Money Doesn’t Fuel Innovation and Transformation. Relationships Do. 

As businesses look to “build back better” in keeping with calls by the new Biden administration and the United Nations, chief executives have made clear what their biggest concerns are for 2021. In a survey by The Conference Board, CEOs in the United States and around the world said digital transformation and innovation top their list of internal challenges. Following up closely behind is the need to control costs.

The pandemic actually sped up digital transformation. Businesses turned to new technologies to cover more tasks, saving money. But what about innovation? 

At first glance, tightening purse strings may seem likely to limit those efforts, since innovation requires investment. As a group of researchers from FCLTGlobal wrote last year, “Effective long-term capital allocation is fundamental for innovating and creating value; investment in research and development (R&D) fuels this growth.”

But having spent years researching and working with businesses to enhance transformation and innovation efforts, I recognize that tighter budgets can actually offer an opportunity. Organizations can use this time to make smarter decisions about how they’ll approach their top challenges.

So the question becomes: How can businesses maximize digital transformation and innovation for the lowest cost? The answer: by harnessing the minds of their employees in new ways.

Inside businesses lie a world of ideas and opportunities for new products and services, new ways to operate, and new systems to attract the best and brightest employees. The key is to unleash those ideas and bring them together.

This does not require bloated R&D budgets. It also doesn’t require external trainers or endless group brainstorming sessions that can get in the way of other work. Instead, the key is to create space for one-on-one conversations across the organization that surface ideas, support change, and lead to actions. In other words, peer coaching.

Psychological Safety Incubates Ideation

Just about every employee has something to offer that will improve the business. But not every employee feels comfortable speaking out a companywide virtual town hall or raising their hand in big-group meetings. 

Peer coaching can empower every employee to speak up though, say, hour-long sessions that bring together two colleagues from across your organization for a structured conversation guided by a set of prepared questions. Each participant speaks and listens an equal amount, offering thoughtful feedback and encouragement. Because neither is in a position of hierarchy over the other, these sessions offer psychological safety, a necessity for innovation.

A study of schools, “Peer Coaching Drives Change,” saw this in action. “Peer coaching sets a tone of trust that enables educators to break out of the status quo,” it found. Peers coaches help each other overcome “the natural inclination to resist change” and “visualize new teaching strategies and pioneer pathways for schoolwide, transformative change.”

Peer coaching also leads directly to concrete actions. Before a session ends, each participant comes up with a specific action to take. This could be, “I will put together a case study on a new way our sales team can engage in objection handling based on my experience.” It could be, “I will have a difficult conversation with my manager about how machine learning could take over much of our extraneous paperwork.” It can be anything aimed at creating positive change.

Because peer coaches hold each other accountable, through ongoing discussions, our research has found that more than 80% of the time participants pull through on their plans. 

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Ending Silos

Over time, it’s good practice to pair employees with different people across the organization, creating relationships with those who have different focus, expertise, and perspective. This helps break down the silos that often prevent deep collaboration.

“Our studies have repeatedly confirmed that about two-thirds of transformation efforts fall short of their goals or are ultimately unsustainable,” McKinsey reports. “By contrast, organizations that break through silos in an end-to-end operating model operate more effectively.”

This makes sense, given that new ideas flourish when people have a better understanding of the challenges their counterparts in an organization are facing. “Innovation requires both reaching across fields and, often, acquiring more than a surface-level understanding of those fields,” three psychology professors explained in the Harvard Business Review.

Moreover, silos don’t disappear through team-building exercises. They disappear through substantive relationships among people. Due to the pandemic, those relationships have been tougher to build. Without going to an office every day, people have fewer watercooler conversations and other interactions that naturally take place. Building relationships across the organization takes an active effort. Putting peer coaching on the calendar makes it happen. “Breakthrough conversations are happening because we’re aligning people from different lines of business,” Corina Kolbe, VP of learning and development at Zillow, told me in a recent webinar.

Continuous Change Management

Once changes in an organization are made through both digital transformation and innovation, there’s always some natural resistance. People are used to certain ways of operating and are wary of existing systems being disrupted. But with the pace of change increasingly faster and a long list of daily tasks, managers don’t have time to help every individual employee process and get accustomed to innovations.

Peers can do this for each other as they share their questions, concerns, and challenges. Rather than providing a partner with solutions, coaches help their partner find their own solutions. They also share their experiences and ideas, and together talk through the opportunities afforded by changes. What’s more, executives can consider assigning peer conversations focused on specific changes, radically accelerating the speed of trust and buy-in.

Ultimately, the experience provides employees with a level of engagement and belonging that many haven’t experienced before. That, in turn, helps fuel further conversations, collaborations, and ideas. A culture of greater agility emerges — one in which CEOs see their top challenges covered, allowing the organization to thrive.

Aaron Hurst, the CEO and co-founder of Imperative, is an expert on the science of purpose and fulfillment at work. Imperative is a peer coaching platform that uses the power of peers to support each other over time to become increasingly effective and fulfilled. The science-backed platform combines the effectiveness of coaching with the impact of building trusted peer networks that are proven to build resilient and high-performing cultures. In 2014, Aaron brought global awareness to the rise of the fourth economic era in history, the Purpose Economy. Previously, as the founder of the Taproot Foundation, Aaron catalyzed the $15 billion pro bono service market. He has written for or been featured in The New York Times, The Wall Street Journal, World Economic Forum, Fast Company, MIT Sloan Management Review, and was named a LinkedIn Influencer.

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