Tag Archives: Leadership

Understanding, Defining And Achieving Innovation

You may have heard the story of famous Wall Street banker J.P. Morgan and the shoeshine kid.  According to the story, Morgan was getting his shoes shined, and the shoeshine kid asked Morgan about the latest stock tip he heard. This made Morgan realize that something was very wrong, that if even the shoeshine kid was in the stock market, then everybody else was too and the market was seriously overbought.  He promptly sold all his holdings and was able to avoid the stock market crash a few weeks later.

I always liked this story and often share it with my consulting clients to make a point about either a market being overcrowded or a concept being overused.  In this instant, what made me think of it was a job posting for a junior position looking for people who are “experienced in innovation” and would “add new innovations to the organization.”  (I especially loved the new innovations idea.  Who wants old innovations anyway?)

It is really getting annoying to see the word “innovation” misused in places where it does not belong. Unfortunately,  innovationmania is all around us.  There are innovation workshops that almost guarantee that all participants will be great innovators at the end of the program.  Self styled “innovation consultants” are everywhere, and can apparently make entire companies innovative overnight.  The first ever Innovation Turkey Expo was held in Istanbul earlier this month, which was really an expo of inventions, but innovation sounds much cooler than mere invention.  Corporate executives talk to business TVs and magazines to announce that their firm is in the innovation business.  Even politicians are making an extra effort to attend events that have innovation in the title somewhere, such as the National Innovation Initiative, because, it is hip, it is cool and it makes one look like they are keeping up with the times.

But seriously, what is innovation?  In “Innovation Is… Hmm…“, we briefly talked about how most companies and their employees are clueless as to what it is and what it really means for their organization and that it is the leadership’s responsibility to define what innovation should mean to the organization in general and each employee in particular.

A useful first step to understand innovation is to look at its etymology:

innovation (n.) mid-15c., “restoration, renewal,” from L. innovationem (nom. innovatio), noun of action from pp. stem of innovare

innovate (v.) 1540s, “introduce as new,” from L. innovatus, pp. of innovare “to renew, restore; to change,” from in- “into” + novus “new” . Meaning “make changes in something established” is from 1590s.

So, etymologically speaking, innovation is taking something that already exists and turning it into something new by making changes. This definition is further elaborated in the 2005 edition of the Oslo Manual, a joint publication by OECD and Eurostat.  The Oslo Manual, taking a broad approach, defines innovation as follows:


The manual distinguishes innovations in four different areas: product, process, marketing and organization.  Definitions of innovation in these areas are fairly MECE (mutually exclusive, completely exhaustive.)




An organizational innovation is the implementation of a new organizational method in the firm’s business practices, workplace organization or external relations.”

The Oslo Manual also lists a number of changes that are NOT innovations.  I cannot help but be amused when I think about the many corporations and executives who call themselves innovative and brag about it all over the media, simply because they did one of these things below:

  • It is not an innovation to stop doing something, even if it improves a firm’s performance. Innovation is something new, not abandoning the old.  Example: an electronics manufacturer discontinuing a line of product.
  • The purchase of identical models of installed equipment, or minor extensions and updates to existing equipment, are not process innovations. This is not something new, it is simply more of the same.  Example: a steel mill expanding capacity by adding another furnace.
  • A change in the price of a product or in the productivity of a process as a simple result of changes in the price of factors of production is not an innovation. Example: a computer manufacturer can now produce the same model of laptop cheaper, because RAM prices have dropped.
  • Creation of a unique product in order to satisfy a specific demand by a specific customer is not a product innovation. It is another story of course, if the customized item displays attributes significantly different than previous products made by the firm.  Example: an automobile company builds a custom car for a wealthy customer.
  • Seasonal and other cyclical changes in design that are routine for the industry in general are neither product nor marketing innovations. Example: an apparel manufacturer switches from the summer line of products to the new fall line.
  • Trading of new or improved products is not a product innovation for a wholesaler, retailer or logistics firm, unless it is a new line of goods, not previously sold. Example: an electronics retailer starts selling the next generation LED TVs.

