1: “Top-down innovation gets a bad rap,” Panera founder Ron Shaich writes in his terrific book Know What Matters: Lessons from a Lifetime of Transformations.
“The popular business press abounds with criticism of initiatives that come tumbling down from the peak of the org chart,” Ron observes.
“And yet, take a closer look at most companies, and you’ll find that organizations are still doing it that way.”
Why is this?
Simple answer: “Because it works,” Ron notes.
“Or to be more precise,” he writes, “based on my experience, top-down works when you focus on the right stuff and bring all the convening power and focus of top management to the effort.”
But what about “grassroots innovation” and “radical ideas” from those closest to the client?
Ron’s response? “I certainly don’t think I’m the smartest guy in the room. I seek out ideas from every corner of the company and from customers, especially in the early stages of an innovation effort. Listening empathically is a key step in the innovation process.
“But in later stages,” he believes, “when a promising idea must be defined, tested, and iterated into a game-changing tactic, innovation works best when democracy yields to autocracy.”
Yes, “many heads, hands, and hearts” are required to “bring a new business idea to life,” Ron writes. “But when it comes to betting and executing on a game-changing, disruptive strategy, you need ownership from the top.”
2: It is the CEO who must be the “Innovator-in-Chief,” Ron believes.
The CEO must actively support innovation by setting clear priorities, allocating resources, and visibly championing new initiatives.
“For innovation to be truly transformative,” he explains, “a leap of faith must be taken, and only someone with everything on the line like the CEO can take that leap of faith and take the company with them.”
Why even have the CEO title unless the point is to look ahead and ensure the company can innovate and gain a competitive advantage?
“As a leader,” he writes, “I also know that there are times when I’m the only one who has the power—and the accountability to the enterprise as a whole—to overcome the internal skeptics (often a company’s functional leaders) and summon the resources needed to innovate.” Yesterday, we analyzed the two functions that exist within every company: Discovery and Delivery. As organizations become more successful, the tendency is to focus more on delivery and less on discovery.
“It’s up to the leader to protect the company’s discovery efforts, again and again,” Ron observes, “and resist the corporate bureaucracy that threatens to smother and stifle those efforts with ever more precise and efficient delivery.
“Indeed, I believe that protecting discovery and fueling it should be the foremost preoccupation of every company builder.
“I’d argue,” he says, “that the most impactful role a leader plays is protecting the people who are dreaming about where the company can be in two, three, five, or ten years, and often, fighting for discovery personally.”
Ron argues that successful CEOs must be deeply committed to identifying, developing, and launching innovations that create competitive advantage.
And the CEO should be held accountable for the results.
“All the other challenges that weigh on every CEO,” he writes, “meeting the quarter’s financial targets, dealing with investors, creating a culture where everyone gives their best—are ultimately irrelevant if we haven’t figured out how we will best compete tomorrow.”
One important strategy that the best CEOs employ is creating a culture “where people understand that creative competitive advantage is their most important job and where they are encouraged to innovate,” he observes.
The CEO must model this mindset. And they must personally be involved with the discovery process.
“This message should be driven home in every leadership program and MBA class,” Ron suggests. “Too many CEOs are afraid of disruptive innovation and more comfortable in the safer role of glorified administrators.” One trap too many leaders fall into?
“The all-important work of generating new business ideas gets sidelined in a skunkworks or relegated to an R&D department. Without the sponsorship of those with organizational power, those efforts go nowhere.”
To illustrate these principles in action, Ron shares the example of IBM in the 1990s. The company created a team called Emerging Business Opportunities.
Many “promising ideas emerged,” Ron notes, “but few ever came to fruition.”
Why? Senior leadership wasn’t involved.
“The innovative business ideas had been assigned to younger, less experienced leaders,” he writes, “partly out of the belief that they’d be less likely to be caught up in company convention and established ways of thinking.”
But without the necessary credibility and clout, the ideas never went anywhere.
Legendary CEO Lou Gerstner changed his approach and appointed a vice chairman and company veteran as “czar” to drive the innovation process, saying, “It can’t be just some staff guy. It has to be someone with really big shoes.”
Noted.
More tomorrow!
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Reflection: In my own leadership—whether at work, in my family, or in my community—am I acting more like a careful administrator of the present or an Innovator‑in‑Chief who protects and fuels discovery for the future?
Action: Block out one focused “discovery” block this week to step away from day‑to‑day delivery, ask “Where could we create new competitive advantage in the next 2–5 years?”, and identify one specific innovation bet I’m willing to personally sponsor and champion.
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