David Tighe

I saw two headlines recently that really confirmed what human resource professionals have long known: Innovation comes from people who have had their creative drive nurtured and encouraged, and does not require massive investments in technology to achieve.

The first article that caught my eye was about the banking business:

“Innovation has nothing to do with technology”

The author, Chris Skinner, blogs about trends in banking, and he freely admits that banking is not a hot-bed of innovation. But he finds it all the time in banks that have fully engaged their people in their mission.

“It intrigues me how often we have a conversation about innovation, and everyone starts talking about new technology…Apart from the fact that innovation is no longer the hot topic it was in banking - the credit crisis saw to that - innovation has nothing to do with technology. Innovation is to do with people.”

Right on. I see this all the time in my own work: Great technology is bought to improve productivity, and fails miserably because the people who need to fully utilize the technology are not engaged in any part of the process. As Mr. Skinner finds, the lowest-tech outfits often innovate better than their highly automated rivals:

“There are loads more (examples) we could reference, and they all have one thing in common. None of their innovations have anything to do with technology. Their innovations are all about design, process and culture. So stop thinking that innovation needs, requires or relates to technology.”

You can singlehandedly be the champion of this person-based innovation mindset in your own organization.

The other headline that grabbed me was this one:

“Five ways CFOs can make cost cuts stick.”
(You may have to register with McKinsey to access this report, but it is free.)

Here are the five ways McKinsey recommends for making cost-cutting initiatives stick:

--Assign accountability at the right level
--Focus on how to cut, not just how much
--Don’t let P&L accounting data get in the way of cost reduction
--Clearly articulate the link between cost management and strategy
--Treat cost management as an ongoing exercise

Do you see the language of employee engagement being used here? Cost-cutting is a financial/accounting exercise, yet we see “accountability”, “clearly articulate strategy”, “ongoing exercise” “emphasize ‘how’ rather than simply ‘how much’”.

As an HR leader, you can play a big role in establishing a cost-conscious culture the right way, marshalling engaged employees who take the lead in innovating ways to invest time and money in programs and activities that add value and improve the bottom line. Senior managers cannot implement such strategies. The staff must, and employees will only do so if they believe in the cost-cutting mission and they make it part of the culture.

Quote from the McKinsey article:

“Most companies treat cost management as a one-off exercise driven by the need to manage short-term profit targets—and some of these exercises do succeed in the short term because of constant pressure from the CEO or CFO. Yet such hasty cost-cutting activity typically goes into reverse once the pressure is removed and rarely results in sustainable changes in cost structure. In our experience, the reason is that one-off exercises don’t require internal capability building. A better approach is to use the initial cost reduction program as an opportunity to build a competency in cost management rather than in mere cost reduction.”
“A more enduring approach includes changing the way people think about costs by, for example, setting new policies and procedures and then modeling the desired behavior.” (my italics)

Changing mindsets (the way people think about things) within a corporation is an HR expertise. Here is your opportunity to step in and help the CFO and his or her staff by insuring the cost-cutting initiative is constructed sustainably, taking the time to clearly communicate the strategic reasons for the change in culture and establishing training that instills within the staff an instinct to tie a dollar spent to a revenue-generating activity.
Done right, cost-cutting is not a burden, but an innovative activity that inspires better use of available funds. Money saved can be used for anything that has the potential to generate return-on-investment, too. This is the kind of initiative we foster with our Foundations of Excellence approach, and we encourage you to adopt it, too!

David Tighe has been helping companies change mindsets for twenty-three years as a principal for Bovo-Tighe, LLC. Bovo-Tighe helps organizations solve leadership, productivity, and hiring challenges using its MINDCHANGE™ and Organizational Transformation processes, which have been market- tested in hundreds of real-world business situations. Contact Dave at dave@bovo-tighe.com.