leadership and innovation - cirano · innovation is cheaper than competition: need to innovate...

Leadership and InnovationLeadership and Innovation

presented bypresented by

Hubert SaintHubert Saint--OngeOnge

Copyright © 2006 Not to be copied or reproduced without written permission of SaintOnge Alliance Inc.

… are inexorably linked … are inexorably linked but what is the relationship but what is the relationship

between thembetween them

ChangeChange

Innovation

InnovationLeadershipLeadership

GrowthGrowthTransformation

Transformation

RenewalRenewal


to learn about successfully leading innovation to learn about successfully leading innovation and change through…and change through…

dialogue

exchanging on your past experience

dealing with your questions

practical tips

the exploration of models/concepts

the purpose of this session is…the purpose of this session is…


… the key propositions… the key propositions

Innovation and renewal is the true source of growth

Complacency and conformity are the true enemies’, yet organizations gravitate towards them naturally

Collaboration and learning are at the heart of innovation.

The organization’s capability to learn and collaboration is a function of its leadership context


What do we mean by ‘innovation’?What do we mean by ‘innovation’?


Innovation: true wealth creationInnovation: true wealth creation

innovation is the only true or net creator of only true or net creator of new wealthnew wealthat the firm level-- all else is caretaking

most large firms focus on past seminal innovations, with incremental improvements

when original seminal innovation runs out...? firms are often lost (kodak, xerox)

creative destruction


so, let’s characterize innovation…so, let’s characterize innovation…

intuitive in its early stages

opportunistic, perceived or real market opportunities

non-linear; not rational, step-by-step

can be chaotic, but… process-oriented and market disciplined


• Technological innovation for continuous improvement

• Business innovative breakthroughs to alter markets and influence competition

• Market innovation powerful enough to create new markets and businesses

three key areas for innovation three key areas for innovation


“grow or die”: markets imputes the health of an organization based on its growth and innovation is the only long-term source of growth

innovation is cheaper than competition: need to innovate faster and faster

clients are changing faster, more demanding, more knowledgeable and more interactive, and insisting on integrated, mass customized solutions

increasing competition and shrinking time to market

greater communication and collaboration with customers, suppliers, partners

Why is innovation an organizational imperative?Why is innovation an organizational imperative?


some observations about leading some observations about leading change and innovation…change and innovation…

Messy by nature

Leaders make a difference

Lots of learning

Frameworks & principles are very helpful


Why are leadership and organization Why are leadership and organization issues so important when dealing issues so important when dealing with innovation? with innovation?


The structured process of innovation…The structured process of innovation…

INSPIREINSPIRE IGNITEIGNITEINVESTIGATEINVESTIGATEIMAGINEIMAGINEGain innovation

commitmentDiscover

new ideasShape ideas into action

Implement and learn


Idea Generation Market Diffusion

Invention Translation Commercialization

Discover Investigate Develop Launch

Gather Organize Analyze Distribute

Creation Sharing Application

Creation Conversion Commercialization

Theory Practice

The Innovation ValueThe Innovation Value--ChainChain

MarketMarketPenetrationPenetrationResearchResearch EngineeringEngineering ManufacturingManufacturing MarketingMarketing SalesSales

ServiceService


why is it so hard to do this…why is it so hard to do this…

INSPIREINSPIRE IGNITEIGNITEINVESTIGATEINVESTIGATEIMAGINEIMAGINEGain innovation

commitmentDiscover

new ideasShape ideas into action

Implement and learn


leading change and innovation…leading change and innovation…

”My job is to listen to, search for, think of, and spread ideas, to expose people to good ideas and role models…When self-confident people see a good idea, they love it.”

