What does it take to become an innovative leader?

By John Cupples
June 10, 2005

How important is technology when it comes to innovation, and is there a direct correlation between innovation and the amount a company spends on technology?

For companies like IT vendors or telcos, technology is very vital and a great facilitator of innovation. In these companies, we would expect to see that sort of correlation. We also find that leaders in the most innovative companies create more effective work climates for their direct reports. An effective climate is mostly identified with clarity around standards, responsibilities and flexibility. When organisations use technology to help create this climate, I’d say a correlation between innovation and technology spending would be a fair hypothesis.

What key factors determine the success of an innovative leader? The first is strategy. Most of the outstanding performers that we’ve seen have "hard-wired" technology in their strategy planning. Second is organisation. Innovative leaders create roles that allow people to demonstrate and apply initiative and flexibility, and at the same time provide the time and resources to do that.

Last is a behavioural mindset. Leaders who encourage innovation are predominantly authoritative, providing strong vision and direction, and also participative, providing encouragement and commitment to new ideas and diversity.

They also deliberately build and foster harmony in the organisation, and are natural coaches, focusing on long-term individual development.

What is the CIO's role in innovation?
CIOs must acknowledge that they wear a "multifunctional hat" and understand the overall business perspective. A good CIO can champion innovation for both business growth and cost containment, provided that they maintain a high degree of personal awareness and objectivity.

Personal awareness is about empathy, adaptability and taking a balanced or neutral view. Being objective is to avoid siding with a particular solution or technology. CIOs have to remember that putting in a piece of technology, which may be a good source of information, does not necessarily provide the dialogue for managing people.

Cost-conscious companies have little funding for research and development or new technologies.

With such constraints, how can CIOs become more innovative?

Cost containment doesn’t mean just slash and burn. CIOs can help envision new possibilities and greater efficiencies that could lead to a faster turnaround. Innovation is about using different ways to fill market niches, finding greater end user value and reducing costs.

Even with little funding in R&D, companies can innovate and dramatically improve performance and restore or increase cash flow.

If CIOs find themselves facing resistance to investments in innovation, they could try to follow what I call the "challenge response scenarios." These are when CIOs handle arguments with more empathy and structure the discussion to focus on new possibilities. However, a risk-averse culture and having people who are unwilling to compromise could mean the death of a lot of innovation.

How do CIOs determine how much should be invested in an innovative idea?

First, compare the cost and return. The value of the proposition must be set against the cost of actually setting it up. The cost of doing nothing could also be assessed, particularly in situations where opportunities are lost to the competitors. So sometimes investment in innovative ideas could be assessed as the cost of staying in the business.

What can CIOs do to promote a more innovative culture within their organisation?

CIOs themselves have to have a clear understanding of the nature of innovation. CIOs must have an understanding of the nature of behavioural mindsets, and the way they can become enablers or inhibitors in the organisation.

From here, CIOs have to be prepared to encourage taking existing ideas and putting them into new contexts, such as those that connect to customers and clients.

Creating an innovative culture is best achieved using cross-functional teams. Organisations with a lot of silos usually find it hard to become innovative.

CIOs also have to develop their credibility as senior executives and add value to the business. In companies with a poor understanding of innovation, CIOs will usually struggle.

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