Advanced GuideHow to Be an Effective Innovation Leader
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IntroductionWhat’s the Formula for Effective Innovation Leadership?
• “Innovation cannot be successful if it does not come from the top to the bottom. In other words, the CEO must be completely convinced that innovation is the best strategy to achieve success." — Bain & Company2
• In a recent Boston Consulting Group survey, nine out of ten respondents that identified their companies as strong innovators reported that top management is committed to innovation, compared with less than half as many at weak innovators.3
• According to an Organizational Psychology study from the University of Lund, 67 percent of an inno-vative climate in an organization is directly attribut-able to the attitudes and behaviors of the leader of that group.4 If the culture of your team is innovative, you can take 70 percent of the credit for it, or if not, 70 percent of the blame.
Are our leadership models broken? Look at most organizations today and you’ll find mundane, uninspired, and “more-of-the-same” innovation programs. This sentiment can seriously affect the results of innovation. While there are many reasons why innovation efforts fail, the effectiveness of leadership certainly is one of the most important.
Beware of the CEO disconnect. One of the common organizational issues around innovation is that leadership tends to have an optimistic view about their innovation efforts that is not shared by the rest of the company (see sidebar). The message is clear: senior managers must better translate their perspective into ground reality, so everyone buys into their vision and shares their sense of urgency.
Welcome to the new leadership paradigm. Companies like P&G, GE, and Apple have thrived because they have innovation programs that are led from the top. These inspiring leaders show that innovation is a personal mission, where passion counts as much as performance. They provide insightful lessons for any senior executive who is charged with the task of innovation.
The key is to lead by example. It is essential to take a hands-on approach to innovation. We’ll focus on some effective leadership profiles, and point out real-life, tactical ways you can lead by example, be an inspiring leader, and drive your innovation efforts toward success.
1IBM, "Global CEO Survey" (2010)
2Bain & Company, “Taking the measure of your innovation performance” (2013)
3 The Boston Consulting Group, “The Most Innovative Companies 2013” (2013)
4 University of Lund (2006)
If there’s one thing that everyone agrees about innovation, it’s that leadership is critical to make it effective in an organization. In fact, an IBM Global CEO survey cited "creativity" as the most important leadership quality for the future.1 If innovation is not orchestrated and led from the very top, it runs the risk of failure. Unfortunately, leaders who play a less than enthusiastic role in innovation efforts at their organizations are slow to discover this truth.
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Leaders come in many shapes and sizes, but a few key attri-butes are what separate the good from the bad The following examples illustrate how leaders from the world’s most innova-tive organizations have mobilized innovation efforts in their organizations.
PART ONELearn from the Leading Innovators
“You have no choice about being a role model. You are one…it comes with the job of being a leader. The only choice you have is which role you will model."
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Role ModelsHow Leading Innovators Bring Innovation to Life
REINVENT. When Kun Hee took over the company from his father, he famously stated, "Change everything but your wife and children." Since then, Samsung has had impressive innovation successes in flat-screen technology, smart devices, and, most recently, health care. Top management are responsible for creating a culture that nurtures bold ideas.
EDUCATE. INVEST. Kun Hee has made sure employees have the resources necessary to innovate by sending them to classes that teach all the fundamentals of technological design and engineering. He has also launched the company’s first in-house design school to make innovation accessible. Samsung has also created a $1.1 billion fund to invest into innovative companies.5
5Yeung, Ken. “Samsung seeks to ignite global innovation with $1.1b for two funds and a Strategy and Innovation Center.” The Next Web. (February 2013).
Lee Kun Hee: Samsung
Jeff Bezos: Amazon
EXPLORE. Jeff Bezos encourages an "explorer mentality" in his organization where employees forge new paths and ideas, rather than a "conqueror mentality" where the focus is on doing better than competitors. Encouraging this curiosity to explore creates an innovative climate where employees are excited about discovering new ideas and solutions.
BE OPTIMISTIC. Bezos once famously said, "To do something a little bit crazy you have to be very optimistic, and I was." His optimism encourages and inspires employees to experiment and be comfortable with risk, and creating this optimistic culture leads to more innovation
Here’s a look at how leaders have inspired and challenged their employees to move innovation forward, and how they’ve demonstrated their commitment to this cause.
