Chapter And Authors Information
There is no doubt that almost all executives appreciate the potential for positive outcomes which arise from building a culture of innovation. What is also clear is that there is more uncertainty regarding the requirements for leading for innovation. This chapter examines the three critical elements of leading for innovation, considering the physical, mental, and psychological components required for executives to create the conditions for innovation. Diving into the innovation-focussed own-drive-contribute framework, it also considers the importance of executives owning the innovation agenda to lead the kind of transformation that organisations require to shape the future.
The Peter Principle, first devised by Laurence J. Peter, states that competent individuals within an organisation are promoted until they reach a position of incompetence. This role calls for different talents and skills than those they currently possess. Examples of this might include the skilled technician promoted to a design and development role without being given any training on planning or computer design programming. Or consider the case of the bookkeeper who is promoted to a team leadership role without being helped to develop people management skills. In both those instances, the individual can still thrive, but only if they are given the skills and tools to carry out their new role.
I would argue that the Peter Principle also works in reverse, showing itself most strongly when competent executives who have reached the top of their career through merit find themselves in situations for which they have little or no preparation. In effect, this reverse Peter Principle takes extremely competent executives within highly efficient organisations and, through the actions of those executives, cascades inefficiencies, misunderstanding and chaos down through the organisation.
Leading for innovation is a classic scenario where the reverse Peter Principle comes into play. Generations of executives have been trained in business thinking, which centres on what are now, outdated command-and-control methodologies. But when the decision is taken to pursue a more innovation-led approach, executives typically find that they are promoting not just themselves but their entire organisation into a role for which current strategies, skills and practices are not suited.
So, the question has to be, how do executives build a genuine culture of innovation without foisting a Peter Principle scenario on the entire organisation? As with everything else in business…
…It starts with leadership.
‘Every project is unique. It has different contexts, stakeholders, inputs and outputs, budgets, talent, and history. Therefore, every project needs a different approach. And that’s where people come in. You need creative leaders who know how to inspire innovation and who can create the conditions for others to shine’.
Chris Baréz-Brown, the founder of Upping Your Elvis, made the above comment in a short piece entitled ‘Creativity is people’, which he contributed to my book ‘Building a Culture of Innovation.’ It’s a piece that perfectly encapsulates people’s central role in delivering innovation. Particularly so as he also commented that, ‘It’s the people that generate the genius, not the tools. That’s why culture is so important. We create. We are creation’.
People, culture, creativity, leadership: if those are some of the secrets to success, then perhaps we need to start with a new vision for the organisation, which moves away from hierarchy and into enablement. Even though this chapter is entitled ‘Leading FOR Innovation’, you may have already noticed how I have talked about executives and leadership in differing scenarios. The reason for that is simple; whilst executives may be (and should be) leaders, leaders are not necessarily always executives.
Executives operate from a position at the top of organisations or divisions, and their role is quite clearly set out and, some might say, circumscribed by legal requirements. Quite frankly, if executives aren’t leaders, then it doesn’t say much for an organisation’s future. Equally, if the only leaders within an organisation sit in the executive team, the future looks bleak.
Authentic leadership is a behaviour and attitude which manifests through actions, approaches, and influences. Therefore, you can find leadership at any level and in any position within an organisation. In ‘Building a Culture of Innovation’, we talk about leaders without a title. These are the people whose attitude, approach to work or interactions with colleagues and others can influence those around them. They may not have a ‘leadership’ title, but they are the people who ensure that jobs are done, projects succeed, and people are engaged.
Interestingly these leaders without a title may be transitory. They may step up when needed for a particular project or even an element of a project and then step back when their leadership input is not required. Think of a sports team. Commentators often talk about leaders on the pitch. These individuals take control when the game is flowing one way but step back and defer to others when the pattern of play changes, only to step up again when required.
Figure 3.1. Situational leadership without the title
I accept that the entire executive/management team sitting within the leading segment in the illustration above is an ideal scenario. However, given the reverse Peter Principle, that might not be the case when looking towards innovation leadership. This is where clever executives can win out, quickly identifying individuals across an organisation who can help to supercharge the innovation agenda.
