DRIVINGINNOVATION

THE CEO’S GUIDE TO:

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The Talent Management Expert

INNOVATION: AN ACT OF LEADERSHIP

© Development Dimensions International, Inc., MMXIII. All rights reserved.

By Ellie Hall

Audrey B. Smith, Ph.D.

DRIVINGINNOVATION

THE CEO’S GUIDE TO:

INNOVATION: AN ACT OF LEADERSHIP

CONTENTS

Innovation: The New Business Normal...................3

Innovation: An Organizational Persona ..................6

The Innovation Paradox.............................................9

What CEOs Need to Know About Innovation........15

1. Clearly define and own your organization’s

vision for innovation .........................................16

2. Assume the right role at the right time..............19

3. Recognize your own tendencies—and

shift gears. .......................................................23

4. Own the Greenlight Moment. ...........................28

5. Tune up your talent engine to drive

innovation. .......................................................32

Moving it All Forward ..............................................36

INNOVATION: THE NEW BUSINESS NORMAL

Organizations today are under more pressure than ever before to

innovate—to actively strive for new ideas, continuous improve-

ment, or where necessary, market disruption—and to achieve

these goals with both speed and purpose. But it’s not just the

“leading-edge” companies that are making innovation a priority.

Driving innovation is imperative for any organization operating in

today’s environment of relentless competition and unprecedented

complexity.

In the Conference Board’s 2012 CEO Challenge study, innovation

was cited by CEOs around the world as the No. 1 challenge facing

their organizations.1 In fact, many organizations are acting on this

need to innovate. In recent years, companies such as DuPont,

Coca-Cola, Citigroup, SAP, and Owens Corning have appointed

chief innovation officers whose full-time roles involve leading

and bringing structure to innovation efforts.2 And some have taken

additional steps. For example, the French wine and spirits pro-

ducer Pernod Ricard has established a Breakthrough Innovation

Group and hired “innovation specialists” charged with facilitating

idea generation.3

2 3

SECTION : ONE

What is your organization’s unique innovation imperative? Do you

need to enter new markets, grow sales, or expand your margins?

Do you need to become faster, better, more nimble, and

adaptable? Do you need to deliver a killer combination of speed,

quality, and low prices? (It used to be that an organization was only

expected to deliver on two of those three. That has changed.)

Do you need to contain costs or streamline processes? Perhaps

you need to do all of these?

Innovation is defined in many different ways. For instance, it is

often thought of as a strategy or a system of processes and tools.

However, we see innovation as something more: An act of lead-

ership. Leaders are the embodiment of their organization and its

way of believing, thinking, and doing. As CEO, the quality of your

leadership will determine whether innovation succeeds or fails. You

provide the values, vision, direction, and passion, which are far

more important to success than a set of innovation tools or

processes.

Innovation vs. Invention vs. Creativity

The terms “innovation,” “invention,” and “creativity” are

often used interchangeably. Yet, they aren’t synony-

mous, and the distinctions between them are important

to keep in mind as you work to make innovation flourish

in your organization.

Innovation is the process of bringing new solutions to mar-

ket that drive differentiation and measurable business

value. Business strategies, processes, and solutions that

are applied internally can also be targets for innovation.

Innovation is not a solo act. It’s a unique social phenom-

enon that requires the contributions of multiple collabo-

rators who play critical roles to get things done.

Invention is creating something new that may or may not

have a measurable business value. It is typically the out-

come of research and experimentation. Unlike innova-

tion, invention can reflect the work of a single individual.

Creativity is best viewed as an individual personality

attribute. An individual may be creative in that he or she

is able to generate many unique ideas (or build on others’

ideas in value-added ways). Creativity fuels invention.

But an individual who is creative may lack the skills,

discipline, and ability needed to bring an idea to fruition

and grow it into a meaningful innovation.

4 5

INNOVATION: AN ORGANIZATIONAL PERSONA

Innovation can assume multiple forms and help to achieve multiple

objectives—making it both fascinating and necessary. Innovation

runs the spectrum from incremental to disruptive, and it can impact

both the “What’s” (products, services) and the “How’s” (strategies,

processes, systems, etc.). Disruptive innovations change the

game, and often create obsolescence (think of the fate of VHS

video tapes once DVDs appeared). Incremental innovations,

meanwhile, typically center on making improvements that result

in new solutions with value to the marketplace (such as the new

features included in the release of a new version of software, such

as Microsoft Office). That’s not to say, however, that all disruptive

innovation must happen on a large scale or that incremental

innovations can’t have a sizable impact. Nor are theses extremes

the only two possible degrees of innovation. Innovations to

individual components or to a process architecture can represent

a middle ground.

As a CEO concerned with making innovation—of all stripes—part

of your organization’s brand, your focus needs to be on creating

the conditions for repeatable innovation—conditions that make

both disruptive and incremental innovations possible. You need to

understand these conditions and drive their absorption throughout

the entire organization.

It’s not about driving an initiative, however. While the work of

innovation is often carried out by executing a number of initiatives,

innovation itself shouldn’t be thought of and approached as an

initiative any more than, say, cost containment, talent management,

or execution. Instead, innovation must become an organizational

persona, demonstrated day in and day out via the behavior of both

leaders and employees. This requires organizational commitment,

discipline, systems, and ongoing, everyday action. It also requires

adopting new mindsets, behaviors, and norms.

