BB3. Innovative Executive Leadership
- UNDERSTANDING KEY POINTS
- Managing for Results or Leading for Innovation?
- What's Wrong with the Current View of Executive Leadership of Innovation?
- THE KEY ROLE OF INNOVATIVE EXECUTIVE LEADERSHIP
- HOW DO INNOVATIVE EXECUTIVE LEADERS SET INNOVATION GOALS?
- INNOVATIVE EXECUTIVE LEADERSHIP LEADS TO INNOVATIVE PORTFOLIOS
- THE STRATEGIC PLANNING PROCESS
- Definition: Business Plan (BP)
- Definition: Strategic Business Plan (SBP)
- Definition: Strategic Improvement Plan (SIP)
- Definition: Strategic Plan (SP)
- Definition: The Annual Operating Plan (AOP)
- Definition: Strategic Management
- CREATE STRUCTURE AND REWARD SYSTEMS TO SUPPORT THE LEVEL OF INNOVATION REQUIRED
- PEOPLE DO WHAT YOU REWARD THEM TO DO, NOT WHAT YOU TELL THEM TO DO
- DEVELOPING THE INNOVATIVE EXECUTIVE LEADERSHIP SKILL SET
- THE INDIVIDUAL
- BOX 1 A COMMODITY COMPANY STRUGGLING TO OBTAIN A COMPETITIVE ADVANTAGE
- BOX 2 A TECHNOLOGY COMPANY NEEDS NEW TECHNOLOGY TO REGAIN MARKET LEADERSHIP
- BOX 3 A NEW TECHNOLOGY COMPANY NEEDS FIRST OR NEW APPLICATIONS
This chapter will discuss the TIME BB3 - Innovative Executive Leadership. Considering the many definitions available for the word “innovative,” creating a clear and concise chapter useful to readers may prove difficult. For example, do you need an “innovative style” in executive management or do the regular time-proven methods work just as well? Is there something different in a start-up versus an ongoing enterprise of medium to large size that requires a “new and creative” approach to management? There are many types of executives, many types of organizations, and many types of leaders. We will attempt to bring together the most important and practical aspects of these factors and others under the umbrella of TIME.
The chapter will start with a discussion of the various ways to understand the term “Innovative Executive Leadership” in the current modern context. We will focus first on critical jobs the executive must perform in any effort to drive an organization to be more creative, more innovative, and hopefully more successful. All too often, executives use general platitudes toward innovation efforts only to see little change in their organizations. Executives make quick speeches, demand more innovation, and then drive their organizations focusing only on the same short-term financial results as they have been managing for all of their careers. Some may think, even today, that they can cut cost or achieve higher efficiencies and call that innovation. The future of organizational leadership requires a new executive mind set and the core of that new mind is creative problem solving and new, innovative management and leadership understanding. Only with this new mind set can it be said you demonstrate innovative executive leadership.
Before changing any organization, most executives will have to first change themselves. The critical function of executive self-development to enable leadership of innovation efforts is discussed. This is much more than changing a few lines in a few standard speeches given at predictable company meetings or other planned public appearances. It is how the executive acts in their daily interactions with their employees. The in-the-moment few words tell your employees just what you really believe about innovation.
We will touch on executive team development here but broader discussions of team and organizational development can be found in other chapters in this book.
Creative Problem Solving: a body of methodologies for solving often ill-defined problems or to help you search for possibilities and opportunities not readily apparent. It also includes methods to help you evolve your understanding of what the problem might be and what possible solutions may exist. Contrast this with linear problem solving consisting of rigid methodologies seeking the “correct” answer as practiced by most executives and their staffs today.
Executive management of innovation: the day-to-day tasks performed by executives to drive an organization to achieve their stated innovation goals.
Innovation: a word with many definitions. In this chapter, it will be defined as the output of a conscious and purposeful effort to create, be creative, identify, develop, and bring to the customer a new value proposition. (Note from the editor: This is not in agreement with the definition of innovation as used by ISO. Personally, I like it better and it is more descriptive.)
Innovative executive leadership: efforts by senior leaders of an organization to change themselves, the way they operate both individually and as the executive team in order to become more creative in their approaches to all areas of their organization. The type of executive leadership required to make the TIME framework a success.
Incremental improvement: a change to a product or sendee that creates a new value proposition to the customer above and beyond just a lower price for essentially the same product or service. Basically making something faster, smarter, better, or more efficient at doing what it has always been doing.
Innovation content: a reflection of the relative rations of the mixture of linear problem solving, uncertainty, and creativity required to achieve a given task(s). Some projects may require only small focused efforts toward creating and implementing innovations while some may require high levels of innovation content focused on finding/creating/inventing and delivering whole new businesses or business/life-changing products or services.