To put it simply, in an organisation in which every individual can be seen as an employee, some may have executive or managerial titles, others may have more non-managerial roles, but leaders can come from anywhere. I will be taking a closer look at the various roles played by individuals shortly when I unpack the own-drive-contribute framework. In the meantime, I cannot stress highly enough that organisations want and need innovation-led leaders at all levels across the organisation when it comes to winning through innovation. Perhaps the first and most important message is that in the same way as you wouldn’t necessarily expect executives to be skilled machinists or technical gurus, executives don’t necessarily have to be the innovators. However, what they do need is to understand how to lead and create an ecosystem in which their people can collectively innovate. That’s why this chapter is titled Leading FOR Innovation. The skills and attributes that executives require are not exclusively those needed for innovation. However, leading for innovation does require a unique set of abilities and outlooks, and executives need to deploy those skills directly towards the delivery of their innovation strategy.
The second message is that we should never lose sight of executives’ part in helping their people engage with the idea of an innovation-centric culture. Executives may not need to be innovators themselves, but they do need to take ownership of the innovation agenda and demonstrate their commitment with every approach and every decision; otherwise, why would the rest of the organisation engage?
I’ve seen this all too often in organisations. Executive teams announce a bold innovation strategy but leave their people floundering as the c-suite fails to put the proper training or infrastructure in place or simply moves on to the next shiny idea. And before you comment that Captain Picard from Star Trek’s ‘make it so’ catchphrase seemed enough, it might be worth considering that every crew member was handpicked and trained to be creative in the face of any intergalactic challenge!
So, executives need to own the agenda, but they also need to create the conditions which enable an innovation-focused mindset to thrive across the organisation.
Figure 3.2. The own-drive-contribute framework
To illustrate this, let’s look at the own-drive-contribute framework. This may look like a straightforward pyramid, but it perfectly illustrates some of the most important aspects of a culture of innovation. On a superficial level, it asks questions such as how executives might help their people to have the tools, skills and understanding to ‘contribute’ to the innovation agenda. We may also ask what skills and attributes managers may need to ‘drive’ innovation forward on a day-to-day basis. And we certainly should consider what executives need to do to truly ‘own’ the innovation agenda.
On a more complex level, questions arise such as how capabilities, mindsets, and behaviours weave into day-to-day activity. And why is promoting the emotional side of innovation, engagement, empathy and so on as important as providing the physical tools and structures to enable innovation? Executives may sit at the top of this pyramid, but, as with an iceberg, the rest of the structure provides stability or sinks the ship. Hardly surprising then that competing priorities, entrenched attitudes, turf wars, and culture all come out as top barriers to innovation success, whereas executive support is seen as the top enabler of innovation. (KPMG, 2019).
Looking at the own-drive-contribute framework in a little more depth, I will start by reversing the pyramid. Let’s examine the part played by non-managerial and managerial people before focusing closely on the approaches and qualities required by executives if they are to lead for innovation successfully. And I’m doing so simply because executives don’t exist in isolation, and their role is as dependent on others as others are on them.
How do I CONTRIBUTE to innovation in line with the purpose and strategy?
It’s a great question and one which executives should be proud that their people are asking. However, let’s be honest; many things must first fall into place. An innovation-focused culture, people engagement, a feeling of trust in the executive team, a belief in the direction of travel of the organisation, all these and more are required to create the conditions in which people feel enabled to contribute to the innovation strategy.
Consider the results of a 2018 study that revealed that 75% of executives believed their company culture was one of innovation, experimentation and risk-taking? (Cap Gemini, 2018) Then consider the same report which revealed that just 37% of employees agreed with the assessment of their executives. That culture gap repeatedly arises across organisations and even across divisions within organisations. It indicates a failure of leadership and a particular loss in translating ambition into everyday actions. Sadly, for many organisations, it is also a legacy response from years of initiatives, introduced with fanfare, only to die unsupported and unacknowledged as the executive team move on. Change fatigue is real, and executives ignore it at their peril.