Jack Welch


mindsets operate at both the individual mindsets operate at both the individual and the organizational levels…and the organizational levels…

• Out of our experience, we each have formed a unique set of beliefs and assumptions through which we filter and interpret what we see and do

• Out of our experience, we each have formed a unique set of beliefs and assumptions through which we filter and interpret what we see and do

• Out of our beliefs and assumptions, we make decisions and develop patterns of behaviour for everything we do

• Out of our beliefs and assumptions, we make decisions and develop patterns of behaviour for everything we do

Our mindsets feed on themselves both positively and negatively: “we believe what we see and we see what we believe”


each one of us will interpret the events each one of us will interpret the events taking place around us based our taking place around us based our

respective lens… respective lens…

EyeEye MindsetMindset ObjectObject

our mindsets shape what we see


Eye Eye LensLens ObjectObject

The culture of the organization becomes the lensthrough which it perceives

the business environment in which it operates

Organization Organization CultureCulture Business Business EnvironmentEnvironment

the pervasive impact of culture on the the pervasive impact of culture on the thinking of the organization…thinking of the organization…


values and principles: what we are or wish to be

the composition of the organizational the composition of the organizational culture…culture…

insights: what we know and understand

rules: what we must and may do

organizational behaviour: what we do

organizationalculture

collectivemindsets

individualmindsets


the organizational culture acts as a filter the organizational culture acts as a filter through which strategies are defined and the through which strategies are defined and the

performance determined…performance determined…

Organizational Culture

environmental forces

organizational capabilities

opportunities and threats

strengths and weaknesses

Strategy

Performance

* acknowledgement to Gerry Johnson, Cranfield School of Management

explicit values of organization


what happens to leadership in different what happens to leadership in different parts of the curve…parts of the curve…

I

II

III

Founder’s Vision

Consolidation of mindsets,culture and structure

Deterioration of feedback

Proliferation of organization routines


I

II

III

shifts in competitive spaceschange in customer preferences/expectations

appearance of new technology

the organization’s life cycles…the organization’s life cycles…


I

II

IIIProductivity

Time

the life cycles keep getting shorter the life cycles keep getting shorter and shorter…and shorter…


I

II

III

formation of collective mindsets formation of collective mindsets which shape the perceptions and which shape the perceptions and the processes of the organizationthe processes of the organization

• the imperceptible principles, mechanisms that shape what is done and how it is done

• they are woven into systematic choice at all levels of the organization and in every discipline: planning, budgeting, resource allocation, hiring, staffing

• they proliferate with the growing complexity of the firm’s task

• they contribute to make sense of otherwise chaotic market conditions

the pervasiveness of collective mindsets…the pervasiveness of collective mindsets…


I

II

IIIthe more rigid consolidation of the more rigid consolidation of collective mindsets which shape collective mindsets which shape

the perceptions and the processes the perceptions and the processes of the organizationof the organization

• this leads to a deterioration of the feedback which is essential to an organization’s survival in the market place

• defensive routines emerge leading to placing the blame on external forces including “misguided customers”

• the resulting rigidity strategy formulation creates static strategies which are “hard-wired” into collective mindsets

the pervasiveness of collective mindsets…the pervasiveness of collective mindsets…


building on strengths… building on strengths…

WeaknessesWeaknesses StrengthsStrengths

middle middle mushmush


How do organizations deal with the How do organizations deal with the ‘conformity’ trap?‘conformity’ trap?


Run the Run the business ‘as is’ business ‘as is’ to optimize its to optimize its performanceperformance

The ambidextrous organization…The ambidextrous organization…

Shape the Shape the strategy and the strategy and the organization of organization of

the futurethe future

How do you steer your business and motivate your people to pursue breakthrough growth while giving proper

attention to executing the here and now with the utmost care and efficiency?


To lead in the ambidextrous organization means that…To lead in the ambidextrous organization means that…

Ambidextrous LeadershipAmbidextrous Leadership

• You must balance your attention, energy and internal resources,

• To strike this balance successfully, you must bring to bear a new perspective on how to insert growth efforts in the work of your teams: how you measure and reward executing the present and building the future, and how you align behaviors to specific growth initiatives.

You must focus on continually improving and growing the core business.

You must be strategic and be ready to ‘break the mold’ in order to innovate and grow.

On the other hand,On the one hand…


…the distinction between ‘reliable’ and …the distinction between ‘reliable’ and ‘emergent’ organizational orientations‘emergent’ organizational orientations

Companies tend not to be creative by design: they tend to be built more for predictability and reliability – the ‘conformity trap’.

Yet, the environment where they function is characterized by theincreasing speed of change. As a result, these organizations tend to fall behind in adapting to the emergent business environment that surrounds them.

