12.5. LEADING INNOVATIVE ORGANIZATIONS

"The old model was how do you get people to serve the organization's goals? Today we have to ask, 'How do you build organizations that merit the gifts of creativity and passion and initiative?' You cannot command those human capabilities. Imagination and commitment are things that people choose to bring to work every day—or not."

Gary Hamel (Barsh, 2008, pp. 27–28)

The challenge of balancing creativity and value creation faces the leadership of all organizations, even icons such as Bill Gates of Microsoft, Jeffrey Immelt of General Electric, George Buckley of 3M, and Antonio Perez of Eastman Kodak (Herbold, 2002; Brady, 2005; Hindo, 2007; Hamm and Symonds, 2007). This ongoing balancing act is experienced not only in R&D-based companies, but also in government and private labs as well as universities that are directing their research efforts toward innovation.

Ensuring that creativity and innovation become deep-seated organizational values implies that leaders communicate clearly the importance of innovation, the organization's broad objectives and measurements related to innovation, and the processes and resources that are in place to support it. They need to do so in a manner that spreads the opportunities and responsibility for innovation throughout the organization and, argues Gary Hamel, guides creative expression versus dictating it (Barsh, 2008). Anthony and colleagues (2008) recommend that senior management be directly engaged in the ongoing innovation process: for example, in idea screening and development, and in bringing in insight and opportunities from external sources. General Electric, for instance, includes innovation as part of the curriculum for senior managers (MacGregor, 2007).

Rewards and incentives should be aligned with organizational culture and reflect the organization's overall goals for innovation. While these can be monetary—cash bonuses and stock options, for example—other types of rewards may be of more value to people. For example, successful innovation might be rewarded via more professional growth—a promotion, time to pursue a project of special interest, or involvement in further commercialization via spin-offs (Davila et al., 2006). Public recognition may be awarded through a prize. Davila et al. (2006) recommend that rewards and incentives distinguish between incremental innovation—which is lower in risk, normally shorter term, in which performance measures are easier to delineate and measure—and radical innovation. In radical innovation, people need to be rewarded for risk taking regardless of success or failure, and share in the value generated through, for example, involvement in a spin-off or stock ownership.

Actions that support innovation can be surprisingly fundamental. Genentech's CEO drills down to the basics. "If you want an innovative environment, hire innovative people, listen to them tell you what they want, and do it." (MacGregor, 2007, p 54) And Intel's Andy Grove reminds us: "Look at how often you as a person in charge jumped out a head and gave your blessing to an idea that was truly different, or complimented the person who took that first step," says Grove (MacGregor, 2007, p 54). "Then, you're catalyzing change. And it costs nothing."