Within the own-drive-contribute framework, although non-managerial staff are shown within the contributing element of the pyramid, to play their part fully, they must also feel that they have a stake in the strategy and direction of the organisation. In other words, owning the innovation agenda doesn’t just sit at the organisation’s top. Everyone must develop a sense of ownership, and everyone must feel that they can take actions that drive an organisation forward.
This sense of ownership will be driven by employee engagement and culture. Accordingly, the primary responsibility for the direction of travel will rest with the executive team. The physical, mental, and psychological conditions required for creating that sense of inclusivity are examined in depth below. However, within this reverse pyramid view, it is worth looking at the organisation’s perspective from a non-managerial viewpoint. This will help develop our understanding of the role that needs to be played by those leading for innovation. How do I contribute? Maybe the headline question, but many people will instead be thinking what do I have to do to contribute, should I contribute, what’s in it for me, or will I get into trouble for contributing? Cynical? Well, consider a 2018 study that revealed that 64% of employees didn’t know how executives treated failure in their organisations, with 10% thinking it would result in redundancy. (Moorhouse, 2018) When there is no feeling of psychological safety, it is hardly surprising that people feel reluctant to put their heads above the parapet. Or what about the 76% of executives who say they regularly empower employees to be innovative but only 42% of employees agree?
I could quote statistic after statistic that reveals a gulf between the executive and employee viewpoint, demonstrating that employees are not incentivised to pursue innovation, are not trained to be innovative, and are not even sure how innovation sits within their job remit. The result is a group of people who are physically and psychologically disincentivised from doing anything other than performing their primary day-to-day role.
For people to be free to contribute, the entire organisation needs to swing into line. Everything from recruitment and reward to job descriptions and training, metrics and leadership should be focused on the same direction. Only then will people feel free and enabled to play their part.
That leads us to the managerial team and their question: ‘How do I DRIVE innovation in line with the purpose and strategy?’ In the same way that non-managerial people need to feel a sense of ownership to contribute, managers also need to be sure of their place within the innovation ecosystem. Sitting between the executive team and non-managerial employees, the managerial task is not an easy one. This is particularly so in a non-hierarchical innovation-led culture in which people may be asked to step into and out of innovation teams as required. Managers may well find that their ‘team’ is constantly in flux. More importantly, the idea of siloed teams with set tasks and targets has no place within a culture of innovation. Tasks, whilst still important, must be viewed within an overall ideal of contributing to the innovation strategy.
The concept of empowering teams to drive innovation is strongly being felt across the business world. BCG’s 2021 CEO Innovation agenda (BCG, 2021) comments that “The most successful CEOs embed insight-based innovation in their company’s culture, its ways of working, its organisational design, and its leadership model. By doing so, they push innovation to frontline teams across their business and empower those teams.”
Therefore, it’s clear that managers sit at the forefront of driving innovation-led change. Their task is twofold. Firstly, they act as conduits for disseminating the culture across their teams and helping people engage with change. Secondly, they are responsible for ensuring that every one of their people has the skills and training to contribute fully.
Both these roles require managers to be fully confident that the executive team will provide them with the tools and support to carry out their tasks. As with non-managerial employees, if there is any doubt that the support, funding, or metrics will work against the innovation drive, managers will be disincentivised from acting. And remember, with fluid teams in which the reporting lines may be blurred, every element of the managerial chain must work in tandem for each manager to feel psychologically empowered to act. Therefore, the drive is for managers who have been given training and infrastructure support that they will need and be helped develop the personal qualities that will enable them to empower others. So, managers lead their people. But they also act as a support structure for the executive team, reporting on progress, identifying additional training or equipment requirements, suggesting alternate approaches, and ensuring that the organisation’s day-to-day business runs smoothly. Hardly surprising, therefore, that an ONS report (ONS, 2021) concluded that:
“Better-managed firms see higher labour productivity per pound of R&D spending than comparable, less-well-managed firms” and that “Across all industries, better-managed firms are significantly more likely to engage in research and development (R&D) than their peers.”