There is a fundamental tension between ‘reliability’ and ‘validity’ and most organizations are geared for ‘reliability’ while giving very little room for the ‘validity‘ that would see them do what is right to meet the challenges encountered in the environment. Anorganization that favors ‘reliability’ will actively drive out the capability for change, the capability to manage emergent conditions. Fear of failure and defensive reactions keeps pressing the organization towards ‘reliability”.

In order to counter this inherent tendency, the senior leadership must explicitly press for creativity and aim to change the culture and the governance structure. They must change what is expected of people and teams.


Organizations built for mostly Organizations built for mostly prepre--defined situationsdefined situations

the characteristics of ‘emergent’ organizations the characteristics of ‘emergent’ organizations

OutcomesOutcomes

•• planning based on planning based on past eventspast events

•• planning based on planning based on future eventsfuture events

•• application of rules with application of rules with minimization of judgmentminimization of judgment

•• leadership exercised leadership exercised based on judgmentbased on judgment

•• production of consistent/ production of consistent/ reliable outcomesreliable outcomes

•• production of changing production of changing outcomes responding to outcomes responding to changes in the environmentchanges in the environment

Organization built for mostly Organization built for mostly emergent situationsemergent situations

predictability orientationpredictability orientation change orientationchange orientation

PlanningPlanning

LeadershipLeadership

Approach Approach to workto work

•• defined roles / ondefined roles / on--going tasksgoing tasks

•• project/issues based teamsproject/issues based teams•• capabilities as determinant capabilities as determinant

of participationof participation

Dominant Dominant attitudeattitude

•• we can only do what we have we can only do what we have the budget to dothe budget to do

•• constraints are the enemyconstraints are the enemy

•• nothing can’t be donenothing can’t be done•• constraints increase the constraints increase the

challenge and excitementchallenge and excitement


prepre--defineddefinedsituationssituations

the use of knowledge in the emergent organization mode the use of knowledge in the emergent organization mode

emergent emergent situationssituations

CharacteristicsCharacteristics

•• rulesrules--basedbased

•• formalized imprintformalized imprint

•• primacy of content primacy of content managementmanagement

•• based on need/ based on need/ productive enquiryproductive enquiry

•• informal imprintinformal imprint

•• primacy of primacy of collaboration/interactioncollaboration/interaction

•• content by expertscontent by experts •• content by memberscontent by members

•• attached to attached to transactional processtransactional process

•• attached to attached to knowledge domainknowledge domain

•• prescriptive useprescriptive use •• use by choiceuse by choice

•• directed by managementdirected by management •• facilitated in networkfacilitated in network

•• emphasis on use of emphasis on use of knowledgeknowledge

•• emphasis on generation emphasis on generation of knowledgeof knowledge


Pre-defined Situations Emergent Situations

principles and policiesprinciples and policiesnorms and guidancenorms and guidanceprecise guidanceprecise guidancestandard operating proceduresstandard operating proceduressubject matter expertisesubject matter expertisecentrally available to all individualscentrally available to all individuals

develop and disseminatedevelop and disseminate

Dev

elop

men

tA

pplic

atio

n

apply and useapply and use

reference tools reference tools optimize work processesoptimize work processescoherence coherence diagnosticsdiagnosticsconsistency and rigorconsistency and rigor

search and exchangesearch and exchangedetection of new trends/issuesdetection of new trends/issuesease with uncertaintyease with uncertaintymultimulti--disciplinary expertisedisciplinary expertiseoperational understandingoperational understandingeffective practiceseffective practicesexchange toolsexchange tools

question and experimentquestion and experiment

evolving principles and policiesevolving principles and policiesgiving space for innovationgiving space for innovationhypothesis, test, verify hypothesis, test, verify experimentation experimentation frame of referenceframe of referenceredesign work processesredesign work processesflexibility and rigorflexibility and rigor

the governance processthe governance process


managing the dilemma between innovation and control…managing the dilemma between innovation and control…

How to exercise adequate control in organizations that demand flexibility, innovation and creativity.

Must rely on employees’ initiatives to seek out opportunities but perusing these opportunities can expose businesses to excessive risk or invite behaviours that can severely damage a company’s integrity.

