Marc Drucker
How Leaders F-Up Innovation
Chapter 3: Innovation Defined for Leadership
“Innovation is the ability to convert ideas into invoices.”
—Lewis Duncan, Former President Rollins College
It’s challenging to find a universal definition of innovation. An academic’s definition might consider innovation as the process of translating an idea or invention into a good or service that creates value or for which customers will pay. An outsider might say innovation means inventing new product. The definition for an innovation practitioner such as a designer, engineer, marketer, would likely include ideas such as addressing unmet needs, enhancing user experience, differentiating from competitors or providing a competitive advantage. Each of these definitions imply the deliberate application of information, imagination, and initiative towards the creation of something novel and tangible. These definitions can be applied to almost any business; products, services, technologies and are directly linked to the act of innovating itself.
For a leader, innovation is much more than the process of creating new and improved products or services, it entails taking on risk to their personal reputation, career trajectory and sense of self. For a role that is rewarded for delivering consistently improving results, innovation means taking on a process whose outcome is completely unknown. For leaders whose role is to reinforce the company goals, innovation means challenging the status quo.
"Insightful solutions that help innovation leaders succeed, no matter where or how they innovate."
Laura Sauter - Founder, Agency Bel
The challenge to define innovation is because it is fundamentally different from all other business functions. It operates not as a linear process with reliable, repeatable outcomes, but as a complex web of iterations, experiments, and occasional serendipitous discoveries. Unlike accounting, operations, or sales, which follow relatively predictable patterns forward and established best practices effective across companies and categories, innovation requires organizations to embrace ambiguity, tolerate failure, and constantly navigate the tension between exploitation of existing capabilities and exploration of new possibilities. This inherent unpredictability makes it difficult to slot innovation neatly into traditional organizational structures or measure it using conventional metrics. Its value often emerges through indirect paths and over longer time horizons than typical business cycles. Furthermore, innovation creates a unique cultural environment, encourages risk-taking, cross-pollination of ideas, and challenging established assumptions – elements that are at odds with the mindset that drives success in other business functions.
INNOVATION IS DIFFERENT FROM OTHER BUSINESS FUNCTIONS:
Innovation challenges leaders because it is fundamentally different from all other business functions in several ways. It focuses on creativity and novelty, requiring a degree of creativity and a willingness to explore all-new ideas, embracing negative feedback and the very real possibility failure. Innovation in antithetical to other business functions, like operations or finance, which are often focused on mitigating risks and maintaining stability. Innovation requires leaders take risks without any guarantee of the outcomes. Additionally, innovation is oriented towards long-term growth and sustainability rather than short-term profits, necessitating a different mindset and decision-making approach. Experimentation and testing new ideas in real-world settings are also key aspects of innovation, unlike the traditional research and analysis methods found in other business functions. Finally, innovation demands cross-functional collaboration between multiple teams or departments, such as research and development, marketing, and sales, to bring new ideas to market and ensure their success whereas most other functions operate independently or through an established hierarchy.
INNOVATION IS A LEADERSHIP CHALLENGE:
Leading innovation can be difficult for several reasons. Firstly, innovation involves exploring new ideas and uncharted territories, which can be uncertain and unpredictable, making it challenging to guide a team without a clear path forward. Secondly, innovation requires a learning mindset to take risks and being willing to fail as part of its process. Thirdly, innovation often necessitates significant changes to existing processes, products, or services, and resistance to change can impede the implementation of new ideas. Innovation also requires significant support, including time, money, and talent, capturing an outsized share of limited resources and often promises only a vague and distant ROI. Collaboration is also crucial for innovation, often requiring cooperation between multiple teams, departments, or even organizations, challenging unfamiliar ways of working and the management of competing priorities. Finally, fostering a culture of creativity, experimentation, and risk-taking is essential for innovation, but changing an existing culture, particularly in larger organizations with entrenched processes and mindsets, can be difficult if not impossible.
INNOVATION CARRIES CAREER RISKS:
Leading innovation requires taking on uniquely personal risks for several reasons. Firstly, conducting innovation means that failure is always a possibility. If an innovation project fails, it can reflect poorly on the person leading it and negatively impact their career prospects. Secondly, innovation often involves exploring new territories and uncharted waters, which can be uncertain and unpredictable. This uncertainty often requires leaders to lead in new ways, change their decisions, challenge their assumptions and entrust responsibilities to subordinates. Thirdly, innovation requires acceptance of change, and every organization’s natural resistance to change can be a significant barrier to overcome. This resistance can be directed at the person leading the innovation project. Furthermore, innovation generally demands an acceptance of creativity, experimentation, and risk-taking. If an organization resists the risk-taking inherent in innovation, it can be challenging for an individual to lead innovation projects to success.
Many leaders have lost their positions due to their innovation management, or lack thereof. For instance, Jeff Immelt at GE faced criticism for innovation without tangible results, creating what some called “success theater.” Jan Singer at Victoria’s Secret failed to align with customer feedback, missing critical market signals. Steve Ballmer at Microsoft oversaw a portfolio of poorly conceived products, making it difficult for the company to keep up with competitors like Apple and Google. Gary DiCamillo at Polaroid focused on maintaining the status quo rather than pushing for meaningful innovation. Mark Fields at Ford put too much emphasis on risky, long-term innovations while neglecting short-term, lower-risk projects. John Akers at IBM underinvested in proprietary innovations, leading to the commoditization of their products.
