A new report reveals that when it comes to creating new products and services, business, leaders play the most important role of all.
Leadership for Innovation, published by the Advanced Institute of Management (AIM) and supported by the Chartered Management Institute, shows that the relationship between leadership and innovation is a complex but critical one.
To be successful innovators, the report says, companies must learn three important leadership lessons:
* Leaders at every level of the organisation make innovation possible in two ways. As motivators they inspire employees to innovate. As organisational architects they create the context or environment in which innovation can occur.
* Innovation comes in different types. It can be incremental, through simple product modifications, or radical, such as creating a new product. It also goes through distinct stages: the exploration phase, where the creativity happens; and the exploitation phase where the commercialisation takes place. Each type and stage of innovation requires a different type of leadership.
* The way organisations develop, support and reward leaders must be tailored to the type and stage of innovation the leader is responsible for.
Deputy Director of AIM and one of the report's co-authors, Professor Andy Neely, said: "The importance of the leader's role in the innovation process is often underestimated. Acting as a kind of organisational architect, leaders can design structures and systems within their organisations that make the difference between innovation failure or success."
Organisations that are best at innovation have a sophisticated understanding of the interaction between leadership and innovation, the report says. Those that are unwilling or unable to grasp the nature of this relationship will fail to meet the levels of organisational innovation necessary to compete in the modern business world.
Petra Cook, Head of Policy at the Chartered Management Institute said: "Employees respond to leaders who let them know that what they do is important and that it makes a difference. Leaders who can show trust, respect and appreciation are more likely to generate innovation across their organisation. This will also have a knock-on effect on performance levels and the ability to compete."