Adrian Van Hooydonk: BMW
DECIDE WHAT INNOVATION MEANS. As Director of BMW Group Design, Van Hooydonk’s guiding principle is that “innovation is often sparked by confronting the unfamiliar.”
SHAKE IT UP A LITTLE. Under Van Hooydonk’s leadership, engineers are encouraged to experiment with challenges. “The constant round of new challenges…keeps everybody fresh.” BMW's current focus is the challenge of sustainable mobility. The BMW i3 electric car allowed engineers to reinvent how cars are traditionally made—recycled PET bottles and carbon fibers are part of the materials.
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Role ModelsHow Leading Innovators Bring Innovation to Life
PULLING THINGS TOGETHER. In terms of innovation, Jobs viewed Apple's success as finding the “gravitational force”
that brings great ideas, creativity, and smart, talented people together. When these individual elements of innovation are disorganized, it is impossible to succeed.
EVERY JOURNEY BEGINS WITH THE FIRST STEP. By setting goals, and focusing employees on smaller, easier-to-swallow tasks, innovative sparks can turn into innovative products. Allow employees to attain success on a smaller scale, because success increases satisfaction, and satisfaction increases motivation.
POWER TRIP. Jobs motivated employees by empowering them to take initiative and make their work fun. Set goals, but understand that people work differently, and allow people to work differently so long as the work gets done. Jobs also reminded employees that true innovation results in working products, not simply ideas and creativity—a reminder that serves to incite dedication, and often results in creation.
Steve Jobs: (Formerly of) Apple
BELIEVE AND DO. Schultz has attained innovation by simply believing in what he does. His leadership and commitment have taken the coffee company from four small stores in Seattle, WA, to nearly 17,572 stores in over 55 markets. Schultz attributes his success to holding fast to ideas he thinks are good, despite the prospect of failure. Against the advice of a high-priced, well-respected consulting team, Schultz opened stores in Japan, and created a market for Starbucks overseas.
WALK THE WALK. Schultz constantly walks around Starbucks factories and stores to simply find out, firsthand, what is working and what is not. He talks to employees, customers, and growers to see where there might be an opportunity to improve.
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Role ModelsHow Leading Innovators Bring Innovation to Life
CONFRONT THE CHALLENGE. In the mid-90’s, Ford was charged with reviving two struggling, out-of-date brands, and had to do so while keeping each one distinct. The first crucial step to Ford’s innovation effort was formulating a vision—deciding what his brands were going to stand for. Mass-market appeal and commercial sensibility have made his products and campaigns both accessible and elite simultaneously.
GET INVOLVED. As a leader, Ford actively participated in nearly every aspect of his fashion businesses—from design and marketing to store layout, he made certain that everything fit within his vision and came together to promote a certain message.
Tom Ford: (Formerly of) Gucci/Yves Saint Laurent
THERE WILL BE NO LOCKED DOORS IN THIS HOUSE. Branson’s key to successful innovation is accessibility; he makes himself completely available to his employees. Every employee gets his home address and mobile phone number. Employees are given open access to Branson to discuss new ideas, concerns, or suggestions. “I keep a notebook in my pocket all the time,” Branson says, “and I really do listen to what people say, even when we’re out in a club at 3AM and someone’s passing on an idea in a drunken slur. Good ideas come from people everywhere, not just in the boardroom.”
THE POWER OF SECOND CHANCES. Branson is the symbol of Virgin’s appetite for risk. He cultivates a reputation as a fun-loving, thrill-seeking daredevil. According to Branson, a business risk is unaffordable if it’ll knock him out or be catastrophic to his business. Otherwise, everything is fair game. Branson says, “Give people a second chance if they screw up. Even people who have stolen from us have become, when given a second chance, incredibly loyal and valued employees. I don’t know where I’d be if I hadn’t been given second chances.”
GIVE CREDIT WHERE CREDIT IS DUE. Branson recognizes the hard work of talented, creative, innovative employees. “It is so important to celebrate those individuals—the entrepreneurs, the rock stars of their industries—that work hard and deliver, even in the face of what others see as impossible.”