Innovation Vision Statement: the vision statement set by executive leadership to guide the whole or specific parts of the organization as they endeavor to develop new products or services or change the way the business operates. The statement is used to focus and direct efforts to achieve maximum effectiveness, and can be applied to whole organizations or specific projects or wherever a conscious decision has been made to develop something new.
Linear Problem Solving: any of the standard methods used to solve problems that have a correct or right answer. This is what we all did in school. We were given a problem, we applied the prescribe methodology for answering that type of problem, and then proceeded to churn out the answer the professor desired. (Questioning the question was rarely, if ever, allowed.)
UNDERSTANDING KEY POINTS
Managing for Results or Leading for Innovation?
There is a big difference between an executive whose focus is to manage for specific results and the executive who leads and manages for innovation. On the one hand, this can be directly surmised from the large body of literature that separates management and leadership as separate, if connected, topics. Some readers will undoubtedly feel that good managers really are just good leaders and vice versa. We will not say here that management or leadership is more important and indeed most business schools and authors drive home the point that successful executives need to do both. What we will contend in this chapter is that managing and leading efforts focusing on and containing innovation, especially those with high levels of innovation content, are ver)' different from driving the organization to lower cost and/or higher levels of efficiency. The fact that innovation is hard to define is a leading cause for complicating the matter. In order to fully understand the manager versus leader components in the TIME context, we need to use some common concepts.
In the modern business world, executive leaders are those who set vision, create strategies, and communicate to the organization the importance of achieving the various specific goals/objectives they have set. How then does this occur if you cannot fully define what you are trying to achieve? This will be discussed at some length later in the chapter. For now, let’s make the point that it’s exactly because innovation is hard to define that a new innovative executive leadership is necessary. To be successful, a leadership style is required that can handle ambiguity, is willing to accept different forms - and sometimes higher - levels of risk, and has the open mind able to absorb new learning quickly so that they can correct and redirect their organization most effectively.
In much of the current literature, you will read that executives must set vision and inspire their organizations to achieve any level of innovation. This, of course, bestows on many executives a halo of grandness as they make bold proclamations in support of more innovation but then do little to actually achieve any real innovation activity. Instead they speak of change but go on to operate in the same manner as they always have, driving and rewarding their staff and the organization for doing pretty much what they have been successfully doing in the past. As Jim Collins wrote in his book From Good to Great, “good is the enemy of great.” There is often little need to change until, as so many brick and mortar retailers have discovered, it is too late to change.
Innovative Executive Leadership is a building block in the TIME pyramid for a very good reason. For real change to occur, a new approach, a more inclusive and broad approach (such as the TIME framework) is needed to guide and inspire the very executives who themselves must go forth and inspire their organizations. But as one can readily see from the TIME pyramid, it is filled with straight-forward building blocks that require strong traditional management to drive the organization to success in its overall goals as well as its specific innovation goals. Most executives can effectively drive their organization to good financial results. The rest of this chapter focuses on how to help executives become the leaders of the innovation content their future organization, and their personal, success requires.
What's Wrong with the Current View of Executive Leadership of Innovation?
Too many executives today hear the sirens call to innovate or die coming from business schools, solution providers, popular authors (some with questionable qualifications), consultants, and everyone else. One would almost think that change in business climate, new technology destroying old business, etc., was some new phenomena, perhaps a by-product of recent specific technological change. But executives have been faced with these challenges since business began. Joseph Schumpeter, in his classic work of economics titled Capitalism,
Socialism and Democracy, noted that one of the great strengths of American capitalism was what he termed “creative destruction”; that the society as whole constantly created and developed new products, destroying the old ones in the process. Clayton M. Christensen expanded on this idea in his book The Innovator’s Dilemma, where he coined the now very popular term “disruptive innovation,” explaining the “how” behind how much of creative destruction actually occurs in today’s world of modern technological advancements.
The reality is that executives today are facing many of the same problems their predecessors faced. The one big difference, and this is crucial, is that society is creating new products, services, business models, etc., at a rate and in a variety faster than ever before. Many executives are simply, even if they will not admit it, overwhelmed with the sheer magnitude of the situation. The situation is huge both in the problems it presents and the possible solutions that may exist. It’s no longer a simple matter of Company A makes a product, then Company B makes one a little better or cheaper, and then Company A makes their original product a little better or cheaper than Company B. Today, while Company A and B are fighting the losing battle of profits through efficiency alone, Company C comes along and removes the need for the original product all together. This is further complicated by the simple, but overpowering fact, that many executives must still deliver expected quarterly results while trying to change their companies to meet new competition. It is not that the current executive leadership lives in a world filled with few options; it is more that organizations today exist in a world filled with too many options (some known and others just waiting to be discovered).
