How Leaders Create the Conditions for Innovative Thinking

[MUSIC] Deals not just another payroll platform, it's one your team might actually enjoy. HR, IT, and payroll together finally, built in-house, built for peace of mind. Visit d-e-l.com/hbrpodcast. [MUSIC] Welcome to HBR on Leadership. I'm HBR Executive Editor, Allison Beard. On this show, we share case studies and conversations with the world's top business and management experts. Hand selected to help you unlock the best in those around you. We carefully curate this feed from across the HBR portfolio, aiming to help you unlock your next level of leadership. I hope you enjoyed the episode. [MUSIC] I'm Audignaceous. I'm Allison Beard, and this is the HBR IDACAST. [MUSIC] All right, Allison, so every organization wants to innovate, right? Not just once, but over and over again. In judging from the conversations I have with CEOs, most feel they cannot accomplish this, right? They look inward, they wonder, am I smart enough, am I clever enough? Can I compete with genius founders? When actually it's not so much about individual brilliance, but about creating an environment where good ideas can be surfaced and tested, and ultimately put into action. Yeah, I think we know from research that a lot of the best innovation comes from the front lines, as well as R&D departments. But then how do you harness those ideas, create effective experiments, and ultimately scale the ones that work? And if you're a leader, how are you overseeing all of these disparate efforts, and then prioritizing the ones in which you really want to invest? So today's guest has been drawing the playbook for innovation for much of her career. Linda Hill, professor at Harvard Business School, wrote the book Collective Genius about a decade ago, and has just published a new one, Genius at Scale, How Great Leaders Drive Innovation. She's going to explain how to create a system and build a team that can innovate and then cascade the new thinking throughout the enterprise. Here's our conversation. [MUSIC] So you've written a book about innovation. I would say this is a time when some leaders are in survival mode. A lot are uncertain about AI. How should leaders be thinking about innovation right now? I think innovation is really an imperative, and it is about survival. It is not about anything extra, because nowadays we have to be able to adapt and respond to whatever is happening out there in the world, and it's a very uncertain world. Talk a little bit about the misconceptions surrounding innovation, because I feel you've been spending much of your career trying to deflate some myths about how innovation happens. Well, this is the second book we've written about innovation. The first one was called Collective Genius, and there we tried to understand what do leaders do that create organizations that can innovate time and again. And one of the things that surprised us is leading innovation is not about having a vision and telling people follow me to the future. Instead, it's about creating the right culture and capabilities to get people to want to co-create that future with you. So leadership is not about followership when it's about innovation, it's about co-creation, and that requires a different mindset, different behaviors, and a different skill set. After we finish that work, we then begin to understand and spend more time looking at organizations and what were they finding most difficult about really innovating. And particularly now with emerging technologies, how do you get people to adopt these technologies to create value as well as, you know, how do you create an organization that can innovate time and again? So we ended up focusing on what people told us was their problem. Maybe we can come up with innovative solutions, but we can't scale them. They never become reality. We really focused in on how do you scale these innovations? And that means really building that only organizations that can co-create, but also partnerships and sometimes whole ecosystems able to co-create. So if Genius requires a collective approach, our most companies even set up to deliver on that. This does require more collaborative approaches or collective approaches, and most organizations are not. There are three pieces to the puzzle of what you need to do to innovate. You have to be able to collaborate, which is really about dealing with difference. You have to be able to experiment and learn, and you want to be able to do that in a pretty efficient kind of way, because you cannot plan your way to an innovation. You can only act your way to one. So I think that's the other method. We can plan it all out, but no, that's not what you're trying to do. You are trying to create some discipline. If you look at any single innovation, I suppose you might find an individual genius can have an aha moment, but we're really interested in building organizations that can innovate routinely, making innovation a capability in your organization, not something that you happen upon you do right once. It sounds like that's partly about process, partly about the skills at the top. What does leadership need to look like to deliver on that? All of the leaders we have studied, and we've studied a lot all around the world, different industries, government, not for profits. All of the leaders we have studied have been visionaries. But one of the things we know about visionaries is, "Can visionaries make space for other people? Sometimes they can take up, and if you will, the whole room." So they figure out how to behave, how to carry themselves, how to create the space where people will be able to work with them. So one of the conversations I just had with a CEO who's very visionary, he said that he had to learn how frankly to be quiet, to be patient. When he's very urgent, he's got lots of solutions, and lots of things he wants to say. So he literally ended up saying to his organization and to his team, "I'm not going to speak anymore for the first 20 minutes." Because he needed to manage himself in a different way if he wanted people to be willing to share what we refer to as their slices of genius. Too often, we don't use the talents and passions of the people who are around us, and we can't afford not to use them given the nature of the challenges and opportunities we're trying to address today. All