Another confusion I come across frequently is mistaking invention with innovation, such as the Innovation Expo mentioned earlier. The two are related, as  innovation refers to the successful implementation of something new, whereas invention refers directly to the creation of it. Not all inventions turn into innovations; if an invention is not economically feasible or practical, it will not be implemented, however novel or beneficial it may be.

Based on all of the above, here is my definition of innovation:

Innovation refers to an idea, method, system or product that;

  1. is new,
  2. has been successfully implemented,
  3. results in a net benefit.

Now that we have a better understanding and definition of innovation, next comes the question: how can a business achieve innovation and become an innovative company?

In Strategy Is… Hmm…(Part 2), we saw that businesses have three strategic resources: people, processes/information, and finances.  In the innovation context, the most important of the three is people.  With the right people, it is possible to upgrade the other two resources, and similar to strategic planning, the company can start thinking of innovation as part of the business – ongoing, habit and consistent – not as a “project” that has a start and a stop.

So, finding the right people is key.  Job postings looking for people “experienced in innovation” and would “add new innovations to the organization” is probably not the best way to go about it.  How a firm can find the “right” people is something that many have different opinions on.

Tony Golsby-Smith, founder and CEO of Second Road, a business design and transformation firm based in Sydney, Australia, thinks that the best way is to hire people with humanities backgrounds.  He criticizes the education system because it focuses on teaching science and business students to “control, predict, verify, guarantee, and test data”, instead of teaching students how to deal with ambiguity and the unknown.

According to Golsby-Smith, people with humanities backgrounds who studied topics like Shakespeare’s poetry, Da Vinci’s paintings, history of the Roman Empire or political philosophy, have learned to grasp and manage big concepts, as well as how to apply new ways of thinking to difficult and unconventional problems.



Communication and presentation. Liberal arts graduates are well-trained in writing and presenting, making them natural fits for marketing, training, and research. A focus on writing helps people develop persuasive arguments, and a background in performance gives people great presentation skills. And an understanding of history is indispensable if you want to understand the broader competitive arena and global markets.

Customer and employee satisfaction. To “get under the skin” of customers and employees to discover their real needs and concerns demands… you need keen powers of observation and psychology — the stuff of poets and novelists.”

Geil Browning,  founder of Emergenetics International, and the co-creator of  Emergenetics Profile, a psychometric thinking and behavioral workplace assessment tool, approaches the issue from a different angle.  In her article titled “You’re Wired To Be A Leader“, Browning talks about research that tells us that there are seven brain attributes—thinking and behavioral tendencies—people take advantage of to a greater or lesser extent, when faced with issues:

1. Analytical thinking is essential to making more objective, less biased decisions. This is the function that helps you look at existing research and data, examine options, and question what will or will not work.

2. Structural thinking ensures that you come up with a plan that is doable. It is the methodical, sequential process that helps maximize results, and minimize pitfalls.

3. Social thinking allows us to listen, build successful teams, relate to people, and develop and inspire others.

4. Conceptual thinking is right-brain, visionary thinking that jumpstarts innovation. Ideas that connect the dots and come out of left field can invigorate your organization.

5. Expressiveness is a behavior style you use to communicate your ideas. It affects how you relate to people and sets the course for the way you speak with others.

6. Assertiveness is a behavior style you use to put your ideas to work. An effective leader is assertive enough to make things happen, but not so assertive that others are stymied.

7. Flexibility is a behavior style you bring to the way you get things done. It determines not only your openness to other points of view, but also your ability to thrive in undefined (or very defined) situations.

More often than not, a company will not have a mix of employees in such a way that all of these brain types are adequately represented.  Most businesses tend to hire similar types of people, with similar thinking styles.  For innovation, an organization will need people with advanced “conceptual” type of thinking abilities, as Browning explains above.  These conceptual people will have different way of looking at things where they generate ideas, notice trends and data points others would miss, and tie them all together to come up with solutions that fit the big picture nicely.  They enjoy challenges and focus solutions at an idea level, but not at a process level.  They are not detail oriented, but if their ideas can be picked up by other people in the organization who ARE detail and process oriented, innovation will most likely occur.

Browning lists a number of useful interview questions to ask to identify strong innovators, but also cautions:

“If you want innovative ideas to surface in your company, it is your job to cultivate an atmosphere in which all types of creativity are valued. Before you hire your perfect candidate, make sure your organization is truly ready to hear new ideas.

