WHITE PAPERBecoming a Leader Who Fosters InnovationBy: David Magellan Horthand Jonathan Vehar

ContentsIntroduction2Business Thinking vs. Innovation Thinking4Becoming More Innovative: It’s Not as Simple as It Seems6Myth: Individual Creativity Can Be Mandated and Managed.6Myth: Simply Unleashing Creative Talent Can Help You Navigate Complexity.7Beyond the “Innovation Silo”8Building Blocks for Innovation Leadership10Effective Innovative Thinking requires all three . . .11Innovation Leadership Toolset12Innovation Leadership Skillset14Innovation Leadership Mindset16Bringing Focus to Innovation Leadership18What KEYS to Creativity and Innovation Measures19Tips for Developing a More Innovative Organization21A Call-to-Action for the Innovation Leader22References24About the Authors251

IntroductionNot long ago we spoke to a senior leader in alarge multinational organization who voiced hisfrustration about the lack of innovation in hisbusiness—even after a year-long campaign toturn things around. By the time solutions filteredup the hierarchy to him, they were “totally derisked” and lacked creativity. The culture of theorganization led managers to strip away any innovation found in new ideas—rendering solutionsthat were weak, limited in scope, and impotent.The executive said he wanted to create a cultureof innovation that would allow ideas to grow andflourish, add value, and help the organizationachieve its growth targets.He’s not alone in his concerns, as evidenced byhow hot a topic innovation is today. But thatwasn’t always the case. At one time, strategy wasking. Forecasting, planning, and placing smartbets created the power sources within organizations. The future of a business (or a career)followed an established framework. If leadersmanaged 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 decisionsthat will play out over one to five years. In thewords of one senior executive: “We’ve lost ourcrystal ball.” What is the next breakthrough product, game-changing service, or compelling vision?What’s the process for getting there?2 2014 Center for Creative Leadership. All rights reserved.Even in more stable times, strategy execution often fails because companies neglect to take intoaccount the inevitable inertia within the organization best represented by the slogan, “Culture EatsStrategy for Breakfast.” An analysis of severalstudies correlating organizational performancewith culture using the Denison OrganizationalSurvey found that “culture . . . is an importantpredictor of organizational performance.” (Discovery Learning, 2007)Innovation involves implementingsomething new that adds value orquantifiable gain. It requires manyskillsets, usually those of a team.It should be no surprise that in these uncertaintimes, innovation is the buzzword du jour (again)and remains critical to an organization’s top andbottom line. Without new sources of value—whether that’s defined in terms of quantity ofrevenue or quality of life—most organizationseventually wither and die. The world around themchanges and competitors emerge to provide thesame offerings more effectively or efficiently.Research by Soo et al. (2002) concluded, “Thegreater the amount of innovation, the greater the

market and financial performance.” A recent studyby Capgemini (2012) comes to the same conclusionand identifies the critical organizational innovationelements that differentiate leaders from laggards,including an explicit innovation strategy, innovationgovernance, and more.So it makes sense that a 2007 BCG survey revealedthat 66% of the 2,468 execs surveyed ranked innovation among the top three strategic priorities fortheir companies (Sirkin et al., 2007). Even after therecession, an IBM Global CEO Study (2010) showsCEOs of organizations thriving during the prevailing economic turbulence believe that creativity hasbeen fundamental to their success—and will continue to be into an even more uncertain and complex future. A related IBM global report involvingChief HR Officers (2010) further suggests that whileorganizations know how to develop strong business managers, they have been largely ineffective atdeveloping creative leaders.It’s as if there has been a conspiracy at many levelsof our culture to stifle the creative disciplines inbusiness. When the Center for Creative Leadership(CCL ) researched the leadership competenciesneeded to navigate complexity, they encounteredseveral C-suite executives who had well-developedartistic talents. Even at their level in the organization, though, they seemed powerless to buck theprevailing culture and use their creative competencies to address challenges and opportunities.Instead they deliberately tried to separate theircreative self from their business self (Palus andHorth, 2002).The same dynamic can play out even when an organization thinks it wants innovation. Most organizations that embark on an innovation campaign areout to find breakthroughs or “disruptive” innovations that represent a new way of doing things.Rarely do these innovations emerge, though. And ifthey do, they almost never make it to the marketplace. That’s because the organization inevitablychokes on the radical nature of the offering, whichdoesn’t fit into its current reality.Actively pursuing innovation requires considerableresources and deliberate focus. It requires innovation leadership, support from the organizationalhierarchy, and a culture that values and nurturescreativity. 2014 Center for Creative Leadership. All rights reserved.3

