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McKinsey research reveals a wide gap between the aspirations of executives to innovate and their ability to execute. Organizational structures and processes are not the solution. Innovation has become a core driver of growth, performance, and valuation.
More than 70 percent of the senior executives in a survey we recently conducted say that innovation will be at least one of the top three drivers of growth for their companies in the next three to five years. Leading strategic thinkers are moving beyond a focus on traditional product and service categories to pioneer innovations in business processes, distribution, value chains, business models, and even the functions of management.
Our research also shows that most executives are generally disappointed in their ability to stimulate innovation. Sustaining innovation to create real value at scale—the only kind of innovation that has a significant financial impact—is even harder.
Our experience convinces us that a disciplined focus on three people-management fundamentals may produce the building blocks of an innovative organization.
- First, formally integrate innovation into the strategic-management agenda of senior leaders to an extent that few companies have done so far.
- Second, executives can make better use of existing (and often untapped) talent for innovation, without implementing disruptive change programs, by creating the conditions that allow dynamic innovation networks to emerge and flourish.
- Third, take explicit steps to foster an innovation culture based on trust among employees. In such a culture, people understand that their ideas are valued, trust that it is safe to express those ideas, and oversee risk collectively, together with their managers. Such an environment can be more effective than monetary incentives in sustaining innovation.
While senior executives cite innovation as an important driver of growth, few of them explicitly lead and manage it. About one-third say that they manage innovation on an ad hoc basis when necessary. Another third manage innovation as part of the senior-leadership team's agenda. How can something be a top priority if it isn't an integrated part of a company's core processes and of the leadership's strategic agenda and—above all—behavior?
In a separate survey of 600 global business executives, managers, and professionals, the respondents pointed to leadership as the best predictor of innovation performance. Those who described their own organization as more innovative than other companies in its industry rated its leadership capabilities as "strong" or "very strong." Conversely, those who believed that the ability of their own organization to innovate was below average rated its leadership capabilities as significantly lower and, in some cases, as poor.
As with any top-down initiative, the way leaders behave sends strong signals to employees. Innovation is inherently associated with change and takes attention and resources away from efforts to achieve short-term performance goals. More than initiatives for any other purpose, innovation may therefore require leaders to encourage employees in order to win over their hearts and minds.
Our research implies that most senior executives do not actively encourage and model innovative behavior. If they did, they could give employees the support needed to innovate. They can also take a number of other practical steps to advance innovation:
- Define the kind of innovation that drives growth and helps meet strategic objectives.
- Add innovation to the formal agenda at regular leadership meetings. We observe this approach among leading innovators.
- Set performance metrics and targets for innovation.
Recent academic research finds that differences in individual creativity and intelligence matter far less for innovation than connections and networks—for example, networked employees can realize their innovations and make them catch on more quickly. Since new ideas seem to spur more new ideas, networks generate a cycle of innovation. Furthermore, effective networks allow people with different kinds of knowledge and ways of tackling problems to cross-fertilize ideas.
Social-network analysis can help executives to diagnose existing networks in order to ascertain their characteristics, such as the frequency of collaboration and the degree of cross-functional interactions among members, and to identify people who broker information and knowledge.
When we combined the analysis of personal perspectives on innovation with the network map, we found opportunities for improvement. Paradoxically, the analysis revealed that those employees, largely middle managers, with the most negative attitude toward innovation were also the most highly sought after for advice about it. Senior management used this analysis to create a network of middle managers who were encouraged to generate newer and bigger ideas.
Shaping innovation networks is both an art and a science. Any network is unpredictable and, in the end, impossible to control. Focusing on the replacement of one or two ineffective members has less impact than establishing the conditions for vibrant networks and taking advantage of the connections through which they flourish. Making networks more decentralized is another way to improve collaboration and performance.
Senior executives say that making top talent available for projects to meet innovation goals is their single biggest challenge in this area. Employees are more likely to believe that their organizations have the right talent but that the corporate culture inhibits them from innovating.
Top teams can help build a more innovative culture in several ways:
- Embrace innovation as a top team. It's not enough for the CEO to make innovation a personal goal and to attend meetings on innovation regularly. Members of the top team must agree that promoting it is a core part of the company's strategy, reflect on the way their own behavior reinforces or inhibits it, and decide how they should role-model the change and engage middle management.
- Turn selected managers into innovation leaders. Identify managers who already act, to some degree, as network brokers and improve their coaching and facilitation skills so that they can build the capabilities of other people involved in innovation efforts more effectively. The goal: making networks more productive.
- Create opportunities for managed experimentation and quick success. Not surprisingly, this approach is typically the best way to start any change effort in large organizations. Quick success matters even more with innovation: people need to see results and to participate in the change. To get going quickly and learn along the way, select an innovation theme or topic area and then create small project teams. While you try out topics and ideas, test the most effective leadership and organizational approaches for your organization. The goal isn't to get it right the first time but to move quickly to give as many influential employees as possible a positive experience of innovation, even if a project doesn't generate profits immediately. A positive experience will make all the difference in building the organization's capabilities and confidence.