Some, perhaps too many, executives take the easy way out. For example, driven to be more innovative by their Board of Directors, stockholders or the now updated-by-the-minute business press perform a review of their product/service portfolio, declare perhaps one or two of the more difficult projects as innovative, declare victory, and go about managing their organization as they always have. In other cases, they may appoint a “new” executive, like the Chief Innovation Officer, which is a popular choice, to drive their vision into real products and results. A good method, but only if the full executive staff has completed the process outlined below. Perhaps the executive creates what is popularly known as a “skunk works” after the model made famous by Lockheed and which turned Clarence
“Kelly” Johnson into a hero for engineers everywhere. Again, not a bad idea and one that can work, at least for a while, but the literature is becoming clear that most such efforts peter out in 3-5 years with little to show for the effort.
There is a better way for executives to be both innovative executives and be executives that drive innovation - the first and perhaps most important task for executives to define what innovation means to their organization. Then they embrace a system such as TIME to help them drive that understanding throughout their organization.
THE KEY ROLE OF INNOVATIVE EXECUTIVE LEADERSHIP
A former tank commander, turned medical device executive, once told me a story, which is useful here. He was a bright newly minted Second Lieutenant assigned to a Logistics branch. The commanding general of this logistics branch apparently liked to play a little practical joke on all new officers. He would called his new officer into his office, tell him/her most energetically that he too is also new to logistics and he does not know what it really is. He then orders the young officer to bring him six pounds of logistics and have it on his desk by noon, then ordering him/ her quickly from his office.
Now this story may be true or not but you can certainly imagine what a young officer in his or her first assignment would be feeling at that time. Pure fear and confusion. How on earth does anyone find six pounds of a concept and put it on the desk? After all, telling your commanding general he is lacking a certain level of knowledge certainly would not appear as the first useful option.
Unfortunately, unlike our befuddled new officer, executives do not have someone to come out and join the laughter as they explain the joke. No, achieving innovation is far too serious a matter. Yet, like this new officer, the innovative executive leader must find a way to drive innovation, that is both a process (the how to achieve the specific innovation content the organization needs) and a result (a product, service, policy, or new thing that creates a new customer value proposition). It is their job to envision, define, strategize, oversee tactics, measure results, kill bad performing projects, and support ones that may seem dangerously close to failure all while running everything else.
The good innovative executive will rarely, if ever, use the word “innovation” or “innovative” alone. They understand, instinctively if not from experience or education, that the vision for innovation must be clear enough to be directive and broad enough to allow for maximum creativity when needed. These terms are best used as an adjective or adverb to describe more specific things or actions. This does not mean simply saying “innovative product” or “innovative service.” The executive will instead repeat the vision or strategy to the organization repeatedly and in many different ways to keep them focused. The following statements hold no real or useful meaning for the innovative executive:
We need to be more innovative!
I want everyone to innovate!
Innovation is everyone’s responsibility!
10% of all projects must be innovation!
This is all like asking for six pounds of logistics! What the innovative executive must do, and provide leadership to achieve, is the definition and targeting of the type and amount of innovation the organization requires in the present and near future. Let’s discuss what we mean by the type or the amount of innovation.
Innovation may be a word that is hard to define but we generally agree that it exist along a continuum. One can envision some innovations as being fundamental discoveries that form the basis for hundreds of uses, dozens of new companies, and thousands of products. One example I often use is the laser beam. This fundament discover)' (the inventor of which was a subject of court cases for decades) has created a technolog)' that we find in everything from laser weapons to medical devices to the simple presentation pointer.
At the other end of the continuum is the incremental improvement. Such improvements make things better, faster, stronger, cheaper, etc., but still provide the same basic functionality. Some incremental improvements can be ver)' important as is shown by the development of the modern electronics industry and components became better, faster, more functional per unit weight, etc. We could hardly have made it to the moon using instruments filled with 1920s style vacuum tubes. Pacemakers, smartphones, and tablet computers would have been impossible with early chip technology. When incremental improvements are planned and executed over time with reliability and cost effectiveness, they can drive a business for generations. They can also lead the business to falsely assume they are invincible and firms such as IBM and GE may be examples to consider from their long history of success mixed with trial and tribulation. They may be considered as case studies in many business schools.
We can also combine here new uses for the same technology in closely adjacent fields and similar efforts. As many readers will know, this is the majority of what many executives will call innovation and claim the results to be innovations. This is not necessarily wrong but the innovative executive leading his or her organization to new heights must be honest and clear in what they are asking of their organization if they have any hopes of achieving their goal at acceptable levels of certainty. Some organizations can be very successful by consciously, consistently, and effectively exploiting the lower end of the innovation scale. It comes with risks but it is a valid strategy.
Since this is a continuum, there are infinite possibilities between the extremes. A possible way to look at this continuum is shown in Figure BB3.1.