One note of caution: look for competence, not just blue-sky thinking, because ultimately you need ideas that will benefit your bottom line. Experience with real world solutions is a bonus in any job candidate.”

Douglas Merrill, CEO and founder of ZestFinance, a Los Angeles-based financial services technology company, echoes Browning’s recommendations but articulates it in a very different way.  In his article “Why Hiring People Who Annoy You Helps You Innovate“, Merrill lists his three rules to follow when innovating an existing brand or starting something new:

Hire People Who Annoy You.  Research shows that diverse teams tend to come up with a wider variety of answers, and, thus, are more likely to find the surprising winning idea. The converse is also true: If you build a team that looks alike, thinks alike, and wears the same shoes (pardon the pun), you will get groupthink and generate only one answer, and hope it’s the right one.

Social psychology has taught us that we tend to like people who are similar to us, and the higher the similarity, the more likable the person. This suggests a hiring strategy–hire people who annoy you. As long as you’re ensuring they are smart, the people who annoy you represent the diversity you and your company require.

Don’t Copy, Remake. There is an entire cottage industry devoted to teaching you how to be innovative… They tell you what was done, not why it was done… Don’t copy the surface behavior–understand the goals, and do them in your context.

Don’t Create, Listen.  The purpose of innovation is not simply to build something new, but to win new customers, new markets, or new products. While you think you may know what they want, in reality, you don’t. Rather, you knew what customers wanted back when the company started, but now the only people who really know what customers want are the customers.

So how do you find out what the customers want? My advice would be to nix the focus groups. While they’re generally not representative of your actual customers, it’s also true that humans can’t describe what they don’t know… In many cases, you can see what customers want by watching their behavior.”

There is no reason to be confused or misdirected by all the hype about innovation.  Innovation is real and it happens every day, all around us. If we understand what innovation really is, and what it means for our business, then all it takes to achieve it is to have the determination to reshape our organization and hire the right people to lead the way.

To borrow from and paraphrase Shakespeare, be not afraid of innovation: some businesses are born innovative, some achieve innovation and others have innovation thrust upon them.  Does innovation lead to greatness?  I do not believe that it is sufficient, but it is very much necessary.

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A few months ago, I was talking to a friend of mine who is a high level executive of a global technology firm’s Middle East Region headquarters in Istanbul.  He complained to me that he had spent his entire weekend attending a startup marathon, trying to see if there were any promising teams with decent business plans.  He was upset that of the many teams that attended the event, only a handful had ideas that could be worth something.  Even those few would most likely not be successful or get any funding, because when the problems with their business plans were pointed out, they either became very defensive, reacting strongly to any recommendation or comment, or very passive aggressive, not arguing, but not really listening to suggestions, either.  For all his effort over the weekend, my friend came up empty handed, and was frustrated, mostly due to the attitude of the would-be-entrepreneurs.

Martin Zwilling’s article, 10 Top Reasons Why First-Time Entrepreneurs Fail, from the Entrepreneur Magazine, reminded me of my friend and his weekend. As the title suggests, Zwilling lists top ten mistakes made by entrepreneurs during their first couple of ventures.  Most of these mistakes are due to inexperience, are quite common, and would probably not be repeated after the first time.  Entrepreneurs, Zwilling suggests, should learn from other people’s mistakes rather live through them personally.  Sage advice, very similar to a favorite Confucius quote of mine:


The ten mistakes are very well explained in the article.  Here they are, plus my translations into investorese. Unfortunately,  they all lead to the same outcome:

  • No written plan
    poor planning = execution risk = low profits = bad investment
  • Slim or no revenue model
    = no revenue = no profits = bad investment
  • Limited business opportunities
    = no revenue = no profits = bad investment
  • Can’t execute
    = execution risk = low profits = bad investment
  • Too much competition
    = not enough revenue = low profits = bad investment
  • No intellectual property
    = easily replicated = too much competition = not enough revenue = low profits = bad investment
  • An inexperienced team
    = cannot execute = execution risk = low profits = bad investment
  • Underestimating resource requirements
    = poor planning = execution risk = low profits = bad investment
  • Not enough marketing
    = no revenue = no profits = bad investment
  • Giving in too early
    execution risk = low profits = bad investment

All that is a lot for an entrepreneur to watch out for. Luckily, Brin McCagg, co-Founder, President and COO of OneWire, in his VentureBeat article, boils it down to Five Lessons Experienced Entrepreneurs Have Learned, for the would-be-entrepreneurs like the ones my executive friend has encountered.  If they listen, learn, and internalize, they could avoid most of the ten mistakes:

  • Follow-through is essential.


