Home » Leadership & Strategy » Innovation » The CEO’s Role in Innovation

The CEO’s Role in Innovation

Can a leader personally drive new ideas? Yes.

With new technologies constantly threatening to upend old strategies and business disruptions occurring so frequently that Moore’s Law is beginning to feel like a snail’s pace, innovation has become an imperative for most CEOs. “It’s a word that I live and breathe,” said Jane Friedman, chief executive of HarperCollins Publishers.

Friedman made that remark at a roundtable discussion in New York sponsored by Chief Executive and IBM. She had just returned from an eye-opening meeting in Monterey, Calif., with the heads of Internet sites recently purchased by HarperCollins’ parent company, Newscorp. The purpose of the West Coast sessions was to figure out a way to integrate HarperCollins’ content with new channels of electronic distribution-ebooks, blogs and online serialization, for starters-that are completely rewriting the operating manual for book publishers, traditionally a Luddite industry.  That meeting, Friedman said, permanently altered her perspective.  “We know where our books are selling and where other people’s books are selling, and what’s working in trends,” she said. “What’s exciting me now is that I can only grow in two ways: through acquisitions-but there are very few publishing companies left-or new technology.  I’m very fortunate that in the last month my boss [Rupert Murdoch] has bought up four major Web sites. They need content. I have the content.”

About a dozen CEOs and their chief strategists attended the roundtable. The two groups broke into separate sessions to explore innovation from their individual perspectives. The camps were largely in agreement about their views of how innovation can be achieved, but there was a subtle but important difference in their descriptions of what part the CEO should play in fostering it.

Generally, the CEOs saw innovation as something they must encourage and even point in the right direction, but not necessarily manage too overtly. Chuck Knight, chairman emeritus of Emerson Electric, spoke about spending 60 percent of his time at planning sessions throughout his company, during which business units presented their ideas for fresh products and technologies that could beat the competition. In that way, Knight was able to “stay involved with the company” without actually directing day-to-day implementation of the new ideas.

In this view, a CEO creates a climate in which innovation can flourish and acts as a “cheerleader,” largely on the sidelines. “Innovating is natural for humans,” added Sunil Kumar, CEO of International Specialty Products, a chemical company. “So the CEO just needs to allow it.”

The strategists, by contrast, felt that the CEO’s role should be a bit more activist. David Butler, product portfolio director at Avaya, a leading telecommunications company, said chief executives had to create a chain of fiscal and performance responsibility involving innovation that they could directly oversee. “If there’s one thing that I could sum up about the CEO’s role in enforcing innovation, it’s assigning accountability, accountability that’s visible in fairly short steps,” Butler said. “The goals [should be] clearly defined and there [should be] a single point of accountability in delivering the expectation. By doing that, it bakes in innovation and the process of getting there into the organization as a whole as opposed to doing it as a sidebar.”

CEOs also must not be timid about innovation-either promoting it or making sure that it is being achieved. “CEOs can’t be comfortable with where we are, because competition is getting fiercer and fiercer,” said Ed Teplitz, executive vice president of Ethan Allen Retail. “The CEO cannot vacillate.”

But, Teplitz added, after CEOs have created pathways for innovation to blossom, they’re entitled to expect that strategists will deliver on the promise and on time. “It’s up to leadership to initiate the beginnings of change, and then it’s up to us and those below us to implement it,” he said. “Once we decide the direction, we need to come up with an implementation plan and just push it through.” His boss, Farooq Kathwari, said his view of his own role was to be the captain of the cricket team, standing on the field and participating directly in the game.

About jeffrey rothfeder