A trucking company in Kansas. A public energy utility in Canada. A financial services company in India. What do these PI® clients, drawn from widely different industries and parts of the world have in common? Each of them has innovation at the top of their corporate agenda for 2011. Good business leaders in the modern organization often possess entrepreneurial traits such as innovation, creativity and risk-taking. But just as importantly, and perhaps more so, they establish corporate cultures and business practices that support and nourish entrepreneurship throughout the enterprise. In today’s global marketplace, in which every company’s product and service offerings run the risk of being simply turned into another commodity, the companies that not only survive but thrive will be the ones that can consistently find and deliver the “secret sauce” – that special combination of offerings that provide unique and hard-to-replicate value to their customers. While critical across all industries, this entrepreneurial mindset may be especially important in knowledge-intensive areas such as financial services, consulting, biotechnology, pharmaceuticals, and a host of others. Effective executives not only tolerate mistakes, they actually encourage them, and they find the right balance between protecting existing revenue streams and promoting the concepts that will be critical to future success. So what can organizations and the people who lead them do to promote a spirit of entrepreneurship, innovation and creativity?
- Specifically incorporate entrepreneurial elements into leadership competency models and profiles. For example, the global leadership model for a Fortune 500 retailer includes elements such as “Intellectual Curiosity – sees different possibilities, tinkers and experiments, cultivates new ideas and approaches, is okay with uncertainty and ambiguity” and “Reasonable Risk – takes calculated risks with personal courage and conviction, learns from both wins and losses.” A Fortune 500 wholesaling company lists “Display and promote entrepreneurship and innovation” as one of its nine core leadership competencies. Incorporating these elements into a company’s leadership framework gives everyone a common and objective language to discuss entrepreneurship, creativity and innovation, and clearly signals its importance.
- Don’t succumb to the myth that that some people simply aren’t “wired” to be creative. Organizations certainly should make efforts to identify and hire people who have naturally-occurring entrepreneurial traits, such as independence, confidence and comfort with risk and ambiguity, and then coach and mentor them in a way that supports those traits, such as by removing burdensome bureaucratic controls. However, my work with personality assessments has taught me that everyone in an organization has the power to contribute to innovation – they just approach it in different ways and need different supports from their managers. For example, you may have a team member whose natural inclination is to rely on established precedents when making decisions and to limit risk, not tendencies that one would normally associate with entrepreneurship. However, you can help that person be more innovative by doing things such as clearly communicating that it is part of the job to be on the lookout for improvement opportunities, helping him or her to mitigate the risk when trying new things, and strongly supporting those efforts by being encouraging and by helping absorb some of the “fallout” when mistakes are made.
- The potential for highly lucrative returns and the accompanying attention they generate often lures executives into a desire to seek the next game-changer – for example, the next YouTube or iPhone. Along the way, an enormous amount of resources are expended, all the while in pursuit of a pay-off that may be rare and unpredictable. Companies that truly master innovation look for many incremental opportunities to be innovative, and do so not only in “traditional” creative areas such as new product development but across the organization in functional areas such as sales or finance or processes such as procurement or recruiting. The message is that innovation can come from anywhere, and not every new idea has to be a block-buster.
- Build a culture of collaboration and communication – from the top down. Successful innovations need multiple connections across an organization to survive, and these connections are often a mixture of “formal” and “informal” ones. Successful innovation teams often have one or more members who are particularly adept at reaching out to other parts of the core business to find the requisite skills and resources that their projects need, and to build support for their efforts. Communication is critical as well, both with respect to articulating potentially radical, disruptive and technically complex ideas in a way that people can understand, see the value in and be comfortable with, and also doing so in a way that fosters a sense of inclusion and interpersonal connection. Effective leaders in the 21st-Century organization are often particularly skilled at finding and leveraging the talent within their workforce that will be innovation “connectors and communicators.”
- Think about how your company and the work that it does is organized. For example, a 2007 Working Paper from the U.S. Bureau of Labor Statistics (BLS) authored by Cindy Zoghi, Robert Mohr and Peter Meyer reported that across 6,322 Canadian companies tracked over a four-year period, those with decentralized decision-making or information-sharing programs were between 14% and 22% more likely to innovate than other companies. Quite simply, the structure of an organization matters.
Remember, history shows that companies that continue to build their capacity to innovate during periods of economic duress are the ones who fare better when the economy begins to grow again.