  • Build an enthusiastic and passionate team.


  • Balance is critical.


  • It pays to think like an investor.


  • Listen and learn.


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Tweak Or Overhaul?

In Listen Up, Biz Leaders: It’s Time to Rethink EverythingFortune editor and columnist Geoff Colvin reminds us about the recent fates of former industry giants such as Motorola, BlackBerry and Kodak.  Colvin comments on the angst felt by many high level executives about the viability of the strategy, organization and business models of their organizations.  He then recommends a self-diagnostic of three questions to see where thing stand:

  • What is our core? Are we certain that our core business will hold up?
  • How is today’s unprecedented environment changing our customers and their behavior? Does that mean more or less demand for what we provide?
  • Is our industry being deeply restructured, and if so, how will it affect us? Are we experiencing a hiccup or an earthquake?

Every now and then the leadership of a company must raise its head, look around and make decisions that lead to change.  The correct amount of change, however, depends on the situation.  Sometimes a small shift of the steering wheel is enough, other times one must stop the car, get out, and look for an airplane going in the opposite direction.  There is no prescribed formula.  Only through rational analysis can the best courses of action be decided.

“Not every company needs to change its strategy, even in these tumultuous times. But every company needs to determine if its strategy requires an overhaul or just thoughtful tweaks.”

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Strategy Is… Hmm…(Part 2)

A new study of 163 CEOs, senior strategists and communications professionals, conducted by Forbes Insights and FD in conjunction with the Association for Strategic Planning and the Council of Public Relations Firms,  looks at corporate strategy development and implementation. Of special interest was the interdependence of strategy and communications in creating and executing a successful strategy.

Their Nr.1 key finding?

…While senior management does not have a common definition of what strategy is at the conceptual level, it does have a very clear definition of what strategy is not, as well as a very clear, pragmatic definition of what types of corporate initiatives are and are not strategic…

In Strategy Is… Hmm…, we talked about Chris McCall’s three fundamental questions about strategy:

  • What business are we in?
  • What business should we be in?
  • How do we get there?

So, if senior management does not have a common definition of strategy, that means they are not on the same page in regards to the three questions above. Am I the only one who finds this extremely disturbing?

Luckily, I am not.  Mitch Ellner, CEO of CNC Strategy Cloud Solutions, talks about this in his post  Strategic Planning – the “Strategy” of all 3 Resources.  With three resources, he means people, processes/information and finances.

“Businesses need to begin to look at all 3 strategic resources – people, processes, finances – to measure and thus manage against, and with begin to look at this as a part of the business – ongoing, habit and consistent – not as a “project” that has a start and stop. Strategic Planning, strategy, alignment, execution, et al. has no start and stop. It does have change.”

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Innovation Is… Hmm…

Innovation. It is the buzzword of the past few years, possibly the decade.  Everybody takes it seriously, everybody claims to know how to do it, yet only few companies around us can truly be characterized as an innovative company. Why is that?

Jorge Barba, Chief Strategist at Blu Maya, in Create Your Own Definition of Innovation, thinks that most companies do not have an internal consensus on what innovation means.  Nor is there a useful textbook definition that can universally be applied to any business.  It is the responsibility of the leadership to come up with a collective definition of what innovation means to the organization in general and each employee in particular. (Sounds familiar? Maybe you have read Strategy Is… Hmm…)





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Change Is Never Easy

Earlier, in The “Odd New Thing”: Social Media, we touched upon how executives treat social media as the something they do not really understand but feel the need to be part of.  And in Social Media Teams we discussed changes brought to the organization structure and the inner workings of a corporation by social media.