The above two sections demonstrate all too clearly that innovation ambitions may start at the executive table but will only succeed once managers and non-managers are given the tools and strategies required to be effective innovators. So, when executives ask: ‘How do I OWN innovation in line with the purpose and strategy?’ they are taking responsibility not only for themselves but also for every person within the organisation.
Therefore, the question is how executives who have never been trained to lead for innovation approach the task. Sadly, for most organisations, the temptation is either for executives to become highly hands-on, diving into the minutiae and getting involved on every level without having the skills to do so, or else to become aloof, issuing diktats without explanation or reason. Undoubtedly there are scenarios in which these approaches may succeed, but they are very few and far between. And when it comes to fundamental transformation such as building a culture of innovation, both directions at best will deliver innovation theatre, thus are doomed to failure.
It doesn’t matter whether it is a conscious decision to instil a culture of innovation within an organisation or the appearance of outside factors which force organisations to consider designing radically different solutions; both can have the same impact. For example, 90% of executives believe that the covid crisis will fundamentally change how they do business over the next five years, and 85% believe that the crisis will impact their customers’ needs and wants over the same period. Meeting these changes undoubtedly calls for innovation, yet just 21% believe that they have the expertise, resources, and commitment to pursue new growth successfully. (McKinsey & Company, 2020). It’s a classic case of being unprepared for disruptive change.
As a result of this lack of preparedness, the instinct has been to retreat to safer ground. This has led to a pre-crisis commitment to innovation of 55% falling to 23% post-covid, with only pharma and medical organisations going against this anti-innovation trend. Sadly, we have not learned from the 2009 financial crisis in which organisations that maintained their innovation focus throughout subsequently outperformed the market average by more than 30%. (McKinsey & Company, 2020).
This is a salutary lesson for executives everywhere. Those who retreated, who saw their organisations turn against innovation-focused approaches, are likely to be the ones who had previously promoted their businesses to a level of innovation incompetence. Either they saw innovation as having no place within their existing organisational structure, or they had tried to layer the pursuit of innovation on top of the organisation without any attention to providing the tools, skills and attributes required to change the organisation accordingly. Realistically, the underlying reason doesn’t matter. What matters is that executives who retreat from innovation are setting their organisations up for a swift fall in precisely the same way as we saw with the demise of many household names following the financial crash.
Only when executives not only start to ask, ‘How do I OWN innovation in line with our purpose and strategy?’ but are committed to acting on the answer can they begin to create the context in which innovation becomes a driver for change. And the place to start is by executives asking themselves some simple questions:
- What ‘mindset’ does a leader need to create an organisation in which innovation is a core driver of growth?
- What ‘physically’ needs to be put in place so others can play their part?
- What ‘psychologically’ needs to be true so that others feel safe to act?
We are now going to unpick these questions to understand how individuals can genuinely lead for innovation.
Owning Innovation Leadership
Physical and psychological leadership, developing an innovation mindset, will only be truly effective if executives engage totally with the innovation strategy and build a culture of innovation. That requires taking full ownership of the innovation agenda, being seen as a figurehead and as a champion of change and shaping the future. The danger is that it can be all too easy for executives to become side-tracked in metrics and measurement, forgetting that people sit at the heart of delivery. Or, equally dangerously, executives take such tight control of the mechanics of innovation that they stifle the pursuit and ability of others.
The statistic that 90% of C-suite executives say that their company’s board is involved with innovation to some degree may be seen as a positive. (Ernst & Young LLP, 2019). But what does ‘some degree’ mean? And when the same report reveals that the senior leadership team was only cited as being the primary driver of innovation within the organisation in 38% of cases, suggesting there may be a bit too much-devolved responsibility with the added danger that the message may be watered down.
