Leading For Innovation And

Organizing For Results

by Frances Hesselbein, Marshall Goldsmith, Iain Somerville, Editors

Jossey-Bass © 2002
299 pages

Focus Take-Aways
Leadership
• Peter F. Drucker defined innovation as, “Change that creates a new dimension of
Strategy
performance.”
Sales & Marketing
Corporate Finance
• Because all complex biological systems demonstrate the ability to adapt, the notion
Human Resources
that human beings are inherently resistant to change is probably false.
Technology • Trying to control everything is the surest way to stifle innovation.
Production & Logistics
• Diversity is an essential ingredient that contributes to innovation.
Small Business
Economics & Politics • Competition between business units tends to reduce people’s willingness to take risks.
Industries & Regions
• If a new idea has to compete with the established business units for resources,
Career Development
it will fail.
Personal Finance
Self Improvement • If a large parent risks stifling an enterprise, the enterprise should be spun off.
Ideas & Trends
• Every great idea requires a period of incubation, and it is often the CEO’s job to
protect the start-up until it is ready to go to market.
• Acquisitions can sometimes enhance innovation, but the strategy is risky.
• Innovation is a culture, not an event.

Rating (10 is best)

Overall Applicability Innovation Style

8 8 7 9

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 Relevance
What You Will Learn
In this Abstract you will learn: 1) The strategies of 23 management experts for cultivating
innovation; 2) Which practices often stifle organizational innovation, and 3) How to
establish a culture of innovation within your company.

Recommendation
Some 23 experts on management from academia and the private sector share their ideas
on how you can take that bloated bureaucracy and turn it into a nimble and innovative
machine. The book offers no quick fixes, as illustrated by the authors’ observation that
innovation is a culture, and not an event. Of special interest is the included list of
practices that squelch innovation. getAbstract.com recommends this book, which was
inspired by management science pioneer Peter F. Drucker, for executives and all devoted
students of the management arts.

Abstract
Adaptive Man
Famed management guru Peter F. Drucker defined innovation as, “Change that creates a
new dimension of performance.” That new dimension, of course, is the constant struggle
to produce faster and with more efficiency. Drucker goes even further, arguing that
businesses exist to accomplish two things only: To engage in marketing activities and to
“After so many
years of being
innovate. For today’s leaders, innovation is more important than marketing or any other
bossed around, of function. In a rapidly changing marketplace, the creative and innovative contributions of
working within each worker must be successfully tapped.
confining roles, of
unending reorgani-
zation, reengineer-
Given that humans are the product of evolution, a process of continual change and adaptation
ing, downsizing, over thousands of years, how is it that we have come to view ourselves as resistant to further
mergers, and evolution? Does it make any sense that out of some 50 million species, it is only ours that
power plays, most balks at the “c” word, change. Once people and their organizations are viewed as complex
people are
exhausted, cyni- and adaptive biological systems, their intractability seems suspect. In fact, it becomes much
cal, and focused easier to drive successful organizational change if you begin with the premise that people
only on self-pro- are creative and able to change as needed.
tection.”
The key is to stop treating people like machines that need to be reengineered. Instead,
you should rely on a more organic paradigm of natural adaptation. In other words, you
must gradually let go of the paradigm that has directed Western society and science for
“Life relies on
diversity to give
three hundred years: the mechanical view of the world and the people who populate it.
it the possibility
of adapting to Most approaches to organization involve mechanistic concepts. Treating people like
changing circum- inputs in a production process tends to de-motivate them, and in the current economy,
stances. If a
system becomes
you must have everyone working together. A few central concepts to keep in mind:
too homogeneous,
it becomes vulner- • Discern the meaning. What’s really important? Listen to what people keep talking
able to environ- about. Whatever they discuss repeatedly is what matters most.
mental shifts.”
• Rely on diversity. Be open to the thoughts of others, and allow differences of per-
spective to exist.
Leading for Innovation and Organizing for Results © Copyright 2002 getAbstract 2 of 5
 • Involve the people who care. Perhaps you will always have a few naysayers, but try
to involve everyone in the discussion of what lies ahead.
• Rely on the goodness of people. People will eventually come to understand that they
have a great deal to gain by working together effectively. Despite past difficulties,
“The best compa-
nies are prepared most people are still willing to work together to try to improve things.
for change
because they are Instilling An Innovative Culture
always preparing Is your company caught up in office politics among the coffee klatch crew who hang
for it.” around the break room? Is the word out that volunteering a new idea is a sure path to
career hara-kiri? Does the workplace seem like one long rut that gets a little bit deeper
every day? If the honest answer to any of these questions is yes, then the time has come
to inject creativity back into your culture. The key is kaleidoscope thinking.
Remember the devices you played with as a child that rearranged random patterns
into different structures until you found one pleasing to the eye? Organizations are
trying to reform themselves even as the external society and environmental conditions
are themselves mutating continually. The appropriate response is to learn to view
“According to
things through a kaleidoscope. You must conceive of possibilities that lie outside the
major thinkers like usual norms, embrace approaches that cut across traditional boundaries, and make new
Einstein, inno- connections and combinations based on existing interdependencies.
vative ideas tend
to be generated How To Stifle Innovation
when the brain is
operating in what Perhaps the way to best to understand innovation is to understand how to discourage it.
might be called Avoid these practices and you will be a lot closer to nurturing innovation:
penumbra mode:
defocused rather • Be suspicious of every new idea from below.
than concentrated
in the linear style • Add additional levels of bureaucratic oversight.
initially triggered • Encourage departments to compete in an environment of survival of the fittest.
by the nature of
language.” • Withhold your praise, but be outspoken in your criticisms.
• Discourage people from letting you know when something isn’t working.
• Keep your controlling hands on every aspect of your company.
• Make organizational decisions in secret. Later, spring them on everybody.
• Operate on a need-to-know basis.
• In the name of delegation, make lower level managers come up with the solutions.
• Assume you are always knowledgeable and right, because you run the business.

