Cultivating innovation: Learning from the world’s best

Wendy Montague.CEO  FORUM. June  2012
Hay Group’s seventh annual report on the “Best Companies for Leadership”, provides a useful checklist on how the world’s best leaders create an environment where innovation thrives. Almost 7,000 leaders from more than 2,300 organisations worldwide participated in this in-depth study which provides a detailed picture of how top companies sustain high performance through their leadership practices. The study ranks the top companies across the globe and also examines how those companies nurture talent and foster innovation in their ranks. This year, General Electric topped the list, followed by Procter & Gamble, IBM, Microsoft and Coca-Cola.Innovation is the key to future growth and ability to survive in a fiercely competitive global marketplace. And placing emphasis on innovation and leadership has been proven to deliver a competitive advantage. Over a 10-year period, the Top 20 Best Companies for Leadership consistently outperformed their peers, producing a 5.39 per cent shareholder return, compared to a 2.92 per cent shareholder return generated by the S&P 500.

How do these Top 20 Best Companies for Leadership create workplace environments and processes that enable innovation to thrive? Many companies praise innovation, but the Best Companies for Leadership approach it in a disciplined way by, promoting peer collaboration that breaks down functional silos, celebrating successes, learning from setbacks and fostering a culture that encourages a passion for innovation throughout the organisation.

The Best Companies for Leadership also remove barriers and create the right environment for new ideas to be heard. This year’s Top 20 companies reported that they cast a wide net for ideas and develop their people to think more broadly, while providing structured opportunities for younger employees to promote innovative ideas. Traditional hierarchies take a back seat. For example, if an individual has an excellent idea, they can bypass the chain of command without the threat of negative consequences.

In the Pacific region, (Australia and New Zealand) respondents indicated that the gap is narrowing to the benchmark set by the Top 20 in areas such as innovation, collaboration, talent management and development. However, there are some other critical areas where Australia and New Zealand are clearly underperforming, including structuring organisations for speed and flexibility and taking a more positive approach to setbacks by using failure or poor results as an opportunity for leaders to grow and improve.

Results from the study revealed the top 5 things Australian and New Zealand companies value most in leaders:

  • Broad perspectives – expanding employees’ assignments to stretch their capabilities (82 per cent)
  • Close collaboration among leaders in different parts of the business (79 per cent)
  • Creating a work climate that motivates employees to do their best (75 per cent)
  • Excellent ideas may bypass the chain of command (75 per cent)
  • Problem-solving by gathering points from multiple perspectives (74 per cent)

Other lessons from the top ranked companies:

  • This year’s top companies are better positioned for talent now and in the future compared to other companies, as their leaders motivate employees to do their best and actively manage a pool of successors for mission-critical roles.
  • The top companies are structured for speed and agility, with organisational structure favouring quick communications path and leaders at the frontline having all the decision-making authority needed.
  • Collaboration and rewarding it accordingly. Effective leaders can easily bridge functional, cultural, generational or geographic boundaries. They also implement incentive plans to put significant weight on team-based measures, and evaluate and reward leaders based on their ability to build productive relationships.

One thought on “Cultivating innovation: Learning from the world’s best

  1. Pingback: Your Innovation Problem Is Really a Leadership Problem - Social Innovation Minnesota | Social Innovation Minnesota

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