Cirrus CEO Dr Simon Hayward considers how British business can address the productivity gap.
There is a statistically significant link between the quality of management in UK business and lack of productivity. That was the view stated very clearly this week by Andy Haldane, chief economist of the Bank of England. In a speech to the London School of Economics, Haldane said some management teams have a somewhat inflated view of their own abilities.
Low levels of productivity are a perennial issue for the UK, which lags behind other major economies. A recent government briefing paper, Productivity in the UK, cites lack of innovation as one of the reasons for this.
As Haldane suggests, many British businesses do need to improve their management skills. To have a positive impact on productivity, skills development needs a clear focus on building agility to support innovation.
If managers do indeed lack awareness of just how much they need to develop their skills, some confidential and anonymous 360 degree feedback, combined with some psychometric profiling, can help to identify what those needs are. Ideally, this will be supported by a shift towards a more honest feedback culture, where colleagues feel free to be open with each other in a supportive way.
Innovation is already a priority for many businesses, as demonstrated by a recent CIPD HR Outlook survey where it was highlighted by HR and other business leaders. Cirrus and Ipsos MORI’s 2016 Leadership Connections research 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. We need to be agile enough to apply innovative solutions to opportunities as soon as they appear.
When I was researching 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 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.
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.
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. At Cirrus we call them ‘Connect All’ meetings, to address particular client issues with a cross-functional approach. 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.
In organisations where I see 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. 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’. Often this is supported by a culture which encourages experimentation without blame. In addition, these organisations are usually disciplined about execution in order to commercialise ideas brilliantly and to build quality into every part of the process.
As Haldane said in his speech, the UK’s Olympic athletes have shown that innovation can take the form of a series of marginal gains. An openness to new ideas and new technology and a willingness to experiment with an open mind have ultimately led to very real improvements. Over time, these improvements accumulate to deliver world-beating performance.
If you’d like to share your views, or to discover how Cirrus can help develop agility and innovation across your organisation, please get in touch.