Above all else, innovation is enabled or constrained by your

organization’s culture. Culture is often defined in terms of the

norms, values, and expectations that drive people. It has perhaps

best been defined as “the way things get done around here,”4

a pithy, yet altogether true description. Culture also can be thought

of as your organization’s “operational brand.”

If you don’t have a culture that can promote, support, and sustain

innovation—if innovation isn’t an ingrained part of “the way things

get done around here”—you won’t be able to create and sustain

the conditions required for innovation. Also, the organization’s

readiness and ability to embrace the risks and rewards of innova-

tion will be limited, if not non-existent. As the CEO, it is up to you

to take deliberate and sustained action to make innovation part of

your organization’s culture—i.e., its organizational persona and its

operational brand—as well as part of your own leadership brand,

which, in turn, will define your leadership legacy.

But, of course, it’s not easy. Consider the challenges that

arise when an organization’s intent to innovate is offset by deeply

entrenched cultural mores that may run counter to, and may

seriously impede, its aspirations to innovate:

6 7

SECTION : TWO

:: An organization that has grown steadily and profitably through

acquisition has turned to innovation as an organic growth

strategy.

:: An organization that has a long history of doing everything “in

house” has determined it is time to outsource product develop-

ment to more quickly get products to market.

:: An organization for which technology has never been a core

competency wants to keep pace with, and move ahead of,

upstart competitors by offering technology-centered products.

:: A traditionally risk-averse senior team with little change manage-

ment experience seeks to grow by entering new global markets

characterized by more aggressive competitors than the organi-

zation has encountered in its core markets.

As these challenges illustrate, innovation can—and should—test

the organization’s self-perceived assumptions, its aspirations and,

by extension, its identity. In its most disruptive form, innovation

can lead an organization out of its comfort zone and away from

markets and businesses where it has had success in the past.

Consider Apple’s move into the music and cellular phone

businesses, General Motors rolling out the Chevy Volt hybrid car,

and Taiwan Mobile’s transition from a traditional telecomm com-

pany to a “digital convergence” company based on the integration

of mobile phones, computers, and TVs—all innovations that moved

these organizations away from their core businesses—ones that

required strong and committed leadership at the top. Indeed, the

purposeful shifts away from the tried, true, and profitable that

sometimes accompany innovation can challenge the CEO, and his

or her vision and leadership in real and meaningful ways.

THE INNOVATION PARADOX

Being a CEO is a frenetic exercise in juggling priorities, but it’s an

exercise guided by one objective: balancing the demands of the

present with the needs of the future. CEO’s must focus on meeting

short-term sales and financial goals, outmaneuvering the compe-

tition, keeping product rollouts on target, managing costs, and nav-

igating the regulatory environment, while at the same time shaping

and reinforcing the organization’s future by formulating a vision,

anticipating the emergence of future markets, setting long-term

strategy, and growing the talent the organization needs for tomorrow.

Innovation falls into the latter category. It’s a future-focused

strategy that exists on an even plane of importance with other

critical demands. In fact, the raft of conflicting priorities and the

perpetual impatience of investors and other key stakeholders seem

to get in the way of innovation.

What also makes innovation especially challenging is that the

decisions made and the actions taken to instill and sustain

innovation can have a large-scale impact on the organization.

As the CEO, you need to focus on both long-term and short-term

priorities, keeping the company profitable now while driving the

right innovation strategy needed for the future. We refer to this

complex reality as the Innovation Paradox. Charles Holliday, Jr.,

the former CEO of DuPont, accurately captured one of the most

vexing aspects of the Innovation Paradox when he told the author

of an article in The New York Times Magazine that “the stock

market pays you for what you can do now,” and that it’s tough to

get investors to think more than two years ahead.”5

8 9

SECTION : THREE

10 11

THE CHALLENGES OF THE INNOVATION PARADOX

In addition to the struggle between the short and long term,

the Innovation Paradox encompasses struggles that a CEO

must grapple with:

:: How to mobilize the company—and its people—to embrace the new and different.

:: How to build a pipeline of new ideas, and ensure that the most promising ones are explored.

:: How to invest adequate manpower and resources in “non-core” projects while still getting the everydaywork done.

:: How to promote innovation without putting the company’s financial viability and competitive position at risk.

:: How to balance the need to give people freedom to innovate while maintaining organizational control.

:: How to bring process and discipline to innovation.

The full impact of the Innovation Paradox comes into sharper

focus when you consider the many things you must actually

do to drive innovation, many of which appear to be

counterintuitive, or otherwise fly in the face of your typical

leadership style.

Among them:

:: You don’t need to be the one who comes up with breakthrough ideas (though you should freely contributeyour own ideas). You need to create an environment in which others can generate ideas, while you retain accountability for the ultimate outputs.

:: You don’t—and can’t—make every decision tied to execution. You need to empower others to make decisions and then be willing to explain and defendthose decisions.

:: You need to drive accountability while disseminating responsibility down through the ranks, yet be willing totake action, when needed.

:: You need to provide the time, freedom, and resources required to achieve ambitious innovation goals, whilekeeping execution moving at breakneck speed.

:: You need to model open-mindedness and value different opinions, perspectives, and approaches, whilepromoting consistency and reinforcing the organization’sstrategic direction.