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Role ModelsHow Leading Innovators Bring Innovation to Life
TACKLE THE BIG CHALLENGES. Musk is a serial entrepreneur and has tackled challenges in online payments, electric cars, and even space travel. He sees problems as opportunities—the bigger the problem, the bigger the opportunity. This type of vision encourages employees to think big.
IDEAS CAN COME FROM ANYWHERE. Musk believes that good ideas can come from anywhere and has opened up ideation beyond his own companies to the public. An example is Xprize, an open competition that aims to identify and solve some of the world’s most difficult problems. By crowdsourcing problem-solving, XPrize winners have dealt with oil recovery cleanup and energy-efficient cars.
INTEGRITY MATTERS. When starting Tesla, Musk borrowed $465 million of taxpayer money from the government to start the company. He then paid back this amount nine years early. Tesla is the only American car company to have fully repaid the government. This sends a signal to both employees and the public that they have integrity.
Elon Musk: Tesla, PayPal, SpaceX
TRANSFORM A GLOBAL ORGANIZATION. Immelt took over the reins of the company from Jack Welch—the charismatic CEO whose mantra was efficiency, cost-consciousness, continuous improvement, and focus on the bottom-line. In the company that literally invented six sigma, Immelt wanted to change the paradigm to organic growth, breakthrough ideas, and growing the top-line. His latest initiative, “Ecomagination” aims to build innovative solutions for today’s environmental challenges.
SUPPORT THE CAUSE. Immelt proves his commitment to innovation by supporting innovation at every level of the company. He has promised to double R&D investment to $10 billion to find sustainable solutions.
INVEST THE TIME. By sitting in on quarterly meetings and progress reports, Immelt shows his employees how dedicated he is to actually making innovation happen. He’s not afraid to roll up his sleeves and invest the time to make innovation happen.
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Role ModelsHow Leading Innovators Bring Innovation to Life
BECOME THE “CHIEF INNOVATION OFFICER.” CEO A. G. Lafley has transformed P&G into a leader in innovation with successes like the Swiffer, Crest Whitestrips, and the Mr. Clean Magic Eraser.
TIME IS ALL THAT MATTERS. Lafley sits in on all R&D review meetings—15 times a year—that showcase new products within the company. He also spends three days a year with the company’s Design Board.
WORK WITH YOUR PEOPLE. Lafley took all of his direct reports—the entire Global Leadership Council of 40 business unit managers—to San Francisco for a one-day fieldtrip. The group was sent out shopping to various retail locations in order to better understand the consumer experience. Lafley’s team went to buy music, first at a smaller independent music store, then at a large national chain, and finally, at various online outlets.
A. G. Lafley: Procter and Gamble
BE APPROACHABLE. At Novartis, there are over 120,000 employees and Jimenez says "it's very important for me to connect with as many of them as I can." He blogs once a week and responds to all comments as a way to keep employees updated and engaged.
MAKE FAILURE OKAY. Jimenez tries to instill a risk-taking culture by giving employees the "license to try." In an interview he said, “Look, as long as you’re not creating a huge liability for the company, just go try a bunch of things, and then we can build on them.” To support experimentation, Novartis spends about 20 percent of sales on research and develop-ment each year.
YOU’RE ONLY AS GOOD AS YOUR PEOPLE. Instead of asking talent to come to a particular location, Jimenez has built research centers where the scientists are. Novartis has built research centers in the U.S., in Europe, and Shanghai.
Joseph Jimenez: Novartis
6Bryant, Adam. “Fix the Problem, and Not Just the Symptoms.” The New York Times. (October 2011).
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Role ModelsHow Leading Innovators Bring Innovation to Life
TRY AND SEE. Benioff is a big proponent of the "try-it-and-see-what-happens" approach. He pushes teams in all directions and lets them roam to encourage a mindset of curiosity and openness to opportunities. Salesforce is known for acquiring companies outside of Salesforce's customer relationship management focus, and these experiments have worked very successfully so far.