Business Thinking vs. Innovation ThinkingThe development of effective creative leadershipis a two-step process. First, leaders individuallyand collectively must get in touch with their owncreative thinking skills in order to make sense ofand deal with complexity. Second, rather thandevelop skills for the “management of creativity”(a control mindset), organizations must developa creative leadership culture—a climate thatpromotes and acknowledges the creative process.Authors and researchers Teresa Amabile (2010)and Goran Ekvall (1999) speak authoritativelyand elegantly on this topic. Amabile talks about“Management for Creativity.” Ekvall in severalpublications describes the statistical significanceof leadership in creating (or not!) an environmentthat nurtures creativity.A creative leadership culture recognizes andskillfully manages the tensions between severalinterrelated and seemingly polar opposites. Majoramong these is the tension between traditionalbusiness thinking and innovative thinking.Today’s managers are typically skilled practitioners of traditional business thinking with itsdeep research, formulas, and logical facts. Business thinkers are often quick to make decisions,sorting out the right answer from among wronganswers. Deductive and inductive reasoning arefavored tools as they look for proof or precedentto inform decisions. Business thinking is aboutremoving ambiguity and driving results.But ambiguity cannot be managed away. Drivingresults is impossible when the situation is unstable, the challenge is complex, the direction isunclear, or when you’re mapping new territory, asis the case—by definition—with innovation.Many of today’s leadership problems are criticaland pressing, and they demand quick and decisiveaction. But at the same time, they are so complexwe can’t just dive in. We need to slow down, reflect, and approach the situation in an unconventional way using innovative thinking.BUSINESS THINKING vs. INNOVATION THINKINGLogicalDeductive/Inductive reasoningRequires proof to proceedLooks for precedentsQuick to decideThere is right and wrongUncomfortable with ambiguityWants results4 2014 Center for Creative Leadership. All rights reserved.IntuitiveAbductive reasoningAsks what if?Unconstrained by the pastHolds multiple possibilitiesThere is always a better wayRelishes ambiguityWants meaning

Unlike business thinking, innovative thinking doesn’t rely onpast experience or known facts. It imagines a desired futurestate 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 allowsus to ask “what if?”Innovative thinking is a crucial addition to traditional business thinking. It allows you to bring new ideas and energy toyour role as leader and paves the way to bring more innovation into your organization.We want to emphasize that there is a critical leadership skillinvolved in managing the tension between these two seeming opposites. It is not about discarding the business thinking.It’s about acknowledging that both exist and that productive new products and services will result from finding thedelicate balance between the two approaches. It’s also aboutthe ability to switch between these two modes of thinking inorder to implement creative ideas and turn them into innovations. Leaders and organizations that do so will find a powerful antidote to complexity and an engine that can help themthrive—even during uncertain times.Key DefinitionsLeadershipA process by which an individual or group creates direction,alignment, and commitment fortheir shared work.Innovation LeadershipA process for creating direction,alignment, and commitmentneeded to create and implement something new thatadds value. 2014 Center for Creative Leadership. All rights reserved.5