BCG calls the ‘Innovation Readiness Gap’ a gulf between the ideal and actuality. In their survey, 75% of companies saw innovation as a top-three priority, yet only 50% were prepared to invest in innovation. Sadly, this is not a new story. The gap between executives talking the talk and being ready to walk the walk has come up repeatedly in reports over the last decade and more. And yet the rewards are so obvious. 90% of companies that outperform on innovation outcomes have clear C-suite ownership of the innovation agenda, against 20% of underperformers. (BCG, 2021). What are BCG’s proposed solutions? Well, they align with much of what we have presented in this chapter, looking towards diversity, aligning incentives, promoting clear accountability and communication.
It’s a message which arose in another form within a Deloitte report which looked at technology leaders. (Deloitte, 2020). In 2016, tech leaders were primarily trusted operatives (55%). By 2020, this had changed, with 69% expecting tech leaders to be change instigators. This evolution was also marked by a growing discrepancy between those companies on the frontline of technological change (vanguards), which were more likely to emphasise innovation, customers, and growth than those on the baseline, which looked more towards cost reduction. In their report, Deloitte introduced the idea of a kinetic leader, one they described as a supercharged change instigator focused not only on initiating tech-driven transformation but also on executing widespread organisational change to deliver business results and position the organisation to be more resilient and agile. In other words, someone who took ownership of innovation and was prepared to promote change.
We could go on. We could mention the results of another study that revealed the positive and significant influence of transformational leadership, highlighting the mediating role of individual psychological capital in the relationship between transformational leadership and aspects of innovation capability. (Le P.B., 2020). We could underline other surveys gathered over the years, which all point to the same thing; that transformational potential arises when executives are prepared to own the agenda and actively champion change.
It is perhaps worth highlighting one key message before looking at an essential aspect of owning the agenda, innovation mindset. Just because executives may need to change to deliver innovation, that doesn’t mean they are poor leaders. On the contrary, many outstanding executives who recognise the vital role that innovation plays in their organisation may themselves need to adapt their leadership style to embrace innovation. The reason? Simply because leading for innovation is quite different from more ‘traditional’ leadership styles. In ‘Building a Culture of Innovation’, we illustrated QinetiQ’s journey as it moved from being a government agency to a public-private partnership. A cultural assessment highlighted key change pathways, including enhanced leadership capability, improved communication, the breaking down of silos and enhanced employee engagement. None of these was a barrier to the business, but all these areas needed to change to deliver a new business style, one which thrived on innovation.
So how do executives create the conditions in which their people feel safe to challenge, question, experiment, fail and ultimately innovate? That’s where an innovation-focused mindset comes into play. Innovation mindsets are open. They promote curiosity and experimentation, rewarding learnings rather than condemning mistakes. They are also inclusive, being prepared to work with anyone within or outside the organisation to derive real solutions which meet genuine needs. As such, they look to the long term rather than prioritising short term profitability. For executives brought up with a short-term mindset that looks to deliver instant results to investors, the translation to a future-focussed, innovation-led mindset may not be straightforward.
It’s well known that New Year resolutions don’t tend to last. The reason for this is simple. I’m going to give up X or do Y does not provide sufficient motivation for long term change. The same is true of a decision to build a culture of innovation. Creating lasting change requires thought, preparation, an understanding of the pros and cons of change, and a defined action plan. Executives must take themselves through that journey before having a hope of moving their organisations forward. That process starts with an understanding of self and identification of critical personal traits which will help or hinder self-development, the pre-curser to organisation-wide development.
Those starting the change journey may wish to familiarise themselves with the work of Dr Carol Dweck. Her work into fixed and growth mindsets demonstrates how the saying ‘you can if you think you can’ translates into learning and growth. Fixed mindsets hold us back, whereas growth mindsets spur us to do more and be more. The good news is that it is possible, through application and practice, to develop a growth mindset that engenders lasting change.
Dr Dweck’s work has been widely acknowledged as redefining the field of mindset psychology. Many have successfully adopted her approach, including Microsoft CEO Satya Nadella. By embodying the idea of growth mindsets and encouraging his people to think of themselves as students, Satya Nadella has been credited with transforming Microsoft from a stagnant entity into a revitalised company. In one interview, he eloquently explained mindsets by the following:
“If you take two kids at school, one of them has the more innate capability but is a know-it-all. The other person has the less innate capability but is a learn-it-all. The learn-it-all does better than the know-it-all.”