BE PASSIONATE. Benioff is known for his dynamic, passionate, and slightly eccentric personality, which flows through to its employees and customers. This infectious spirit has helped build an innovative, fast, and fun culture at Salesforce—Benioff has even appointed his dog as the Chief Love Officer, one of many quirks that make Salesforce an enjoyable place to work.
Marc Benioff: Salesforce
Regina Dugan: (Formerly of) DARPA
KEEP TEAMS NIMBLE AND SMALL. The Defense Advanced Research Projects Agency is an agency of the United States Department of Defense. Dugan believes that by keeping teams agile and small, it allows for ideas and decisions to move with speed. There are only two management layers in the organization and they have a small team of only 140 technical personnel to keep agile.
IT'S OKAY TO FAIL. Dugan believes that “we cannot fear failure and create new and amazing things.” She created a culture of iteration at DARPA, with teams knowing there is room for technical failure if the payoff from success will be great enough.
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Role ModelsHow Leading Innovators Bring Innovation to Life
EVERYTHING IS POSSIBLE. Burns describes the culture at Xerox as a culture of possibility—"When there’s a big challenge or a huge opportunity, we have a culture that says, yes, let’s go after it." By believing all things are possible, employees are able to achieve the impossible.
DRIVE "PARITY." Burns believes her employees shouldn't be compartmentalized to their expertise and encourages them to give voice to their views. She is a big advocate of giving individuals parity—equality—in the discussion. She also allows customers, competitors, employees, and shareholders parity to speak about issues.
BE AUTHENTIC. When hiring people, Burns rarely asks people about their credentials but rather, questions around values and fit. She looks for people with flexibility, agility, empathy, and those who fail fast and learn quick. "Character is a huge piece of the fit and fitness test. Strong moral compass, humility, self-awareness, authenticity."
Ursula Burns: Xerox
OPEN UP AND INNOVATE. Smith believes wholeheartedly in the wisdom of crowds, and stresses open communication as the key to successful innovation. “It is through the free flow of ideas across work groups, departments and divisions that innovation flourishes.”
FOCUS ON VISION AND EXECUTION. One of FedEx’s core beliefs is that innovation is everywhere, at all times. To get results, however, innovation needs a repeatable process. “We have a customer summit each year, in which our top management gathers to listen to various customers whom we invite and to brainstorm solutions based on what they tell us. The most successful innovation is built around five things: listening, brainstorming, choosing an idea, testing, refining and implementing.”
Frederick Smith: Federal Express
So, what do these leadership profiles mean for you? The next section takes these examples and distills them into real-life lessons for any senior executive charged with innovation.
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The truth is, leadership styles are very personal. You have your unique approach to managing your teams, and we’re certainly not insisting that you adopt an approach that you’re not comfortable with.
While there’s no single formula for effective leadership, you should understand that an innovative climate is not simply born out of random chaos, or on a personal whim. You need to practice a management style that reflects your beliefs, yet deliberately and actively creates an environment that fosters innovation. Only then will people become comfortable with creativity, newness, risk, and change.
In this section of the tool, we’ve outlined a few key approaches that you can take to lead an innovative organization. These simple tactics can go a long way to breed and sustain innovation activities in your firm.
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Lessons from Innovation LeadersWhat You Can Learn from the Best of the Best
In the following section, we outline a number of “jump-starts.” These are practical ways to bring innovation to life in your organization. Some of the jump-starts you’ll see are immediate tactics that you can execute with limited resources. Others are broad-based and require a more substantial investment. The right choice of jump-starts will depend upon your needs and available resources. Consider which tactics could relate to you, your leadership style, and your organization.
Inspire Ultimately, innovation is about people. When you exude enthusiasm and passion about innovation, you become a symbol for what is possible. You’ll be able to motivate and inspire your team to greater heights.
Communicate The most effective leaders are vocal about innovation—and people listen. Make yourself accessible by opening up the channels of dialogue, and you’ll experience very positive results.
Show Commitment Effective leadership leaps out of the PowerPoint slide. The best leaders walk the walk by actively participating in innovation every day, not just at annual or quarterly meetings.
