When someone in an organisation decides that the organisation needs to embark on an innovation program, one of the first decisions which must be made is, who should lead it. Irrespective of whether it’s a standalone innovation project or a more holistic program to build organisational innovation capability, these initiatives tend to get senior management attention. As a result, the leadership and management of these efforts tend to be allocated to a senior leader who has a strong track record of delivery and getting things done. This seems to be all very logical – after all if somebody can successfully run a key part of the core business, then running an innovation initiative should be a piece of cake right? Well bizarrely enough, perhaps not!
A fascinating piece of research done by Saras Sarasvathy, a professor at the University of Virginia’s Darden School of Business in the US, uncovered that successful entrepreneurs actually think and behave very differently from corporate executives. Successful corporate executives are very good at running the “factory”: they excel at setting goals and then diligently seeking the best ways to achieve them using the available resources within the “factory”. They have excellent causal reasoning skills and are highly goal-focused. Entrepreneurs on the other hand don’t start out with concrete goals. Instead, they constantly assess how to use their resources, innovations and ideas to actually develop goals and continually change them as they learn. They are experts in effectual reasoning and are brilliant improvisers.
So what does this mean for corporates looking to become more innovative? The simple answer is that it depends on what type of innovation the corporate is looking to implement. If its focus is on incremental innovation (see “Radical vs incremental innovation – does it matter?”), then there is a pretty good chance that the causal reasoning skills of the existing leadership team will be highly relevant – the innovations are likely to generate improvements to the existing factory. But if the innovation focus is on more radical innovations, then there is a strong argument to look elsewhere for effective leadership. With radical innovation projects, it is often unclear at the outset as to how value will be created and captured. This can create significant discomfort with causal thinkers to the point that potentially promising ideas can get killed because they appear too uncertain and do not have any clearly apparent outcomes.
This partly explains why corporates find it so difficult to become more innovative – they rely on a group of leaders who are proven causal thinkers!
Of course, simply being an accomplished executive who has successfully ‘run the factory’ does not mean that you can’t engage in effectual reasoning. Just as effectual thinkers can engage in causal reasoning, causal thinkers can engage in effectual reasoning. It’s just a matter of developing the right skills and having the right tools at your disposal.
If you’d like to find out more about this fascinating topic and how you can best exploit the different leadership capabilities within your organisation, then please feel free to get in touch with me or Astrid at astrid@orangesquid.com.au or astrid@orangesquid.com.au – we love talking about this stuff and we will be more than happy to discuss it further over a coffee 🙂