Above all, as the CEO you must be a champion for taking

appropriate risks and supporting experimentation. However,

the “new and different” outcomes associated with innova-

tion are never a sure thing. The gains promised by innovation

rarely happen without iteration and openness to occasional

misfires or even “failure.”

As the list above suggests, innovation requires a wholly unique

leadership approach. The way in which you have led your

organization may not prove helpful in driving innovation; you

need to view innovation differently.

A MODEL FOR ASSIMILATING INNOVATION

Through research DDI conducted with LUMA Institute, we sought

to understand what is required for innovation to establish roots,

become repeatable and sustainable, and drive differentiation.

The result of our research is a model (Figure 1 on page 14) that

identifies four inherent innovation challenges—ones that probably

keep you up at night:

:: Failure to understand stakeholders (i.e., both internal and ex-

ternal, such as clients, partners, consumers, senior leaders, and

other departments)

:: Lackluster ideas (i.e., old ways of thinking, narrow ideas, ideas

that don’t pinpoint the heart of the problem)

:: Aversion to risk taking (i.e., failure to push new boundaries,

playing it safe, conflict avoidance)

:: Poor execution (i.e., creative ideas simply remain ideas)

The middle column of the model highlights four corresponding

things that leaders need to do to drive innovation. Keep in mind

that these four things are not level-specific; all leaders, from

the CEO down to frontline supervisors, must take accountability

for them:

:: To overcome failure to understand stakeholders, leaders must

Inspire Curiosity in their employees by showing them how to

adopt a stance of humility and providing intellectual stimulation

to learn about the people for whom they are providing solutions.

To help do this, leaders themselves need to exhibit curiosity

about a wide range of topics—including those topics that are

unrelated to the business.

:: To overcome lackluster ideas, leaders must Challenge Current

Perspectives by pushing boundaries, creating and sharing

compelling aspirations, and providing ideation methods that

provoke thinking. Leaders need to be adept at helping others

think beyond the confines of the way things are usually

conceived of and executed. They must inspire others to think in

terms of “What if?” instead of “What?”

:: To overcome aversion to risk taking, leaders must Provide Free-

dom to empower their people to take risks on new and different

ideas. When leaders take the risk out of risk-taking, they

allow for potentially game-changing ideas and solutions. Senior

leaders, especially the CEO, need to be willing to commit

organizational resources, including time, money, and talent, to

promote innovation and advance the exploration of new ideas

and execution of new solutions.

:: To overcome poor execution, leaders must Drive Discipline by

providing focus, accountability, engagement, and sustainability

to the execution process. They also need to devote the same

structure and focus to innovation as to other critical organiza-

tional priorities.

12 13

Later in this booklet, we will offer suggestions for how you and your

team can assess for these four leader behaviors.

Figure 1 A Model for Driving Innovation

WHAT CEOS NEED TO KNOW—AND DO—ABOUTINNOVATION

The CEO job is one defined by action, whether it’s making deci-

sions, mapping out strategy for the future, or driving the organiza-

tion on to success and (hopefully) greatness. But the actions a

CEO takes usually occur at the intersection of what is known and

what needs to happen. Innovation is no different.

The reality, though, is that as the CEO it can be hard to know where

and how to insert yourself, and while there are multiple things

that all leaders must do assimilate innovation into the organization,

your role, of course, will be unique. With this in mind, there are

five critical things you need to know—and do—to make innovation

an organizational persona:

1. CLEARLY DEFINE AND OWN YOUR

ORGANIZATION’S VISION FOR INNOVATION.

2. ASSUME THE RIGHT ROLE AT THE RIGHT TIME.

3. RECOGNIZE YOUR OWN TENDENCIES—AND

SHIFT GEARS.

4. OWN THE GREENLIGHT MOMENT.

5. TUNE UP YOUR TALENT ENGINE TO

DRIVE INNOVATION.

14 15

SECTION : FOUR

Innovation Challenges Driving InnovationFailure to UnderstandStakeholders

Lackluster Ideas

Aversion to Risk Taking

Poor Execution

Inspire Curiosity

Challenge CurrentPerspectives

Create Freedom

Drive Discipline

QuestionAssumptions

Think Differently

Experiment

Get Things Done

Leader Everyone

Leader

Everyone

1. CLEARLY DEFINE AND OWN YOUR ORGANIZATION’S

VISION FOR INNOVATION.

Innovation will look different—and be approached differently—from

one company to the next. Ultimately, what matters most are the

clarity of your innovation strategy, the organizational alignment that

supports it, and for everyone to understand the strategy and their

role in making it successful. DDI defines innovation as the process

of bringing new solutions to market that drive differentiation and

measurable business value. How this definition comes to life and

is acted upon can take any number of forms. It might entail an

innovative business model or a paradigm-shattering approach to

an internal process. It also might mean focusing innovation efforts

on offerings, serving the needs of customers, or both.

At a large consumer food company, for example, innovation is de-

fined as the outcome of combining insights, discipline, and products

and capabilities, while remaining committed to a “product-driven”

business strategy. For a regional bank, meanwhile, innovation is

about connecting with its customers in new ways, which has led to

it opening branches in a large chain of supermarkets.

Formulating a vision for innovation. Oftentimes, the most diffi-

cult business insight to gain is clarity regarding the future. And this

challenge may be the most compelling reason to develop a clear

innovation vision. A vision can help simplify decision making, but

more than that, when it is communicated down through the organ-

ization, a strong vision also brings clarity and purpose to everyone’s

contributions—in addition to helping ensure that everyone is

moving in the same direction and toward the same objectives.

