Wednesday, March 26, 2014

Leadership - Innovation...What Matters Most

WHY LEADERS FIND INNOVATION CHALLENGING

Innovation challenges "current ways" that are not necessarily "Black Swans," per se, but rather a normal course of commerce in an instantaneous information-filled business world. In many respects, determining the priorities of change and executing to value are a CEO's greatest leadership challenge. And, for Boards who are charged with the responsibility of evaluating their company's CEO's progress and performance, it remains their most important duty.

We asked many of our clients why product and process innovations prove difficult.  It boils down to a leader's balance, and courage.

Knowing that innovation is disruptive to business models, organizational structure, and a company's traditional culture (note that Peter Drucker once pointed out that culture triumphs strategy any day), many CEOs, on balance, believe that change may be too disruptive, "career risky," and regardless, may not be achievable during their stewardship. And therefore many CEOs "play it safe." Yet, as challenging as it is to pivot with the velocity of change ever accelerating, "playing it safe" or not gaining first advantage rarely results in maintaining or moving toward a market-leading position.

Courageous leaders recognize this risk and opportunity cost of inaction. They seek to innovate and execute, and don't hesitate to reinvent their business proposition to sustain and/or extend their disruptive advantage. These leaders recognize that the actions undertaken, i.e. disruptive risk, is all things considered a superior alternative to becoming a laggard, requiring future triage to catch up and remain relevant.

Sometimes tune-ups are mislabeled as innovations, for example improving customer care, while true innovation requires a significantly different path, of broader dimensions, to accelerate enterprise opportunity. Be careful to know which is which, and why.

THE WINNING HAND IS TALENT

Leading innovation to tangible value is a difficult undertaking, and a truly "sensitive matter" fraught with complexities. It requires a clear vision, commitment, and flexibility. It must be planned carefully, resourced, and executed with care, taking into account unintended consequences will likely pop up.

The most successful CEOs recognize that talent wins out, most especially in times of significant adjustments. And the CEOs interest (and yes, professional preservation) in carefully attracting and evaluating the best talent for his/her inner circle is job one. Talent is their "secret sauce" necessary to shape and guide the economic future of their enterprise, not just to react to it.

Without a team of exceptional leaders guiding and "owning" change, transformation will fall short.

Forward thinking CEOs continually evaluate whether they have their best players in the most impactful roles. They view the recruitment of key executives as an ongoing responsibility, realizing that they oftentimes don't have the time to develop internally the special skilled talent that they need now.

THE BOTTOM LINE

We live in a world of two truisms: a rapidly reforming world, and CEO accountability to enhance value, taking into account the opportunities and obstacle, foreseen or not. And with the realities of short term measurements and "Black Swans," attracting and investing in exceptional, and oftentimes rare, executive talent is an investment that pays off. In most cases, the best teams claim the most wins.


It's what shareholders expect, and activists demand.