right. Well, let's talk about how to extract that, because I feel like companies frequently say, we need to reach out to the leadership team or maybe the entire employee base, because the good ideas are going to come from there, are going to come from the people, maybe who are on the front lines. But they have trouble actually eliciting these good ideas that should be there. So how do you do that? How do you get the good ideas? First, I have to feel like it's worth it for me to share my ideas. To share my slices of genius with you. So what are the conditions you create that I am actually going to feel like I want to do that, because innovation is hard work. It's emotionally and intellectually difficult work. So you as a leader have to create the space where people feel willing and able to do that work. It's not surprising to me that there's so much attention paid to purpose, the purpose of the organization, because people want their work to be meaningful. Why should I take risks trying to work through a conflict with someone who is a very different point of view of mine, has a very different point of view than me, or in fact, you know, we're going to experiment and learn, we're going to have missteps and failures. Why should I do that unless the work is meaningful? So one of the most important things for a leader to do is to create that sense of purpose, a shared sense of purpose. The other part of it, though, is making sure that the people I'm going to be working with are people that I fundamentally trust. So what really you see these leaders do is they think about building the social environment, the social connections amongst people. So they'll be willing to take on this meaningful work that is going to be hard work. And if I think I can trust you, I'm much more prone to want to do this kind of work with you than if I don't think I can trust you. And one of the things that's very important about whether I trust you is also whether I think I can influence you and that you actually respect that I have something to offer. Now that may seem like very obvious stuff that you talk to many people in organizations. They don't feel valued. They don't feel valuable. They don't necessarily feel that they can have influence. So let's say listeners are persuaded, how do you learn that skill? If you don't have it naturally, that skill of listening, empowering, staying quiet as your example from earlier, how do you learn that? Well, what I see is that one of the leaders we studied, he's a Rhodes scholar. He's a brilliant surgeon. He's a pioneer in robotics. One of the things that he did is he got a sparring partner. He found someone, CEO, he found someone who had a very different sort of point of view about the world. He's an optimist, his other person's a pessimist. He's big picture that other person's more detailed. And he became a sparring partner and he actually sought this individual out to give him feedback to see if his intent was matching his impact. And when it wasn't, you know, that sparring partner, even though he was reporting to this CEO said to him, no, your impact wasn't what it needed to be in that particular instance. When this particular leader also had to learn, how do I actually lead virtually? How do I do this? You know, when I'm looking through a camera, he hired a coach. He moved his face this way that way, moved his hands certain ways, asked the coach, how are you perceiving me? So it's very difficult to figure out how you're perceived if in fact you don't have feedback because leadership is always about an emotional connection. It's always emotional. And you are trying to figure out how do I create the experience for others when they're with me that they're going to be willing and able to take on this hard work of innovation. We shouldn't assume that we all know how to do this stuff, particularly given all of the anxiety people legitimately have right now. We might need some assistance, but having someone near you who can give you that feedback is important. There's another mindset that I want to bring up that another leader brought up with us. That is, he said, "You know what, Linda? My job is to convince everybody that there's nothing called business as usual." Nothing called business as usual anymore. And consequently, everything we do is a working hypothesis. There's not certainty. So we're going to try to collect as much data as we can to help us or evidence for our decision we're thinking of making. It's going to always be very incomplete and ambiguous if you will, data. We're going to have to act. And once we act, we won't know whether or not we're on the right track until we get feedback on the impact of our actions. And when we see that impact, we're either going to have to say, "Looks like we're moving in the right direction?" Or, you know what? We need to pivot. So I think that orientation of understanding the leader's not the one who's the expert who has the answers. The leader is the one that creates the right kind of environment to make sure people have the capabilities and the tools they need to make the best decisions they can in very uncertain circumstances and to honestly, honestly pay attention to the feedback they get about whether or not that decision really went the way they hoped it would. So when I talk to leaders about innovation, they usually talk about experimentation. You have to have this mindset of experimentation. But I talk to some who say, "You can get caught in a trap." So experimentation paralysis, and at a certain point you have to simply act, "Where do you come down in terms of the proper approach to experimentation so that it's really valuable and not a stalling tactic on the way to figure out a new strategy?" So what you're sort of saying there is really we have to be decisive. We've done a survey of about 9,000 executives and they've told us that if you want to be an effective CEO or a C-suite executive today, you have to be comfortable with ambiguity. You still need to be able to make decisions in the face of ambiguity. And that is not an easy thing to do. So going back to experimentation, the issue with experimentation is, again, you have to pay attention to what's the feedback by being honest about what we're learning from this experiment. That's assuming you've designed an experiment that is rigorous and relevant. But once you get that