Go Against the Grain The best leaders are always prepared to challenge conventions, have a contrarian point of view, and possess the courage to stand up for what they believe in.
The role models from the previous section point to a few key learnings that all managers can adopt in their organization. These lessons are timeless and will arm you as you lead innovation efforts.
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Jump-startsPractical Ways to Be an Effective Innovation Leader
Embrace “Good” Failure
Not all innovations result in winners—and good leaders know this. Great leaders not only allow their employees to fail, they actually encourage it. The key is to allow failure within reasonable limits. We call this “good failure.” Here are a few ways you can encourage good failures in your organization:
Allow many “little failures” instead of risking “one big failure.” Consider how you can spread your risk and better balance your ideas in development. Get teams to work on a blend of projects and empower them with the freedom to fail within limits.
Showcase examples of good failures. You may have already had good failures—you may just not be aware of it. Talk to your direct reports or peers. Ask them if they’ve seen examples of good failures among other managers, employees, or teams. It’s important to get in touch with, showcase, and recognize the importance of their efforts.
Know when to stop. Most innovation projects falter because stakeholders don’t know when to draw the line. Make sure the team has defined what “failure” means. When a project is reviewed, hold it up against this standard. And remember: kill the project, not their enthusiasm.
Go Against the Grain
Challenge Conventions
When a leader begins to question existing conventions, people will take it as a sign that they can too.
Spearhead a “Kill a Stupid Rule” campaign. TD Bank has had tremendous success with its “Kill a Stupid Rule” policy, in which employees are rewarded for addressing a conventional banking rule and coming up with a creative solution that is more customer-friendly. You can send a similar message to your staff with such a campaign.
Shake things up a little. Nothing signals a committed leader more than one who is willing to change. For example, you could put together an unconventional team to lead an innovation project.
“Challenge the CEO.” Help your staff break out of the consensus culture, and instill a sense that it’s good to ask questions. You could start a “Challenge the CEO” day where employees can question you on any topic—no holds barred.
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Jump-startsPractical Ways to Be an Effective Innovation Leader
It’s About Time, People, and Money
Showing your commitment to innovation can come in many forms, but it boils down to three essential things: time, people, and money. You need to figure out how to pull these levers to become an effective, believable leader.
Time. Devote time to making innovation happen. Whether it is one hour a week, or two days each month, set aside time on your calendar specifically for innovation-related tasks and activities.
> Formalize meetings. Dedicate a few meetings each quarter to innovation and how it can be accom-plished in your firm. Name the meeting. Give it a title so that everyone knows that innovation is a serious, formal effort in your firm.
People. Identify lieutenants. Find the people in your company who can get things done regarding innovation. These are the people who understand your vision and understand the company as a whole. Inspire them, give them the tools they need, put them together, and have them work on innovation.
> Bring it to the center. Develop a centralized innovation team to steer and support efforts in your company.
> Make it full-time. Ideally, innovation should be this central team’s day job. When teams are tasked with innovation in addition to their regular jobs, it can become just one more item on their to-do list. If this is unrealistic, consider getting a full-time intern or MBA, or offer incentives to the “best and brightest” to commit dedicated time (say, 10 hrs/week) for innovation. The incentives can include a financial bonus, promotions, greater visibility, etc.
> Pick the right team. You’ll need a small but diverse group. It’s important to mix and match skills, functions, backgrounds, and perspectives. Find the people in your firm who are hard working, committed, and dedicated. They should understand both your goals, and those of the company, and have a unique vision of how to attain those goals.
> Assign the team with the right role. No matter the size of your central team, their role should be as facilitators rather than innovators or idea-generators. They must be positioned as a single destination for innovation in the organization.
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Jump-startsPractical Ways to Be an Effective Innovation Leader
Show Commitment
It’s About Time, People, and Money
Money. Ultimately, money talks the loudest. Innovation without funding is impractical.
> It’s not how much, it’s how you spend it. You shouldn’t be signing a blank check for innovation. Make your budgets milestone-based and conditional. For example, on every project, you can step up innovation budgets as you achieve certain milestones or deadlines.