Interestingly a study from 2011 (Jason S Moser et al., 2011) examined the theory that how well people bounce back from mistakes depends on their beliefs about learning and intelligence. The study provided evidence to back up the theory that for individuals with a growth mindset, who believe intelligence develops through effort, mistakes are seen as opportunities to learn and improve, whilst for individuals with a fixed mindset, who believe intelligence is a stable characteristic, mistakes indicate lack of ability. Therefore, a growth mindset that promotes mistakes as learning opportunities makes a good fit for innovation cultures in which failure is seen as a chance to learn.
Dr Dweck’s theories also have echoes in the finite and infinite theories propounded by Simon Sinek. (Simon Sinek, 2018). Those with fixed mindsets are likely to be playing a fixed game, seeking to deliver stability, continuity, and certainty. Unfortunately, this leads to stultification and decay in organisational terms, to organisations that fail to change and ultimately fail to exist. On the other hand, those executives who have developed a growth mindset are likely to be looking towards a future in which anything is possible. They are prepared to change the organisation to deliver more, engendering growth and positive outcomes.
Developing an innovation-led mindset is only the start, however. I have sat with executives who have undertaken months of discussions, investigations and self-development work and have been baffled why their organisation’s innovation ambitions have come to nought. And the cold hard conclusion is that you can think what you like but unless you do something to demonstrate that mindset and bring it to life inside your organisation, whatever your mindset, what reason do your people have to change?
Adopting an innovation-led mindset requires a fundamental resetting of thinking and approach. But be honest, how many times has your organisation looked to change its model in the recent past? How many internal and external reorganisations have taken place? How many changes of structure and approach? How many of these have been announced with great fanfare, only to be swept aside or reversed by the next great idea?
When someone comments that the organisation is structured one way, if the year ends in an odd number. If it ends in an even number, that structure is reversed, moving from global to regional and in a never-ending search for difference. This is when I know there’s a fundamental problem with the leadership approach. And when those same executives move towards innovation, then their people can be forgiven for treating the move with scepticism as yet more change fatigue kicks in.
So, executives must adopt an innovation-led mindset. They have also to bring about meaningful change within the organisation. This requires two additional traits: physical leadership and psychological leadership.
I’m not saying that executives should necessarily march through the office every day, shaking hands to demonstrate being physically present. Nor am I suggesting following the search engine definition of physical leadership, which seems to throw up multiple sites devoted to the importance of being physically fit to lead.
Physical leadership is far more than that. It is being the person executives want their organisation to be. It means living the desired strategy and culture; demonstrating it in every action and decision so that no one can be left in any doubt about the sincerity and determination of the executive team to drive change. And it means providing everyone across the organisation with the physical tools and skills they need to deliver innovation-led outcomes.
That’s why physical executives actively look to help people understand and engage with the innovation strategy and culture. Results of a 2020 study point to the importance of paying attention to the situational demands of creativity and implementation in innovation processes to contribute to better innovation outcomes. (Gerlach et al., 2020). In other words, leading for innovation isn’t just about being a figurehead, announcing change and expecting it to happen. The pursuit of innovation requires care and attention, crafting the conditions which enable people to feel free to innovate. One way to do this is for executives to show open leadership behaviour instead of closed behaviour. This allows them to set frameworks that enable their people’s creativity more easily. (Bledow et al., 2009).
So, behaviour, leading by example, can have a profound effect on spreading the innovation message. But it is not the only solution. We must also consider the strategies that physical executives employ to motivate creativity in others. Those who actively seek to build cultures of innovation within their organisations will realise that innovation requires a cross-organisational reset, changing approaches to every aspect of engaging with people, from recruitment and training to reward and recognition.
Let’s consider the challenge of rewarding people within a culture of innovation. Classic reward mechanisms tend to focus on task completion, the number of actions carried out, or the delivery of profitability. Those metrics have no place within an innovation-focused culture. How do you reward research or experimentation? In a silo-free collaborative organisation, is there any place for recognising one individual’s contribution to a group outcome?