In Figure BB3.1, we plot a continuum from low level of innovation content to high level of innovation content. Placed along the continuum is a view of the progressive growth of innovative focus within an average bedside organization. I am sure there are many other ways to view this as well as more complex ones but let’s focus on this one example for now. On this view we see the most fundamental discoveries as being more likely to allow for higher levels of innovation and lower levels of technology changes as being more likely to yield lower levels of technolog)' changes. This is by no means cast in stone and the variations are legend. For example, the first smart phone may well be considered to have been a collection of available technologies put together into a new format. (It was also not a very good phone, at least at first.)
I often caution executives and managers seeking to improve their innovation content that they may see a useful fundamental discovery once in their life time. Twice or more is rare. Yet when you ask people what they think of their own innovations, they often glow proudly and explain how it will change the world. The innovative executive must display the leadership that keeps the organization well-grounded in judging their place on the innovation continuum.
Now this is helpful to the innovative executive, but only half the story. The executive must know what is the state of their organization relative to its business environment, what level of risk can the organization sustain, and what are the needs of the organization, before he or she tries to determine what level, or levels, of innovation content they must lead their organizations to achieve. This is a complex issue since there are infinite potential combinations of large versus small organizations, profitable versus struggling, nonprofit versus for-profit, start-up versus multinational, public versus private, public sector versus government, etc. However, as complex as the problem appears in general discussion, it is often much simpler and certainly more focused to the specific executive trying to lead innovation efforts toward specific goals.
HOW DO INNOVATIVE EXECUTIVE LEADERS SET INNOVATION GOALS?
Innovative executives start with their innovation vision statement. Simply put, it has to control who you are and that controls what you are allowing the organization to do. Set a vision that you will always be the innovation leader and you have created a vision as clear as a London city fog. Sounds good but leads everyone to go their own way according to their definitions and immediate constraints of time, people, and money.
The vision statement must be clear about what you are allowing your organization to excel. You may be a start-up and just beginning to exploit a new technology hoping to create a major innovation. Or perhaps a medium-size company feeling the pressure from new rivals who have incrementally improved their product or service and are taking market share. Do you try to one-up them or do you search for a bigger leap in innovation content? You may be a multinational organization that is suddenly facing the obsolescence of your business and you need to reinvent yourself as IBM successfully did by becoming a services company in place of a hardware provider. Only the executive leadership can make this determination and then drive this understanding into a vision and then a strategy. If you are struggling, the one thing you do know is that you cannot keep doing things the old way. That is a death sentence for the organization (or for some the definition of insanity).
INNOVATIVE EXECUTIVE LEADERSHIP LEADS TO INNOVATIVE PORTFOLIOS
When you really think about this, setting “innovation goals” for an organization’s portfolio sounds ridiculous especially given the lack of a firm definition for the concept of innovation. Yet there are more than enough authors, consultants, and solution providers who suggest such a practice. How can you tell a group that they must deliver 25% innovative projects? 25% or six pounds, whichever comes first! Most people today just take the current portfolio, call some percentage innovative, declare victory, and proceed right back to doing whatever it is they know best. The innovative executive will lead his or her organization to decide on the right level of innovation content for the needed area of the business and focus the efficiency and cost-saving efforts where they are appropriate. This should be a joint decision and consensus agreement by the entire senior staff.
Once decided and the portfolio understood, the gap analysis between current and future situations will let the staff know how much “newness” is going to be required. This is a term indicating how much organizations change in all the areas shown in the TIME pyramid that will have to be touched, altered, revised, completely changed, etc., depending on the specific situation. It may be necessary to bring some innovation content to many projects across the organization and this will almost assuredly require the executive leadership to drive new organizational capabilities in all areas shown in the TIME pyramid. It may require ver)' specific innovation efforts in targeted business sectors while directing other sectors to drive differently.
Of course, all this sounds simple but it is usually difficult and occasionally results in executive personnel changes. Some executives are ver)' good at making things lowest in cost or at squeezing out the next 1% of efficiency in performance. Such people are good, often brilliant, linear problem solvers. It is rare, very rare, to find executives who are equally good at all types of problem-solving and creative thinking. Real change requires organizational change.
THE STRATEGIC PLANNING PROCESS
Innovation should not be left standing by itself. In order to be effective, it needs to be a key integral part of the organization’s Strategic Plan. Let’s start out by answering two questions. Rate these using a scale of 1 to 10 with one being extremely low and ten being extremely high.
- 1. How important is Strategic Planning to the organization?
- 2. Based up on actual performance, how effective have the Strategic Planning activities been to date?.
Good fortune is what happens when opportunity meets with planning.