A great example comes from Akio Morita, the co-chairman of Sony

in the late 1970s. Morita loved to listen to opera and would often

travel with cassette tape players so that he could enjoy his favorite

music. As these players were bulky and inconvenient to cart on

and off of planes, Morita challenged the engineers at Sony to

create a small player that would be easy for him to take along on

his travels. The result was the Sony Walkman, the iconic personal

cassette player that the company brought to market in 1979, and

which became one of the most important and influential consumer

electronics products introduced in the late 20th century.6

While he set the design of the Walkman in motion to satisfy his

own personal needs, what Akio effectively did was provide a very

specific vision for a game-changing innovation. (In one version of

the story, Akio brandished a small block of wood to demonstrate to

the Sony design team the target size of the product.) He set, to

paraphrase the words of author Jim Collins, a big, hairy, audacious

innovation goal that fell just beyond the borders of what conven-

tional wisdom acknowledged was possible.

The takeaway from this story might be that you must seek out the

proverbial block of wood that will create a clear vision for innovation

in your organization. In whatever form it may take, if articulated

and communicated effectively, the innovation vision can serve

as a rallying point and forward-shining beacon for the entire organ-

ization.

Understanding the cultural implications. It’s a common

occurrence: The CEO articulates his or her organization’s intention

to innovate, yet the required freedom, embrace of the new, and

willingness to act on potentially risky ideas that drive innovation run

counter to the organization’s culture. It’s worth pointing out that

16 17

while you must be proactive in driving the necessary cultural

transformation, the reality is that you can sometimes make the

problem worse either by not recognizing the need for culture

change, or by reinforcing the problem by inadvertently short-cutting

or undermining innovation efforts through your words or actions.

In subsequent sections we will discuss role clarity, and also the

importance of you and your senior team gaining the needed self-

insight and understanding to be effective. But you and your team

also need to understand the personality of the organization, and

how this personality must be synched up with efforts to innovate.

Organizations, after all, as collections of people, often embody

human characteristics, including falling prey to inertia, and resist-

ance to what’s new and what differs from the proven and accepted.

Overcoming these tendencies isn’t always easy, especially—and

perhaps ironically—if the organization is characterized by other

strengths. For example, an organization with a laser-like focus on

execution may not have people who are predisposed to curiosity,

to exploring the new and different, or to the disruption that can

accompany innovation.

You must help people think beyond how to get their jobs done in

the same old way. You have to both model and foster a degree

of organizational curiosity, and openly embrace new ideas and

perspectives.

Frank Ning, the chairman of the Chinese conglomerate COFCO,

exemplifies the senior executive who inspires curiosity by his own

actions. In a series of articles, Ning explores topics that have little

to do with his business. Through these articles he models inquis-

itiveness and a curiosity about the world beyond the parameters

of his organization and industry.

18 19

You also need to pave the way for change by being out front artic-

ulating the vision, providing clarity about the strategy, reinforcing

its importance to everyone in the organization, and, at every turn,

communicating effectively about the organization’s commitment to

innovation. Ken Frazier, the chief executive of Merck, has kept

innovation front and center in his public comments about the phar-

maceutical company’s future direction. He has even underscored

the importance of innovation when talking about other organiza-

tional priorities, including diversity and inclusion. A quote from

Frazier posted on the Merck web site said, “Merck’s core strength

is the skill, integrity, and creativity of its people. Merck employees,

while remarkably diverse in background, training, and life experi-

ences, are all motivated by innovation and our mission of providing

products that save and improve lives around the world.”7

What executives such as Frazier understand, however, is that

you can’t just make a pronouncement that your organization is

innovative and assume that the tone has been set. Others in the

organization will ultimately “tell the story” of how innovative the

organization really is. You need to make sure they have plenty of

material and evidence from which to construct that story.

2. ASSUME THE RIGHT ROLE AT THE RIGHT TIME.

Innovation doesn’t get absorbed into the culture overnight; it takes

time. For the CEO, driving absorption is a multi-faceted responsi-

bility that demands you to assume multiple roles. What’s more,

you need to be able to step into the right roles at the right time and

simultaneously make certain that other leaders do the same.

Some of these roles are likely to feel more natural than others and,

as we shall discuss, the transition from one role to another is not

always smooth and seamless. What’s more, they are not neces-

sarily CEO roles exclusively. They include:

Innovation Sponsor: One of the most important roles you will

likely find yourself in on an almost daily basis is that of the Innova-

tion Sponsor. It’s also the role that you are likely to find most intu-

itive as it mirrors the role you may often fulfill for a major initiative.

In this role, the CEO is a provider—of money, resources, freedom,

and more—as well as an articulate advocate, visible champion,

and model of curiosity and open-mindedness.

Innovation Enabler: While the Innovation Sponsor role is about

providing resources and leadership, the Innovation Enabler

contributes to innovation by removing obstacles and creating the

conditions for innovation to flourish, such as establishing

processes, systems, and ground rules that promote innovation.

An excellent example of a CEO effectively acting in the role of the

Innovation Enabler can be found in Howard Schultz’s memoir of

his years leading Starbucks. For several years, the company had

been working to perfect a high-quality instant coffee that could both

be sold in supermarkets and represent a new revenue stream.