feedback, you're going to have to make decisions and it's not going to be black and white. It's going to be maybe gray, right? So in organizations that can innovate time and again, we see that decision-making rights are very clear. Everybody knows who's going to make the decision. And actually in many organizations, we don't like to be clear about who's going to make the decision because it makes people feel bad when they're sort of told you're not the one, two of the leaders that we've studied, actually three, they've rewarded people for killing ideas. So when your idea is not working, people aren't receiving it, we can be rather reluctant to let it go. So one of the leaders that we studied basically said, I will give you a bonus if you kill your own idea. Also we see that our peers don't like to tell us when they know something isn't working because they don't want to hurt our feelings. A lot of people are polite and literally they have to learn how to say, you know, we've tried this Linda once, twice, three times, it's not working. Once we need to move on. So I think decisiveness is one of the things we actually see in innovative organizations and they have very clear rules about how decision-making is going to happen, who's going to do it, whose voice it should be heard before the decision is made. One of the things that we actually learned at Pixar is that you don't want one group to dominate. You don't want the bosses to dominate and you don't want the experts to dominate. And the experts are particularly dangerous when it comes to trying to innovate. One of the things I like about the book is that it's almost journalistic, smart journalistic in terms of their detailed stories, case studies, not in the classic sense of companies that are going through innovation journeys. And I'd love to talk about a couple of them. So MasterCard, as you wrote, was a risk-averse organization when Ajay Banga took over in I think 2010. Talk about what happened there. Ajay, as you know, came in and he first talked about purpose. He came in and he decided with the board that really MasterCard was facing an existential crisis. Finn Tech was going to overtake them and they needed to move from being a credit card company to being a tech company in the payment space and now in the e-commerce space. And he knew this was going to be a big shift for an organization that actually had, it was a very proud organization and had a lot of success. I said recently just had a very successful IPO. And the first thing he needed to do, get people aligned, was around purpose. And he declared that the purpose was going to be financial inclusion. And financial inclusion was going to be the way that he really developed a narrative about why they were going to need to become a tech company. Because if they were going to include those individuals and those medium and small business people who didn't have access to the financial system, they needed to have very affordable solutions and only digital tools would allow for those affordable solutions. Then he laid out really very clearly what the strategy was going to be, three pillars. And he also said about those three pillars, we're going to spend 50% of our time on the core business, but 50% of our time and our resources, I should say, are going to really be spent on diversifying the business and growing new businesses. And he was very deliberate about that. So if you brought him a budget that didn't have that kind of division and he was went back and said you need to think about it differently. But perhaps one of the more critical decisions he made is he asked another manager, an entrepreneur who they'd acquired his company to come and help catalyze the change that need to be made. That individual Gary ended up creating a series of innovation labs around the world to help drive innovations. He really understood he needed to get other leaders engaged to help both change the culture to be more supportive of innovation as well as bring in someone who could help them develop new innovation really innovative solutions based on digital capabilities and bring those capabilities into the organization. So he really engaged a number of leaders to play these catalyst roles in moving the culture and developing these innovative solutions. But IJ did is select leaders who knew how to sort of be the bridge between tech and business. You know, if you will, the future and the present so that actually these solutions got scaled. So that's I think what's really a critical part of that story. So the takeaways are having a sense of purpose, driving strategy based on that kind of true north, changing out the top leadership to make sure everyone's aligned and make sure you have some of these skills you just talked about, you know, a bit of genius maybe in IJ's ability to kind of put his finger on the vision that they needed. The one that I would just pull out a little bit more is in genius and scale, we talk about three interrelated leadership roles. The first one is you do need to architect the organization to be able to innovate time and again and IJ worked on that a lot. The other is you need leaders who know how to bridge, who know how to work across organizational boundaries. And also, I mean, literally find partners even outside the organization to help them bring in the talent and capabilities they need. So these bridges are really critical. And then the last role that we talk about in the book is the catalyst role. These are the leaders who actually know how to create what we refer to as movements across all ecosystems to get some innovation done. So if you actually get those architects in place, that's good. But to move at the pace you need to move today, particularly with technology, you need these bridges. So I've been talking to lots of C-suite executives and what they tell me is we don't have enough people in our organization who know how to bridge between the tech side and the business side. That's the way they put it. We just don't have people who know how to do co-creation across tech and business. And that shortage is slowing us down. So I think what we also need are these leaders who understand about co-creation across organizational boundaries or even across, like with electric vehicles, whole ecosystems that need to be put in place to support electric vehicles really becoming