- Thomas Edison
For most people, there is a major difference between the answers to #1 and #2. Ask yourself why there is a difference and take the time to make a list of why this might be true. The third question might be, “What part does innovation play in the organization’s Master Plan?” Although it should not be the major part of the organization’s Master Plan, it should be an important key part of the plan.
The Organization’s Master Plan combines the five major management plans together into a homogeneous, agreed-to, focused approach to managing the organization’s culture, business, and operations. (See Figure BB3.2.) These major management plans are:
- • The Business Plan (BP)
- • The Strategic Business Plan (SBP)
- • The Strategic Improvement Plan (SIP)
- • The Strategic Plan (SP), which is the prioritized integration of the Strategic Business Plan (SBP) and the Strategic Improvement Plan (SIP)
- • Annual Operating Plan (AOP)
Five Parts of the Organization’s Master Plan.
Definition: Business Plan (BP)
A Business Plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It also contains background information about the organization or team attempting to reach those goals.
Definition: Strategic Business Plan (SBP)
The strategic business plan focuses on what the organization is going to do to grow its market. It is designed to answer the questions - What do we do? How can we beat or avoid competition? It is directed at the product and/or services that the organization provides as viewed by the outside world. When an organization is just being funded, this plan is often just called a Business Plan.
Definition: Strategic Improvement Plan (SIP)
The Strategic Improvement Plan focuses on how to change the culture of the organization. It is designed to answer the questions - How do we excel? How can we increase value to all the stakeholders? It addresses how the controllable factors within the organization can be changed to improve the organization’s reputation and performance.
Definition: Strategic Plan (SP)
Strategic Plan is a document that is the result of Strategic Planning. It defines the organization’s strategy and/or direction and makes decisions on the allocation of resources in pursuit of the organization’s strategy including its capital and people. It focuses on the future of the organization and is the combination of the Strategic Business Plan and the Strategic Improvement Plan with each item prioritized to maximize the organization’s performance. The Strategic Plan is the combination and prioritization of the Strategic Business Plan and the Strategic Improvement Plan individual strategies.
Definition: The Annual Operating Plan (AOP)
The Annual Operating Plan is a formal statement of business short-range goals, the reasons they are believed to be attainable, the plans for reaching these goals, and the funding approved for each part of the organization (budget). It includes the implementation plan for the coming years (year 1-3) of the Strategic Plan. It may also contain background information about the organization or teams attempting to reach these goals. One of the end results are performance plans for each manager and employee who will be implementing the plan over the coming year. The Annual Operating Plan is often just referred to as the Operating Plan (OP).
Definition: Strategic Management
Strategic management is the process of specifying the organization’s mission, vision, and objectives, developing policies and plans, often in terms of projects and programs that are designed to achieve these objectives and then allocating resources to implementation of policies and plans, projects and programs.
The Organization’s Master Plan must combine all of the major planning processes together and, at the same time, ensure they are customer focused. All of the plans must be based upon understanding the customer requirements and preferences, plus having an excellent understanding of what the competition is doing currently and in the future. Figure BB3.2 is a model of an Organization’s Master Plan, indicating the five different parts of this plan: the Business Plan, the Strategic Business Plan, the Strategic Improvement Plan, the Strategic Plan, and the Annual Operating Plan. (The Strategic Plan is the prioritized combination of the Strategic Business Plan and the Strategic Improvement Plan and, in the model, it is represented by the combination of the two black diamonds.)
The Business Plan’s primary objective is to inform external investors. It is prepared early in the organization’s development cycle and it is often used to provide potential investors information related to the organization and its management. Information from it feeds directly into the Strategic Plan. While the Strategic Plan focuses on the future of the organization, the focus of the Annual Operating Plan is short range and addresses the current operations. You will also note that the Strategic Business Plan and the Annual Operating Plan define the direction that the organization wants to take and complement each other. On the other hand, the Strategic Improvement Plan is focused on the organization’s operations (how things get done) and its culture.
The purpose of any planning process is threefold. First is to set direction, second is to define expectations, and third is to define actions that need to be taken to meet the commitments documented in 1 and 2. The connections between the 3 points are not unidirectional; it’s a continuous flow back and forth to optimize total performance. (See Figure BB3.3.)
By viewing Figure BB3.4, you will note that the planning process starts with a vision that sets direction for the total organization. Normally all five direction outputs are prepared by the executive team with the Board of Directors approval. The two expectation outputs are typically prepared by middle-level managers with their immediate superior’s agreement. The four action outputs are ideally prepared by first-level management and the employee. This approach has the
Three Purposes for Organizational Planning.
Business Planning Elements and Timing.
advantage of tying the entire planning product together from the Board of Directors down to the individual employees committed performance plan and the budget required to support tech commitment.