Frustrated by the slow progress, Shultz arranged a meeting with

his project leaders. Upon hearing in this meeting that it would still

take 32 additional months to bring the product to market, Schultz

challenged those in the room to do better. “Why must it take so

long?” he asked. “If Apple could develop the iPod in less than a

year, we can do this!” Spurred on by this challenge, the product

was ready for market in nine months.8

Innovation Connector: Innovation doesn’t happen in a silo. To the

contrary, most innovations are characterized by interdependent

relationships characterized by polarized objectives and agendas.

Yet these interdependencies require collaboration across boundaries

such as departments, functional areas, business units, vendors, etc.

While individuals at all levels can initiate these connections and

build networks, the CEO has the greatest power to break down

silos and bring together the moving parts of an organization to

share information and access, and support initiatives.

Innovation Doer. Innovation isn’t just the job of research and

development (R&D); it’s everybody’s job. “Everybody” includes the

CEO and senior team, who shouldn’t assume that others should

generate new ideas. They should feel free to contribute their own

ideas, just the same as everyone else in the organization.

The Jobs to be Done

In his book The Innovation Challenge, author and innovation expert

Clayton Christiansen provides a helpful way to think about innova-

tion roles in terms of the jobs that need to be done.9 There’s the

job to be done around providing money, time and resources for

innovation (Innovation Sponsor). There’s a job to be done around

setting the climate and conditions (Innovation Enabler). There’s

the job to be done around coming up with new great ideas (Inno-

vation Doer). There’s a job to be done around providing networks

of information and people to help facilitate the creation of better

ideas and solutions (Innovation Connector).

As the CEO, you could at any time need to assume any one of

these roles. But because role clarity is important, it’s incumbent

upon you to make sure others understand the role in which you

are serving in any given situation. For instance, if you are partici-

pating in a brainstorming meeting as an Innovation Doer, and if

other participants assume (due to your role in the company) that

you are the Innovation Sponsor, they might withhold some of

20 21

their more revolutionary ideas and be unwilling to push back or

challenge your ideas.

It’s important that when appropriate, you stay in role, as well. If, in

the same situation, you are participating in the ideation process,

you can’t, at will, shift into the Innovation Sponsor role and let it be

known, on the spot, that an idea isn’t going to be greenlighted.

Sometimes, filling the right role at the right time is about knowing

when not to be the CEO, but instead filling one of the other roles

required for that given stage in the innovation process.

Another important reality is that, despite the need for you to fill any

one of these roles, you won’t be actively involved in the process at

all times. In fact, probably 90 percent of the innovation work will

need to happen without your direct involvement. Getting the 10

percent right, however, and knowing when to be involved and what

role needs to be filled at a given time, is paramount.

How Far, How Fast?

When you consider the implications of driving innovation

within your culture and with your people, one of the

most important questions you will need to answer is, “

How far, how fast?” How ready is your organization for

an innovation-driven culture? What is the appetite

for change? And, as alluded to in our discussion on the

Innovation Paradox, what are the opposing forces that

have to be considered?

In considering these questions, you will need to consider

factors such as your organization’s innovation goals, your

current culture in terms of its ability to foster innovation,

your people’s willingness and ability to change, and the

quality of your innovation infrastructure.

3. RECOGNIZE YOUR OWN TENDENCIES—AND

SHIFT GEARS.

Sometimes the greatest barrier to executing the innovation roles

to their fullest isn’t a lack of personal commitment so much as it is

not seeing how your leadership style may be getting in the way of

your own effectiveness. For example, those senior executives who

are risk-averse or overly detail-oriented can stop innovation dead

in its tracks unless they learn to “lead around” these derailers.

To gain the self-insights you need to be a true innovation leader

you need to take a deep look inward. Specifically, you need to

examine your own typology as an innovator.

The innovation framework and role descriptions provided in this

guide offer a good starting point for conducting a self-assessment

of where you might need to focus your development efforts.

Flip back to the innovation model on page 14, take a few minutes

to read through what leaders need to do, and do a quick self-diag-

nosis of where your greatest individual strengths lie. Also, you’ll

want to identify the area or areas that are a relative weakness for

you. This might constitute an area where you need to try harder,

develop skills, or even work around those areas where you aren’t

likely to change. Maybe you are strong in inspiring curiosity but

weaker in execution—an area where you need to develop and

adopt a more disciplined approach. Or perhaps you are more than

capable at challenging current perspectives. However, if you are

aware that you have micromanaging tendencies, you may need to

take a step back and be more “hands-off” to create freedom.

Similarly, examine the definitions of the roles (beginning on page 19)

and conduct a self-diagnosis of how you measure up to their

associated requirements.

22 23

Also, it will be important that each member of your team conduct

the same analysis and gain the same self-awareness and self-

insights that you are seeking. They, like you, will be susceptible

to the same derailers and leadership style differences that can

shortcut their best intentions to create the conditions needed

for innovation to flourish. Additionally, the act of going through a

self-insight exercise together as a team can serve to promote

commitment and unity, and reinforce the importance of each senior

team member’s support and involvement.

Ask a Colleague to “Hold the Mirror”

One way to determine if you have personally committed

to innovation is to take a look in the mirror by seeking

honest feedback from your colleagues on the senior

team. Ask simple, yet powerful questions:

• How do you perceive my openness to change?

• In what ways do my actions and decisions reinforce

or hinder my openness?