Becoming More Innovative:It’s Not as Simple as It SeemsMany articles gloss over what it takes to become more innovative. It’s as if the writers believe creativity will beunleashed with a snap of the finger to facilitate a competitive advantage. But it’s not that simple.MYTH: Individual Creativity CanBe Mandated and Managed.A dear colleague at CCL, Dave Hills, drew a lovely cartoonto illustrate the myth of the mandate. It shows a seniorexecutive—presumably returning from the latest seminaron organizational innovation—demanding creativity froma group of bound and gagged people.Managers can’t mandate innovation. They do, though,need to lead it and “walk the talk.” Too many times we seeleaders make pronouncements of, “we need innovation!”and then proceed to quash new ideas. They often do sounconsciously through lack of knowledge about how eventhe smallest behaviors impede or encourage the creativityof others. We hope to address some of the more criticallyimportant behaviors in this paper.Integrity in supporting what you say the organizationneeds to do requires the extra work (and it is work) to fullyunderstand, consider, and evaluate innovative conceptsthat emerge and provide learning-oriented feedback.Without follow-through and role-modeling, the leader mayprovide direction, but create impediments to commitmentby failing to engage the intrinsic motivation, energy, andpassion of those led.Leaders can contribute to alignment by taking an activerole in creating systems that enable the work of innovation to be coordinated effectively. With only proclaimeddirection (which is not necessarily shared), the leader isall talk, there is no incentive for others in the organization to share in the direction or do what they are askedto do—nor are there systems to facilitate the trajectory ofinnovations.While modeling innovation at the top is useful and necessary, it’s only the starting point. Time and again we’ve satin presentations where the “innovation expert” fires upthe crowd by telling them innovation can’t happen without senior management support. The message: All it takesfor innovation to take root in the organization is for seniormanagement to hoist the innovation flag. In practice, thistypically looks like simply hosting a big kick-off event.Sometimes it is even followed by rolling training throughthe organization as quickly as possible, starting at the topand working down.Reflecting on what we’ve seen work, we’ve come to theconclusion that the opposite is a better strategy. Ratherthan a “push” mentality, we suggest leveraging seniormanagement sponsorship and working in small groups todevelop the tools, skills, and mindset necessary to driveinnovation. Then let the results speak for themselves—creating a hunger and a “pull” in the organization for moreinnovation development.6 2014 Center for Creative Leadership. All rights reserved.

MYTH: Simply Supporting Creative TalentCan Help You Navigate Complexity.When considering how to make your organization more innovative, you might be tempted todiscover and support creative heroes and to trainothers to be just like them. Our colleagues JohnMcGuire and Gary Rhodes (2009) in their bookTransforming Your Leadership Culture describe thisas an “independent” culture where heroes are valued and bold, independent action is highly prized,and the prevailing philosophy is that it’s better toask for forgiveness than permission.Imagine a company, though, where every big ideais pursued, regardless of how crazy or impractical.We know of at least one highly creative organization with a culture like this that continually burnsout talented managers who try to get a handleon the madness. Without appropriate structure,this kind of hero-driven, independent culture isa recipe for more complexity, not less, and in theworst case, anarchy.At the end of the day, it’s execution of the creative ideas that pays the bills. We also know fromthe research of people like Dr. Michael J. Kirton(2003) that those who prefer to challenge thestatus quo and generate radical ideas are typically not skilled at execution and implementation.They tend to be averse to structure or completelyignore it. Implementation is the skill of those attuned to shaping ideas, navigating organizationalsystems and structures, and transforming ideasinto useful processes, products, and services.When we interviewed Dr. Michael Lombardo, author, entrepreneur, and founder of Lominger Inc.,he talked about the need to give creative workto those with the skills and abilities to handleit—and then to buffer and manage them carefully,since by their very nature highly creative peoplecan be prickly and tough to work with.A 2011 IBM report on cultivating organizational creativity affirms the need to manage the tension between creativity and execution. The report states,“For many companies, creativity and adaptabilityare latent capabilities just waiting on the catalyststo energize them. Creative leadership requires harnessing the dynamic tensions between the dualities that define today’s complex business environment—to drive toward both creative disruption andoperational efficiency at the same time.”However, the IBM report fails to acknowledge thevalue and creative contribution of those moreadept at execution—choosing instead to focus thedefinition of “creative leadership” on those whoare gifted with coming up with radical ideas in thefirst place. Historical examples abound of successful partnerships between someone who challenged the status quo and someone who knewhow to interface with the establishment and getthings done. Where would Walt Disney have beenwithout Roy Disney? 2014 Center for Creative Leadership. All rights reserved.7