INNOVATION PROMISES THE GREATEST REWARDS:
Despite all the inherent risks and challenges, innovation offers leaders many rewards and opportunities. Most importantly it is the primary driver of growth and profitability. This unique reward underscores the significance of innovation in the business landscape. Innovation is essential for establishing and maintaining a competitive and profitable edge in the market. By leading innovation projects, executives can gain a deep understanding of their industry’s evolving dynamics, trends, and customer needs. This proactive approach helps companies stay ahead of competitors, anticipate market shifts, and adapt quickly to changing conditions. An innovative organization can better differentiate its offerings, capture new market opportunities, and retain customer loyalty.
Leading innovation initiatives allows leaders to develop deep expertise and insights into their industry. This knowledge not only enhances their strategic decision-making but also positions them as thought leaders. Successful innovation efforts increase credibility and influence, both within the organization and in the broader business community. This expertise can be leveraged to forge strategic partnerships, attract top talent, and secure investor confidence. Innovation is not just about creating new products or services; it’s about fostering a culture of continuous improvement and agility. By embedding innovation into the organizational DNA, leaders can ensure long-term sustainable growth.
At its core, innovation aims to uncover novel ways to enhance profitability. Although most innovation efforts are focused on new products and services, innovation is equally relevant to finding improvements that reduce costs, product innovations that open new revenue streams, or business model innovations that redefine industry standards. By continuously seeking ways to innovate, executives can identify and exploit new avenues for revenue generation and cost reduction, driving overall financial performance.
An innovative company is often seen as an exciting and dynamic place to work. This reputation helps attract top-tier talent eager to be part of a forward-thinking organization. Moreover, a culture of innovation keeps employees engaged and motivated, reducing turnover and fostering loyalty. Talented individuals are drawn to environments where they can contribute creatively and see the tangible impact of their work, further fueling the company’s innovation engine.
Innovation fosters resilience by enabling companies to manage uncertainty and change. In a rapidly changing business environment, the ability to innovate ensures that the organization can pivot in response to new challenges and opportunities. This adaptability is crucial for long-term success, allowing the company to navigate disruptions and emerge stronger.
Many of the leaders who have excelled in innovation are household names. Steve Jobs is renowned for his visionary leadership at Apple, where he drove the development of groundbreaking products like the iPhone, iPad, and MacBook. As CEO of Tesla and SpaceX, Elon Musk has been a pivotal figure in advancing electric vehicles and private space exploration. Jeff Bezos transformed Amazon from an online bookstore into a global e-commerce giant and cloud computing leader. Since becoming CEO in 2014, Satya Nadella has revitalized Microsoft by shifting its focus to cloud computing and artificial intelligence. As co-founder and CEO of Netflix, Reed Hastings has played a critical role in revolutionizing how people consume media. Following Steve Jobs, Tim Cook has continued Apple’s legacy of innovation by focusing on product expansion and sustainability. As CEO of IBM, Ginni Rometty spearheaded the company’s shift towards cloud computing and cognitive solutions. Mary Barra, the CEO of General Motors, has been instrumental in leading the company’s transition towards electric vehicles and autonomous technology. As CEO of Adobe, Shantanu Narayen has transformed the company from a software provider of boxed products to a leader in cloud-based solutions. As co-founder and CEO of Airbnb, Brian Chesky has transformed the hospitality industry.
While the journey of innovation is fraught with risks, the many rewards it offers makes it an indispensable pursuit for any leader. By embracing innovation, leaders can secure a competitive advantage, drive sustainable growth, enhance profitability, attract top talent, and build a resilient organization. The promise of these outcomes underscores why innovation remains at the heart of strategic business leadership.
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Sample Chapters
the obsession with being first to market
There is a misplaced obsession with being first to market. Instead of taking risk, venturing into the unknown, and absorbing the cost of pioneering, a fast-follower strategy often results in far more successful innovations at lower cost and far fewer unknowns – benefits that can far outweigh any delay in revenue growth. Fast followers learn from the experiences of pioneers, improving and refining their competitive offering based on the real-world market. This can lead to innovations that better meet customer needs, delight in ways a pioneering product does not and is more rapidly accepted since the first to market has educated the consumer and created demand. Companies like Apple and Amazon are examples of successful fast followers who enter markets after pioneers and leveraging insights to dominate their respective sectors.
acting too much, or not enough, like Steve Jobs
Here the book discusses the challenges leaders face when trying to emulate Steve Jobs’ innovation leadership style. While Jobs exemplified a relentless pursuit of perfection and an intuitive understanding of consumer desires, leaders must recognize who he was and was not, and how the unique context in which he operated helped shape his success. The chapter underscores the importance of finding a balance between being engaged in the innovation process – like Jobs’ hands-on involvement – and allowing teams the autonomy to create innovate with a focus on goal setting and performance – like Jobs’ ‘reality distortion field’. Further, it considers that many innovation leaders unknowingly innovate for themselves, falling to internal biases that result in innovations that are ideal for the leader, but fail to meet actual user/consumer needs, wants or desires.
Leading like an innovator instead of a banker
This chapter argues that leaders should approach innovation more like bankers, focusing on enabling and guiding rather than being the primary idea generators. Many leaders mistakenly believe their role demands them to generate groundbreaking ideas. Instead, successful innovation leadership involves assessing risks, managing resources, and supporting team efforts to facilitate outcomes. By optimizing an innovation portfolio aligned with business strategy, leaders can effectively accelerate product launches and invest in the innovations most valuable to their business.