Innovation? It’s a people problem

HSBC UK has partnered with Raconteur to deliver advertorial content and an accompanying research program to look at what’s driving UK businesses with ambitions to grow. In this article, we look at how the role of innovation in driving business growth and how firms can foster a more innovative culture.

There’s little doubt that the way business has changed in the last decade or more has been affected by the rise of innovative technology products. In fact, many huge strides forward have been down to devices and products.

The result is that business leaders can end up linking the two directly. In their pursuit of innovation businesses are increasingly looking to tech solutions. However, despite tech’s importance in bringing about change, many businesses struggle to innovate effectively.

New research from Raconteur and HSBC UK shines a light on such challenges. The Growth Experience survey of more than 500 decision makers across UK businesses highlights that while a lack of tech can inhibit innovation (36%) the biggest challenge facing businesses is a lack of the right people, with 38% of leaders saying this is their biggest barrier to innovation.

And why wouldn’t business leaders want to overcome such hurdles to unlock innovation? The benefits on offer are myriad, with 1-in-4 business leaders saying innovation helps their business to better meet customer needs, while more than a fifth claimed that enabling better organisational problem-solving was another key driver of innovation.

“There are many new, innovative solutions out there that could help a business,” says Tom Wood, managing director of global payments solutions at HSBC UK commercial banking. “But it’s being able to connect those tech opportunities to the business and the knowledge of how that business operates that makes a difference.”

Linking innovation and growth

Innovation isn’t just a buzzword in the world of business; it is a crucial driver of growth for businesses of all sizes. According to the Growth Experience survey by Raconteur and HSBC UK, 81% of respondents believe there is a strong or very strong link between innovation and growth, with 92% feeling this link is stronger within their own businesses than generally in the market.

“It’s clear to me that innovation is a key source of value for businesses of all sizes, from SMEs through to the largest customers that we have,” says Wood. “Successful innovation helps our customers create opportunities to attract new customers; it creates opportunities to deliver new products. It creates cost efficiency; it creates lower operating costs, which allows for better business performance.”

But innovation doesn’t come from anywhere. And despite the tech sector’s best attempts to convince people otherwise, it doesn’t come from their products alone.

People power

People are the backbone of any innovative endeavour – and they’re the ones innovating within businesses. HSBC UK’s survey reveals that having the right people (63%), the right technology (68%), and innovative leadership (66%) are seen as the biggest enablers of an innovative culture by business leaders.

“Tech can’t do it alone; the connection between emerging technology and the needs of customers is where people come in,” says Wood. “Tech provides the tools, but people are the ones who wield the tools to drive innovation within their businesses.”

The research found that while businesses were most likely to have implemented innovative thinking around technology and processes - they were less likely to have done this with their thinking around people strategies.

It seems people are the overlooked resource in the innovation value chain, with 56% of respondents having ‘new ideas’ around people but progressing little further on the innovation maturity curve. This suggests that a reframing of the value of people in a tech-enabled world could lead to stronger growth among UK businesses.

Yoti, the company that has developed digital identity solutions to check the age and/or identity of users visiting websites, among other use cases, exemplifies the approach of blending people and product to unlock innovation. Robin Tombs, co-founder and CEO of Yoti, says his company’s success is down to fostering a culture that encourages all employees, not just those in R&D, to innovate.

“You can’t make innovation happen, but you can create the climate to encourage as much opportunity for innovation as possible,” says Tombs. “If you close people down, if you don’t listen to your junior people who might come up with a wonderful idea, you’re effectively closing off most of the ways that innovation thrives and flourishes.”

Where innovation stalls

Yoti is a business that has got it right, empowering its people to speak up and find new solutions. But not every company fares so well. Despite the clear benefits, several barriers hinder innovation within businesses. The Growth Experience survey data identifies a lack of the right people and a lack of strategic thinking as significant inhibitors to innovation, with 38% of leaders citing both. Those barriers could stem from a failure to invest in talent and a reluctance to embrace change.

