Camelia Ram shares three common barriers to building an innovative culture.

Since Satya Nadella joined Microsoft, its share price has more than tripled. Nadella saw that, while the company had been focused on star products, its future depended on the ability to continuously learn and quickly adapt to changing customer needs. Growth mindset became central to enabling the right behaviors. The performance management system was overhauled to reflect frequent check-ins, and employees began to be rewarded for their ability to both build on existing capabilities and support the success of others. Daily pulse surveys to track learning from failure and support the growth of others became the norm.

This concerted approach to engendering the right culture in one of the world’s leading technology companies highlights that people, not the technology itself, are the drivers of innovation. However, organizations can all too easily inhibit the development of the right conditions for people to come together to creatively solve meaningful problems and create winning products and services. There are three common obstacles.

Obstacle 1: An unconvincing proposition

Organizations that can’t convince employees they are worth working for quickly find themselves in trouble. Today’s multi-generational virtual workers are looking for progression opportunities, for career flexibility and mobility, and for inclusive practices. Businesses that don’t provide these in a credible and transparent way sow the seeds of unhealthy competition and undermining behaviors among employees.

Boston Consulting Group (BCG), one of the world’s leading management consulting firms, has consistently been ranked near the top of Fortune’s ‘100 Best Companies to Work For’ list since 2006. In a work environment that is 24/7, the company has sought to deliver a proposition that brings some predictability to the work schedule and builds strong relationships among team members. Its work-life balance program, dubbed PTO – standing for predictability, ‘teaming,’ and open communication – requires each team member to set a collectively-agreed goal for time off. Teams reflect on progress against both project and PTO goals weekly. The initiative is supplemented by an inclusion dialogue series, mentoring, career development programmes and partnerships with global and local social impact organizations. This holistic approach has led to 98% of BCG employees agreeing that people at the company are willing to give extra to get the job done.

Obstacle 2: A lack of opportunities to grow

The second obstacle is the lack of clear, timely and actionable opportunities for employees to learn and grow. This is worryingly common: up to three-quarters of high-potential employees could be tempted to leave for better career development opportunities or to make better use of their existing skills, according to IBM’s Smarter Workforce Institute (Should I stay or should I go?, 2017). This represents a significant continuity risk. Career paths that consider the intersection of individual interests, individual expertise and ongoing business needs can build motivation for employees to stay with an organization and go the extra mile.

One company that has recognized the criticality of internal talent mobility and dynamic learning to a positive employee experience, and to the depth of its talent pool, is IBM. The IBM Watson Career Coach is an AI-powered conversation service that understands natural language and answers specific career-related questions. Multiple data sources such as job transitions for similar job roles, personal resumés and employee answers to questions posed by the chatbot are used to make recommendations on best-fit open roles and relevant development opportunities.

This personalized digital career adviser has formed part of a re-design of the company’s performance management and talent management approach. Employees were deliberately involved in its design: employees need to be recognized as central stakeholders in their learning and development, not reduced to bystanders or consumers.

Obstacle 3: People practices out of sync

New strategic directions often necessitate a change in how work is done, so fluidity in employees’ work is commonplace – but people practices can end up out of sync with other business practices. At its core, innovation requires continuous development. This relies on rapid, regular feedback and the learning and application of new skills, so companies shifting towards agile ways of working must also put in place practices that clearly signal new expectations, provide support and reward appropriate behavior. If companies fail to match business practices to people practices, the dissonance can undermine efforts to create an innovative culture.

One firm seeking to align its people and business practices is Tata Consultancy Services, the Mumbai-headquartered software services giant, which employs nearly 400,000 people worldwide. Traditionally, its business approach meant that the client only saw the product at the end of the development process, but now, more rapid cycles of development take place with greater customer involvement. This has led to smaller teams working on clearly defined, incremental aspects of projects. It has prompted a review of processes like budgeting, hiring and employee progression: individuals can complete numerous small projects in relatively short time frames, so performance evaluations, recruitment and talent development processes have all been re-designed. The company is focusing on hiring for and developing competencies that remain relevant over time.

Uninspiring employee propositions, a lack of opportunities to learn and grow, and people practices that are out of sync with the business can kill motivation and innovation. It is time for a closer partnership between business leaders, the HR function, and stakeholders inside and outside organizations, to redesign people practices. Companies cannot take for granted the motivation, fears and interests of their people; they need to recognize that robust and flexible people practices are an essential ingredient of truly agile and innovative cultures.

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