During a time when inflationary pressures and recession concerns disrupt markets, elastic innovation continues to propel change while also creating stability and organizational resilience. Effective leaders recognize that, especially with key talent in high demand, people are at the center of innovation, and that innovation creates both growth and value in any environment.
As such, these leaders add a sixth “P” (People) to the traditional “Five P’s” of innovation (Pipeline, Pace, Process, Portfolio, and Products) and adhere to the following fundamentals (with thanks to WTW’s Ken Kuk):
Effective leaders understand that the right talent is essential both to source new ideas and to implement new or improved products and services during times of change. They also know innovation is about challenging the status quo. A constantly refreshed and diverse workforce is fundamentally important in creating new ideas – not only as measured by its demographic traits but also through individual backgrounds and personalities. A deep understanding of the performance and skill profile of joiners and leavers supplements hiring and attrition statistics in telling a complete story.
Effective leaders know innovation is a learned skill (as opposed to something innate in certain individuals). With the right nurturing, any employee can innovate in their distinct capacity. For knowledge- and judgment-based workers, this could mean learning the craft of A/B testing, stakeholder journey mapping, customer listening or rapid prototyping. It also could involve adding new technical skills or a better understanding of market trends. For administrative and manual workers, it could mean developing new approaches (within reasonable procedural, safety and quality limitations) to performing daily tasks that enhance efficiency and effectiveness or learning new tools and applications, as well as save costs. Effective leaders make learning and upskilling targeted to support the different stages of an innovation lifecycle – from ideation to testing to commercialization.
A healthy company culture that fosters innovation amplifies the impact of people and their skills. Agility, new ideas and inspirations are best cultivated in an environment where people feel psychologically safe to step outside their comfort zone and take risks, and where failing is considered an integral step of learning. When the purpose of work resonates and employees feel dignity, improving the status quo is about making an impact. This inner drive is often more powerful than any extrinsic (e.g., pay-based) incentive system. Listening to employees enables leaders to understand progress and tweak management styles, while employee analytics help address innovation barriers within specific segments of the workforce.
Decentralized decision-making models empower managers and professionals to execute a broader overarching strategy. Supported by healthy company culture, such models give all levels of management more freedom to take risks and pilot ideas at a higher velocity. Distributed organizational models with the right culture enable and elevate innovative sparks anywhere in the company, and better enable employees at all levels to support the pursuit of innovation.
Most traditional performance management and reward systems fundamentally discourage risk-taking. Employees often are penalized for failing so they perform their work in largely tried and tested ways. This mentality is the opposite of what fosters an innovative organization. While it generally does not make sense to reward for failure, holistic performance management systems treat “failure” as learning, assessing whether the individual develops and makes better decisions based on the experience, and the level of coaching required for the individual to build their path to success. People are more likely to thrive under an effective manager who encourages them to try new approaches, advocates for them in the performance review process, and coaches them to grow from failed attempts and incorporate learning into their next endeavors.
The connection between employee wellbeing and innovation is well-established. At organizations where the employee experience centers around physical, emotional, social and financial wellbeing, stress levels are lower and the company purpose is reinforced through culture and supporting programs. This frees employees to create and inspire. Effective leaders seek to build a wellbeing-centric, equitable and inclusive employee experience. When all members of the workforce feel emotionally connected to their work, the power of innovation multiplies. Workforce analytics enable leaders to gauge wellbeing outcomes within employee groupings and reduce specific stressors.
Leading organizations are accelerating innovation while facing the many current challenges. The sixth P of innovation reflects that business leaders are adding a new dimension to their pursuit of elastic innovation. By ensuring that they have the right people, skills, culture, structure, programs and wellbeing, leaders position their organizations to prevail in increasingly disruptive and dynamic times.
A version of this article originally appeared on Forbes.com on June 27, 2022.
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