• How effective am I at seeking diverse points of view?

• To what degree do I encourage the entire senior

team to seek diverse points of view?

• In what ways do I help create a culture of innovation?

• In what ways do I hinder a culture of innovation?

24 25

The Innovation Barrier You May Not Want to Admit (But Need To)

The CEO’s job—and the job of the senior team—entails

the need to make courageous decisions and take risks.

But the truth is that, as human beings, CEOs are as driven

by fear as much as anyone else. That personal fear can

be a real barrier to doing what he or she needs to do to

make innovation happen, whether its Inspiring Curiosity,

Challenging Current Perspectives, Providing Freedom, or

Driving Discipline.

What might a CEO be afraid of? Here are some possibil-

ities to consider:

• Pressure from the board to drive near-term profit.

• Unfavorable reviews from analysts, and other key

external stakeholders.

• Having to navigate competing demands for scarce

resources and resulting internal conflict.

• Fear of being exposed as ineffective at innovation.

• Losing market share and competitive advantage.

• Going down in the history of the organization as the

CEO who failed.

• Getting fired.

The CEOs who successfully overcome their fears typically

do so by compartmentalizing their own personal fears and

focusing on the practical need to serve as a guardian of

the organization’s future by driving innovation.

One Approach to Building Senior Team Self-Insight

When a senior team goes through a self-insight exercise

together, the experience can be powerful, as it provides

an opportunity to get a composite view of the team’s

strengths and growth areas relative to driving innovation.

In one such exercise, the team compiles and agrees to

a list of commitments the team must make to create an

environment that fosters innovation. Each team member

then rates the team as a whole on each commitment,

designating it as a strength, or growth area. In our expe-

rience, we have found that a low-tech, yet valuable,

approach to gathering the ratings is to give each team

member colored stickers that they can affix to a chart on

a wall to indicate their rating. For instance, a blue sticker

may indicate that a commitment is an exceptional

strength of the team, a green sticker a strength, a yellow

sticker a growth area, and a red sticker an area where

there is substantial room for growth.

The resulting scatter or colored stickers provides a visual

map of where the team stands on its innovation commit-

ments.

26 27

4. OWN THE “GREENLIGHT MOMENT”

When working properly, an organization’s innovation efforts will pro-

duce ideas in quantity, and some of those ideas will diverge from

the status quo, and even from the organization’s current business

strategy. The process of making ideas actionable and moving them

along the continuum to implementation and realization is one that

is advanced through a series of multiple decisions. These include

important decisions—on approval, funding, commitment of

resources, etc.—about whether or not the organization will further

explore or take action on an idea, radical or otherwise.

We refer to the junction at which such a fateful decision must be

made as the “Greenlight Moment.” And, for the most critical of

these decisions, the moment belongs to the CEO and the senior

team. Only the leaders at the very top of the organization will have

the proper perspective to weigh all of the factors that require

consideration and arrive at the decision about whether or not to

move forward.

In a Greenlight Moment, the stakes are often high, not just for the

direction of the company but for its culture as well. The future

direction can be changed along with the company’s relationship

with its customers and potential customers. A Greenlight Moment

has the potential to energize a company’s people, and in the

process transform its culture.

A Greenlight Moment also has another side to it: It can be a test

of the CEO and senior team’s true level of commitment to innova-

tion. If, for instance, your organization has a stated goal to double

in size but the senior team shies away from a widely rumored

acquisition that would accomplish that goal in one fell swoop, the

workforce may question the senior team’s ultimate intentions and

commitment—even if there were legitimate reasons not to do the

deal (“Are they really committed to shaking up the status quo?”).

Similarly, when an innovative idea has bubbled up to the top of the

organization and, in the process, generated genuine excitement

among a core group of people, the senior team runs the risk of

demotivating all involved and being perceived as disingenuous

about promoting innovation if it decides, in the Greenlight Moment,

not to commit resources to the idea.

This perception is made worse when the CEO and senior team

insulate themselves during these Greenlight Moments, and insist

on seeing a proposal and hearing assurances that the new idea is

likely to work. Asking people to “prove” the likelihood of success

of a new idea is like asking people to predict the future. Instead

the team should focus on ideas/solutions with the greatest potential

and commit to testing these ideas. Later, customer and stake-

holder feedback will provide the most critical data needed to make

further decisions.

To navigate the potential pitfalls, you and your team must own and

embrace the Greenlight Moments, and be transparent in commu-

nicating the rationale behind the decisions you make in these

moments. You must also think from the “outside in” during these

times. What is it that our users need? What problems do our

customers have that a new idea will solve? By focusing on your

customers and empathetically understanding their world, you give

yourself and your team ammunition to make decisions. Too often

decisions are made based on internal constraints, obstacles, and

other realities that will always exist to block innovation.

28 29

Finding Innovative Ways to Be Innovative

To achieve the right balance between business strategy

execution and innovation, you and your senior team

need to look for “innovative” ways to make innovation

happen and in a way that it can be cordoned off to

flourish or fail on its own merits.

Examples include:

• Setting aside one portion of an initiative—time,

people, and resources—for innovation.

• Identifying a relatively low-risk portion of the business

where successful innovation can add value but

where a failed attempt at innovation will not result in

a damaging loss.

• Chartering one team, among many involved in a

major strategic project launch, to “break from the

norm” and seek ways to innovate as it carries out its

portion of the implementation.