something that many of us are willing to buy and enjoy. So I would have thought that the catalyst, the bridges, that that happens organically. But it sounds like you're saying, no, you actually have to be very purposeful about if it doesn't have an organically that you have to create the structure where these roles will be in play. Think about it. The too many organizations are siloed even to this day. And when you ask anyone, what is it going to take for you to make sure that these investments you're making in GNI and agent AI are really going to pay off? They all say almost immediately horizontal work, right? We still haven't learned how to work horizontally within our organizations. Nonetheless, with others outside our organizations who have different priorities, different constraints, different working styles. So what you see in the Ajay Banga story is how they learn to work with startups to learn and bring them in to give them talent and capabilities. Then they learn how to build even a broader ecosystem where they bring their clients to work with these startups and they facilitate those relationships to create different kinds of, I'll call them coalitions necessary to get changed on if you want to start doing business in a country you've never done business in before. So I think that those leaders who can have that big picture and think about, you know, you can't do this all. You need lots of majors. You need lots of catalysts. I think that that's what we're seeing is new and it has to do in part with the speed of the emergence of new technology. as well as people have become very aware, maybe partly because of the pandemic, I don't know, or the political issues going on, that you need to think about creating an environment a broader ecosystem in which your organization is working so you can be successful. So that's what we see. It's become tougher. - So another example from your book, a fun one you write about Austria, French-Escana, a Italian restaurant that has twice been named the best restaurant in the world. What are some lessons that the rest of us can draw from their success? - Massimo and Lara, who are the couple who have created this whole global network of both Michelin-rated restaurants, as well as soup kitchens called Food for Soul. And they see these as very interconnected, because for them, being in the restaurant business is about what they call the slow food fast car movement. That is embracing tradition, but also innovating. So one of the things that they really worry about is how do they develop chefs who have their own identity? So none of his restaurants are named after Massimo, all of them have their own names, and actually are restaurants that really suit the local environment. And so if I'm going to Tokyo, I need to be a chef, I'll work for a while in Modena at the main restaurant, but then I'm going to go off to Tokyo, and I'm going to create a restaurant there that reflects on what I've learned from Massimo and Lara, not only about the food and how you do restaurants, how you create a really world-class restaurant, but also how do you get to know the community and figure out how you can serve the needs of that community, help with the unhoused. So whenever a chef goes into whatever city location they go into, they actually have this sensibility about we want to become a part of this community. And part of that is making sure that we source local food, we source locally and develop relationships with the suppliers in a particular region, but it's also about understanding what the needs are of that community and figuring out how we can serve those needs. So they develop chefs who are really values driven chefs about all that they do, and that shows up in all of the work. You talk generally about great leaders as being wayfinders and not pathfinders. I like that distinction, but talk about what that means to you. Well, I have to tell you, whenever you are writing the epilogue of a book, by that time as an author, you are tired. And we wrote that epilogue over, I don't know how many times, probably our poor editor wanted to kill us, just couldn't get it right. And one day I was reading about explorers, the explorers that discovered America, or the continent, or whatever. And it struck me that one of the problems we're facing right now is all of us are searching for leaders who can help us find the path. We need vision, let me be clear. And if you have vision and you know the vision, then go ahead, tell people that vision, get them to follow you. But nowadays, many leaders don't have vision. They know the problems and the challenges, but they don't have a vision. So what I realized in reading this about these explorers were, you know what we need is we need wayfinders, not pathfinders. People who know how to use whatever tools they have, you know, back in the day, I guess it was the currents in the moon, and the stars and all of that. And now we have Gen AI, we have all these other more sophisticated tools, but we still need people who have the courage, and some sense of their values or purpose to help them navigate, who can help the rest of us find our way. I guess it's experiment and learn our way to where we want to be. So I keep asking about, you know, how can leaders take us to the future? And for me, it's like, no, nothing's going to take us to the future. How can they help us shape the future that we all want? And that is more co-creation than take us to the future, because anybody that tells you they know what the future looks like, they don't. There's just too much going on to figure that out. So what specific advice would you give to a C-suite leader who feels the innovation pipeline is stalled? They want to do the right thing. They want to be a wayfinder. They don't know how to fix things. What advice would you give? I think I would start by really assessing what do you think, and this may not be the kind of answer you want. But what is the culture of your organization? What are the capabilities? Be honest about that, and think about, this is not going to be fixed fast. These are not fast fixes. But I think leaders need to really first do an assessment of, you know, what is our culture? What about our culture actually facilitates innovation? And what are the barriers? And then I really do think it's about looking at the capabilities of the