“We’ll stick to what we know (or hide until it goes away)”
Recent research by the always excellent McKinsey* group has shown that in the current Covid crisis, many organisations are hunkering down and focusing on their core activities – and cost savings. The first response will be to batten down the hatches and do what we’re really good at. That includes saving cash and hiding under the bedcovers until it all goes away. However, the research shows that there is a very strong case for recovery through innovation.
McKinsey interviewed leaders and strategists from 200 organisations in various sectors. The findings that caught my eye were:
- The great majority of executives (90%) interviewed believe the crisis will fundamentally change how they do business over the next 5 years.
- More than 75% of respondents agreed that they will be looking for the changes to provide an opportunity for growth.
- Only one-fifth of those interviewed agreed that they have “the expertise, resources and commitment” to implement new growth through innovation.
- Commitment to innovation as a priority item has fallen from 55% before the crisis to 23% now.
Why does recovery through innovation matter?
Research from the 2008 financial crisis shows that companies that innovated outperformed the market by up to 10% during the crisis. Moreover, in subsequent years, they did so by 30% in subsequent years.
The current crisis has therefore highlighted the need for competence in:
- Adapting the core to meet new customer needs
- The need for new offerings
- Changes in customer behaviour, and
- Influx of competitors from other industries
So what’s the big People challenge for recovery through innovation and creativity?
Creating and chasing opportunities will require innovation; athe big issue for people professionals is that fewer than 30% of the executives interviewed felt confident they are ready to address these challenges.
So as People professionals working in HR, Learning & Development, and Talent, we need to ask ourselves
- First, does our organisation have a plan for focusing on innovation as part of our strategy?
- Secondly, does our leadership/talent population have the skills to respond to the innovation challenges?
- Following on from this, will we assess innovation skills and their levels of competence now and in the future?
- The next question is does our organisation enable employee innovation skills to be used and built into key practices and processes? As the McKinsey article asks: “ are your people motivated, rewarded and organised to innovate repeatedly”
- Following on from these, is the culture ready and agile enough to start thinking and acting on innovation, and if not, how will we do this?
- Next, are our leaders equipped to develop their teams’ innovation mindset and skills?
- Consequently, does our organisation recognise and encourage innovation skills at every stage of the employee journey?
- Finally, do we have a plan to persuade key decision makers of the importance of innovation?
Get started with innovation models, and customise to your needs
For McKinsey, innovation is a combination of eight practices, as follows:
Different sectors have different challenges. So a good approach would be to take a model adapt for your business and sector. The practices above are high-level. We can break each down into a number of more detailed behaviours, skills and attributes that show the ability to innovate.
Here are examples of more detailed behaviour and skills that can define and identify, and initiate through innovation:
- Brings the creative ideas of others to the table
- Encourages effective idea generation and brainstorming
- Uses and encourages others to use experimentation
- Is open to the creative ideas of colleagues and others
- Can step back from current ways of doing things to imagine new ones
- Encourages and learns from failures and mistakes
- Moves on quickly from solutions that do not work
- Understands customers and the market/sector
- Demonstrates curiosity by studying innovation in other fields/sectors
Innovation will be the key to recovery future and success
All organisations and their people are going to need to be more robust, creative and innovative to survive and succeed. To make this happen, we can start supporting recovery through innovation now by building the right skillsets and competencies.
Here are more resources on the topic of innovation:
*Innovation in a crisis: Why it is more critical than ever. McKinsey Article, 17 June 2020
‘Ericsson: 5 key steps to creating an innovation mindset’
‘Diversity Is a Key Driver of Innovation: Forbes’
And for a slightly left-field view, ‘Why diversity isn’t the real key to innovation’