The American Cancer Society funds its innovation projects in phases. Ideas receive an initial $2,000 for a quick exploration, and if it is judged to have potential, it receives another $5,000 to test feasibility.
Dow Corning intentionally provides extremely limited funding to innovation teams. They believe that this forces teams to be more creative and resourceful.
> Benchmark with competition. Do some skunk work. How much is your competition spending on innovation, product development, and R&D? This will build an immediate case for funding innovation efforts.
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Jump-startsPractical Ways to Be an Effective Innovation Leader
Draft “Innovation Talking Points.”
Write down the three things you always want to say when you’re talking about innovation. Ensure that these “talking points” go out to the key stakeholders within your organization, so you’re all consistent with your communications.
Set up a discussion board or blog about innovation.
You can stream it on your intranet so that employees are able to quickly and easily communicate ideas, as well as hear your opinions about innovation. Make sure that you’re monitoring the board and answering questions.
Communicate continuously.
You can make a big impact when you communicate regularly with your staff. If your communication is inconsistent, you’ll have a hard time breaking through the skepticism in your organization. Here are some ways to make your communication a normal business practice:
> A weekly email updating everybody about the latest innovation developments in the company.
> An innovation article in existing communication channels (a monthly newsletter, annual reports, etc.)
> A “five minute ice-breaker.” Remind yourself to quickly talk about innovation before all meetings.
> Personal phone calls. Leave a message for an employee who you think (or you’ve been told) deserves a pat on the back for his or her involvement in innovation.
> Set up a reminder. Put some or all of your communication tactics on your calendar. A friendly reminder won’t hurt.
Keep an open door.
Communication is a two-way street. Your employees have a lot to offer, so be available to them.
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Jump-startsPractical Ways to be an Effective Innovation Leader
Step out of that ivory tower. Effective leaders bring a down-to-earth flavor to their management styles. That means you need to think beyond that annual meeting and make your presence felt every day.
Be passionate. Innovative leaders truly believe that innovation is key to their organization’s survival. Their passion comes from a sense of urgency to move the organization forward to break new boundaries. This passion is infectious and spreads to the rest of the organization.
Have a vision.Do you have a clear vision for where you want your organization to be in five, 10, or 20 years? What does your organization need to do in order for the future to be a success? You need to have a clear vision for where you want to take the organization. And you must communicate the vision clearly and consistently.
Listen. The best leaders have their eyes peeled when it comes to their customers and their employees. It’s because they know that the insights of employees, paired with the unmet demands of customers, lead to the most powerful innovations.
Walk the floors. Spend time with your staff. Set a time each week where you walk the floors and tap into what your workforce is doing, thinking, and saying.
Be genuine.If you want innovation efforts to be taken seriously, you want to make sure that your staff takes you seriously. If possible, avoid the temptation of email—a face-to-face meeting or phone call can sometimes be more effective.
Don’t let innovation be the flavor of the month. Ultimately, inconsistency can kill innovation. You need to prove that you stand by your innovation efforts, and that they are an ongoing, dedicated, and serious commitment. If people sense that your support is wavering, you’ll never get them fully on board.
Advanced GuidesHow to Be an Eff ec� ve Innova� on Leader
DAILY WEEKLY QUARTERLY ANNUALLY
GO AGAINST THE GRAIN
SHOW COMMITMENT
COMMUNICATE
INSPIRE
Leadership Action Plan
On the following page, we include a worksheet that you can print and use—starting today.
This Leadership Action Plan will help you think about ways in which you can be an effective leader and promote innovation within your company. Each row lists the lessons learned from innovation leaders. The columns then asks the question: What can you do on a daily, weekly, quarterly and annual basis to be a more effective leader?
Use the Jump-starts and Role Models sections to give you ideas about what is possible for your organization. Here are some questions to think about as you develop your action plan:
> How can you more formally participate in innovation?> Can you formally dedicate resources to the effort? > How can you support smart risk-taking?> How can you deliver consistent, inspiring
communication on innovation?> How can you come across as a genuine, memorable
leader on innovation?> How do you think and act beyond memos, Power-
Points, and annual meetings?> What are your biggest hurdles in terms of innovation?
