Leading an Innovative Company

By: Hal Gregersen / Jeff Dyer

Having a reputation as an innovator is the ‘holy grail’ in business today. Leaders and companies want to be seen as innovative, and be tied to the many associations that come with it: creative, marketing leading, cutting edge. Leading business publications including Forbes, Fortune and Fast Company celebrate and publish an annual list of companies they consider innovative.But what is it to be innovative, and how do leaders foster it within their company culture?

Consistently innovative companies all have something in common: they innovate on three levels, and all of these levels are important to sustain and grow a business. The first is growth innovation, which transforms a complicated product or idea and simplifies in order to increase access and affordability. Second is sustaining innovation, in which next-generation products are developed to replace older portfolio or industry products. And the third is efficiency innovation, which creates and drives efficiencies in products and services.

Any company can be innovative, they just need to find the right balance between discovery and development.

Any company can be innovative, they just need to find the right balance between discovery and development (innovation activities), and delivery, and ensure they are fostering a culture that supports pushing boundaries and risk taking. In workshops with global leaders, we’ve questioned them and found that few managers spend 25 percent or more of their time on discovery work or development work. Most focus on delivery, where they tend to excel, but this creates an inherent problem. Failure to see and implement needed change today produces failures tomorrow.

We’ve culled a few of the key learnings from our Innovator’s Accelerator course that are crucial for innovative companies today.

Start at the top

For a company to be truly innovative, it has to start at the top. CEOs and company leaders have to embrace discovery skills, and drive the value of these skills throughout their organization. Questioning, observing, networking, experimenting and associating should be practiced at the most senior level, and imprinted throughout the organization.

Exceptional leaders today are just that – exceptions. They are the 20 percent of leaders who invest in discovery, develop new capabilities and deliver significant results. How these leaders accomplish such impactful change is not rocket science: it is systematic use of creativity and discovery skills throughout their lives.

CEOs should ask questions, and allow their people to challenge the status quo.They should be observing – other companies, new technologies, different industries.

Smaller companies often excel at this, because they maintain a culture of experimentation and risk taking, but larger and more traditional companies need to look at their leaders and what they’re doing. The change has to happen here for an organization to follow.

“Many people, even top performers, believe they are just not built to innovate.”

Embrace risk

Many people, even top performers, believe they are just not built to innovate. They may excel at delivery, but leave creative thinking for those deemed to have the “gift.” Everyone has the capacity to innovate and be creative. As several studies on identical twins raised separately have shown, creativity is one-third genetic, and two-third environmental, so there is a lot a company can do to foster innovation throughout its people and organization.

Companies have to create a safe space where discovery skills are valued, and where provocative questions can arise. If the questions don’t get asked, the disruptive ideas will not surface.

Some leaders want to ensure there is a capacity for inventiveness from the start. Jeff Bezos, CEO of Amazon, tests innovation in new hires by simply asking them, “What have you invented.”

Act differently to think differently

As a leader, do you encourage your people to bring fresh ideas from other groups, companies, and industries? To question, “Why?” Why people do what they do, eat what they eat, wear what they wear.

Under Armour came into existence because its future CEO, a football player, was tired of sweating through his T-shirts during practice. He looked at his shorts and thought, “Why can’t I have a shirt like this?” And the company was born.

The company has stayed true to its origin and sustains its business growth through constant observation of athletes, identifying problems and developing products that serve as a solution.

Innovative companies don’t just happen, they are consciously cultivated at the leadership level, and then throughout the organization. If company leaders don’t embrace innovative thinking and skills firsthand, the rest of the organization doesn’t stand a chance.