Beyond the “Innovation Silo”Often organizations try to confineinnovation to an R&D departmentor some other organizational silo.We fondly call this the “innovationsilo.” But it’s not the way to derivetrue value from innovation.A recent tour of a plate glass factory provided some important lessonsabout imbuing innovation throughout an organization. Manufacturingglass is a dangerous process involving huge hoppers of raw materialsheated to 3200 degrees Fahrenheit.The material eventually cools intofragile, razor-sharp, and potentiallydeadly final products.It was startling to hear there was nosafety department—yet the planthad a stellar safety record. Ratherthan having one person or teamaccountable for safety, everyone in8the organization was responsible.Even the most junior person in theoperation could point out risks andensure there were no injuries.Similarly, innovation initiatives willbe diluted when they are relegatedto one department or arena. Thesubtext is that innovation ONLYhappens in one department, removing the responsibility for innovationfrom others. When everybody is onthe lookout for opportunities thatcan build or replace current paradigms, an organization can thrive.Innovation can drive improvementsin the 10 types of innovation thatthe Doblin Group identified: profitmodel, network, structure, process, product performance, productsystem, service, channel, brand,and customer engagement (DoblinGroup, ND). 2014 Center for Creative Leadership. All rights reserved.

2014 Center for Creative Leadership. All rights reserved.9

Building Blocks for Innovation LeadershipEven in organizations lacking the leadershipand culture needed for creativity to flourish,individual heroes can still emerge. They pursue creative ideas and transform them intonew processes, products, or services—despitethe lack of support systems and in the face ofa hostile culture. But they are the exceptionand not the rule. Innovation Systems expertBob Rosenfeld (2006) describes these individuals as having the “secret grid” that enablesthem to navigate the organization that wouldotherwise reject their ideas.A more systematic approach is needed if yourorganization is to derive sustained, addedvalue from innovation. And innovation leadership is crucial. Organizational innovation consultant Jeffrey Phillips (2008) encourages organizations not to leave innovation to chanceby relying on the few savvy innovators.Effective innovation leadership has three essential building blocks:1. TOOLSETThe collection of tools and techniques used to generate new options, implement them in the organization,communicate direction, create alignment, and causecommitment.2. SKILLSETA framework that allows innovation leaders to use theirknowledge and abilities to accomplish their goals. Morethan tools and techniques, it requires facility, practice,and mastery of processes.3. MINDSETThe attitudes and resulting behaviors that allow thetools and skills to be effective. The mindset is the fundamental operating system of the creative thinker anddistinguishes those leaders who enable creative thinking and innovation from those who shut it down.10 2014 Center for Creative Leadership. All rights reserved.

Effective Innovative Thinking requires all three . . .Structured, focused, anddivergent approaches–but limited optionswhen stuck.Many creative solutions lackfocus and refinement or application to the actual goal.Potentially no implementation. Free-ranging mindthat operates within aframework Lack of clear direction meanslurching from ideas to implementation to question . . . Weak ability todeliberately pursueadditional approachesMINDSET Ad hoc approaches Like a cobbled-togethercar that lurches andsometimes runs Can get stuck withouta strategy to get outTOOLSETSKILLSET Like having anunderstanding of musicand knowledge of howto make it without anyinstruments Like a well-defined carthat is in trouble whenit breaks down as thereare no tools to get itmoving againCognitive understanding of how to think morecreatively without the ability to do so. Many approaches that don’t seem to work Like having a nice car but no gasoline 2014 Center for Creative Leadership. All rights reserved.11

