Companies of all kinds now see innovation as a key part of their business strategy. Whether it’s through never-before-seen offerings, a new business model, or innovative internal processes, gaining significant advantages over the competition is the end game. Such quantum leaps occur only through talent - the people who generate superior ideas, fresh perspectives and new ways of doing things. 

Yet because of preconceptions about creativity – that it’s an inexplicable, individual occupation – many companies simply hire smart people and hope for the best. They fail to see that the connection between talent and innovation can be organized and so they lag behind companies that understand and manage the issue.

Forward-looking chief human resources officers (CHROs) and HR department leaders understand their key role in enabling an innovation strategy.  

To better understand how such leaders are ushering in the HR function of the future, we interviewed senior HR executives. Their responses show superior talent management is critical for the success of innovation strategies.

Innovation no longer simply means throwing money at R&D. It means outperforming the competition through the power of ideas in any aspect of the enterprise.

Larry Kleinman, CHRO of Providence Health & Services, says: “Health care is under tremendous pressure to innovate across the board – in the business model, the delivery of care and the transparency of pricing. The challenge is to find ways to take advantage of scale to take out costs without sacrificing the quality of care.”  

Thinking about and doing things differently throughout the organization requires a company-wide effort.  

R. James Cravens, senior vice president, human resources, Kinetic Concepts, Inc, says: “creating an environment of innovation is the only way to ensure that a firm will have relevant business offerings over time. To sustain that culture of innovation, a company must have the ability and systems in place . . .  to select and develop people who can serve as agents of change when called upon to assume senior leadership roles.” 

Developing, aligning and driving the talent management system falls squarely on the shoulders of the CHRO. The CHRO must win the support of senior leadership and have active participation across the enterprise if a culture of innovation is to be sustained. Winning that support and participation often requires overcoming deeply ingrained assumptions and habits, including:

Talent management is solely an HR process. No, says Marshall Mills, CHRO of Baylor Health Care System, “it’s a business process and not an HR process – you therefore have to help the organization recognize that talent management is a strategic, proactive initiative that is critical to sustaining the organization’s current and future success.”

Why should I invest the time and money when it’s not rewarded? Busy executives are reluctant to devote effort to something for which they’re not being “compensated” in some way. But with senior leadership’s backing, talent management and succession planning can be incorporated in performance appraisals, which can motivate business units and executives to pay them more attention.

I’ll order out for talent. Lack of “compensation” is not the only reason senior leaders devote little effort to meeting, assessing, coaching, and shaping future leaders. As one interviewee says, “They too often think one just ‘orders out’ for take-your-breath-away talent and it arrives hot and ready. Talent management is just not perceived as a hands-on senior management accountability.”

Tracking and recruiting external talent is important to any talent management program. But it is fast becoming the most potent competitive advantage and “ordering out” is becoming more difficult. Internal talent development and strategic external hiring is a comprehensive approach to creating an innovative organization.

What does HR know about innovation anyway? In many organizations, HR is often regarded as a payroll and benefits area. Organizations with a CHRO have signaled that issues of talent are central to their success, but HR departments must make good on that claim by quantifying, insofar as possible, the value of innovation-focused, organization-wide talent management.

With backing at the top, the CHRO has a far better chance of bringing along the rest of the organization. One of our interviewees, for example, having helped the top leadership team establish talent management as a key initiative globally for an information management company, met the regional presidents over three days to get their support and establish the framework for the program. The HR managers in each of the countries took the program to the country managers and line executives. This kind of global approach fosters interaction that leads to innovative cross-fertilization across the enterprise.

Common errors, say the leaders we interviewed, include:

• Failing to move talent across organizational boundaries for development and pivotal innovation opportunities
• Creating barriers to letting talented outsiders into the culture
• Conducting inept assessments that unjustifiably protect poorly performing leaders
• Settling for “good enough” in critical talent appointments
• Spending too much time resurrecting flawed or failed leaders
• Failing to align the major components of talent management with each other and with the organization’s innovation strategy
• Lacking agreement among senior leaders about what success looks like – the unique set of values, skills, capabilities, and behavior changes believed to be necessary for pursuing a strategy of innovation
• Over-weighting past performance as a predictor of future success in a job that may require far different competencies
• Forsaking talent management during tough economic times for the company – precisely when innovation could offer the best hope for dramatic turnaround

Many companies have sought to make HR a business partner by posting HR people to key posts, making a stint in HR a part of the career path of high-potential executives, and securing a seat for HR at the top leadership table.

No matter what specific form this HR department of the future takes, however, one thing is clear. In a competitive world where innovation is an imperative for every part of an organization, HR must help achieve innovation-focused talent management now.