Changing that is a top-down decision. “If leaders are unable to explain why a business needs to evolve as new tech and competitors emerge – and the potential risks if they don’t – then you end up with a culture of iteration that fails to really change the current business model,” says Wood.

Yet it’s easier said than done. One of the major challenges that businesses face is balancing the need for operational efficiency with the need for innovation. As companies grow bigger, the focus dictated by business leaders often shifts towards maintaining existing products and processes, rather than exploring new ideas.

“You must have enough confidence to say, ‘Well look, we’re going to make some room for that. We can’t do too much but we’re going to make some room for it and see where you get to in two or three months,’” explains Tombs. The ability to create time and space for innovation is easier for larger organisations, where there is more capacity, than in smaller ones – but nevertheless requires a deliberate effort to prioritise and support innovative projects, even if it means deviating from established plans.

Planning for success

However, a sea change in how businesses approach the idea of innovation can mean plans needn’t be overhauled if the ability to innovate is baked into them at an early stage. Business leaders could choose to recruit a diverse workforce that imbues the business with a broader range of perspectives and experiences from which innovation can spark. Hiring from different industries and backgrounds, as well as focusing on skills that are not traditionally associated with the business can bring new perspectives.

Empowering those already within a business to learn new skills can also bring new ideas to the table. Investing in ongoing professional development ensures employees are up to date with the latest knowledge and skills in their sector – improving their ability to innovate and boosting confidence, which can lead to more experimentation.

Actively encouraging employees to experiment and take risks without fear of failure is crucial to innovation in a business. As Wood notes, this requires providing necessary resources and time for employees to explore new ideas – but can reap dividends.

Freeing up that time isn’t solely a job for those lower down the organisational chart, either, says Wood. Innovation must be championed from the top. Senior leaders should actively participate in ideation sessions, showcase their own innovative efforts, and recognise and reward contributions from employees at all levels.

“Senior leaders need to carve out sufficient time in their own working week for that ideation, that learning, that showcasing of your own development and then showcasing it to the team,” says Wood.

Outside perspectives are also important. Engaging with consultative partners like HSBC UK can provide valuable insights and support. Those partnerships can help businesses navigate the complexities of innovation, from accessing advanced technologies to connecting with other industry innovators.

“HSBC UK’s role in this for our customers is about how we work with innovative businesses alongside ourselves to create a more compelling customer proposition,” says Wood. “We’re partnering with the progressive tech companies to access new technology and develop our understanding and capabilities. We can then share these insights with our customers to help them build their own industry knowledge and strengths.”

How small businesses can unlock innovation

From its inception, Yoti has championed a culture of openness and collaboration along the lines outlined above.

“A lot of innovation comes from product and services,” admits Paco Garcia, chief technology officer of Yoti. “But beyond that, it’s about creating a framework for new and innovative ideas that helps them to see the light of day quickly.”

Yoti encourages all its employees to suggest innovative solutions to their work, regardless of their role. Doing so has led to the application of AI to improve customer service and the development of secure biometric capture systems to combat fraud – key parts of what separates the company from the competition.

Yoti’s flat organisational structure allows ideas to flow freely, enabling rapid implementation of innovative projects, says Garcia. That bottom-up approach, which allows new ideas to come from anywhere, ensures that innovation is not confined to specific departments but is a company-wide effort.

That internal innovation is bolstered by support from partners like HSBC UK, who play a critical role in supporting business innovation.

“We engage quite a lot with HSBC UK on the technology side,” says Tombs. “They’ve been our bankers for a long time, but since they put the funding into us, we’ve engaged more with them on the technology side.”

That has reaped benefits, he says. As with everything, innovation can often come down to clear communication and productive conversations - and so it may be time for smaller and mid-sized firms to lean into their people if they want to truly unlock tech-enabled innovation in their business.

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