America the Innovator

The New Rules For Global Market Growth.

Written by Karen A. Edelman

Why do so many companies talk about innovation but fail to create anything truly innovative? The Forbes Leadership Networks Forum set out to answer this vexing question. Held this past fall in Chicago, the Forum was produced by the Forbes Conference Group and presented by Project Management Institute (PMI), with support from SAS.

The Power of Innovation

The Leadership Networks Forum revealed that one of the first challenges is defining innovation. Clayton Christensen, Harvard Business School professor, author, Innosight cofounder and Forum speaker, views disruptive innovation as the key to creating future growth. Christensen warned that myopically focusing on creating product or service improvements for existing customers can lead companies to overlook disruptive technologies,which have the power to open up entirely new markets.

Other speakers elaborated on how innovation can happen inside established companies. “Great leaders recognize that companies must innovate to remain competitive, and they nurture environments that encourage creative thinking,” said Gregory Balestrero, chief executive officer of PMI. “Innovation is rarely accidental — it takes an organizational commitment that starts at the executive level.” Balestrero views innovation as both the creative idea and the execution of that idea into business success. “The idea is not enough,”he said.“As Thomas Edison said, innovation is 1% inspiration and 99% perspiration.Too often companies forget the ‘perspiration’ or execution part of the equation.”

 

The "How" of Innovation

Speakers agreed that to make innovation happen, leaders need to physically set aside talent and resources to devote themselves fully to the task.Innovation teams need to be managed differently — and, preferably, separately.These teams should also be given freer rein than existing operating units; they should not be asked to deliver financial results quickly.

 

“If you’re trying to do something new within an established organization, you have to do what IBM did with the PC — give it its own P&L,” said Rich Karlgaard, publisher of Forbes magazine and Forum moderator. “When Steve Jobs took a different building to develop the Macintosh, they even raised the pirate flag to signal that they were different and couldn’t be smothered.” Mark Johnson, cofounder of Innosight, believes that most companies fail to innovate because they build a team that devotes 20% of its time to a new growth project and the rest to existing responsibilities. “That never works,” Johnson

said. “You’d rather have two people 100% of the time than 15 people 20% of the time. Trying to bifurcate the mind between deliberate execution versus emergent creativity — we’ve never seen it work.”

 

The Leader's Role

Innovation requires a certain kind of leader, what Balestrero calls an “engaged CEO who understands the value of creativity in the organization, but never loses the sense of urgency and speed that will separate them from their competitors.” A leader who, he said, “is willing to invest those resources in activities that will build the competency to create, but at the same time will build the capacity to deliver this creativity in a way that will create value for the company and the customer.”

The Leadership Networks Forum speakers agreed that innovation requires leaders who are dedicated to building something new.Paul Camuti,president and chief executive officer of Siemens Corporate Research, estimated that 80% of innovation efforts fail because the
CEO offers only lip service. “Rather than just setting goals and assuming it’s going to happen, there has to be much better ownership of innovation all the way up and down,”Camuti said.

 

Innovation demands leaders who communicate efforts and demonstrate patience, commitment and a tolerance for failure. When failure is accepted and discussed, the lessons can lead to future and sometimes even bigger successes. For this to happen, though, leaders need to build an environment of trust. Suzanne Gordon, vice president and chief information officer of SAS, explained: “When you have an environment where people trust each other, and they share information and ideas, and they respect each other, it’s just amazing how quickly things can get done.