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Why Are CEOs Bipolar When It Comes To Innovation?

Posted by: Bruce Nussbaum on May 29, 2007

The next issue of Inside Innovation—IN5—will go online Wednesday night and the key theme is the tension between efficiency and innovation within corporate culture. To me, this is emerging as one of the great economic issues of our day.

Most managers are trained in B-Schools to focus on efficiency—wringing out costs and boosting quality with Six Sigma and other tools. But the cost to this is reduced risk. The goal is to cut variability. Of course, innovation requires risk—smart, intelligent, risk and more variability, not less. Very few CEOs and top managers understand this. Every fewer know how to do it. And only a tiny number of top execs know how to combine efficiency with innovation to run a global corporation. CEOs tend to be bipolar—they are either very good at efficiency or very good at innovation. Not both.

Check out How Symbol Got Its Mojo back from our last issue of IN. It begins the conversation that we continue with the upcoming issue of Inside Innovation on Wednesday.

Reader Comments

Shimon Shmueli

May 30, 2007 3:06 PM

Indeed the tension between efficiency and innovation is a big issue, but the root of the problem is not in a B-School (or D-School) education. You are correct in calling it "tension", and where there is tension the greatest possibility is for either side to win, but there is another, healthier, possibility: to find a point of balance somewhere on the continuum between the two. Balance is the ability to manage a product portfolio that takes into account risks to maximize rewards. Tightly linked to it, balance is the ability to build a workforce in which not all fit the same mold. Balance is the ability to work with shades of gray and not just with black and white (and to sometimes even have color!). Unfortunately "you are either with us or against us" is only one manifistation of the prevalent simplistic culture in many corporations (and is not rooted in HBS), and that is reflected in the many management fads and the fact that so many CEOs lose their jobs not too long after they publish a book about their huge success. Simple bipolar choices are easier to communicate and to mobilize organizations around, especially in today's hyper-active and hyper-competitive environment. In corporate America the people who diffuse to the top are the execution-driven people and not the visionaries and innovators, and these tend to be black and white types. There is a good reason for that. What would you prefer, a fantastic innovator who is willing to take great risks but at the end of the day cannot deliver or the opposite? When given the choice (because mixed types are rare), corporations, naturally (and justifiably) tend to promote the latter. The problem is that when they get to the top, and along the way, they often fail to think in shades of gray and they indeed tend to lead in a bipolar way.

Chris Conley

May 31, 2007 2:58 AM

This is a critical issue, but we don't want to throw the baby out with the bath water! This is because a good amount of what a company needs to do is manage the current operation. For this, methods of analysis and the drive towards efficiency are good. We can't be taking risks everywhere! Companies falter when they apply these same ways of working and thinking to innovation programs as you have rightly pointed out. I would suggest that a compelling way to organize for innovation efforts should be more like a production. Seasoned innovator (producer) with creative lead (director) and whatever cast (engineers, marketers, strategist, designer, etc.) is needed to attack the opportunity. Keep them together and expect great results by the agreed upon show time.

Mark Schraad

May 31, 2007 1:37 PM

"The purpose of business is to create a customer. Business has two basic functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs."
-Peter Drucker

I think there is a lot of smart in this quote. Risk avoidance, risk mitigation? Why not put the effort into properly assessing and managing the risk? My experience tells me that in a command and control environment, you will always have management policies (either implied or explicit) that decrease the incentives for innovation and avoid the chance of learning from a mistake.

If you look across the business landscape, fearless leadership is a very rare commodity. Frankly, most companies operate with a rather standard follower strategy. Reduce costs, maximize profits and capitalize on the leader’s R&D. Very few companies actually catch up utilizing this approach. To borrow a sports analogy, but this is a bit like playing not to lose, as opposed to playing to win.

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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