• Targeting the business model for innovation,

by seeking out new ways to reach markets and satisfy

customer needs with a product or solution that has

only been changed incrementally.

To come up with alternatives such as these, you have

to think in many dimensions, especially given that all

initiatives and projects will be bound by limitations,

whether they are related to budget, timeframes, or the

need to consider other organizational priorities.

The advantages to this approach far outweigh the

potential drawbacks. That’s because it is a safe and

low-risk option, especially if the organization is new to

innovation, and those involved are still building their skills

and experience base. It also represents a way to

empower a select portion of your talent, such as a group

of high-potential leaders, to step up and employ innova-

tion to solve a real business challenge—a tremendous

development opportunity for those individuals.

30 31

5. TUNE UP YOUR TALENT ENGINE TO DRIVE INNOVATION

Innovation is an act of leadership. And leadership is all about

people. Yet, many organizations don’t assess and build the kind

of values, beliefs, skills, and behaviors their people need to create

new things that bring value. That requires a high-functioning “talent

engine”—the systems that need to work in concert to ensure your

people can execute your innovation strategy.

Questions to consider in order to assess your talent engine include:

:: Do you have the right talent to foster and sustain innovation,

especially leaders who can inspire curiosity, challenge current

perspectives, provide freedom, and drive discipline?

:: Do you have the systems in place to develop, manage, and

deploy talent effectively?

:: Are your people aligned with your innovation vision and

strategy?

A sampling across the array of talent systems on which an

organization must rely to execute both its talent strategy and its

innovation strategy are described in the next several paragraphs.

When it comes to these systems, HR can help you with the right

tools, processes, and metrics, but you ultimately must own the

talent strategy and its integration with your innovation strategy, and

be purposeful and deliberate in the roles you play. This is true

whether you are commissioning a talent review, serving as a

mentor to one or more junior executives, or setting accountability

for the identification and development of people for key roles.

Selection: Your selection systems must be aligned with your

innovation strategy for the organization to identify and hire those

individuals who are a good fit with an innovation culture. HR can

work with you and other hiring stakeholders to build accurate

Success Profiles that bring together the right competency profile

to serve as the standard against which all candidates are assessed

and evaluated. This is especially important when selecting leaders

whose success will depend on their effectiveness in creating an

environment in which innovation thrives. Such a Success Profile

will incorporate competencies and other attributes that help identify

those who can inspire curiosity, challenge current perspectives,

provide freedom, and drive discipline.

Also, while the right Success Profile will help you identify those who

are the right fit with your innovation strategy, it also will be important

to promote diversity of thought by hiring individuals with different

perspectives, backgrounds, and leadership styles. The tendency

to hire those too much like ourselves is a surefire way to kill inno-

vation.

Assessment/Development: With a developmental assessment

center, you can put a participant through a simulation where he (or

she) will have to demonstrate the leadership behaviors associated

with driving innovation. The participant may encounter a simulated

innovation mandate from the “CEO”; he or she may be asked to

sell an innovation-focused set of recommendations to a cross-func-

tional group of stakeholders; or he or she may be asked to create

and stimulate more curiosity from a workforce given to by lackluster

ideas. The requirement that participants demonstrate actual

behaviors as opposed to making claims about what they can do is

what makes an assessment center especially indispensable.

An assessment center can be used to assess for the competencies

(see sidebar on page 35) and personality traits (e.g. openness,

ambition, learning orientation) related to innovation, contributing to

attaining a broad, holistic view of the individual.

32 33

As for developing the innovation competencies, the most effective

approach is usually to incorporate the development into the indi-

vidual’s daily job, such as through a job assignment or membership

on a task force. These assignments are especially beneficial if they

place the individual in a different functional area than the one in

which he or she has worked previously. This helps to increase the

individual’s knowledge of the organization while simultaneously

promoting more expansive thinking and network-building. These

assignments are limited in number, however, so they will need

to be reserved for your most critical talent, such as your high-

potential pool.

Performance Management: If your organization is truly serious

about innovation, you will need to ensure that it’s “baked in” to

every employee’s performance plan. Innovation can even be

incorporated as a key action area, with measurable metrics to hold

each employee accountable. HR can provide guidance and

assistance on how to most effectively align your performance

management system with your innovation strategy.

Succession Management: Probably no talent system will matter

more to the sustainability of the organization’s innovation

persona than succession management. Given the importance of

senior team members to the absorption of innovation into the

organizational culture, and also the innovation roles they must

play, identifying and developing leaders who possess the right

combination of skills is critical.

As alluded to previously, multiple executive competencies will

define the effective innovation leader. But your succession

management system should also provide for the identification of

those high-potential leaders with a track record of being “boundary

busters”—those who think expansively and make connections and

drive results beyond the silos that define their roles. In developing

these leaders for the move to the executive team against a

Success Profile that includes innovation-related competencies,

it will also be important to expand their horizons so they understand

that there’s a world of “possibilities” they should strive to consider;

that it’s important that they challenge assumptions; and that they

model curiosity for others who will be watching them.

Competencies Required for Innovation

The following executive competencies are strongly

linked to the behaviors that drive innovation:

Building Organizational Talent

Business Savvy

Coaching and Developing Others

Compelling Communication

Cultivating Networks

Driving Execution

Entrepreneurship

Establishing Strategic Direction

Influence

Operational Decision Making

Selling the Vision

34 35

MOVING IT ALL FORWARD

Own the vision—and its execution. As the CEO, it is up to you

to create and communicate the vision for innovation and see to it

that the vision is carried out. For innovation persona to emerge

and be sustainable in your organization, accountability matters.

