How Can Leaders Promote Innovation?

The Finnish mobile handset company Nokia was once a leader in the mobile handset industry but had to change its business model when the transition to window-based mobile handsets with Microsoft failed. The transition had been necessitated after they suffered a defeat in the marketplace. The company eventually decided to sell a handset business to Microsoft. Nokia reimagined itself, and today, Nokia is a global digital infrastructure provider. How can leaders promote innovation? Leaders can use innovation to grow their organizations. Many companies make mistakes, but good companies react and recover.

Innovation is sparked by imagination, and all humans possess this unique skill. It is hard to describe it accurately like a lot of things that we do intuitively. The fact that it is not codified makes it harder to harness it. The process of innovation can be laborious and difficult for most organizations, and CEOs are generally frustrated with the ability of their organizations to reimagine themselves.

Innovations require both quantitative and qualitative research. How can leaders promote innovation? Without reimagining themselves, the performance and the growth potential tend to decline over time. Every time an organization doubles in size or scale, it’s potential for future (vitality) growth declines by three percentage points.

Large corporations rely on yesterday’s productive innovation to remain relevant, but not necessarily renewing that legacy. The problem is you can never be a leader if you keep doing that, and that is what we seek to understand. It is easy to become a leader in your industry, but what got you there may not be enough to keep you at the top. To remain at the peak, corporations need to reinvent, and the question we seek to answer is, how can they do it systematically?

Over time, innovation has been misperceived to be an individual act, momentary act, or streak of divine inspiration. This is a hangover from the romantic era. It is not only owned by specific creative individuals like Steve Jobs or the fallacy of the Eureka moment. In line with that misconception is the notion that this probably can’t be managed.

How can leaders promote innovation? It is ironic that corporations are able to deal with complex aspects of human affairs in consumer psychology and HR management. Of course, so why not be a little bit more systematic about innovation? However, in order to fully systematize they have to first come up with innovative ideas.

You need to put some kind of a structure around innovation, which is something that’s organic and hard to contain. It starts with idea generation; where do ideas come from? Innovation all starts with surprise, and surprise comes in different flavors. There are occasions when innovation happens by accident; when they were trying to do something and something else happened.

The more the corporations grow, the more they become internally facing, and you don’t notice those small changes until they become big changes, sort of cascades. Corporations should seek the reason to reimagine what we call seduction. External orientation is one aspect of that, I think, looking beyond the averages and aggregates is another one.

We may look at the world and say on average, the customers love our product, but if you don’t notice the first one or five who don’t, then eventually the average changes, but by then it’s too late. The deviation doesn’t tell you what to do. It is just a trigger and does not tell you what to think. We must be proactive in going further to reflect and investigate what the divergence might mean, and that’s constructive action in the sense that the reality is not inevitable.

Corporations find it difficult to entertain thoughts that go against their current business model. It’s easy to understand why because you’re stepping into the unfamiliar, you’re stepping into the risky; you’re sort of questioning the basis for your success. For most of us, the last time we were instructed and invigorated to exercise our imaginations was in kindergarten.

You can’t complete a podcast episode about imagination without talking about Lego. Lego has a history of lateral imaginative moves. Lego starts off as a carpentry company, then it becomes a wooden toymaker. Then they invest in a newfangled technology called plastic injection molding, and they become a maker of plastic toys, then they hit on the idea of a system of plays. You can’t do any of that unless you’re really used to taking seriously the process of systematizing imagination.

The usual thinking about innovation is that it’s individual, intellectual, momentary, and elusive. It’s not something that you could plan intentionally or systematically. How can leaders promote innovation? Part of cracking the system for innovation was to seriously question those assumptions. Imagination is a mental act triggered by nominalism surprises in the world, the real world. It is a crossover from reality to the mind.

And then in the next stage, called the collision, is where you collide the evolved idea for a new business with reality. The next step is to test the idea in the real world; testing it for validity. In the process you’re also generating new surprises; there are things about reality that you discover that are then fodder to reimagine further.

Then you have the social stage, where the idea has to leap from one mind to another; that often involves something you can point to, which is a prototype or an experiment in the real world. That’s how we communicate ideas because, of course, I can’t directly see the idea that you’re thinking about what philosophers call the intersubjectivity problem, we have to be sure that what I’m imagining is the same as what you’re imagining.

Then you have to restrict the codification to the essential elements because if you gave a complete instruction, manual, everything will just be overwhelming. You can see that ideas crossing into the mind crossing into reality crossing into other minds being embodied in the physical, external processes, and harnessing imagination is absolutely not solitary or entirely mental.


How companies can stay relevant

Many large corporations are engrossed in optimizing current performance. What are the leadership packs that could reignite this cycle of innovation? How can leaders promote innovation? One of the things that spark innovation is a crisis. Humans are fond of responding to necessity with great ingenuity. You can embrace a crisis or precipitate a crisis. One good way of precipitating the crisis is what we call the bad customer game, where on average, your customers may love you, but you’re interested in the marginal 1% or 2% that don’t and what they’re thinking. Most businesses may disagree with their colleagues easily or reject new ideas from their colleagues, but it’s rare not to respect the customer. That is one way of creating a sort of a sense of urgency, crisis, and hunger.


How can individuals contribute to the innovation of the organization?

We used to live in a world where corporations lasted longer than the people that worked in them. Perhaps our parents experienced a one company career and maybe one-function career or one function in one company. That’s now more or less, athletically impossible in many companies because we live longer than the companies that we work for; the pace of business is extreme. What can we do as individuals to contribute and give longevity to our own careers?

With the current trend, it is unrealistic to join a mature business with the idea of being a functional contributor for the entire length of your career. We have to be used to the skill of finding ideas, developing ideas, piloting ideas, building businesses, codifying businesses, and, yes, optimizing mature businesses. The traditional managerial role is still there. You partly have to ensure that you are building a career that has multiple stages of experience.


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