Avoiding Convention Wisdom

“To support inno-
vation, the culture If you always do what you’ve always done, you’ll always get what you’ve always gotten.
must encourage In other words, to be more innovative you have to be willing to walk the path less
fast approvals, traveled. Some unconventional approaches to becoming more creative:
open communica-
tions, cooperation • Downplay individual accountability. Yes, this flies in the face of traditional manage-
instead of combat
across internal ment practice. The rise and fall of the quality assurance movement suggests that there
units, tolerance for is more to productivity than numbers, statistics, monitoring and measurement. For one
uncertainty, and thing, there are the factors of team productivity and team measurement. The advantage
faith in people to
try new things.”
of measuring units and teams is that you focus more on process than personalities.
• Discourage intra-company competition. Internal competition has become a routine
part of corporate life. Performance awards, for example, commonly pit employees
against either other. These structures make it more difficult to work across organiza-
Leading for Innovation and Organizing for Results © Copyright 2002 getAbstract 3 of 5
 tional boundaries, or silos. Such structures take on a reality of their own when they
are used as the basis of rewards.
• Foster the courage to be different. Allow for, and encourage, diversity. It takes a lot
“It’s a self-reinforc-
of courage to buck the conventional management thinking.
ing cycle; those
already successful Helping Your Organization Cope
at change create The nerve-wracking thing about the increasing pace of change is that most managers
the circumstances
that make it easier weren’t very good at promoting innovation when things used to move a lot slower. For
for people to example, it is interesting to note that none of the minicomputer companies — Digital,
sense the need for Data General or Wang — succeeded in developing a competitive position in the personal
the next changes,
because they have
computer market. When a manager delegates a task, the first thing she asks is who has
opened minds and the skills needed to accomplish it. Only rarely, however, do managers ask whether their
broken through organizations are well suited to meet the changes that wait ahead. There are several ways
walls already.” to equip your company with the tools it will need to respond to change:
• Plan for Disruptions. Sustaining technologies involve an improvement in an exist-
ing product or process; disruptive innovations, on the other hand, bring to market
entirely new systems or methods that overturn the old way of doing things. For
example, of the 116 technologies developed between 1975 and 1995 related to com-
puter disk drives, 111 of them were sustaining technologies that offered primarily
incremental improvements. Only a few advances represented discontinuous leaps
forward. You must determine how responsive your organization is to disruptive inno-
vation. This can be achieved by acquiring a company that has capabilities closely
“Ironically, many matching the new challenge; changing the processes and values of your organiza-
companies have tion or by spinning off an independent organization and developing within it the new
spent a fortune
building intranets
processes and values needed to solve the problem.
and other formal • Acquisitions. The record of acquiring a company to assist with change is inconsistent
knowledge-shar-
ing structures and at best. You are presumably acquiring the company because its focus, culture and
systems that they skill sets differ from your own; and yet you seek to blend it with your current opera-
then undermine by tions to make them more competitive. If the acquired company has a uniquely effec-
developing cul-
tures of internal
tive culture, they will likely resist efforts to absorb them into the larger organization.
competition.” If, on the other hand, the company’s resources were the motive behind the acquisi-
tion, the deal is more likely to achieve its purpose.
• Internal Change. This is the homegrown approach to changing your corporate para-
digm. The track record in this regard is spotty as well. If you simply throw more
people and money at a problem, without redesigning processes or their underlying
values, not much will change. One vehicle you can use to change the actual infra-
structure of your company is the heavyweight team. IBM, Medtronic, and Eli Lilly
are a few companies who have tried this method. Giving a group new powers that cut
across the traditional silos can invoke change.