When failures of experimentation are seen as learning points that will contribute towards future success, how measurement, metrics and reward are calculated may need to be revised entirely. Dan Toma and Esther Gons commented in their book ‘Innovation Accounting’:
‘Financial accounting only paints half of the picture of how a company is doing because it only measures final outcomes, not the process used to reach it, nor cost avoidance or learnings‘.
They advocate an accounting methodology that sits alongside the more traditional profit and loss mechanism and delivers real insight into the measurement and value of innovation efforts. This includes the reward mechanism.
Another study observed that executives should focus, whenever possible, on topics that engage curiosity, interest, and satisfaction. It also suggested that executives should focus their strategies on giving related rewards if a reward mechanism is in place. This minimises the risk of sundering the internal motivation to innovate for already interested workers. The study concluded that effective executives in organisations actively maximise the confidence of their workers and account for the values that they see in innovating. (Solwas, E.K., 2020). Moving on from motivational strategies, physical leadership also ensures that people have the tools, training, and support required to pursue innovation effectively. For example, one survey revealed that in addition to providing incentives for innovative accomplishments (44%), companies also provided support for external workshops or training (43%) or offered special innovation-focused events, such as hackathons (42%). (Ernst & Young LLP, 2019).
When considering the provision of innovation-focused support, there is no one correct answer. Some organisations will find that a culture and engagement reset is all that is required. Others may need to look towards more drastic solutions such as rearranging offices to remove silo working practices and encourage cross-department collaborations. One area that all organisations will need to look to is upskilling and training, particularly in areas such as collaboration, communication, and teamwork.
Underpinning all these activities is the strategy. We mentioned above that physical executives need to live the strategy. But that strategy must be deliberately designed to deliver innovative approaches and outcomes. Many executives see innovation as a separate entity that can be overlaid on top of an existing vision and corporate strategy. However, such an approach will only lead to conflicting priorities and confusion. The innovation vision must be integrated into the strategy to deliver a seamless outcome in which every resource is deployed to pursue the same goal.
To illustrate this, let’s look at another example from ‘Building a Culture of Innovation’. The information, data, and market measurement company Nielsen, in tandem with Brightidea, developed an innovation management framework that included the creation of an overall portfolio scorecard. This enabled the company to ‘drive employee engagement, liberate functions to innovate as needed, satisfy corporate oversight and governance and increase innovation activity and throughput’.
The final key trait of physical leadership is communication. Effective communication seeks to convey a message and ensure that that message is heard and resonates with others. From one-to-one meetings to mass events, the choice of medium will influence how much people engage with the innovation strategy and how much they trust the desire of the executive team for change. As Simon Sinek commented, ‘there are two ways to influence human behaviour: you can manipulate it or inspire it’. (Simon Sinek, 2009). How you communicate will say a lot about your ability to inspire.
Of course, inspiration can work two ways, and the last thing you want is to create a culture in which your people are inspired to fail. That is why psychological leadership is such an essential element of leading for innovation. Within a culture of innovation, there is no place for the executive team to promote teamwork yet practice siloed working. There is no place for a voice that exhorts people to pursue innovation yet shuts down the funding required for development. And there is certainly no place for those who call for experimentation yet punish failure. In fact, ‘The role of a leader is not to come up with all the great ideas. The role of a leader is to create an environment in which great ideas can happen’. (Simon Sinek, 2009). And that means delivering an environment in which people feel supported to try, experiment, and wonder.
However, creating the conditions for psychological safety may be more challenging than executives realise. A 2019 survey revealed that 79% of C-suite executives believed their organisations were tolerant of failure. However, just 25% of entry-level employees thought that to be the case. (Ernst & Young LLP, 2019).
