When it comes to pursuing success in any market, both risk management and innovation feature high on executive agendas. How do organisations balance these potentially conflicting priorities? And what role do leaders play in creating clarity and alignment? I explored these questions with four experienced HR Executives and PageUp Talent Lab contributors. Key outtakes that we can all learn from are summarised below.
Innovation versus Risk Management
Jane Lewis, Director of People and Development for international law firm, Allens and Natalie Marsh, General Manager of People and Planning at the Department of Industry, Innovation and Science are well qualified to provide us with guidance on the interplay between innovation and risk management. Both hold senior roles in traditionally risk averse environments – law and the public service – but their insights on this topic are relevant far beyond these sectors.
Jane points to the complexity of fostering a culture of continuous learning and innovation in a professional services environment. She says that behaviours such as experimentation, accepting failures and learning through iteration are “all fundamental building blocks of an innovative culture.” At the same time, the value that Allens delivers to its clients and the market is built on expertise and getting things right. The very traits that serve people in the profession well – attention to detail and a low appetite for risk – appear to contradict the characteristics that foster innovation and growth.
The very traits that serve people in the profession well – attention to detail and a low appetite for risk – appear to contradict the characteristics that foster innovation and growth.
Natalie Marsh puts a different lens on the relationship between innovation and risk. In her experience, a clearly defined risk management framework can be conducive to innovation without fear of negative consequences. Frameworks to manage risk enable people to take chances and do things differently in a structured way. This enables innovation and risk management strategies to work well together, especially in more risk averse environments.
Natalie expands: “In my opinion … a low risk appetite is the reason why public servants don’t innovate. But, in fact, if you use your risk framework and your risk appetite properly, it creates a safe boundary so you can innovate more. If you have an idea, then you wrap a risk framework around it when you’re determining your next step, you can make sure you identify the risk, put in place mitigation strategies, speak to your bosses and seek their help. If you use it properly, risk actually helps innovate.”
“If you use your risk framework and your risk appetite properly, it creates a safe boundary so you can innovate more.” – Natalie Marsh, Department of Industry, Innovation and Science.
For Allens, the firm sits firmly in the middle of the innovation-risk management spectrum. “We sit on the extreme end of the spectrum from a risk perspective when risk management is required, but we can also be quite innovative when that is what’s required. We have healthy evidence of both, but we need to bring them a bit more into balance,” Jane shares.
Leading from the Top
So how is Allens addressing this “cultural polarity” and fostering workforce innovation? They are currently experimenting with a number of formal and informal learning strategies, which start with their leaders. Jane sees a close alignment between a ‘learning culture’ and cultures of innovation. This is reflected in behaviours such as experimentation, integrating diverse ideas, and approaching problems in new ways. The firm has pulled together a cross-section of Partners to build out their learning culture. Jane and her team are also shaping a leader-led learning strategy that will equip Partners and people managers to serve as teachers and talent developers. She sums up: “Innovation can’t be a centralised mandate. Unless partners and people managers are engaged as champions of change, nothing will shift.”
“Innovation can’t be a centralised mandate. Unless partners and people managers are engaged as champions of change, nothing will shift.” – Jane Lewis, Allens
Steve Arthurson, General Manager of People for Australian Pharmaceutical Industries (API), and Andrew Keen, Executive Manager of People and Organisational Development with The City of Greater Geelong, concur with Jane. Leaders play a critical role in creating clarity and alignment, and ultimately fostering innovation. Both have firsthand experience of this.
Steve describes his time as an executive with 120-year old beverage company, Fosters, by way of example. In this capacity, he was part of an innovation revolution that dramatically changed the way the company and its people worked. This hinged on changing mindsets, skills and behaviours, and putting in place processes and structures to support innovation. The results were astounding, reducing time to market for a new product in excess of 85%. At API, Steve and his team are on a similar journey laying the groundwork to foster a culture of innovation. A senior leadership cohort has been tasked with exploring how to make innovation a way of working in the company. To underpin this culture shift, the company has embedded a range of innovation behaviours, such as insight, collaboration and influence, within its leadership framework.
An innovation revolution hinges on changing mindsets, skills and behaviours, and putting in place processes and structures to support innovation.
The City of Greater Geelong is currently undergoing an organisational transformation led from the top. Andrew and his executive peers are spending time at different work sites role modelling the open and collaborative behaviours that they want to foster throughout the workforce. They’ve fortified this cultural shift with a set of fundamental principles. From recruitment to talent management, leadership development and succession planning, “we’re underpinning all of our investments in capability and development with these core principles,” Andrew explains.
Innovation can thrive within boundaries. To achieve this, our panel of contributors highlight the importance of (1) leading by example and (2) defining expected behaviours of employees. Cultural development is far from black and white. Structured frameworks can make it less ‘grey’ when senior leaders serve as exemplars and bring these to life.
About The Author
Head of PageUp Talent Lab , PageUp
Alison leads PageUp Talent Lab and is responsible for research in the field of strategic human capital management. She has more than 15 years of experience delivering organisational development solutions, consulting and advisory services to a diverse range of companies. Alison is a Registered Psychologist with a Masters Degree in Organisational Psychology.