Innovation and leadership are closely related. They are coalesced and mutual. Ernst & Young 2010 Connecting Innovation to Profit report says ‘We assume that 50% of revenue in 5 years time for more successful companies must come from sources that do not exist today’. This is a clear indication of how innovation is already transforming the business landscape of today and the years to come.
Very often business leaders are focused on the immediate results. They want immediate solutions that will give the results for the current quarter. Most of their efforts, time and energy are spent on achieving short-term goals and will become their vision and focus. This is bad for innovation.
Innovations require long-term outlook. It goes beyond the quarter-to-quarter focus. Leaders have a vision for change. Their vision is meant to be long term. We cannot expect a team to be innovative if they do not know where they are headed. Innovation must have a purpose. To be an effective leader for innovation we need broad vision and narrow focus.
In most cases founding CEOs have the broad vision and narrow focus. Most founding CEOs of an organization have clarity on where the organization is headed. They also know where they need to apply their focus. But on the other hand the hired CEOs tend to focus only on producing the results what the board dictates. They are caught up in the matters affecting the current profitability and hence they ignore the future they no longer feel certain about.
Founding CEOs tend to be more visionary. They can plan for the next twenty years, because they are not likely to leave their company. They can conceive risks and they have long-term vision and commitment to innovation. Innovation takes time. The cycle of innovation is longer. In some instances it will exceed a hired CEOs term. If a successor could carry on the legacy, then it’s more than manageable beyond a term. Bottom line the hired CEOs often lack the vision as much as the founding CEOs. Former Google CEO Eric Schmidt is an exception as non-founding CEO, who could actually maximize the original product cycle of Google including Android and Google Apps. He could succeed because he worked closely with the founders. Their working style showed that they worked like they had a broad vision and narrow focus strategy.
One of the key research observations by Andreessen Horowitz, a venture capitalist firm in Menlo Park California is that: “Professional CEOs are effective at maximizing, but not finding,product cycles. Conversely, founding CEOs are excellent at finding, but not maximizing,product cycles.” One prime example would be Steve Jobs return to Apple. The CEO who preceded Steve Jobs, Gil Amelio, a non founding CEO of Apple was focused on creating an ecosystem of Mac cloners who would provide the commodity hardware complement to Apple’s famous Operating System. The conventional wisdom was to separate operating system from the hardware. Upon Steve Jobs return to Apple, he challenged the conventional thought of horizontal strategy and decided to go vertical with new product cycles like iLife, iWork, iStore and iPad.
Innovation is a serious agenda. Those who envision innovation as a tactic tend to see it as a short-term agenda. Seeing innovation as a long-term strategy serves better for sustainable growth. You can’t afford to stop innovating in a high volatile market. It’s never ending. To sharpen the competitive edge, to fuel new industries, to exploit new markets and to develop new products and services, you need innovation to be a part of the long-term vision and the short-term focus.