Each of these three important components of innovation leadership is explored in greater detail below.Innovation Leadership ToolsetIn our experience, most people interested in promoting innovation look first to tools and techniques.An effective toolset can be a critical part of driving innovation in an organization, so it should be nosurprise that there are literally hundreds of books on the topic. Here are a few tools and techniqueswe’ve culled from some of those sources that we believe can be particularly helpful to an organization’sinnovation efforts:PrototypingOne of the most significant factors keeping organizations from innovating is the fear that hugeinvestments in R&D, marketing, and more are putat risk by a radical new product or service. There isa mindset that a new product or service has to befully working before it meets the cold light of day.Design companies like Continuum, whose breadand butter is innovation, have shown that the riskscan be substantially minimized through a rapidprototyping process, beginning with the simplestmockup of the new product or service. Using theseearly prototypes, initial tests are conducted withinthe organization, serving to integrate various ideasabout the new product or service and to socialize itthrough a kind of peer review process.Rapid prototyping also can drive an innovationmindset. The creation of simple prototypes is a vehicle for continuous learning as it moves the organization incrementally towards the finished productor service with associated incremental investment.More refined prototypes developed later in theprocess become a way of engaging potential clients,getting their feedback, and testing how the newproduct or service will be marketed. In some caseswhere there is a strong relationship and a clearunderstanding that they are only interacting with aprototype, clients might be engaged even earlier—providing valuable feedback at a point in time whenthe costs of making changes are minimal.12 2014 Center for Creative Leadership. All rights reserved.We can’t emphasize enough how simple earlyprototypes need to be and their value in decreasing risk while creating energy and learning. Theinitial prototype might involve a narrated PowerPoint presentation or a mockup created from papersketches and found objects. One company we knowprototypes the designs for new educational experiences by having each designer participate in theexperience as if it were already fully designed andrunning. In this way they can detect whether theexperience is flowing as intended, pose questionsthat a typical client might pose, and catch detailsthey might have otherwise missed.BrainstormingPerhaps the best known and most misunderstoodinnovation technique is brainstorming—the structured thinking process created by advertisingexecutive Alex Osborn. While many people believebrainstorming simply involves sitting around atable to suggest and criticize ideas, the practice ofbrainstorming is more formalized. Structured brainstorming requires a facilitator to lead the thinkingprocess and to keep the group accountable to aspecific set of guidelines. Effective brainstormingfacilitators alternate between individual reflectionand group dialogue to ensure a proper balance ofbuilding, reflecting, and understanding ideas. Inthat way, the group can generate ideas that aremuch more than the sum of their parts.

Mind MappingAnother classic innovation tool is mind mapping.Rather than capturing a linear flow of words, theindividual or group captures data, challenges,ideas, solutions, action steps, etc. in both wordsand pictures. They indicate the relationshipamong the elements by using a series of branches and links.connections.” It requires the thinker to take astimulus—like a random object or picture thatis unrelated to the challenge—and ask, “WhenI look at this object/picture, what ideas do Iget for solving the challenge?” The philosopherArthur Koestler (1964) referred to this as “bisociation.” It is a premise that underscores manycreative thinking techniques.EthnographyPraise FirstThis research technique is especially useful ingaining customer input that can help to drivethe innovation process. Researchers go beyondmerely asking questions and instead watchcustomers interact with the product (or service)in their own environment to see what works andwhat doesn’t. It’s a great way to surface opportunities for innovation that the customer mightnot be able to articulate due to lack of awareness fostered by familiarity. In the words of LeeIacocca, “Consumers never told us they wanted amini-van.”Forced ConnectionsGreat ideas frequently combine two things thatwere previously unconnected. A deliberate technique for making this happen is called “forcedProductively evaluating ideas can be just asimportant as generating ideas. Praise First is anaffirmative judgment technique that:Looks for what is good about the idea andthe good things that might result if the ideawere implemented.Lists the issues or limitations of the idea inthe form of a question (e.g. “How might wereduce the cost?”).Applies creative thinking to overcome theimportant limitations.The intention of this critical thinking technique isnot to “be nice,” but rather to give an idea a fairhearing and to develop and improve imperfectideas. 2014 Center for Creative Leadership. All rights reserved.13