What is true for social media in particular is also true for new technologies and digital in general:  New, innovative ways of doing business force companies to undergo drastic changes in organizational structure, uses of technology, measures of success and resource allocation.  More than merely the way of doing business, the business mentality itself is becoming more customer-centric, more adaptive and less tolerant to mistakes.

Based on my observations of executives in Turkey, especially those of traditional companies, most react to these changes in one of the two extremes: apathy or obsession.  Some consider these changes to be something to be managed in a vacuum, to be handled by others, either someone within the organization or by an external consultant.  They do not really want to be involved, and as long as there are no problems, and it does not crowd their space, it is all good.

Others get really excited about all this transformation and want to become a part of it.  They spend a lot of unnecessary time and energy at the expense of other areas, driving their teams and colleagues crazy. Even though they do not understand the underlying strategy or the methods all that well, they want to “do it” anyway, albeit in a manic manner.

Martin Gill, an eBusiness and Channel Strategy Analyst at Forrester Research, talks about similar difficulties faced by eBusiness managers in Shooting Arrows At Eagles:

“Some visionary companies Burberry, Marks and Spencer are lucky enough to have CEOs who grasp the power of digital. These companies are embedding digital into every aspect of their operations and are collapsing the walls between “eBusiness” and the traditional store or branch chains.

But most organizations aren’t so well positioned. Many eBusiness leaders have a vision for agile commerce that isn’t shared or even understood by their senior management and are now finding that their primary mission is to drive transformational change across their companies from within their area of accountability — selling the vision upwards, sideways, and downwards and positioning themselves as cross-functional leaders.

This takes vision, great communication skills, and the courage of their convictions much like our pacifist revolutionaries. Change driven not from the top, but from small seeds.”

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Defining Leadership

Mike Myatt is a managing director at N2growth and the author of Leadership Matters – The CEO Survival Manual.  He complains about lack of a clear and commonly agreed upon definition for leadership and attempts to come up with the description of a “perfect leader” in A Leadership Job Description.  He draws the following conclusion, which I think is something that most people miss:

There is no perfect leader; only the right leader for a given situation. Great leaders have the innate ability to call on the right skills in a contextually and environmentally appropriate fashion. No single leader can possess every needed attribute. It’s not the traits you possess as a leader, but what you do with them that matters.”

Myatt then comes up with his own definition of leadership:

“Leadership is the professed desire and commitment to serve others by subordinating personal interests to the needs of those being led through effectively demonstrating the character, experience, humility, wisdom and discernment necessary to create the trust & influence to cause the right things, to happen for the right reasons, at the right times.”

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Do You Really Have A Strategy?

Freek Vermeulen is an Associate Professor of Strategic and International Management at the London Business School.  In So, You Think You Have A Strategy?, Vermeulen claims that, empirically speaking, nine out of ten strategy directors and CEOs do not really have a strategy for their organization.

“To be emphatically blunt: most companies and their top executives do not have a good rationale for doing the things they are doing and cannot explain coherently how their actions should lead to superior performance.”

Vermeulen lists five reasons why high level executives miss the most basic necessities of cogent and executable strategy:

  • Not really making choices: Strategy is about making choices; choices in terms of what you do and what you do not do.
  • Being stuck in the status quo: Everything in the strategy definition fits into what the company is already doing anyway.
  • No relationship to value creation: You need a good explanation why your chosen strategy is going to create value for the company.
  • Mistaking objectives with strategy: “We want to be number one or two in all the markets we operate in” is not a strategy.
  • Keeping it a secret: A strategy only becomes a strategy if people in the organization know about it and alter their behavior as a result of it.


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Organizational DNA

Neilson, Pasternack and Mendes, three management consultants with Booz Allen Hamilton, discuss what they call Organizational DNA, an organization’s unique traits in The Four Bases of Organizational DNA:

  • Structure: What do the organizational hierarchy and connections look like?
  • Decision Rights: Who decides what? Where are the boundaries?
  • Motivators: What objectives and incentives do people have? What are they encouraged to do?
  • Information: Who knows what? Who talks to whom? How?




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The Yin And Yang Of Innovation

Dorie Clark, CEO of Clark Strategic Communications, talks about how to encourage and foster innovation in the workplace and challenges innovators face in Why Innovative People Fail:


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