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 second article, Raconteur speaks to entrepreneurs about the value of innovation in driving business growth and how leaders can foster an innovative culture.
Finding a path to growth is the goal of any business leader. But the shelves of business books lining airport supermarkets, and Amazon bestseller lists, suggest that, while we’ve had centuries of business expertise to fine-tune the core principles of how organisations should be run, there are as many proposed solutions as people on the planet.
One strategy that’s often embraced by business leaders looking to grow their organisation is to foster a culture of innovation. But what that means in practice depends on whom you ask. Most people agree that innovation is a core component of growth. In a competitive business environment, having new ideas and strategies to stay ahead of the competition is crucial.
“You can have growth without innovation – and I think you can also have innovation without growth,” says Roland Emmans, head of the UK technology sector and growth lending at HSBC UK. “However, if you’ve got both, you’re more likely to ultimately be successful.”
Emmans meets and speaks with between 200 and 300 tech businesses a year through his role at HSBC. He believes, from what he sees day in, day out, that change is “ever accelerating”.
What is innovation anyway?
The challenge is how to keep pace – and how to encourage your organisation to think innovatively without losing direction, focus or staff morale.
“Innovation is a bit of a scary word,” Emmans says. “It conjures visions of Steve Jobs and other tech titans. Many people worry that they can’t or won’t measure up.”
But he adds that business leaders and rank-and-file staff alike need to be aware that innovation needn’t be overly disruptive. “It doesn’t have to be revolution; it can be just evolution. Many of the most powerful innovations I’ve seen have been evolution.”
One example of evolution leading to revolution can be seen through Grayson. The firm is a global manufacturer of heating and cooling solutions for electric and hydrogen vehicles, but it started as a family business running a small radiator repair shop in 1978.
Stuart Hateley, managing director of Grayson, sees innovation as integral to the company’s growth. He says that it’s been “at the heart of everything we’ve done. Innovation is part of the DNA within the business; that’s what we do. Every day we come to work to improve. Every day we’re working on next-generation products.”
For Hateley, fostering a culture of innovation goes far beyond simply designing new products.
If you’re going to push the boundaries…yet you’re not making mistakes, then you aren’t pushing that boundary far enough
“I think it’s everything,” he says. “Your business has to be innovative in the way it thinks, whether it’s your sales force looking at opportunities, your product development programme or your production.”
Grayson doesn’t make goods in vast volumes, so the company needs to be more innovative than most.
“We’re a small-volume batch producer,” says Hateley. “So, our focus is to excel in innovation rather than scale, particularly given how rapidly the markets we serve are changing.”
If at first, you don’t succeed…
Hateley points out that innovation is also about having the courage to try new things – and the humility to learn from failures.
“If you’re going to push the boundaries, if you’re going to be brave, if you’re going to develop new things, yet you’re not making mistakes, then you aren’t pushing that boundary far enough to really drive that differentiation you’re trying to achieve,” he argues.
However, giving employees the space to make mistakes safely – and to feel confident that it won’t affect their standing – is vital, stresses Hateley, who adds: “You have to engage them as well.”
His company holds town-hall meetings every three months, convening staff to explain what’s going on in the business. At one session, the firm presented all the advanced product development activities in progress. It highlighted that these had come from blue-sky thinking from staff, with the goal of encouraging more people to think this way.
Celebrating both success and failure, because businesses must be brave enough to experiment and learn, is crucial. That’s the view of Robert Appleford, co-founder of luxury cashmere brand Signature Cashmere. Encouraging employees to come forward with new ideas that could fail as much as they could succeed is a challenge that requires good management skills. Authentic leadership and emotional intelligence are key to unlocking growth through innovation.
“I think soft skills really generate a culture where everyone’s driving in the same direction towards a growth agenda, vision or strategy,” he says.
Appleford believes strong communication, flexibility and self-awareness as a leader can help to build an innovative company.
“I think it’s really important to know your own limits, build the right team, see through the organisation,” he says. “You need to understand and empathise with every level as you’re building your business and developing and delivering its strategy.”
Evolving your business
The soft skills required of leaders often evolve as a business grows, Appleford notes. In smaller firms, the focus is more on “corralling, collaborating and getting an aligned vision”. But, when the organisation scales up, “the layers start to increase in terms of where your role is”. This means that the added depth in the organisation requires different skills – and more authentic leadership communication – to ensure that clear guidance and strategies are disseminated.
For Signature Cashmere, the importance of a feedback loop – listening to others and being willing to admit to mistakes – cannot be overstated.
Appleford believes it’s important to understand that errors are “not necessarily determinative of the outcome of the business. They are sometimes a step towards understanding what else you need to do. And those mistakes are actually what helps to you define where the business should be going.”
Getting that feedback loop in place can be difficult and depends on the size of your organisation. For larger businesses, employee questionnaires, annual surveys and HR teams can all play their role in understanding whether the culture of innovation their leaders are trying to foster is bringing staff members along or leaving them behind.
You’ve got to make a decision and be able to then communicate why it’s been taken
Sometimes that feedback can result in course corrections, which is where innovation really lies, reckons Appleford, – who’s a veteran former HSBC employee himself.
“You need to have the ability to assimilate the feedback loop, communicate, listen to others, and then communicate the outcome of what you decided as a result, which may not always be the most popular option,” he says. “But you’ve got to make a decision and be able to then communicate why it’s been taken.”
Measuring success
Employee feedback and sentiment analysis can help to check whether innovation is working and enabling business growth.
“Business success is the real test of whether innovation is working. It proves the market is responding positively to what you are doing,” says Hateley. “I don’t think creating an innovative culture is something you can simply mandate or set rigid KPIs against, though. It needs to be fostered naturally across all levels of a business.”
Having supportive partners, including banks such as HSBC UK, that are willing to countenance short-term challenges to unlock longer-term growth is crucial, according to Emmans. It’s in this way that HSBC UK differs from other banks.
“Banks are there to provide funding, but they’re also there to help businesses succeed,” he says. “A lot of my time is spent connecting people and helping them to understand what’s coming, what ‘good’ looks like and how to share perspectives.”
But, if innovation is a mindset that needs to be nurtured, it’s equally important to ensure that everyone feels their voice is being heard from top to bottom in an organisation. Being aware that opinions will differ is also vital, Emmans stresses.
“Most of us recoil at the idea of being asked for feedback, because we think: ‘Oh, my god. I’m going to say something that will offend you,’” he says.
Framing innovation in the right way is ultimately key to building stronger buy-in among employees, Emmans concludes: “If you say to your people: ‘The world is changing all the time, and we have to change with it. Let’s try lots of things and learn from that process and evolve with it,’ you’ll probably end up with more buy-in and a better outcome.’”
