The business world today is faced with a dichotomic and a fairly ubiquitous problem. In recent years, the performance of the latest technologies relative to their costs has improved substantially. But this hasn’t necessarily reflected in how modern day organizations have been able to tap into such a potential to improve the company’s growth. The gap between the advancement of technology and its successful adoption within companies today is of key concern. In other words, the gap between how much companies are investing in innovation and its adoption into improving business processes poses a challenge in front of companies, especially when studies show such a gap has been increasing.
A recently published study by Capgemini’s Digital Transformation Institute highlights this growing trend. 87% of companies have a lab or space dedicated to innovation. However, the report found that although many firms, over the years, have significantly increased investments in innovation centers, they are still to see tangible results. In addition, the investments into R&D projects have also risen globally. According to an Accenture analysis, top global companies have all increased their spending on R&D projects—and show almost a 6 percent rise between 2012 and 2017. It also predicts this to be a rising trend as many more companies are expected to follow suits with executives expecting a rise from anywhere between 25 to 50 percent in their R&D investments over the next five years. Such a rise in innovation centers and R&D projects are done with the intent to ensure companies are prepared to weather market disruptions and embrace business transformation to remain productive. But that has not been the case. Companies today are still wary of the threats that external markets pose today and still feel unprepared to undergo transformation processes like shifting to completely digital platforms. Accenture’s recent report “How to unlock the value of your innovation investments” reveals how most organizations report incremental innovation levels which in the current times does little to proactively prepare the organizations for incoming challenges while keeping a lookout on the possible opportunities. Given its increased importance within companies today, the low success rates of companies in successfully ‘innovating’ to leverage markets conditions better while investments into developing such capabilities are on the rise, is certainly puzzling.
Over the years, many organizations have significantly increased investments in innovation centers, but they all are still to see tangible results
One thing that often takes on a significance when it comes to innovation in a company’s context is to know that it's not a one-time effort to innovate and neither can one person completely ensure that a company is innovating. It is not something that can be achieved without creating the necessary conditions that make such a process sustainable. Thus, when it comes to identifying the culprit that’s been holding companies back by creating impediments in their innovation journey, many factors come into play; some factors which squarely find themselves in the realm of modern-day HR functions. Factors like a company’s culture, lack of engagement and coordination with different stakeholders, and a lack of qualified talent — all act as variables in the final equation. Many such issues directly, and some indirectly, fall into the ambit of an effective HR functions role.
Talent: A missing part of the equation?
According to the latest Deloitte Global Human Capital Trends report, over 90 percent of leaders globally state that making organizations future ready is a key priority. But the same study interestingly points to how few, 11 percent of the same cohort, believe that their organizations are ready and possess the capabilities to do so. Innovation in the workplace is an important indicator when it comes to creating the institutional capabilities to manage change and be future-ready. For many companies, the ability to innovate is often considered the single most important predictor of future growth. In light of such a reliance on innovation, heavy investments in building an organization to successfully innovate make much sense. But human talent still forms a core part of how companies are able to sustain and maintain their abilities to constantly innovate. And it often becomes the reason why innovations in work fail to have a larger impact on the company’s performance.
Currently with the continued improvement of advanced technologies, the gap between what technologies make possible and the ability of companies to internalize it is only going to grow.
Failing investments in research and innovation stem from the lack of culture that can sustain innovation or the lack of talent needed to translate any innovation into a working reality.
To ensure that innovation becomes the mainstay in companies today, corporate innovation strategies need to aim at being more people and human capital-centric. Strategies, like engaging and incentivizing key talent for the purposes of innovation, promoting and rewarding entrepreneurship and risk-taking, and allowing opportunities to develop innovation skills for all employees, helps create the necessary cultural shifts. This would greatly improve the abilities of the organizations to reflect the true value of their spending on innovation strategies. Creating a culture that enables companies to innovate and having the right talent that helps it become future looking, therefore, becomes a necessary component in the larger machine that would drive corporate innovation. And this is where the HR functions across the globe become crucial and play a key role in ensuring that companies keep up with the external changes.
The role of HR
The Accenture study also mentions that having a supportive and inclusive work culture is necessary to ensuring that businesses are able to change how they operate. With the kind of talent decisions that the HR function is entrusted to make, they can help their companies realize their goals of being better innovators. With Talent models evolving with the advent of freelance and project-based works, HR professionals today can help businesses meet talent expectations when it comes to leveraging market innovations for better business performance. Similar to the case of supporting business transformation, HR professionals have to play an active role in ensuring their company is able to innovate in a way that keeps them ahead of the curve. Reports note how companies today are struggling with a lack of innovation-focused culture, the absence of robust internal processes and a lack of leaders who promote such a culture internally. These are critical aspects that require immediate problem-solving. For the HR function, this might involve breaking free from the established path of following ‘best practices’ and using levers like rewards, performance management, L&D, and organization design to solve problems of coordination, vision, and the absence of a culture that structurally and sustainably promotes innovation. Only then can innovations truly help modern-day companies, and to do which HR itself might need to think of innovative solutions.