Low productivity plagues the UK. What can business leaders do to improve it? Writing in The HR Director, Dr Simon Hayward, author of Connected Leadership and CEO of Cirrus, suggests how we can create cultures that help boost output.
Whatever happens in our post-Brexit world, the UK government’s goal is to achieve strong economic growth. A recent government briefing paper, Productivity in the UK, highlights how crucial productivity is to this long-term growth. However, as we know, UK productivity lags behind other major economies. Latest Office for National Statistics figures show that while productivity is improving, it is still weak. One of the reasons the government cites for this, alongside a lack of investment and the banking crisis, is a lack of innovation.
Evidence suggests the link between innovation and productivity is clear. The European Bank for Reconstruction and Development’s 2014 report, Innovation and Firm Productivity, concluded that productivity is significantly boosted by innovation. In fact, it found that while the average increase in productivity as a result of a new process is 20%, the average increase in productivity associated with introducing an organisational or marketing innovation is a staggering 67%.
The link between innovation and productivity has also been demonstrated by some high-profile case studies. For example, in the 1950s and 1960s, Japanese car manufacturing volumes were extremely low by European and US standards. However, well documented Japanese innovations in both management and technology saw productivity soar. Japanese car manufacturers challenged convention in creative ways and set new standards of efficiency.
Innovation is an area where HR leaders can have a huge impact. A recent CIPD HR Outlook survey identified innovation as the leading business priority for HR and other business leaders, and found a growing trend towards encouraging creativity and new ways of working.
Cirrus and Ipsos MORI’s most recent Leadership Connections research in 2016 found that 49% of C-suite leaders are concerned about increasing innovation in their organisation, and that they are also keen for HR to step up, work in partnership with the C-suite, and help drive it.
Innovation is critical if we are to come up with new ideas for products, services or market opportunities. In our ever-changing and unpredictable world, we cannot always see where new opportunities will come from. Hand-in-hand with innovation goes agility. We need to be agile enough to apply innovative solutions to opportunities as soon as they appear.
In my research for my book, Connected Leadership, it became clear that a hierarchical style of leadership can stifle both innovation and agility. Bureaucracy and command-and-control can also slow the speed of response to new opportunities. In order to boost innovation and agility, we need a more ‘connected’ style of leadership – one that encourages collaboration and rapid decision making. By becoming more ‘connected’, organisations are better able to respond to complex market challenges and changing customer needs. HR leaders can help to develop a culture of innovation, and to connect colleagues to this shared goal.
Connected leaders foster cultures of innovation. They are typically comfortable with uncertainty, receptive to new ideas and keen to share knowledge. They also devolve decision-making responsibility across teams. When teams use this increased discretion, and collaborate effectively across organisations, they can be a powerful source of both innovation and agility.
HR leaders can help to build this team-working mindset on a number of levels:
- At senior levels, HR leaders can help members of the board or leadership team to work well together, in a trusting and mutually supportive way where egos are secondary, so that they set a tone (and provide a helpful role model) for the rest of the business that collaboration is key.
- More widely across the business, HR leaders can develop teams to work across functions and business units to share knowledge and fuel innovation, such as sharing new product development across brands or product categories.
- Between firms, HR leaders can set up and facilitate new partnerships where there are opportunities for sharing investment in R&D or creating joint ventures for new market entry, such as in capital intensive sectors such as energy.
Innovation is rarely successful in isolation. It flourishes where there are both formal and informal meetings with a wide assortment of people both internally and externally who can exchange ideas and learning. This sharing of best practice is pivotal to success. Bringing people together into cross-functional teams to think about the same problem from different perspectives can lead to less predictable and more innovative solutions to problems. It also helps to break down functional silo mentalities, preventing colleagues from looking inwards and protecting their turf rather than seeking breakthrough ideas. The irony I sometimes see, however, is that in the pursuit of productivity these meetings are often discouraged as they are seen by managers as distracting people from their immediate objectives.
Creating cross-functional teams to work on key challenges also supports the use of short ‘sprints’ of activity to address the priority issue, rather than trying to move forward on a range of initiatives that too often leads to none of them getting done well. The role of HR is often to help bring together a balanced team, to facilitate the process of problem solving and decision making, and to provide tools and techniques to enable the team to work effectively from early on in its lifespan. By showing teams how to use agile techniques like sprints they can enable those teams to be both more innovative and more productive.
In organisations with which I have worked where there is a strong innovation culture, the customer often looms large, with majority effort focused on anticipating and meeting what current and future customers need and want. For example, the culture at clothing company Inditex (owner of Zara) is both fast and efficient, adaptable to changing customer needs in local markets whilst having robust productivity in its highly efficient supply chain. This clarity of customer priority tens to drive breakthrough thinking in processes, products and services, with the determination to follow through to actual market release and commercial success.
In these organisations, typically, people are highly capable and inquisitive, seeking constant improvements and never satisfied with ‘good enough’. In one well-known branded consumer goods business the managers encourage people to seek repeated improvements to the ultimate benefit of customers across brands. As well as being agile, there is a real discipline about execution in order to commercialise ideas brilliantly and to build quality into every part of the process. The business has seen record revenues and profitability in recent years as a result.
In another leading retailer seeking to become more agile and productive, HR has led a culture shift programme to enable leaders to encourage colleagues to adapt to changing circumstances, to share what they learn and to operate in a culture which supports experimentation without blame – to ‘fail fast and learn’ as a driver of innovation and pace. They are seeing greater movement of knowledge across the end-to-end process, which increases innovation and improvement, and ultimately better availability of better products on the shelves.
HR leaders can also be very influential role models. As a leader, it is difficult to change how an organisation behaves and operates unless you are a role model for that change. If you say you want your organisation to be more agile but then slow every decision down by seeking more information or insisting on multiple levels of authorisation, you will appear inauthentic. Research shows that authentic leaders encourage a positive culture in which people are motivated to give of their best. Increased levels of employee engagement have proven links to improved productivity. If you are an authentic role model, your fellow leaders are more likely to be authentic, too.
Something else which can help to increase innovation is introducing an element of disruption. Within many organisations I visit there are blockages and restrictions which stifle productivity. I have found that disrupting existing systems by encouraging people to think boldly and approach things in more challenging ways can contribute a great deal to innovation and agility. It encourages faster decision-making. Success is often about changing the way people work, changing the processes and systems that hold back more agile ways of working.
Lastly, a word about focus. In our unpredictable, fast-moving world, multitasking has become the norm. It can also be very distracting. Increased focus leads to increased productivity. So, focus on one thing at a time, be realistic about the amount of time you need to allocate to important tasks, and encourage others to do the same. In an agile world, we need to focus on the top priority and deliver a result quickly, rather than spreading our efforts too widely.
As you connect people and ideas across your business, improving team working and collaboration, you will unlock a great deal of creativity. No matter how unpredictable the future is, by creating a culture of innovation and agility you are much more likely to increase productivity – and increased productivity is key to an organisation’s future success.
© The HR Director 2017
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