CREATE STRUCTURE AND REWARD SYSTEMS TO SUPPORT THE LEVEL OF INNOVATION REQUIRED
No one expects the innovative executive team to engage in every detail of every project to assure that the best type and level of innovation content is being applied. Experience has also shown it rarely helps to talk about it if speeches are all the executive team can offer. Much more effective is to reward those real-life examples that best fit the vision and specific requirements of the innovation content the innovative executive team has decided needs to occur. Regardless of the organization, its purpose (cost efficiency or major innovations), and despite what any executive says in hopes of creating inspiration, people will do what they are rewarded for doing. If you want small amounts of innovation over many projects, then reward that type of result. If a project needed a major innovation to be successful but only provided small incremental changes, you may have more of a learning opportunity to share with the organization.
There is a popular trend that is grossly misunderstood. Some people feel they need to reward failures. The truly innovative executive leadership team will know that this is fundamentally flawed. Failure is not a career path for anyone. Some failures will, if placed into the proper context, provide a real learning opportunity that can be communicated to the whole organization as a way of helping the organization develop their innovation skill set. But to reward real failure is not an option. Executives simply do not have the time and the majority do not have the talent to put a lot of failure into a positive context. Innovative executives understand the value of experimentation as a natural part of the trial and error that is key to creative problem solving. Experiments that provide information on what will not work when such a result is fully or reasonably expected is not failure, it is learning and should be managed in that way. The only true failure is where you have no idea how it happens, no idea how to prevent it from happening again, and no idea of its significance if any.
PEOPLE DO WHAT YOU REWARD THEM TO DO, NOT WHAT YOU TELL THEM TO DO
It is useful and supportive to create reward programs that align clearly and simply with organizational requirements. When you have need for cost-savings and efficiency, reward that. You probably will need for moderate innovation reward that is for achieving its goal and share how it was done. On those rare occasions where the team and leadership recognized a long shot and nurtured it to success, quite possibly with high levels of problem solving and/or high innovation content, reward that and make clear what you are rewarding.
One thing is clear, if all the executive team states that they are rewarding the financial results, then all teams will work toward financial results and human nature will often send them down the path of least resistance. This can sometimes lead to less than lasting results and sometimes immediate discomfort when shortcuts show their “unexpected” outcomes such as poor reliability in products, services that fail to sustain customer satisfaction, or are easily duplicated and surpassed by your competition.
This area is also a great way innovative executive leadership shows itself. The concept of rewards can take many forms and executive leadership should direct appropriate amounts of their time to be creative, and develop and deliver creative reward options that support the innovation vision and specific innovation goals. Rewarding people for good ideas is great but unfortunately too many reward programs stop there. The innovative executive leadership team will take this task as a serious part of their personal workload to complete, manage, and constantly measure and review for improvements as well as continually search for new ways to reward the right behavior.
One caution here is not to fall into the trap of believing the often-made statement that money is not a motivator. Yes, there are many studies out there that seem to indicate that money does not motivate. What they really mean is that the money being offered does not motivate. Now here we must exclude those few who for truly altruistic motives perform work that pays little or seem not to be interested in money. Bless them all each and every one, but we are focused on the far greater number in everyday business environments.
Here is an illustration. Imaging you have two crowds of people waiting to run into a stadium to collect their rewards by giving them two choices.
They can run to the left and collect a nice plaque memorializing their accomplishments or they can run to right and collect $1 million each. Now decide which group you will lay down in front of. I have never had an executive tell me they will lay down in front of the money side. It’s not that money does not motivate and it is not just that “everyone has their price.” It’s that the money offered has no impact upon the individual. It takes little research to read a corporate finance statement and see that the CEO and direct reports may well earn millions for what some may, with considerable justification (rightly or wrongfully), consider their creative accomplishments. It’s not that money does not motivate; it’s that unfairness is such a demotivating power.
So this is where the innovative executive team must look across the TIME structure and find ways to reward and motivate groups in new and exciting ways. This chosen method will need to be tailored across the originations, tied to the nature of the work being performed, distinguished between individual or team accomplishments, and, of course, be within the ability of the business or organization’s ability to deliver. BB16 - Rewards and Recognition will discuss this subject much more thoroughly.
I like the fact that here in the United States our status is governed by how hard we work and how creative we are. The big money that is earned by the CEO could be motivating enough to have the CEO’S position as your goal and how you are structuring your career. An alternative path is going into your own business risking everything on being successful as the CEO of your own company. That requires some creativity, innovation, and takes risk but that the potential bigger paycheck may be worth it to you.