organization. And we know there are certain muscles that have to be there. The muscle to collaborate, which we refer to as creative abrasion. The muscle to experiment and learn, which we refer to as creative agility. Can you actually do that kind of experimentation and learning? Again, efficiently. And then this muscle of how to make decisions, creative resolution. So I think that I would start by doing an assessment, whatever way you want to do it, you know, can be crude or whatever, and begin to work with people, have other people help you figure out where should we start? And then what does the day-to-day work of the leader look like once you take these steps? Depends on what you're going to work on. So if it's about how do I encourage people to actually embrace difference and work through conflict, then you need to role model that. And you need to show that you can do that yourself, because people do follow the example of a leader, and too often leaders don't necessarily encourage or amplify difference. They minimize it. So you need to amplify the differences in your organization, those slices of genius. And when you do that, there is going to be conflict. So the first thing I would say day-to-day for you to do is work on your capacity to deal with conflict. Many, many leaders, and just all of us individually don't know how to work through conflict. Real conflict, because people actually are passionate about their ideas. They're not going to let go easily. So what we talk about is there are really, you know, six dilemmas you have to be able to manage. If you're going to be able to lead in the way that encourages the kind of culture you need, what you need to understand is how your own actions are impacting whatever the culture and the capabilities are. But I do also want to emphasize, are you building the right leadership talent? This is not about you going back to the example we talked about with IJ and MasterCard. Do you have a cadre of leaders who can be bridges and catalysts for the organization? I mean, just think about, I don't know anything about it, but I'll mention it. I mean, Microsoft is now trying to work with OpenAI. Those are partnerships where somebody has to be able to bridge across. Someone else in the organization needs to be able to think about what's the regulatory environment we need to actually use these technologies in a responsible and effective way. So it's not going to be just about you. So I would say the other thing, what should I start with day to day? Maybe the better answer I could give you about that is really look at your leadership talent. Do you have the architect's bridges and catalysts that you need? And if you do not, then I say look at yourself and see why don't you. Why don't we have more bridges? Because they're not rewarded for bridging. They're not rewarded for working across those silos. They're not rewarded for learning how to work with people outside the boundary of the organization. So you need to look at what you're doing that is actually not encouraging people to develop these leadership talents. We need if we're going to be able to scale innovative solutions with any speed. If people are listening to this and say, yes, I want to innovate at scale. That's me. What's something they can go do right now to start that process? So I guess what I would start with is think about your own capacity, for instance, to deal with conflict. Your own capacity to live with the missteps and failures of trying to experiment and learn your own capacity to make decisions when in fact you have very incomplete or ambiguous information. And to the extent that you're not good at those three things, it's going to be real hard for you to build an organization that is good at those three things. So I think I'd start with your own leadership. And as you know, the reason why I found myself on this journey of looking at innovation is because one of our former deans said to me, Linda, I keep hearing that we don't have leaders who know how to lead innovation. Would you please go find out what that means? And so it turns out that a lot of the innovation work did not look at the role of the leader. We didn't have a lot of understanding about what leaders need to do. So in looking at that, I think the other piece I put with it while I'm saying start with yourself is that many of the people who are listening are people who are quite talented, are stars. Stars actually have more trouble learning to lead because they think they have the answers. They have the solutions. And that's not what this is about. This is about in fact being sort of more of a social architect of an organization or a partnership or an ecosystem. And that's a different mindset and requires a different set of skills. And one of the things we hear and it sort of frightens me in some ways is most senior people. They don't like to lead in situations where they don't have formal authority. But fundamentally, being an architect, a bridge or a catalyst, that is about leading without formal authority. You can only invite people to want to work with you by definition if you're partnering with someone who's outside your organization or an ecosystem which is often multi sector work, you're not the boss. Quite the contrary. So how you learn to operate when you are not the boss and when you don't have that kind of control and instead you're nudging people along, you're pulling because you cannot push. That's a different stance. And so I think we're to start thinking about are you pulling or are you pushing? Maybe I'll start there to get people to do the kind of work they need to do for your organization to flourish. Maybe that'll be real simple. Push and pull. This episode was produced by Mary Do. On leadership's team includes Maureen Hoek, Rob Eckhart, Erica Trexler, and Ian Fox. If this episode helped you, please share it with your friends and colleagues and follow the show on Apple Podcasts, Spotify, or wherever you listen. While you're there, consider leaving us a review. When you're ready for more podcasts, articles, case studies, books, and videos with the world's top business and management experts, find it all at hbr.org. Deals not just another payroll platform, it's when your team might actually enjoy. HR, IT, and payroll together finally. Build in-house, build for peace of mind. Visit d-e-l.com/hbrpodcast.