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Innovative organizations deserve innovative leaders. It is the height of folly to expect that organizations which choose to put dramatic change at the center of everything that they do can do so without being led by individuals who love moving into the unknown and who flourish amidst the ambiguity and contradictions that ensue. Is it even possible to believe that that we can change everything that characterizes modern life: our communications practices, our transportation, our sources of knowledge and labor, eventually our very genomes, without changing the way we assemble talent, take risks, make choices, or move groups of people forward or in new directions? Yet, while we all know that any answer other than “No” is wrong, the great majority of individuals in leadership positions, and the great majority of institutions that are developing them, are either unaware, indifferent or unconvinced by such needs, and therein lies a problem for our future.

It is the eventual appearance of the Internet of Things…that seemingly inevitable assemblage of ever more networked devices, products and everything in-between … that will ultimately force us to reconsider what we look for in leaders and how they will best practice their craft. Ironically, we will likely find that after a long history, spanning multiple millennia where leaders have worked and schemed to amass more power, the cardinal characteristic of leadership in the future may well be to shed power and liberate talent. Increasingly decentralized organizations which place key performers closer to the action, and loosely connected value ecosystems which draw on diverse talent that is easily accessible rather than permanently controlled, will populate the industrial landscapes of our future. What we know will become more important than what we make, and this will have dramatic collateral consequences for the practice of leadership. In fact, it is sobering to realize how fast this change is already coming, and how ill-prepared we all are — leaders and schools, alike — to embrace it.

Innovation, for decades a functional servant of leadership, is the force that will ultimately guide leadership change. Contemporary leadership is much more suited to operating effectively in worlds of uncertainty, where the rules of the game are known and the choices familiar. In fact, a tenet of modern management is the confidence that industrial boundaries are clear enough and stochastic data sufficient to allow for decision-making based on a limited number of familiar variables, allowing us to pursue optimization in the face of uncertainty; Michael Porter’s Industry Analysis, the opening salvo in any MBA education, is a good example with this. Daunting as the competitive threats may be, we know what we’re doing and we’ve done something similar before. Prior generations of leaders have all signed-up for such periodic strategic “readjustments” and cannot envision anything else. They are good at it, have advanced their careers by mastering such situations, and cannot envision tectonic changes that render such expertise less valuable.

Today’s change is, however, profoundly different! An unprecedented acceleration of functional achievement through digital technologies has led to the blurring of traditional industry and expertise domains; hotels, news media, imaging, telecommunications and urban transportation, are all examples. In addition, an essential part of this industrial reorganization has been the repositioning of a highly-nuanced customer experience at the heart of everything. Interloping disruptors, both B2C and B2B, have recognized that this customer experience is a journey not an event, and how by eliminating long-standing customer pain points customer loyalty can be quickly won despite the unfamiliarity of their brands. Can anything else explain the dramatic rise of iPhones, Uber, or even AirBnB? This is a complete reorientation of managerial mindsets and each of these companies have relied upon new leadership approaches to achieve their dramatic success. In doing so, they have reoriented themselves from a traditional “inside-out” perspective to the more appropriate “outside-in”. And, since none of these same organizations were long-standing industry members, what we also see is that much of such Big Change has been authored by strange new industry entrants whose primary explicit objective has been to smartly introduce instability, rather than preserve stability, into what were formerly well-defined competitive terrains. For leadership, this is a replacing of the uncertain with the unknown, where far fewer managerial choices can be easily recognized and where old skills and knowledge may no longer be enough to be successful. Instead, we need a completely new way of thinking about the world than we have inherited from the past. Here, is where innovation is no longer the servant of leadership, but the guide.

So, what is innovation-led leadership likely to bring?

  • Less control rather than more. Mr. Zhang Ruimin, Chairman of China’s Haier Group, the world’s largest home appliance manufacturer, has observed that “we are entering the era of losing leadership control”; no one leader can any longer know enough to lead by expertise alone, and no big organization can move fast enough to meet changing market demands.
  • Exploration rather than discovery: an instinct to generate many possibilities rather than a few alternatives; a willingness to open the conversation wider, rather than a rush to judgement.
  • Experimentation rather than deciding: many choices requires resolution by trial, and trials in a nascent rather than final state.
  • Faster: too much experimentation raises the risks, and only faster trials can reduce them.
  • Inclusiveness: the unknown demands more different knowledge rather than a reliance upon the same.
  • Generosity: smarter leaders sharing opportunities, credit and rewards with more partners.

 

This is the original English-language version of an article appearing in France Forum, April 2017.

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