Phrasing Problemsas QuestionsEducational pioneer John Dewey stated, “A problem welldefined is half-solved.” That’s because problem-solvingefforts are far more effective (and efficient) when we focuson the proper problem.One particularly effective technique for framing the challenge clearly is to phrase problems as questions. When welook at problems in the traditional way (e.g. “There’s nomoney in the budget”), we get stuck because our brainseeks evidence to support the assertion. However, whenwe phrase problems as questions starting with somethinglike, “How to . . . ” or “How might we . . . ” (e.g. “How toreduce the cost?” or “How might we reallocate the budget?”), then we naturally trigger our brains to start solvingthe problem, rather than reinforcing it. This subtle shift inlanguage invites solutions automatically.Reframing the ChallengeIn our experience, reframing is a vital innovation leadership skill. Many tools exist for reframing the challenge,including the “Ladder of Abstraction.” You ascend theladder by repeatedly asking “Why?” and transforming theanswer into a new statement of the challenge. You thenask “Why?” for each new statement. Each repetition leadsto an increasingly abstract framing of the challenge. Youdescend the ladder by asking, “What’s stopping you fromsolving the problem?” Again you transform each answerinto a new statement, with each repetition leading to amore concrete and actionable step.Other reframing tools include a focus on “Values-Aspiration-Experience,” which can be useful when the challengeyou are wrestling involves a product or client service. Youask what the client values and aspires to, and then reframethe answer as a new experience for the client. Leverageparadoxes within the challenge using “both/and” ratherthan “either/or” thinking.Innovation Leadership SkillsetWhen creating shared direction, alignment, and commitment, everyone has a role—from individualcontributor to CEO. While there is a general skillset for innovation leadership that applies across an organization (such as managing the tension between new ideas and existing “cash cows”), specific innovationleadership skills are called into play at each level, including:For Individual Contributors: Knowing howto generate novel solutions and approaches individually, understanding how to participate on aninnovation team with others unlike themselves andfinding sources of inspiration for new approaches.For First-Level Managers: Knowing aboutand leading group innovation processes, being aneffective team leader and project manager, andfinessing resources from outside their unit.For Mid-Level Managers: Supporting andprotecting the innovation team from superiors andother parts of the organization, ensuring due diligence in building a case for grass roots innovationsand bridging groups that are working on similarchallenges to ensure constructive cooperation.For Managers of Functions: Managing con-flicting demands for resources, initiating strategic14 2014 Center for Creative Leadership. All rights reserved.and structural changes to accommodate promisinginnovations, playing a vital role in establishing aninnovation strategy that bridges “silos,” modelingbehavior and driving communication that sets thetone in support of innovation. Management of thepipeline of new products, processes, and services isalso a critical role for a very senior leader to ensurethe right mix of innovation bets.For Executive Leaders at the Top of theOrganization: Setting an innovation strategy forthe organization and fostering a culture of innovation—including modeling behaviors that promotea shift in the culture and communicating the visionover and over again so everyone knows that “new,different, and disruptive” ideas are supported at thetop of the organization. Executive leaders might alsowant to discover ways to get unfiltered conceptsthat haven’t been “de-risked” by the many layers ofmanagement in the organization.

These skillsets are supported by a set of threecompetencies that promote the creative process andcan help a leader create a climate for innovation:Personalizing is about bringing more of who youare to the work that you do and encouraging thoseyou lead to do likewise. It is about engagementand passion. We know from the work of TeresaAmabile (1983) that people are most creative whenthey are motivated primarily by the work itself andnot via external rewards—i.e. they are intrinsicallymotivated by and have a passion for the work theydo. Personalizing is ultimately about creating theenergy that leads to the shared commitment that isso necessary for innovation leadership.Imaging is about the use of metaphors, imagery,poetry and other tools to engage an innovativemindset, gain new perspectives, and reframe achallenge.Collaborative Inquiry is at the heart of innovationleadership. It involves engaging in dialogue to create shared direction, alignment, and commitment,and to propel innovations on a successful trajectory.The notion of collaborative inquiry challenges themyth of “the one big idea” or the “one great mind”behind an innovation. We recall doing a workshopwith a group of managers and pharmaceu

Introduction 2 Business Thinking vs. Innovation Thinking 4 Becoming More Innovative: It’s Not as Simple as It Seems 6