Why the difference? Well, the reasons could be many and varied. Still, they all point back to insufficient attention being paid by executives on delivering a culture of innovation that reaches every point of the organisation. When tasks are measured in terms of completion rates, when reward and promotion are based on successful outcomes, when teams are tasked with deliverables, it is little wonder that people are conservative in their actions. And never forget, whilst executives at the C-suite level may have developed their innovation mindset, which sees failure as a learning point, all it takes is one leader or manager with a different mindset to spread entirely the opposite message lower down the organisation. Or, to put it another way, team leaders’ authoritative-leadership behaviours are detrimental to psychological safety, while consultative-leadership and supportive-leadership behaviours promote psychological safety. (McKinsey & Company, 2021).
The importance of creating a culture of psychological safety cannot be overemphasised. Leader psychological capital has significant and positive effects on innovative employee behaviour, particularly in hope, self-efficacy, resilience, and optimism. This translates into a belief amongst employees that they can undertake creative activities without risk. To foster this culture, executives must dedicate themselves to building a fair and harmonious climate, presenting their passion, confidence, resilience, and creativity to their followers indifferently, being liable for their commitment, and keeping a good interpersonal relationship with their followers in the routine work. (Wang et al., 2021)
Another further bolsters the above mentioned 2021 study in the same year, which concluded that when employees feel comfortable asking for help, sharing suggestions informally or challenging the status quo without fear of negative social consequences, organisations are more likely to innovate quickly, unlock the benefits of diversity, and adapt well to change. (McKinsey & Company, 2021).
What does this all add up to? Quite simply, if you want your people to explore, experiment, wonder and help you shape the future, you must give them the psychological confidence that they can do so without fear of repercussion.
Leading for innovation starts with self. When executives demonstrate supportive, consultative behaviours, they can begin to challenge their teams and individuals within those teams to change. More importantly, by leading the way, they can show how change is possible, helping others build new attitudes and approaches.
One of those outcomes will undoubtedly be empowerment. Without psychological safety, empowerment is just a meaningless word. With psychological safety, people are freed to take control of their innovation pathway. And with the leadership innovation mindset helping to deliver the physical and psychological attributes required for innovation, that innovation pathway can take organisations on a visionary and rewarding journey. The concern might be that that way leads to anarchy, leading to doorways slamming shut in the pursuit of certainty. But an organisation in which people are engaged in the pursuit of innovation is one in which people take responsibility for delivering good innovation-led, creative outcomes. They become their own moderators, experimenting, and pushing the boundaries whilst remaining within the strategy.
When transforming in this way, individual executives should recognise that they are not alone. The entire leadership team needs to follow the same path to present a united front to the organisation. Interestingly, this highlights the importance of diversity in leadership. A 2018 study found evidence to suggest that part of the reason organisations are more innovative when women are in leadership positions is the impact this has on organisational culture. In other words, female executives can have a ‘top-down’ effect in that they infuse aspects of innovation throughout the organisation. (Torchia et al., 2018).
This benefit of organisational diversity in driving innovation also showed up in a 2019 survey that revealed that innovation mindset is six times higher in the most-equal cultures than in the least-equal ones, with employees in the most-equal cultures seeing the fewest barriers to innovation. (Accenture, 2019).
I could provide other statistics and examples, but there are only so many times that the message can be repeated before it becomes meaningless. At its heart, leading for innovation comes down to one thing: the mindset of the individual leader. Innovation-led executives aren’t figureheads, but they hold the beacon of change, igniting the flame of potential across their organisation. It is they who devise the strategy, who communicate engagement, who enable and empower.
I’ll leave you with a final thought I explored in an article originally written for Outcome. (Outcome, 2021). For me, innovation represents a microcosm of the human experience, thriving when it encounters a positive, visionary-led culture whose mission is to help others maximise their potential, or trudging sadly home alone as it is blamed for adverse outcomes brought about by poor leadership. The more I’ve come to know innovation, the more I’ve come to understand just what a natural force for change it can be. But that force takes leadership, executives who are willing and prepared to take ownership, create mindsets, and the physical and psychological conditions that free people to explore and deliver change. You don’t have to be a leader to innovate, but you do have to lead for innovation to bring about solid and innovation-led outcomes.
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