When it comes to spurring innovation, today’s CEOs are two handed. On one hand, they know they need to devote attention to it – to generate organic growth. But on the other they are focused on making those numbers quarter in and quarter out, such that innovation practitioners must constantly work to gain and keep CEO mindshare and support.
For years we’ve assumed that CEOs short shrift innovation out of the need to focus on short term priorities. We’ve assumed that many are reluctant to get involved in projects that have a longer time horizon because of the trend towards shorter and shorter tenure at the helm (seven years median according to Booz & Co. research). And in the current global slowdown, we’ve seen an overwhelming preference for hunkering down and cost cutting, and risk-adverse, line extensions and me too products and services, rather than game changing products like the iPhone. But there’s another explanation that gets far less attention: lack of knowledge about how to move the growth needle.
“I have come to realize how much time is wasted teaching managers about the practical skills of innovation,” notes veteran new products maven Thomas Kuczmarski in a recent blog. “It is the chief executive officer that needs the lesson.”
Yet when CEOs do get personally involved, success rates soar. Kuczmarski & Associates own survey of 87 USA product and service companies reveals a jarring stat: in 62 percent of successful firms he and his researchers studied, the CEO was actively involved in the process of planning new products and services, compared with only 30 percent of the unsuccessful firms. Don’t have time to be involved in innovation? You don’t have time not to!
Yet when I ask attendees at “Back End of Innovation” conferences, and CEOs at trade association conventions how many CEOs are actively involved in innovation, very few hands rise. Could it be that CEOs are quietly intimidated by the topic? After all, few studied innovation at university, and most touched on it briefly, if at all, in business school. Many rose up through the ranks based on their superior execution, on making their numbers. They’re intimidated to ask basic questions, and don’t have time to study up. Thus, they are much more comfortable delegating rather than participating and engaging with the troops.
Of the 23 Innovation Vanguard Firms my colleagues and I at the Innovation Resource began studying over a decade ago, the single most important trait of those who have sustained growth was, you guessed it – ongoing CEO involvement. Among them were IBM, Whirlpool, Procter & Gamble, Borg-Warner, and GE. These standout firms established clearly defined and compelling future state visions for their new cultures. They established a few simple metrics, and wrestled with rewards. And though they appointed a senior person to be in charge of systematizing innovation, their leaders never abdicated responsibility entirely.
The poster child of this new holistic approach to innovation was, of course, Procter & Gamble. When A.G. Lafley took the top position at P&G, the company was losing market share to lesser priced house brands and morale was at low ebb. Lafley used the crisis to get people’s attention. He focused squarely on the customer and said “the customer is boss.” He had everyone and every department and division set stretch goals for innovation. And then he gave out rewards to people who came forward with ideas. Result: in 2000 only 15% of the company’s innovation efforts met profit and revenue targets; today the figure is 50%.
Steve Jobs was actively involved in everything and every project at Apple right up to the time of his death. Jeff Bezos “still dashes around Amazon with the intensity of a startup boss trying to make his first payroll,” according to Forbes’ George Anders, who spent time at Amazon decoding their amazing idea machine. If you’re tired of hearing about Bezos, Jobs, Benioff and the like, ask yourself this question: why aren’t there more CEO examples to pull from?
Examples from the other side of innovation are all too plentiful, like this one: “What really gets to me is the waste of human talent around here,” observed one respondent to a climate survey my firm helped design earlier this year. “This company is not even getting ten percent of what I and others are capable of producing if the culture wasn’t so screwed up.” As an innovation coach and innovation speaker, I hear this all the time.
The CEO and chairman of this $30 billion energy company had ordered a new approach to innovation, and appointed a team to come up with a plan. A year later, the team was still embroiled in endless meetings trying simply to define innovation, and build trust across estranged business units. The one tangible accomplishment was the climate survey. However, the team was flummoxed when the survey revealed the single most significant barrier to innovation turned out to be … the imperial CEO himself. Fear and lack of trust discouraged even well-placed managers and senior executives from foisting ideas up the chain of command, stopping innovation in its tracks. Speaking candidly and truthfully, even inside innovation team meetings, was not considered safe. So when it came time to present this inconvenient finding to the chief, everybody laughed nervously — but nobody volunteered. Eventually the “finding” was removed from the deck altogether. Why risk wrath?
But leaving aside such distinctly non-innovative cultures, I do see emergence of a new breed of CEOs – mostly founders, admittedly – running companies who do “get it” with regard to the need to actively lead innovation. Ronald Shaich, founder, chairman and co-CEO of Panera Bread, is one.
In an interview with Adam Bryant in the New York Times, Shaich spoke about not falling prey to what happens in so many large companies that let their “delivery muscle” (how they get work done) overpower their “discovery muscle” (how they reinvent themselves).
The delivery muscle, Shaich explained, feels rational, “and [your] people feel much safer with it because you can analyze it and it’s driven by market research.” “But when you are talking about companies that find new patterns, that have discovery, it’s about leaps of faith. It’s about trusting yourself; it’s about innovation.” And making your numbers get bigger as a result.
Robert B. Tucker is the President of The Innovation Resource Consulting Group. He is a speaker, seminar leader and an expert in the management of innovation and assisting companies in accelerating ideas to market.