But, as with every strategic priority, no one must be more account-

able than you. What’s more, the more self-aware you are—and

focused on improving—the better.

Break down silos. A social activity, innovation doesn’t happen in

a vacuum. Sustainable innovation requires a cross-pollination of

ideas, viewpoints, and strengths. Encourage interaction, network-

ing, and partnering across different parts of the business—and

even outside of the business. And, of course, you need to be the

visible model of these behaviors by thinking and working beyond

your domain.

Get over yourself. Face what you, personally, are doing to help

or hinder a culture of innovation. Change your behavior as needed

and let go of fear. Have the courage to ask your stakeholders what

it is that they want and need as opposed to assuming you know.

Be empathetic to the world of your customers. Put yourself in their

shoes and let their experience, not your own, be your guide.

Align with your talent systems. Your organization’s ability to

innovate will only be as strong as your talent. In turn, your talent

will only be as strong as your talent systems. It’s one thing to

announce that the organization will hire, develop, and promote

innovators; it’s quite another to have the talent infrastructure to

make it happen. Partner with HR to ensure that your innovation

strategy is aligned with and executed across all of your organiza-

tion’s talent systems, and also to confirm that these systems

employ the right competencies. Innovation, after all, is not a

“uni-dimensional competency,” but rather a business driver that

emerges from an individual possessing multiple competencies.

Consider the team mosaic. You need to be cognizant of the

“team mosaic”—the unique strengths, developmental areas,

personality attributes, and leadership styles that comprise your

senior team. More than likely, there won’t be one member of the

team who is strong in all of the things leaders need to do to drive

innovation—inspiring curiosity, challenging current perspectives,

providing freedom, and driving discipline. But it will be important

for all of these areas to be present across the team as a whole.

Your succession management and high-potential development

systems must support your having a senior team that can effec-

tively manage and sustain innovation.

Measure to drive execution. It’s an old leadership adage: You

can’t manage what you don’t measure. This applies to innovation,

as well. With its absence of boundaries and lack of constrictions

on ideation, blue-sky optimism is an important characteristic of a

truly innovative organization. Innovation, however, also demands

discipline and measurement to track progress, keep efforts on

track, and determine ultimate success or failure. Useful metrics

include those related to product-development cycle times, revenue

from new offerings, and measures of internal efficiencies. Equally

important are the tracking of individual accountability and behavior

through the performance management system.

36 37

SECTION : FIVE

Putting It All Together

How will you know when you have been successful, when all of

the hard work, leadership, discipline, quest for self-insight, behavior

change, system alignment, and execution discipline has resulted

in an innovative organization?

In their book Nanovation about India’s Tata Motors, one of the

world’s most innovative car companies, authors Kevin & Jackie

Freiberg, and Dain Dunston suggest the following ideal end-state

of innovation efforts:

We believe that this is the goal for which you should strive and

which, in time, can be within your organization’s grasp.

Create the conditions for innovation, and your people, and cus-

tomers, will carry your organization farther than any one person,

especially you, could do alone.

AUTHOR BIOGRAPHIES

Ellie Hall is DDI’s innovation practice leader,and an executive consultant. She specializesin executive development and creating compelling learning journey’s that ensurereadiness for mid and senior leaders to meettheir organization’s business goals.

Audrey B. Smith, Ph.D., is Senior Vice President,Executive Solutions, at DDI. She spearheadsDDI’s global consulting resources to help organizations identify, develop, and deployexecutive-level talent.

ABOUT DDI

Development Dimensions International (DDI) will help you system-

atically and creatively close the gap between today’s talent

capability and the people you will need to successfully execute

tomorrow’s business strategy.

We work closely with top organizations who see talent manage-

ment as their key competitive advantage. These companies rely

on us to help them identify and execute appropriate talent

strategies, review their talent readiness, put high potentials on the

road to success and optimize executive performance.

The work we do with our clients is tied to the organization’s

strategies and becomes part of its business and culture, to deliver

a solution with long-term sustainability. Equally essential, DDI

has the global resources needed to implement our clients’ talent

initiatives effectively and consistently worldwide.

Take a closer look at www.ddiworld.com/talentmanagement.

38 39

Perhaps the most glaring sign that innovation has made

it into the bedrock of your culture is no sign at all.

The organizational mind-set changes so significantly that

when you are innovating, you are not all that conscious of it.10

7 Corporate Responsibility: Diversity & Inclusion. (2009-2011).

Merck Sharp & Dohme Corp. Retrieved 12 August 2012

<http://www.merckresponsibility.com/focus-areas/employees/

diversity-and-inclusion/home.html>

8 Schultz, Howard (with Joanne Gordon). (2011). Onward:

How Starbucks fought for its life without losing its soul.

New York: Rodale.

9 Christensen, Clayton M., & Raynor, Michael E. (2003).

The innovator’s solution: creating and sustaining successful

growth. Boston, Mass.: Harvard Business School Press.

10 Freiberg, Kevin, Freiberg, Jackie & Dunston, Dain. (2011).

Nanovation: How a little car can teach the world to think big

& act bold. Nashville, Tenn.: Thomas Nelson.

40 41

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