In the era of the industrial economy, companies were able to succeed by being more efficient than their competitors. Today, in the so-called knowledge and innovation era, that’s not enough. Given the speed at which changes occur, companies must be able to innovate and to constantly offer products and services that offer new value and exceed customer expectations.
Innovation, especially radical innovation, requires different organizational skills from operational excellence. So the need to create ambidextrous companies able to make the most of the current business while exploring new opportunities. Achieving this is not an easy task. The first step is to accept that skills, tools and mental models valid for organizational efficiency and making the most of the current business are not suitable for exploring and spurring new discoveries.
The big challenge is to ensure that both approaches, despite all the differences, coexist harmoniously right within the same organization. That mission should involve as many stakeholders, the more the better. Nevertheless the HR function should undoubtedly play a leading role , as people management is a crucial facet for achieving cultures that blend efficiency and innovation together.
The organizational culture reflects the values, rules and mental models that the people in an organization share. It is therefore a key aspect for realizing work environments that favour innovation. Factors such as curiosity, autonomy, being ready to take risks, and openness to new points of view are vital to ensure that innovation shifts from an abstract notion to become a reality that generates impact.
However, most companies do not have the optimal culture. New ideas are rejected and companies do not feel comfortable managing uncertainty and risk. They establish hierarchies and seek control mechanisms in order to maximize their efficiency. To perform even better at what they do and to sidestep divergence are their main goals. An entire discipline has been created around this idea. Management as we know it today emerged precisely from this interest in controlling and seeking operational excellence. Trying to innovate using the same principles is doomed to be a failure.
There are a number of practices that affect different functions that must be unlearnt, if you want to create innovative environments. This involves learning and implementing other new functions from scratch. Likewise this is also true for the HR function, whose goal should be to create and maintain the most suitable culture for encouraging and supporting innovation.
While many traditional HR systems make sense in the ambidextrous company, in many cases they must be reformulated and others must be recreated. When discussing systems related to people management, I’m referring to the HR planning system, among other things.
An effective HR planning system is crucial for innovation. This category includes analysing and identifying both present and future talent needs, which implies getting to know in depth the business, the areas to be innovated and the capabilities required for it. From here you must decide whether to develop internal talent, or hire external people.
Managing radical innovation has little to do with media, convergence and consensus. It is in fact much more related to what is atypical, divergent and extreme. It is important to keep this in mind when selecting and hiring people who must offer their talent to contribute to innovation.
Individuals and organizations tend to repeat habits, which makes it difficult to create products and services which are sufficiently original and different. These habits also make it hard to identify new variants of value. The easiest type of value to notice is the one that is already being offered and which establishes the prevailing business logic of the company or even the sector.
The obsession with finding people who fit the culture must be complemented by the diversity that innovation demands. Companies need to be specific about those features that are not negotiable, but must ensure that such criteria enable them to recruit people with very diverse views and cognitive styles.
Such people participate in questioning current practices. Diversity is a key part of innovation. This leads to the importance of adapting new practices to ensure the presence and management of truly diverse people working in the same organization. That includes setting up recruitment processes in order to seek out unconventional people who do not fit in today's culture.
One such example is L'Oréal, the world's largest cosmetics company which established a separate recruitment process from the regular one for the group of people they call "unconventional". These are people with interesting profiles, but who would have had difficulty passing a recruitment process aimed to cover jobs where the role was to handle day-to-day operations.
More and more companies are aware that innovation comes from those who are at the edge. Only by employing people who think differently and who are able to generate new combinations of elements will these organizations be able to meet the challenges of the twenty-first century.
Nevertheless we should not lose sight of how differences generate conflicts. Retaining and recruiting unconventional people with great potential for innovation can be a real challenge. In many cases these are people who are not easy to manage. Often they are anarchistic, with little concern for others, even self-centred, unpleasant and without much capacity for teamwork. Nonetheless they are essential for achieving major innovations.
Like other areas of traditional management, this must be reformulated to adapt to the need for recurring innovation, the same applies to the HR function. If people must innovate, then how to manage them to benefit from all their innovative potential must be well understood to ensure that the company has people who are able to see what others don’t.
This means abandoning practices that have been considered dogma up till now and adopt other new practices from the ground up. For years the emphasis has been laid on the importance of recruiting people aligned with the company values and discarding whoever of those are different and could distort workforce homogeneity. The new message is that if you want to innovate, you must hire people who do not fit into the organizational culture and who are able to challenge the prevailing business logic.