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Organizations are spending hundreds of millions of dollars on employee engagement programs, yet their scores on engagement surveys remain abysmally low.
When organizations make real gains, it’s because they’re thinking longer-term. They’re going beyond what engagement scores are telling them to do in the moment and redesigning employee experience, creating a place where people want, not just need, to work each day. But what does that mean, and what does it look like?
To understand this, I interviewed 150 psychologists, economists, and business leaders around the world. Based on those conversations, I identified three environments that matter most to employees: cultural, technological, physical.
After analyzing more than 250 diverse organizations, drawing on the Fortune 100 and various “best workplaces” lists, I found that over half the companies were rated poorly by their employees in at least one of the three areas, and 20% got very low scores across the board.Although 23% were making strides in all three areas, just 6% were investing heavily in all three — and those “experiential organizations” (Adobe, Accenture, Facebook, Microsoft, and others) saw performance gains.
When I interviewed business leaders at the top-scoring organizations, they told me their investments in the three employee experience environments had led not only to happier employees but also to larger talent pipelines and greater profitability and productivity.
Looking at the data, it’s clear that there is a significant return to organizations that focus on employee experience over the long term, not just engagement in the here and now.
The important thing is moving away from putting people into outdated workplaces, and redesigning workplaces and practices around your employees.
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Today, as companies increasingly need to become more dynamic, interconnected and flexible, soft skills are critical. According to Deloitte’s 2016 Global Human Capital Trends report, executives now consider these skills important to fostering employee retention, improving leadership, and building a meaningful culture. In fact, 92 percent of Deloitte’s respondents rated soft skills as a critical priority.
The good news is that soft skills are learnable. In fact, resilience training experts, who specialize in teaching and training in the soft skills, would go further to say they are foundational to creating strong employees, teams, leaders and organizations.
Here are the most critical soft skills to build resilience, and how to develop them in your team:
- Problem Solving
The ability to get into “problem-solving mode” and stay in it for long periods of time—in other words, persist until a problem is solved instead of disengaging and giving up—is key to dealing with the inevitable challenges that come with any role more efficiently and effectively. - Emotion Control
Getting control of our emotions is the single most important soft skill we can learn. In fact, there's a high correlation between emotion regulation and our ability to manage our stress and stay productive under pressure. - Purpose
Feeling connected to a mission beyond ourselves and our own self-interest works as a wellspring to carry leaders and their teams through tough times, which invariably happen at work. Developing purpose can be taught and involves learning how to reframe our work in a larger context and focus on personal contribution to the overall mission of the organization.
We’re entering a new frontier in the workforce. By framing soft skills as a teachable discipline, we can position our companies to thrive in an atmosphere that runs on resilience just as much as technical know-how.
Peter Diamandis Exponential Leadership 3
Arianna Huffington founded the Huffington Post, a news platform with millions of readers per month. AOL acquired the Huffington Post in 2011 for $315 million. Now, Arianna is starting an exciting new company called Thrive Global to help entrepreneurs and individuals make their lives more sane, meaningful and productive.
Arianna Huffington’s 10 Lessons on Exponential Leadership
1. You Don’t Have to Burn Out: People who burn out at work do not perform as well as people who are well rested and balanced.
2. Allow For Time to Renew Yourself: To be your most productive, your most effective, and your most creative as a leader, you must allow time to renew yourself.
3. Do Entry Interviews: Arianna explains, “Right now, everybody does exit interviews. How about doing entry interviews and asking people what they need to feel balanced?”
4. Create Elegant Success - Find Your Spot Between Chaos and Order: Arianna spoke about a concept called “Elegant Success” – it’s about finding the right balance between order and disorder.
5. Our Relationship with Technology Has to Change: Arianna wants to create new role models that will shape the conversation around improving our health and productivity.
6. Sleep More! Arianna cited a study from the RAND Corporation estimating that sleep deprivation costs us $411 billion per year in lost productivity.
7. Put Your Phone Away 30 Minutes Before You Go To Sleep.
8. Don't Call It Slowing Down: “If you define these strategies as ‘slowing down,’ you are never going to do them. Nobody wants to slow down."
9. Ask for help: If you feel stressed, bogged down, burned out or too busy, ask for help.
10. Make Your Leadership Meetings Device-Free: To incentivize your team to leave their devices behind, aim to do meetings in half an hour, rather than an hour.
Beth Comstock's principles are here: https://singularityhub.com/2017/03/03/8-principles-for-leaders-to-make-the-most-of-the-exponential-age/
Sue Siegel's principles, here: 8 Principles for Leaders to Make the Most of the Exponential Age (Part 2)
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