Business Thinking vs. Innovation Thinking

Not long ago we spoke to a senior leader in a large multinational organization who voiced his frustration about the lack of innovation in his business—even after a year-long campaign to turn things around. By the time solutions filtered up the hierarchy to him, they were “totally derisked” and lacked creativity.

The culture of the organization led managers to strip away any innovation found in new ideas—rendering solutions that were weak, limited in scope, and impotent. The executive said he wanted to create a culture of innovation that would allow ideas to grow and flourish, add value, and help the organization achieve its growth targets.

He’s not alone in his concerns, as evidenced by how hot a topic innovation is today. But that wasn’t always the case. At one time, strategy was king. Forecasting, planning, and placing smart bets created the power sources within organizations.

The future of a business (or a career) followed an established framework. If leaders managed well, success would follow.

Today, complexity and uncertainty are palpable. Planning for even the next quarter is a challenge. Even more difficult is committing to decisions that will play out over 1 – 5 years.

In the words of one senior executive: “We’ve lost our crystal ball.” What is the next breakthrough product, game-changing service, or compelling vision? What’s the process for getting there?

Even in more stable times, strategy execution often fails because companies neglect to take into account the inevitable inertia within the organization best represented by the slogan, “Culture Eats Strategy for Breakfast.”

An analysis of several studies correlating organizational performance with culture using the Denison Organizational Survey found that “culture…is an important predictor of organizational performance.”

Innovation involves implementing something new that adds value or quantifiable gain. It requires many skillsets, usually those of a team.

It should be no surprise that in these uncertain times, innovation is the buzzword du jour (again) and remains critical to an organization’s top and bottom line.

innovative cartoon

Without new sources of value — whether that’s defined in terms of quantity of revenue or quality of life — most organizations eventually wither and die.

The world around them changes and competitors emerge to provide the same offerings more effectively or efficiently. The greater the amount of innovation, the greater the market and financial performance.

A recent study comes to the same conclusion and identifies the critical organizational innovation elements that differentiate leaders from laggards, including an explicit innovation strategy, innovation governance, and more.

So it makes sense that a 2007 survey revealed that 66% of the 2,468 execs surveyed ranked innovation among the top 3 strategic priorities for their companies.

Even after the recession, an IBM Global CEO Study (2010) shows CEOs of organizations thriving during the prevailing economic turbulence believe that creativity has been fundamental to their success—and will continue to be into an even more uncertain and complex future. A related IBM global report involving Chief HR Officers (2010) further suggests that while organizations know how to develop strong business managers, they have been largely ineffective at developing creative leaders.

It’s as if there has been a conspiracy at many levels of our culture to stifle the creative disciplines in business. When CCL researched the leadership competencies needed to navigate complexity, we encountered several C-suite executives who had well-developed artistic talents.

Even at their level in the organization, though, they seemed powerless to buck the prevailing culture and use their creative competencies to address challenges and opportunities. Instead, they deliberately tried to separate their creative self from their business self (Palus and Horth, 2002).

The same dynamic can play out even when an organization thinks it wants innovation. Most organizations that embark on an innovation campaign are out to find breakthroughs or “disruptive” innovations that represent a new way of doing things.

Rarely do these innovations emerge, though. And if they do, they almost never make it to the marketplace. That’s because the organization inevitably chokes on the radical nature of the offering, which doesn’t fit into its current reality.

Unlike business thinking, innovative thinking doesn’t rely on past experience or known facts. It imagines a desired future state and how to get there. It is intuitive and open to possibility.

Rather than identifying right answers or wrong answers, the goal is to find a better way and to explore multiple possibilities. Ambiguity is an advantage, not a problem. It allows us to ask “what if?”

Innovative thinking is a crucial addition to traditional business thinking. It allows you to bring new ideas and energy to your role as leader and paves the way to bring more innovation into your organization.

Business vs. Innovative Thinking

Actively pursuing innovation requires considerable resources and deliberate focus.

It requires innovation leadership, support from the organizational hierarchy, and a culture that values and nurtures creativity.

 

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2 thoughts on “Becoming a Leader Who Fosters Innovation

  1. This definion of Innovative thiking is very nice but I not right. Innovation is logical as in the evolution of the market, there are specific patterns that are logical. Innovation also requires results – otherwise it could not be a business function. I know there is big notion of people who support trial and error and “accept failure” mindset but unlike in the trandtional scientific research, business must provide resutls and cannot accept missed innovations that can lead to bunkcrupcy. The fact that only 1% of innovations is to create growtth doesn’t mean we need to praise it as as a best practice. Especially, that there a ways to reduce this risk.

  2. Wojciech, I totally agree. What our article doesn’t readily portray is that innovative thinking needs both business thinking AND the creative aspects of innovative thinking. If either is overdone at the expense of the other we either gets lots of ideas and no results or lack of growth from business dependent only on what we have today.

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