Every company wants to create breakthrough innovations. Corporations spend a lot of energy and money trying to make their innovation initiatives work, yet they rarely produce the breakthroughs they want. The companies that successfully create new value do so because they have built a culture that supports ongoing innovation. And while many companies attempt to foster that environment, one of the primary reasons they fail is because the people most likely to drive transformation are in the wrong roles.
Like most companies, your top talent is likely assigned to keeping the trains running, not creating new growth engines.
Your most talented employees are underutilized
In most companies, the best and the brightest employees are typically in leadership roles within the largest business units. These units are where the power and prestige reside and where executives lead large teams and manage substantial P&Ls. Running a large business unit is the place to be and often the career aspiration of talented executives. These roles are the stepping stone for those aspiring to become CEO.
However, if you examine the businesses that these superstars manage, they invariably have a well-defined business plan, and the leader’s role is to execute upon this plan. The primary charter of these executives is managing ongoing operations and making improvements to existing products and offerings rather than developing something completely new. Sure, there are improvements, but those typically involve replacing the 2021 version of a product with the 2022 version.
These business units typically show steady growth and will not add substantially to the incremental shareholder value of your organization. Yes, these units are critical because they drive the whole company’s value, and even the slightest slip-up here equates to a misstep for the entire organization. But the plan and outlook for these business units remain essentially unchanged year after year and are known across the company. At the risk of oversimplification, the leader’s job is to execute the plan and keep the ship running.
Since these established business units have well-defined tools and approaches, the playbook is clear. Consequently, a larger pool of executives available in your company can effectively manage these business units. The talent pool is more extensive than you might expect and extends beyond the select few managers the company considers its best and brightest.
Move Your Best Talent to New Value Creation
In a rapidly changing world, the next generation of value will come from breakthrough activities and not incremental improvements. And if the best talent focuses on established business units, breakthrough innovation will suffer. Steve Jobs is the ultimate role model for this. Ask yourself, did he spend more time on the next version of the Mac or on creating the next generation of value from brand new ideas.
Consequently, the question companies must address is: Should the staffing model be reexamined so that the most gifted people focus on activities that drive new value instead of running stable business units?
This would mean reassigning your most trusted and valuable performers away from established business units into leading a small team creating brand new and innovative value. New value creation is nebulous and requires creativity and the ability to deal with ambiguity, characteristics shared by the most capable managers. And if the future of a company rests on its ability to create new value, it is essential to staff these activities with the most talented managers.
These “new value creation” roles typically do not have large teams or enormous budgets. But still, they need to be viewed as being on par with any other significant role within the company. In most companies, innovation units are not considered at parity with larger teams and often have difficulty attracting the talent they require.
This is the culture shift that organizations need to make. Too often, the size of a P&L the number of people within an organization determine influence, and that is wrong.
If you believe that new value will drive your future, you must create a culture where innovation activities are on par with established business units. This parity will allow you to assign your best talent to develop new businesses, not cranking the lever on established business plans.
If your innovation activities are viewed as anything less, you will be unable to thrive in a world that heaps outsized rewards to innovation.