Millions of dollars spent on R&D and still no profitable products! Vast resources and state-of-art technology are poured into R&D and yet the pipeline of innovation runs dry. Company after company experiences this familiar trauma. Why? The answer is simple but difficult to discern. Leadership is the make or break factor in innovation, not technology or spend.

This is rather difficult to digest for most entrepreneurs and CEOs. That’s because the accountability for innovation rests directly and entirely on the leaders. This is one area that cannot be outsourced; it has to be nourished and germinated by the context, culture and practice of leadership. So, let’s begin at the beginning. What is leadership? My easy-to-understand and all encompassing definition is as follows: leadership is ensuring the consistent and sustainable delivery of results.

Implicit in this definition are :

• Ensuring results under all conditions (even in the most difficult of circumstances a leader is accountable for results); therefore leaders are guarantors of results.
• Merely a flash in the pan is not sufficient; leaders have to make sure that month after month, quarter after quarter, year after year the results are achieved; consistency of results is mandatory for leaders
• Consistency can only be achieved if the context for results is built and nurtured; that means creating an environment in which the focus on delivery is maintained; this includes culture creation, development of people , design and implementation of systems and processes, organization design and change management Very briefly, the term, “results” is used here within a very specific meaning : results are an ethical outcome subject to the adherence to specificity, measure-ability, a binary analysis of “achieved or not”, time-defined and challenging. In other words, a result is a result if only if the foregoing conditions are satisfied.Therefore, the territory of leadership is to guarantee consistent results in a sustainable organizational setting. What does this mean?
• Firstly, the leader must understand and master the dynamics of human interactions, not just the intricacies of products, markets, margins and technologies. Too many CEOs today are dominated by highly evolved leftbrain capabilities to the detriment of their right-brain development. They have powerful quantitative, analytical and decision making abilities; but many times they see people only as faceless resources that need to be deployed in pursuit of a result. Consequently, their interactions are mostly opportunistic; so its not
  surprising that they have no feel or connect with people. The first requirement for ownership and motivation is that people must feel that they have a relationship with the boss; they must know that they are not merely cogs in the wheel and that their feelings, aspirations and concerns as human beings are recognized and respected by the leaders.
• Secondly, creating a culture of empowerment is arguably the most important responsibility of a leader. This means encouraging people to think freely, articulate their ideas and points of view and act boldly without fear of rejection or victimization. Unfortunately, many CEOs specialize in just the opposite! They shoot the messenger without taking the time and effort to understand the message and its implications. A culture of fear, reticence and reluctance to share is created. People drop creative approaches, work in silos and stick to established modes of thinking, behavior and practices. They choose to remain within the safety of the status quo or indeed their silos. Why rock the boat if you can be flung overboard? In such an environment, the results will start to peter out sooner than later.
• Thirdly, organizations must become vehicles for people to reach their personal and professional destinations. Every human being must know that the organization he dedicates himself to will in turn furnish him with psychic and monetary rewards that enable him to build his self worth and status in family and society. One-way traffic never works over time, in either direction, in almost any area of life! Therefore, career development plans, compensation programs and personal growth (including health and well being) must all be customized for every individual subject to some over-arching people policies. For example, while it is inevitable for some sort of hierarchical uniformity to be implemented, there is still potential for person-based customization; within an overall compensation that is comparable for grades, individual components can be tailor-made for individuals. So, if the organization enables the person to achieve his personal aspirations the sustainability of results will undoubtedly be greatly enhanced. People will then be engaged and motivated to focus on results all the time without distractions, de-motivation or doubts.

Flower beds must be fertile, nourishing and free from weeds and pests if tender, fragile flower buds are to blossom. Similarly, the organization must be a positive environment in which ideas can bloom into innovation. This is the context in which innovation needs to be approached.

Leadership is therefore the primary requirement for idea generation. That is because leadership creates a risk-free environment for the airing and pursuit of ideas. Encouragement, empowerment, acceptance, respect, affection, serenity, harmony and comfort (not just physical but equally, psychological) are hygiene factors for idea generation. Maximizing the number of ideas is vital because only a fraction of the total number of ideas generated can fructify into innovation. So if the culture does not permit freedom to generate ideas the prospects for innovation are bleak indeed. Hardly any flowers bloom in the forbidding environment of a desert!

Having created an environment in which ideas can spring forth in large numbers, leadership must be watchful on the next priority. This is to separate idea evaluation from idea generation both in terms of time and space. Assessing an idea for suitability must be decoupled from the generation phase. If both are telescoped together the result will be a choking of the number of ideas being generated. Only if a size-able number of ideas are selected for evaluation and development will concrete products and services emerge from the innovation funnel.

The creation of such an innovation-friendly environment is too important for a leader to leave to chance. While undoubtedly his attention has to be fixed on the strategic, operational and profit parameters, he does need to bestow a significant percentage of his personal time (I would say easily about 25%) and energy to set standards, systems and policies that create a culture and context for the idea-innovation funnel to prosper. This also entails a policing aspect. The leader must demonstrate with transparency and in advance that behavior that is contra and damaging to this culture are unacceptable and non-negotiable. When such instances arise he must immediately initiate the pre-defined consequences for such behavior; these could range from reprimands to suspensions, benching and even dismissal. Maintaining and protecting the context for innovation is that important! It is a strategic priority of the highest importance because the organization’s survivability depends on mapping the rapidly changing needs of the market and filling them profitably with new products and services. And all that is inexorably tied to innovation.

You can throw all the money you want at R&D but every penny will simply roll down the drain if the leader cannot create and safeguard the context that spurs innovation. Leadership therefore is the source of innovation!

By V.K. Madhav Mohan
Published in: Asian Management Review (July – September 2013)
Leadership Causes Innovation