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CEO Talk: Relationship between Innovation and Innovators

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As a 25 year veteran in business and being an entrepreneur (I started our first family business with my father in 1983 – last year of my college at University of Connecticut), I have always wondered why so many businesses fail and disappear, and why others succeed. Same is true about thousands of people that I have met – how do some people make lot of money (anything they touch seems to turn into Gold), while others always suck-up more resources and generate very little value (ROI, wealth, brand, reputation, etc.).

I have now concluded that some people are “wired” to make money, and others are just not.

To take it further, I think real definition of "innovator" is those who generate value more then they consume resources - simple. Not only once, but almost every single time at bat.

So, as a CEO, if you are committed to innovation as the instrument of choice to help you create a sustainable growth (and profit) engine, put real “innovators” in charge of innovation in your organization. Probability of success will be very high. And your risk will decrease.

Additionally, make sure you are clear on these critical questions as well, before you invest into innovation programs and infrastructure expenses:

  1. How can your organization improve the probability to enhance your organization’s financial performance – particularly relative to that of competing organizations?
  2. Do you know if your team can generate real wealth – high value using minimal resources?
  3. Do you have the right team makeup you need to create value and wealth – based on your organizations’ current life-cycle situation?
  4. Within your team:
    • Do you know who will utilize the most resources and who will utilize the least? 
    • Who will generate the most value and who will deliver the least? 
    • Who may have the required mental agility and who will need a lot of help?

By answering these questions, you will be able to optimize and direct innovation correctly. 

Innovation is the responsibility of the Top-Team. Do not relegate it off to Product Development, or Human Resources, or R&D. Those tactics don’t work anymore alone. More about this issue, later…


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The Game of Innovation

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My dear friend John Madigan, President and Founder of Executive Talent Services (, invited me to give an executive briefing to many of his clients who were all senior leaders from variety of backgrounds with deep corporate experience.

The session was very engaging. During the interactive exchange and free flow of Q&A that was occurring, I realized how important it is for all current leaders (and aspiring leaders) to better understand the Game of Innovation.

Over the last 25 years being an entrepreneur along with real-world field experience, our applied research shows that it takes many elements to nurture innovation, two of those elements are:

1) Innovation is elusive; it cannot be produced on demand, nor can it be corralled or scheduled. In fact research shows that over 75% of ideas that turn into practical business ventures come from unplanned activities.

2) Real breakthrough innovation that matters and has a major impact in practice is extremely difficult to achieve. At best, the organization can create an environment in which innovation seeds are planted and nurtured— so the fruits can be harvested quickly thereafter. This requires foresight, courage, and persistence by the leaders at all levels.

3) Like a game of soccer or ice-hockey, innovation is arduous, difficult and tricky. Be prepared to score a game-winning hat-trick once, maybe twice – but only if you are ‘in the game of innovation’.


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For CEOs, what are the barriers to innovation?

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Knowing that the markets are very unforgiving and will always continue to be unfriendly, and that embracing innovation is not an option, the next logical question might be obvious. What must CEOs do to embrace innovation while managing the associated risk and overcoming the barriers?

First, answer lies in developing clear Innovation Mandate - a strategic statement that describes innovation in the context of your business, the value it promises to generate for growth and disciplined process by which to get there.

Innovation Mandate must be vividly clear for everyone in your organization; it must be concise to help drive alignment to business unit initiatives, and it must help articulate specific employee behaviors necessary at all levels for innovation climate to take root. When designed correctly, it is clearly linked and driven by the business strategy.

From our experience, keys to becoming innovative are highly dependent on your ability to address four critical barriers that are incumbent in most organizations. When not addressed together, the journey towards sustainability and value creation invites a higher risk of failure, potentially minimizing the results of innovation investments.

  • The first barrier is that most organizations do not have the mindset to harvest ideas and manage those ideas.
  • The second barrier is not recognizing and then not aligning the abundance of resources available to large organizations for investment in innovation.
  • The third barrier is to recognize the sheer size of the human capital assets that are under-utilized and disengaged from an organization's creative capacity. 
  • The fourth and final barrier relates to the broad product and delivery capabilities that large-scale organizations possess.

Of course, this is not the exhaustive list, but the primary list of obstacles that must be managed and mitigated so you can develop a proper framework for innovation within your firm.

To learn more about my firm's commitment to innovation and our work, please visit and also look at information on our Strategy-Driven Innovation framework.

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Six Criteria for Innovation Success

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In our work at The DeSai Group, we have observed that an organization can achieve sustainable growth through innovation by:

  1. Having a clear strategic intent – a unique direction for the company that will generate a specific value (Top-Line, Bottom Line, or Other).
  2. Value creation strategy – Depending on the value target, creating a vertical and horizontal organizational alignment for everyone to see themselves in the vision and mission is essential for future returns.
  3. Developing deep insights – commercially savvy perceptions to help develop great ideas that can be ventured profitably. Without insights, organizations will predictably migrate to Commodity Island with other industry laggards.
  4. Mobilizing strategically with discipline – vision, strategy, leadership, and ideas are all required for growth, but they don’t guarantee success until you execute with discipline.
  5. Having high performing innovators – innovation can occur by having innovators who can generate real wealth and not just come up with great ideas. People who over-utilize resources and under-deliver value, cannot be called real innovators.
  6. Selecting top-talent with optimum financial behaviors - or developing talent by creating self-awareness about what specific corrective actions executives can take to develop optimal behaviors.

As I have said before, organizations MUST begin to take innovation as a serious tool for survival.

Innovation is no longer a choice - should we or should we not. It is only about WHEN you choose to commit to it.

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Primary role of innovation is to grow revenue - period.

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It is not a surprise that revenue growth is the primary driver of shareholder value and the number one challenge for every business sector around the world. Yet today, growth objectives for most industries are tempered by a continuing focus on cost containment.

For U.S. companies, after tremendous focus on "optimizing the bottom line" and losing the competitive edge to other parts of the world, it is time to reclaim the innovation edge. Only way to achieve this, is to point innovation activities to growing the Top-Line (revenue).

Revenue doesn't mean focus on product development alone. That isn't the sole answer either. For example, financial institutions looking for a competitive edge generally focus on product innovation, but most have little sustainable competitive advantage. Many new products never generate a profit. And those that do are often quickly copied by the competition – negating any long-term advantage. The result? Massive investment in product development, without a commensurate improvement in market share.

To achieve sustainable growth, companies must better integrate product innovation with process and service innovation – finding new ways to improve efficiency and customer service. That’s the kind of innovation customers want. And it’s the kind of innovation your competitors will find hard to duplicate. Yet some financial services companies have focused on product innovation for so long they don’t know how to innovate any other way.

Transforming a company into an innovative enterprise is a major challenge that generally requires new strategies, new tools and new behaviors – as well as a dedicated process for nurturing and commercializing good ideas. That deep commitment to innovation is the surest way to achieve meaningful and lasting differentiation.

Institutions with broad-based innovation capabilities enjoy higher customer satisfaction, greater loyalty, faster revenue growth, stronger earnings, and ultimately, dramatic lifts in investor returns.

Do you agree?

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