What Drives Product Innovation

R&D investments are NOT the primary driver of product Innovation.

PEOPLE investments are.

Creating business aligned, mature, tech and process savvy, positive culture driving HR functions is the BEST investment companies can make to improve a key business metric: INNOVATION.

We've been exploring the connection between people analytics and business KPIs - how metrics like revenue per employee, customer satisfaction, operating margin, and market share growth are all shaped by measurable workforce levers that HR owns.

Looking deeper at the INNOVATION metric, there are 7 obvious people related indicators through People Analytics that can expand or shrink a company's capability to innovate: Diversity of Perspective & Experience, Skill Gaps (needed vs actual), Hierarchy Depth (# of layers of approval), Risk Taking Culture (fear or comfort of failure), Cross-Functional Mobility & Collaboration (% of employees who move into new functional areas, or work on multi-functional project teams), Retention Rates (esp. in the innovator functions like R&D), Slack Space (is workforce planning staffing at minimum levels to get basic work done, or is it factoring in space to think and innovate).

To become a competitive Innovator company, HR teams need to build the programs that drive cultures and workforces prone to innovation, develop talent dense workforces, reduce friction from overlayered org structures, encourage and reward both retention in current roles and movement across functions, and create space to breath and think.

Too many companies, and too many leaders, believe massive financial investments in their R&D functions is the obvious path to being a top-tier innovator. But the research shows that without these underlying foundational People realities, those investments will not outperform the competition.

📊 Full breakdown in this infographic.