for successful contribution.
Second, HR teams need to have a strong knowledge of the bench strength of key “innovator talent.” Knowing where there are innovation gaps and surpluses is critical when acquiring new employees. It’s also important from a learning and development perspective, as the learning team can work to create programs focused on building effective innovation behaviors in existing teams.
Learning and development can also help emerging innovators develop clarity and focus and build robust networks, improve influencing, persuading and communicating skills, and navigate the culture of their organization by leveraging networks locally and internationally. In talent reviews, CEOs, boards of directors and business leaders should regularly examine “innovation potential” scores when deciding whom to place in roles requiring strong innovation.
Third, using talent intelligence to help the broader organization create teams with a blend of innovator talents is significant. Innovator talents are rare, yet teams who excel at five or more behavioral markers are 50 percent more effective, CEB research suggests. By using talent intelligence, HR teams can build teams of complementary innovator strengths and guide the manager on how to manage across those talents. Doing so will increase the likelihood that the investment and effort placed in innovation will pay off.
For many organizations, team mobilization balancing complementary behaviors within teams may be the quickest way to drive innovation. Planning for “innovation teams” allows organizations to get immediate returns from mixing and matching capabilities, even as they embark on longer-to-pay-off efforts to hire and build innovation skills.
As companies around the world seek to adapt, evolve and grow with fewer resources, the ability to innovate is imperative. Getting the people part of the innovation equation right is a critical factor in determining whether organizations innovate successfully or not.
It’s not surprising that true innovators are less common than most companies realize. Organizations need to look at their workforce through the right lens, factoring in the rounded skills and behavioral traits necessary to deliver innovation in today’s business environment.
To learn more about how R&D is driving innovation, read the sidebar that accompanies this feature here.