THE DEMOLITION MANTRA – Innovation & Leadership

Just read a really interesting article on CNBC Business on the ever increasing link between innovation and leadership.

The author Colin Brown discusses China’s boom economy and its drive towards being cited as the world’s leading innovative powerhouse. The problem being that it seems to be taking the wrong approach. China seems to have taken the strategy of reverse engineering existing products and creating its own products. China has seen a huge increase in locally made smart phones rather than purchasing the big brand names, but look underneath and you will find all the components are the same and the phones are run on Google android. Having grown up in Hong Kong, I have seen this tact being employed for years. I neither condone nor support “copy products” but many do. I recall at an early age visiting one of the larger computer shopping centres in Hong Kong and seeing one of the shops create a PC that duplicated the specs of a well-known brand, but using local Chinese components and thus making the unit much more cost effective. Things have moved on since then but the same principles are alive and kicking. No sooner have a major brand launched a new innovative product to find that there is a cheaper version brought out soon after.

This strategy is good for short term goals, but does not create long term investment. In order for China’s companies to build a lasting dividend yield, they would need to undergo what the author calls a “Brain Transplant” at the leadership level. Innovation is not something that can be manufactured or churned out on a regular basis. Innovation is risky, it is full of mistakes and random chance encounters and unless an organisation is willing to acknowledge the inherent risk attached to innovation it will be left behind.

Kjell Nordstrom is quoted as saying that “innovation is a form of creative disruption”. He uses the iPhone as a prime example, something that did not take advantage of current technology and ideology in the mobile phone market, but instead completely transformed what a mobile phone was and does. The leadership at Apple have employed this maverick risk taking strategy for years now and it has made them into a global leader and one of the most innovative companies to work for worldwide. Many of the leading technology companies now employ what is known as 20% time, or FedEx days, whereby they actively encourage their staff to drop what they are doing and research and work on something completely different. Many products have stemmed from this free space thinking time and this could only have been possible by leaders driving and encouraging this out of the box activity.

This is not to say that the western world is so quick to encourage and adopt innovation as a business strategy. How many start-up companies have been bought up by larger firms only to find that a few years later that there is nothing left of the start-up apart from the brand. Having been merged into the parent company, everything that made that entity attractive in the first place has been eroded and replaced with the corporate strategy and commercialisation of the bigger brand. Dan Heath recently told me that Apple saw this problem at an early stage in its dominance. The success of their first Apple computers meant that when Steve Jobs wanted to create a new version, a funkier, better version, a mac, he was met with resistance and the only way to succeed was to create a completely new silos within Apple. He even called the team pirates stating that “it’s better to be a pirate than join the navy!”, going against the grain…..we all know how successful the outcome was and it is this leadership style of being willing to take risks and investigate new ideas that has made Apple the company it is today.

This innovation philosophy has meant that some companies have had to re-invent how they do business and R&D. Kjell says there are two options:

  • Create clear cut separations within the business, whether this means creating the Steve Jobs pirate approach within an organisations or actually outsourcing R&D to a third party in return for a 20-30% stake in that business.
  • The alternative is to attempt to straddle the two worlds in a more open-reined system that invites ad-hoc collaborations with outside partners while breaking down the silos within the corporate structure. “You need pretty sophisticated systems to make this happen,” says Nordström, “It becomes all about people arbitrage.”

With this concept of innovation and creativity comes pit falls. Every business would love some of Apple’s magic pixie dust but do not fully appreciate the lengths that Apple, Google and Facebook have gone to create that environment. Chris Barez-Brown, once of the ?Whatif! company in London, now advises and presents on what companies can do to create this innovative culture from the leadership level down.

“Innovation is at the top of the agenda right now because as companies we’ve done everything else: cost reductions, customer relationships, engagement. The basics have all been done.” 

I think that although this is recognised by a number of leaders worldwide as a concept, there is always the issue of buy-in. It’s like employee engagement, everyone knows that motivated staff are more productive than unmotivated staff, but some find it difficult to actually implement a culture that encourages and supports this concept.

Chris talks about “finding the Elvis in the room”, something which he takes from Bono of U2 fame. Bono would walk into a room on one of his charity fund raising missions and ask who was Elvis?, in most part everyone knew who this person was and as such Bono would know who he needed to get on board. Chris uses this technique in business, he finds the person in a leadership role than understands and appreciates what innovation is all about and then utilises this sponsor to champion what is required in the business and to gain support from others.

Not unlike employee engagement, the key to leadership buy-in for innovation is to find what people are passionate about, what their values are and dealing with cynics and concerns. R&D is an expensive and risky business and to drive innovation you must make the leaders aware that there will be failures along the way, but for all the failures that they will encounter, the one idea that is a success will pay for the errors 100 times over.

From my perspective, Innovation is a key attribute no matter what industry you are in. I have heard some outstanding speakers in my time at Benchmark For Business including Marcus Buckingham, Dan Heath and Patrick Lencioni on subjects from leadership to talent management to playing to your strengths and I think the time has come when creativity and innovation need to be as important to organisations in order to allow them to stay ahead of the game and create long term success.

You can see Kjell Nordstrom and Chris Barez-Brown speaking in Manchester on the 14th September 2011 and I for one can’t wait.

The original article from CNBC from which my thoughts have been generated and quotes used can be found at:

THE DEMOLITION MANTRA – CNBC Business.

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