Tools to reconcile this dilemma are available:

• belief systems that communicate core values and inspire all to commit to the purpose.

• decision-rights and boundary systems establish rules and identify pitfalls.

• diagnostic systems allow managers to ensure that employees are meeting goals.

• interactive control systems enable top management to focus on strategic uncertainties.


organic growthorganic growth

1 Improve Internal Processes

3 Internal Incubator

2 Business Area Initiatives

4 5 Strategic VC

AutonomousIntegrated

Hybrid Internal/ External Incubator

Business as Usual

New Initiative

Existing Org Structure New Standalone Organization

Internal Business Hybrid Internal/ External Business

External (guided by Company Strategy)

innovating for growth: the spectrum of approachesinnovating for growth: the spectrum of approaches


the different types of ‘corporate entrepreneurship’ the different types of ‘corporate entrepreneurship’

DedicatedDedicated

Resource Resource AuthorityAuthority

DecentralizedDecentralized

Organizational OwnershipOrganizational OwnershipDiffusedDiffused FocusedFocused

•• procedures for finding, procedures for finding, selecting, and selecting, and resourcingresourcing new new businessesbusinesses

•• no formal dedicated no formal dedicated organizationorganization

The EnablerThe Enabler The ProducerThe Producer•• formal organization formal organization

with specific mandate with specific mandate to create new to create new businessesbusinesses

•• mostly selfmostly self--funded funded organizationorganization

The OpportunistThe Opportunist•• no formal procedures no formal procedures

or organizationor organization•• social networks drive social networks drive

selection and selection and resourcingresourcing

The AdvocateThe Advocate•• defined organization defined organization

act as a facilitator and act as a facilitator and proponentproponent

•• limited budget, limited budget, majority of funding majority of funding from from sbu’ssbu’s


What’s the role of leadership in What’s the role of leadership in fostering innovation in the fostering innovation in the organization? organization?


Leadership is both an individual and organizational capability…Leadership is both an individual and organizational capability…

Individual CapabilityIndividual Capability

The manner in which individuals exercise their responsibilities

To be an effective leadership requires a deeply personal journeyTo be an effective leadership requires a deeply personal journey of of commitment and authenticity…commitment and authenticity…Every leadership act you undertake builds the context for leaderEvery leadership act you undertake builds the context for leadership ship within which everyone realizes their own leadership potential. within which everyone realizes their own leadership potential.

Organizational CapabilityOrganizational Capability

A leadership context and principles that encourage all individuals to maximize their capabilities and contribution to create value for customers.

shaping an effective leadership shaping an effective leadership context…context…


MindsetsMindsetsandand

ValuesValues

AttributesAttributes

CompetenciesCompetencies

Individual Capability

... the elements of individual capability... the elements of individual capability


Strategy

Structure

Systems

LeadershipLeadership... the manner in which individuals chose to exercise their responsibilities

Culture



StrategyStrategy

StructureStructure

SystemsSystems

Leadership

CultureCulture

... the elements of ... the elements of organizational capabilityorganizational capability

Mindsetsand

Values

MindsetsMindsetsandand

ValuesValues

AttributesAttributesAttributes

CompetenciesCompetenciesCompetencies

... the elements of ... the elements of individual capabilityindividual capability



Mindsetsand

Values

Attributes

Competencies

... the elements of ... the elements of individual capabilityindividual capability

... the elements of ... the elements of organizational capabilityorganizational capability

StrategyStrategy

StructureStructure

SystemsSystems

Leadership

CultureCulture

the “how”the “how”

the “what”the “what”RiskRisk

ManagementManagement

Solutions Solutions DevelopmentDevelopment Items Items

ProcessingProcessing

Sales force Sales force ManagementManagement

Financial Financial EngineeringEngineering



The strategyThe strategy--culture axis…culture axis…

Strategy

Structure

Systems

Leadership... the manner in which individuals chose to exercise their responsibilities

Culture

... the goals of the organization and the ways it seeks to serve them

... the grouping of accountabilities; structures defines the position of and relationship between members of the organization

... the ways in which processes (information, communication, decision-making) and flows (products/ services and capital) proceed

... the combined sum of the individual opinions, shared mindsets, values and norms


What is the relationship between What is the relationship between collaboration and innovation?collaboration and innovation?


what role do networks play in this evolution?what role do networks play in this evolution?what role do networks play in this evolution?

networks enable:• new combinations of knowledge• coordination of disperse resources• diffusion and provision of new products & services… offerings


…collaboration is the most important …collaboration is the most important source of innovationsource of innovation

Sustainable business growth requires innovation.