“History is full of
• Spin offs. You need to spin off part of an organization when the parent organiza-
now defunct com- tion’s values would impede the division’s progress. Perhaps the cost structure, busi-
panies that were ness model, or bureaucratic approach is so different from what the market requires
the early innova-
that the parent company would inevitably commit infanticide. How separate is sepa-
tive leaders in their
fields.” rate? Well, the essential condition is that the new enterprise should not have to com-
pete with the established enterprise for resources. Only direct leadership from the
top — the CEO’s office — can protect a start-up and insure that it receives the nec-
essary resources.
Leading for Innovation and Organizing for Results © Copyright 2002 getAbstract 4 of 5
 Toward An Innovation Protocol
If you want to lead your organization into innovation, you need an innovation protocol.
The protocol suggests how best to respond to priorities as they arise. The critical premise
is that innovation is a culture rather than an event. Without the proper culture, innovation
will never occur. Consider the following components of innovation:
“We crave leader-
ship like children
lost in the wilder-
• Idea generation. Some ideas flow from management’s examination of the market-
ness, convinced place and the recognition of a gap or hole in existing customer needs or expectations.
that if only the This is outside-in innovation. Sometimes customers actually demand or request an
great hero will additional service or product, perhaps through a focus group, and this more proactive
appear, all our
problems will mag- circumstance is called customer-pulled innovation. In either situation, however, new
ically disappear.” ideas are the critical resource.
• Impact. It’s not enough to have a new idea. A new idea must have an actual impact.
To determine impact, analyze its strategic fit with your current business units, the
potential value and market, the firm’s ability to withstand competition in the new
endeavor and to differentiate itself, and the degree to which employees are likely, or
unlikely, to support it.
• Incubation. Even an idea with impact will die on the vine unless carefully watered and
cared for. Every great idea must have an incubation period before it is ready for harvest.
The incubation protocol requires an investment, so you must ask whether your organi-
“The surefire and zation is willing to support an investment that, like any other, may not be rewarded.
ultimate result of
birth will be death, • Integration. Once you have an innovation, it is necessary to integrate it into the
but the great
uncertainty during already established ideas of old. New services and products must both complement
a lifetime is how and overtake the established ways.
quickly death will
follow birth.” • Improvement. It’s not enough to innovate; innovation itself must be subject to
improvement. In other words, once you design a better mousetrap, you must continue
to perfect the new design until it achieves its maximum potential.
By developing an innovation protocol for your company, you have created an environment
more likely to nurture innovation.

About The Author

Frances Hesselbein is chairman of the board of the Peter F. Drucker Foundation for
Nonprofit Management. She is the former CEO of Girl Scouts of the U.S.A. Marshall
Goldsmith is a founding director of the Financial Times Knowledge Dialogue, a
coaching network that connects executives with thought leaders around the world. Iain
Somerville is managing partner of Somerville & Associates, and former managing
partner with Accenture.

Buzz-Words
Customer-pulled innovation / Innovative protocol / Outside-in innovation / Team
measurements / Sustaining technologies / Disruptive technologies

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