Foster Innovation to Drive Digital Transformation

To drive transformation efforts, HR needs to look for ways to foster innovation, not just buy and build digital talent.

Digitalization is a top priority for corporate leaders, and CEOs increasingly expect HR to drive the digital transformation of the business. HR executives often believe their mission is to attract, develop and retain digital talent. But this limited focus area prevents HR from truly contributing to the digital ambitions of the business. HR can’t just buy and build digital talent. It needs to foster innovation — fast, disruptive and broad innovation that enables the organization to compete and win digitally.

 When HR can improve the innovative effectiveness of the organization, annual revenue can increase by as much as $8,800 per employee

“When it comes to how HR reinvents itself in the digital age, HR’s job is not simply to recruit, retain and develop digital talent but also to solve the problem their CEOs are asking about,” says Brian Kropp, Group Vice President, Gartner. “What CEOs want to know is how to improve the innovative effectiveness of their organizations in the digital age. And CEOs are right to want this outcome. When HR can improve the innovative effectiveness of the organization, annual revenue can increase by as much as $8,800 per employee.”

Digital talent is difficult to acquire and keep

CEOs expect HR to support digital transformation and HR has focused heavily on building and buying digital talent — but those strategies are getting increasingly difficult.

The skill requirements for the majority of technology-based jobs are changing rapidly leaving organizations with significant skill gaps. HR is working to reskill existing employees, and looking at new ways to expand the talent pool, but these efforts aren’t enough in the face of the fierce demand for digital talent. According to Gartner TalentNeuron™, 47% of S&P 100 job postings in 2017 were for the same 37 roles, and 90% of S&P 100 companies recruited for those same roles.

Read more: 5 Places You Didn’t Think to Look for Digital Talent

Digitalization and today’s buoyant economic conditions are also creating discontent among employees — who are expending less effort at work, and keen to pursue alternatives. Globally, employee engagement is low, and has been for at least the last two decades. The latest Gartner Global Talent Monitor finds that only 32% of employees globally report high levels of intent to stay and only 14% report high levels of discretionary effort day to day.

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Innovation as a key driver of digital strategy

The imperative to build and buy digital talent will remain, but HR also needs to consider how else to support digital transformation — especially by driving innovation. Competing digitally means innovating to remain competitive.

In a survey of over 2,000 earnings calls of major global companies, Gartner found that when the topic of talent arose, it centered on talent as a means of driving innovation. In the digital era, companies need to innovate quickly, be disruptive and scale innovation across the enterprise.

Building an environment that enables innovation

Traditionally, innovation strategies have centered on helping individuals and teams to be more innovative, but their impact is limited. Too few employees are actively engaged in generating new ideas and/or leaders’ risk aversion stifles them.

Gartner research found that a more network-based approach achieves greater innovation effectiveness. This involves building and drawing on a network of expertise — including employees and leaders — to innovate at scale.

Notably, our research found the network approach is more effective, regardless of the organization’s level of digital acumen.

Innovation strategies that win

HR functions that are the most effective at creating innovative organizations use these network-based strategies:

  1. Involve employees in filtering not just generating ideas. When employees feel like they have skin in the game and are actually responsible for choosing which innovative ideas the organization pursues, they are more engaged and committed to it.
  2. Equip leaders for shared not individual risk taking. HR needs to help leaders work together to understand how to take better risks and chances in the digital age.
  3. Give employees more guidance on using networks to innovate. To maintain momentum, HR needs to rethink how ideas move through their organization and equip employees with a different sense of who to work with and how to push ideas forward.

Gartner for HR Leaders clients can learn more by attending the webinar Driving Network Innovation: Talent Strategies for the Digital Age.