Increasingly, effective, sustainable innovation requires effective collaboration both within and between firms.

InnovationNew

KnowledgeCreation

EffectiveCollaboration


CoreCoreKnowledgeKnowledge

PartialPartialKnowledgeKnowledge

IndividualIndividual Networked Networked CommunityCommunity

…the “networked community” effect…the “networked community” effect…the “networked community” effect


Networked Networked CommunityCommunity

•• accelerate the generation of individual accelerate the generation of individual and organizational capabilitiesand organizational capabilities

•• enhance the agility of the organizationenhance the agility of the organization•• reinforce integration and cohesiveness: reinforce integration and cohesiveness:

work interdependently with common work interdependently with common purposepurpose

•• collaborate across geography and collaborate across geography and organizational boundariesorganizational boundaries

•• develop the ability to respond fast to develop the ability to respond fast to local and national issueslocal and national issues

•• enhance the ability to partner enhance the ability to partner internally and externallyinternally and externally

•• enhance cost effectivenessenhance cost effectiveness

…the “networked community” effect…the “networked community” effect…the “networked community” effect


changing demands = changing practiceschanging demands = changing practices

global vision results from prepared minds capable of identifying new combinations across geographic and cultural boundaries


how to exercise leadership for how to exercise leadership for organizational change…organizational change…

1. define clear, measurable, consensual objectives

2. free up the conditions for organizational inquiry

3. provide public, fast feedback of the results of experiments

4. iterate

The most effective way to exercise leadership towards accelerating change and innovation is to:


networks, competition & collaborationnetworks, competition & collaboration

1competitionquest for differentiation

& innovation

4new offerings

increasingly delivered & optimized by the network

3internal & external

collaborationenabled & accelerated by the

network

search for new knowledge

enabled & accelerated by the network

2

from this dynamic, new managerial processes emerge


leading to realize the potential of leading to realize the potential of the networkthe network

Fostering Shared Ownership

Elevating people’s perspective to see the whole organization

Generating TrustIncreasing Confidence in One

Another and Valuing Differences

Collaborating Building on One Another’s Capabilities


from…belonging

the most foundational mindset shift the most foundational mindset shift one can undertake is …one can undertake is …

to…self-initiation

my security resides in being my security resides in being part of an organizationpart of an organization

my security resides in my my security resides in my capabilitiescapabilities

following the traditional following the traditional contract: I do what I have contract: I do what I have to in order to get to a to in order to get to a promised futurepromised future

following the new contract: following the new contract: I dedicate myself to I dedicate myself to creating value in exchange creating value in exchange for an opportunity to for an opportunity to develop my capabilitiesdevelop my capabilities

I work for the firm…I work for the firm… I am fundamentally selfI am fundamentally self--driven…driven…

by virtue of working here, by virtue of working here, I am entitled to…I am entitled to…

I want to be recognized for I want to be recognized for my contribution…my contribution…

success comes from success comes from loyaltyloyalty

success comes from success comes from commitmentcommitment


a framework for leadership…a framework for leadership…

Making meaning: Making meaning: inspiring shared ownershipinspiring shared ownership

Striving Striving for for

status quostatus quo

Seeking Seeking renewed renewed

coherencecoherence

Structuring Structuring and controllingand controlling

The forcing approach

The telling approach

The participating approach

The transforming approach


in conclusion…in conclusion…

is best understood as a process, bringing new combinations to market.

is the only net creator of new wealth in the long run

arises in the first instance from the prepared mind...

...but typically requires a lengthy, non-linear process to market

structuring this process can reduce risk and increase value output

innovation


[email protected]@saintongealliance.com

leadership and innovation - cirano · innovation is cheaper than competition: need to innovate...

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