At a time when so many legacy businesses are being disrupted by fast-growing upstarts, it’s little surprise that Chief Executive’s selection committee vets CEO of the Year contenders for a proven ability to foster innovation.
“In today’s environment, you either innovate or you evaporate,” asserts Bob Nardelli, founder and CEO of XLR-8 and a longtime member of the CEO of the Year selection committee. “The rate of disintermediation taking place today is unparalleled, so CEOs must figure out how to be innovative not only in the products and services they offer, but more broadly in things like the culture they’re creating, the succession process and cybersecurity practices.”
Innovation is also inherently risky, demanding that business leaders hurl considerable time and resources at goals that are far from certain. To be a champion of innovation, CEOs leading the charge must be prepared to face down critics when the path to innovation hits a detour, says Nardelli, who cites two recent CEOs of the Year as exemplifying this ability to persevere in the face of adversity:
The Walt Disney Company’s Bob Iger (2014): Rather than rest on the laurels of the iconic brand he inherited, Iger transformed the company through bold acquisitions, snapping up Pixar Animation Studios and Marvel Entertainment and successfully monetizing them. “There were a lot of naysayers suggesting he might have overpaid for Marvel, but in retrospect it was a brilliant idea of innovation to bring that portfolio of character and story lines that he has been able to monetize significantly over the past several years,” notes Nardelli.
Boeing’s Jim McNerney (2015): Stepping into a company whose reputation had been dinged by military-procurement scandals, McNerney set things straight, then made a courageous bet on building a jetliner that would revolutionize the industry. “He ran into a bump on the lithium battery, but stood tall, took on responsibility and fixed it as opposed to folding the tent and walking away,” says Nardelli, who praised McNerney for incorporating state-of-the-art materials and technology in the 787’s design and for adopting component manufacturing to speed delivery. “Sometimes leaders who [pursue innovation] are criticized for making a mistake, but the important thing is that they never make the biggest mistake of all—which is to do nothing.”
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Courage: One of 11 CEO Leadership Qualities