Consumer companies know all too well that the winner of the innovation race will land the next generation of customers. Yet one blind spot many organizations face as they push to discover “what’s next” is that they equate leading innovation with leading change. That’s a mistake: Leading innovation is fundamentally different and requires a different type of leadership mind-set and competencies. The good news is that you may already have these leaders and capabilities within your organization; you just need to unleash them.
What It Means to Lead Innovation
In the traditional leadership construct, one person at the top — usually the chief executive officer — creates a vision for the company and motivates employees to make that vision a reality. This direction-setting approach works fine when problems are clearly defined and solutions known. In this time of continuous disruption, leaders need to solve for new, undefined problems. Leading in this type of environment is less about having the answers and more about weaving an organizational context that allows innovation to emerge. Innovation is a messy process that requires leaders who are comfortable with ambiguity and secure in themselves and their abilities. The culture that springs from this type of leadership enables employees throughout the organization to offer ideas — and sometimes the most innovative suggestions come from those closest to the end consumer.
How can your company tap into its latent innovation potential? You need two elements to begin this journey: a community that is willing and able to grapple with the process of innovation.
A Will and Then a Way
In our experience, companies struggle with the “willingness” side of innovation: creating a culture that has a sense of purpose, shared values and rules for how people in that company will engage with one another. Leaders and employees must understand and truly live the values of the organization. For example, a company can say it values boldness and risk taking, but if leaders marginalize the careers of those who tried to launch new businesses but were unsuccessful (rather than celebrating the learnings from failure), the rest of the organization will infer that its leaders don’t truly value boldness.
Leaders must create a culture where employees feel connected to the company’s values and higher purpose, are engaged in their work, and have a sense of psychological safety so that they can be their true selves at work. Innovation cannot emerge if people do not feel comfortable sharing novel ideas and unconventional perspectives that may lay the groundwork for truly disruptive innovation.
At Egon Zehnder, we worked with a large global consumer services client that had difficulty creating a culture of innovation. When we dug deeper, it became clear that the employees didn’t know what the company’s values were, and there was little sense of community. The company had a “macho” culture, where showing vulnerability was seen as a weakness rather than a strength. Leaders were initially reluctant to establish company values and purpose because they dismissed it as “meaningless soft stuff” until they realized that in order to set the stage for innovation, they had to start by creating a sense of belonging and psychological safety.
We worked with the leadership team to establish a purpose that was true to the company’s roots and then focused on creating organizational dynamics that fostered engagement. At meetings, they clarified the purpose of the gathering, what they were solving for, and the rules of engagement. These changes made employees feel more connected to the company — and each other — and more willing to contribute their thoughts freely. Priya Parker, the conflict resolution and professional facilitator, asserts, “It is the way a group is gathered that determines what happens in it and how successful it is.” We strongly believe that the cultural context you shape sets the stage for drawing out an organization’s ability to innovate.
Building Innovation Capabilities
Ensuring your company has the willingness to innovate is step one. Step two is instilling people with the ability to innovate. Innovation often happens when a diverse group of people comes together and generates a wide range of ideas that get refined or evolve. This process often involves heated debates, and the leader’s role is to ensure people feel supported enough to share their ideas, yet make sure there is enough confrontation to spark new ways of thinking. As new ideas emerge, companies must then experiment and then adapt based on the learnings.
One example of this type of culture in action is Amazon, as embodied in its Leadership Principle #13: “Have a Backbone; Disagree and Commit.” Amazon believes that leaders must “respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting” and that they should “not compromise for the sake of social cohesion.” It’s hard to argue against this approach, considering the numerous disruptive innovations the company has produced: Amazon Echo, Amazon Kindle, Amazon Prime and Amazon Web Services. Many of us cannot remember life before Amazon Prime, but that offering was the result of heated internal debates and multiple iterations, since the finance team was initially opposed to the idea because financial models showed Prime would be extremely unprofitable (Amazon’s warehouses and processes were immature and inefficient at the time).
We helped another client — the largest consumer products manufacturer in the U.S. in its category — that struggled with the “ability” side of innovation. The company had two challenges:
They had shared values and purpose but were “too nice” to each other, preventing constructive conflict and difficult — but necessary — conversations.
Leaders believed they did not have time for the hard work of innovation because they were swamped in their day-to-day jobs of manufacturing high-quality products.
To help the leadership team become more comfortable with constructive conflict, which is critical to enabling the tough conversations and debates that drive innovation, Egon Zehnder helped each leader by creating a personal development journey that helped each one “unlock” their own abilities to handle conflict.
To address the lack of time for innovation issues, the company created a new innovation unit that would be independent yet remain connected to the core of the company. The key was to make sure that this group was not an “island” unto itself. Egon Zehnder assessed the top 15 leaders of the company and identified one who was highly trusted and “wired” to lead innovation. Putting this company “insider” as the head of the newly formed innovation unit allowed him to leverage his existing trust and relationships to ensure that new ideas coming out of this innovation unit are launched, scaled and integrated back into the core company. From here, the company hired additional employees to the innovation unit, many of them from other companies. While the rest of the industry has struggled with digital transformation, our client was one of the first movers in its industry to embrace innovative digital business models and successfully launch an e-commerce business that enabled it to adapt to the future of how consumers want to shop.
Leading innovation requires a different type of leadership approach and leaders who can shape a cultural context where people are willing and able to innovate. Chances are, your company already has several of the key elements needed to enable disruptive innovation — now you just need to unleash them.