What do an old Chinese saying, job evaluation at Siemens, and Coca-Cola’s new performance management system have in common? The answer provides us with an intriguing lesson in innovation.
In the 1970s, China’s leaders described a series of economic reforms as “crossing the river by feeling the stones.” That is, pilot projects help test new ideas and lead the way toward progress, and each of these small advances leads to a shake-up of the system, too.
As technology progresses apace, we are seeing businesses increasingly seek new ways to create sustainable value. This is clear in Mercer’s Global Talent Trends Study, in which 94% of executives said they have innovation on their strategic agenda this year.
We also know that innovation makes a difference to individuals — what inspires them, where they want to work and where they want to stay. And the data bears this out: employees who report feeling energized at work are twice as likely to work for a company they believe actively supports innovation.
Yet there is a mismatch between how individuals and organizations experience innovation. Yes, innovation goals sit glowing on company mission statements and websites. But the reality is, while three out of five CEOs rate their executive team highly on leveraging creativity and innovation, only 42% of employees say their company makes it easy to innovate.
It also presents a challenge for HR with many of us thinking it is up to others to take the reins on innovation. We may wonder what innovation amounts to in practice — is it simply another toolkit to get our heads around? But if embraced fully, innovation can change the narrative on HR’s role in the business — and test how the role of CHRO can evolve in the future of work — particularly as AI and automation increase the pressure to deliver a new vision for the function.
Adopting a lab mindset tackles both these challenges. Just like in a science lab, a lab mindset creates an environment of curiosity that encourages employees to ask questions, investigate hypotheses, and draw on data to validate these assumptions.
On the HR side, by boldly experimenting with talent practices, we can upend our legacy models of how we enhance the employee experience. This is particularly true as technology super-charges opportunities to change working practices.
Here are three ways I believe HR practices can infuse an enterprise-wide culture of experimentation (and contribute to each of the goals in the model above), which drives new commercial products and solutions and can accelerate the evolution of HR.
Creating a lab mindset requires building up the layers of an innovation culture and integrating them into performance management. There is little motivation for employees to experiment if they are evaluated only on financial outcomes or if there is no space to try something new. This requires companies to think carefully about the formal and informal messages they send, including what type of innovation is rewarded, to whom and when. Rewarding managers on how many ideas they coach to fruition might be more impactful than celebrating idea generation, for example.
Employees need the tools and framework to help them experiment. Innovation hubs or labs are increasingly prevalent (two in five companies say they have them today). While this is a step in the right direction, some of the most innovative cultures champion innovation beyond these pockets and find ways to leverage creativity — not only of the whole workforce, but the broader talent ecosystem, too.
Companies that are good at innovation create nimble, interdisciplinary task forces that come together to experiment and learn — and talent analytics are vital to enabling this step-change. By mining employees’ behavioral data, HR can match varied skillsets and personality types to work on gnarly business challenges. Bio data and information on people’s interests also ensure these teams are diverse, assembling groups of people who would not normally partner to stimulate ideas. And to avoid misunderstandings, these task forces need training to develop a common organizational vocabulary for innovation. Self-paced micro-learning experiences (such as Inventium’s Customer Driven Innovation program, or MOOCs provided by edX and General Assembly) are a great way to build this new language.
Perhaps the biggest contribution to a lab mindset is a commitment to data-driven decision-making. Creative ideas often come from the people closest to the customer (or an employee, if this is the challenge), but employees need access to data to verify the results of experiments they undertake.
We need to walk the talk on innovation. We’ve learned that adopting a lab mindset helps HR teams pose questions, probe the data, and set up experiments that challenge the status quo. For example, Siemens is exploring the impact of going level-less at senior levels and closely monitoring the results to see whether it increases efficiency. Improving the employee experience requires HR to empathize with employees’ needs and work backward from this aspiration to create a solution. This is a world apart from the efficiency mindset of the past.
To add a final note, predictive workforce analytics are essential to HR’s test and validation process. This analysis is critical if we are to answer executives’ most pressing talent questions, such as what causes people to leave/stay? Coca-Cola gained executives’ support for a new performance management system by focusing on the numbers: by comparing results from pilot projects against a control group, they demonstrated its impact on variables such as engagement, productivity, and retention. This is a far cry from traditional “socialization campaigns” and brings us closer to where HR should be.
Cultivating a lab mindset is an intrinsic part of building a thriving workforce for the future. What’s more, by harnessing empathy, increasing our aptitude for experimentation, and enhancing our ability to tell data-led stories, we can lay down our own stones toward the HR of the future.
To learn more, download Mercer’s latest paper, Cultivate a Lab Mindset: Building the Innovation-Ready Organization
About the author
Kate Bravery is a Partner and the Global Leader for Mercer’s Career Practices. She has over 20 years’ experience in Human Capital consulting and has spent her career helping clients achieve a talent advantage through people. She is focused on the Future of Work and the implications for organisations, HR, managers and individuals. Kate leads on many of Mercer’s thought leadership pieces, such as the annual Global Talent Trends Study, and supports Mercer’s Talent and Transformation Practices to turn future-forward ideas into action.