DEVELOPING THE INNOVATIVE EXECUTIVE LEADERSHIP SKILL SET
Many executives probably think they have all the skills necessary to be a truly “innovative executive leader” right way. Many are already successful (as measured by current title and compensation), perhaps graduated from prestigious schools, or have some other past measurement to show they “have what it takes.” Maybe they are right. Clearly some people seem to have a natural talent for this type of executive leadership. For many, the late Steve Jobs comes to mind. But I would contend from years of experiences working for and with many such executives, they may have what it takes but probably not, and even if they do, they probably need to use their skills in whole news ways. They just don’t know that part yet.
Many executives are good problem solvers and have strong analytical skills when presented with hard data and facts, but innovation and projects that require high levels of innovation content are different creatures. In school, one learns to solve problems, which are clearly stated and where available data is designed to allow one to solve the problem using readily available tools and methods. The case-study method, practiced still by prestigious schools, still overly use this method. The more ambiguous problems often require the executive to first define the problem for the organization and then work creatively to find possible solutions. It is defining the problem that trips up so many executive teams trying to be innovative executive leaders. They simply cannot define a problem in a way they cannot see the solution for themselves. The true innovative executive leadership team can define a problem in an ambiguous manner and comfortably move forward knowing that the clearer definition will come over time. Not the answer, mind you, just the definition that may well be something they had not been really considered.
Executives therefore must develop new skills in at least two areas if they wish to be successful in leading innovation efforts. One is creative problem solving and the other is in creative leadership. Creative problem solving is a recognized field with all the associated trimmings of associations, meetings, consultants, and universities promoting their programs in the subject. Creative leadership is a bit newer. While there are many theories about leadership, the concept of creative leadership as used here is that form of leadership that combines the best of creativity with the necessary facts, demand requirements, and daily chores of running a business of any kind.
A full discussion of either creative problem solving or creative leadership is beyond the scope of this book, much less this chapter. A brief summary is discussed here for basic clarification. Let’s think of creative problem solving along a continuum as shown in the graph displayed in Figure BB3.5.
Creativity Level Continuum.
At the lowest level (based on page position, after all some problems are huge and require tremendous intellectual capacity to solve), we have straight-forward linear problem solving meaning where executives can gather the necessary data and solve the problem where there is one right, or at least one very much desired, answer. Then we have what was once the highest compliment you could pay an engineer, designer, or scientist. That is, to call their solution “elegant.” This means that not only was there a satisfactory, or correct, answer, but also that the answer itself or the method followed showed a certain level of creativity that others could appreciate.
At the next level is creative problem solving where executives will need to apply new methods and skills to help define, often re-define, the problem until they finally understand enough about their situation, even if nowhere near perfectly, to being searching for solutions. The techniques used by the innovative executive leader are focused more on learning about the problem than in immediately and linearly proceeding to the solution.
The first step to becoming a leader in the process of Innovative Executive Leadership is to recognize that you must constantly review.
learn, develop, practice, and reflect on the results of your skills and how they are applied by you as an individual. Very few, if any, senior executives, when asked to leave a company for poor performance of the organization, ever say “it was my fault.” Mostly you hear a string of excuses; they move on to another firm and might even be highly successful if their unchanging skill set aligns with the specific needs of the next company to employ their abilities.
Now many of you will say “but of course that makes sense.” You are supposed to hire the person able to solve the company’s problems and grow the business. Unfortunately, the more narrow liner problem solving skills often yield only shorter term results. As Amazon has shown, the crushing losses in the brick and mortar retail sector of long-standing brand names, more of the same is rarely a long-term solution to survival in the face of innovative new approaches. Who tends to succeed? Those who employ both the problem solving and creative leadership to create and reinvent organizations to meet the current and near-future challenges.
The individual leading a commodity company will probably require different personal development from a start-up and different than a growing midsize, and also different from a large multinational. As a result, there is no one-size fit all-solution set no matter how much the university, consultant, or solution provider may tell you. Careful reflection on your own situation and the research on available training and other educational opportunities are the best start. And I think one new message with “do” mean just a start. For nothing is of value unless you implement it and carefully review what works or not.
There’s an old story of a company president who was released because the organization was not meeting the investors’ expectations. Being a good soldier, he agreed to overlap for two weeks with the new president. On his last day with the organization, he wrote three letters and gave them to the new president telling him, “Based upon my experience with this organization I prepared three letters that I hope will help you in doing the assignment. If you get into trouble, open the letter marked 1.”
They said goodbye and the new manager tossed the three letters in his desk drawer not thinking much about them.
Just as predicted the new president found he was missing ship schedules in his second month in the assignment. Remembering the advice, his predecessor had given him, he went to his desk and opened letter #1. Inside was a one-page letter that said, “Blame it all on the terrible condition the organization was in when you took over. If after 2
months you’re still having problems or have run into some new problems, open letter number 2.” He followed this advice and the Board of Directors accepted his reasoning and understood he had the condition well under control now.
Things in the organization did not get better; in fact, they got worse. A number of key people resigned and sales dropped off significantly. As a result, he decided to open letter number #2. A single sheet of paper in letter read, “Blame it all on whole management team. If things still do not get better, open letter number #3.”
Again the new manager followed the sage advice and again things got worse as two of their major customers decided to move the work to the Philippines. Now really unhappy with the way things were going, he decided to open letter #3 which simply read “Write 3 letters.”
The simple lesson is “Don’t blame things on someone else. It is you that makes the difference.”
We can offer guidance in what a learning executive may be looking for in terms of new knowledge. The first and foremost would be developing skills in creative problem solving. Now this is a broad field and there is the Creative Problem Solving Institute, which is a good place to start. Like all institutes they may be someone parochial to their philosophy and seeking a broad range of seminars and course is always recommended.
There are some caveats on training in creative problem solving. It can be fun to take a course that brings out the plastic building blocks or uses art assignments to help you understand the value of reframing and thinking differently. But what you really need to find are those courses, seminars, and the like that focus on applying creative problem solving to real-world problems. You need to practice. As the great NFL coach Vince Lombardi is quoted, “Practice does not make perfect, perfect practice makes perfect.” Many courses in subjects such as design thinking are quite good at this and should be considered regardless of your industry.
A second caveat is to avoid courses that state they will help you think “outside the box.” There are now a number of books in publication about thinking inside the box. Based on research into what helps people actually think both creatively AND productively, it has been shown that most people are actually more creative when they have effective constraints (aka, a “box”). Those constraints that represent the Goldilocks area of not to rigid and not to lose tends to focus people and their creative minds in practical and useful directions. It is this box that is the major task for the innovative executive leadership team. (See Figure BB3.6.)
Innovative Executive Leadership Sets the "Box”.
In Figure BB3.6, we have three examples of “boxes” that innovative executive leadership could set. Let’s discuss each one by citing a possible example. Each example is, of course, just one of what may be many possibilities.
BOX 1 A COMMODITY COMPANY STRUGGLING TO OBTAIN A COMPETITIVE ADVANTAGE
The executive leadership in a commodity-type company may want to break out with some tremendous innovative leap forward but such a dream is hardly, if ever, realistic. The executive team needs to define for their organization the type and nature of innovation that best fits their business. They may set compensation and rewards systems that recognize those people who achieve “cost cutting” results but do so in different, more effective, and customer-pleasing ways. There may be further in-the-box limits that say such innovations should be compatible with some or all aspects of a sector of the current business operation. Some people will contend that Amazon is just such a company since they started out as a “book store on-line” in a world filled with bookstores.
BOX 2 A TECHNOLOGY COMPANY NEEDS NEW TECHNOLOGY TO REGAIN MARKET LEADERSHIP
In such a case as this, many executives will use the buy-or-develop form of the problem to see if they have a technology ready or can they simply purchase something “new” to sell to customers. The innovative executive leadership team will more often start off with trying to better define what they mean by “regaining market leadership.” They may well seek ways to redefine the business they are in and develop new products or sendees. It is always better to be the market leader of the new business just breaking the disruption line than the on-going, even currently rising business that is still open to be overtaken by the upcoming disruption. Such analysis requires creative thought and imagination in combination with facts and figures.
BOX 3 A NEW TECHNOLOGY COMPANY NEEDS FIRST OR NEW APPLICATIONS
In this box, the executive leadership needs to keep the organization focused and flexible as they learn about what the technology can do and not jump to the first application that comes to mind or simply the easiest one to implement with the least risk. This area can be very expensive to operate in and by nature is high in risk. The innovative executive leadership team will find ways to distribute the risk over the organization such that new and creative ways are identified through. Too often such firms as in this specific example are so focused on delivering the technology they do not plan ahead to the type of organization that will deliver and exploit it while continuing to develop the creative approaches to problem solving that gave them their first insights.
Of course, large multinationals with many individual companies may well have divisions with one, or all of the type of problems shown on the continuum. The innovative executive leadership teams must develop the agility to maintain balance between the level of innovation content and the specific requirements of the particular subdivision.
In this chapter, we looked at innovative executive leadership as a new way to manage the innovation content of your organization under the umbrella of an encompassing approach called TIME. Stressed in this chapter is that the innovative executive will display his or her leadership through a new approach to organization combining the best of creative problem solving, strong management of fundamentals, and specifically by making taking on and excelling at that most difficult of defining just what innovation means to their organization.
Gandhi is quoted as saying “Be the change that you wish to be in the world.” The innovative executive can exhibit leadership only by becoming an innovative person. This path relies on readily available tools and methods but is unique is some way for each person. Extended, it will be unique for each executive team and will certainly evolve as technology and challenges change over time.