The New Leadership Structures that Unblock Innovation

0:01AI agents are suddenly everywhere you turn, but without identity you can't really control what they do. Okta helps you assign every agent a trusted identity, so you get the power of AI without the risk. Secure every agent. Secure any agent. Okta secures AI.

0:22Linda Hill:A new digital reading experience from Harvard Business Review is here. It's the HBR interactive issue. swipe through pages search each issue and listen to articles with audio narration the interactive issue is available now to all hbr print magazine subscribers not yet a subscriber to the hbr print magazine subscribe today at hbr.org interactive issue

0:59I'm Adi Ignatius.

1:00Linda Hill:I'm Alison Beard, and this is the HBR IdeaCast.

1:11All right, Alison, so every organization wants to innovate, right? Not just once, but over and over again. And judging from the conversations I have with CEOs, most feel they cannot accomplish this, right? They look inward. They wonder, am I smart enough? Am I clever enough? Can I compete with genius founders? When actually it's not so much about individual brilliance, but about creating an environment where good ideas can be surfaced and tested and ultimately put into action.

1:37Linda Hill:Yeah, I think we know from research that a lot of the best innovation comes from the front lines as well as R &D departments. But then how do you harness those ideas, create effective experiments and ultimately scale the ones that work? And if you're a leader, how are you overseeing all of these disparate efforts and then prioritizing the ones in which you really want to invest? So today's guest has been drawing the playbook for innovation for much of her career. Linda Hill, professor at Harvard Business School, wrote the book Collective Genius about a decade ago and has just published a new one, Genius at Scale, How Great Leaders Drive Innovation.

2:12She's going to explain how to create a system and build a team that can innovate and then cascade the new thinking throughout the enterprise. Here's our conversation.

2:25So you've written a book about innovation. I would say this is a time when some leaders are in survival mode. A lot are uncertain about AI. How should leaders be thinking about innovation right now? I think innovation is really an imperative, and it is about survival. It is not about anything extra, because nowadays we have to be able to adapt and respond to whatever is happening out there in the world, and it's a very uncertain world. Talk a little bit about the misconceptions surrounding innovation, because I feel you've been spending much of your career trying to deflate some myths about how innovation happens.

3:02Well, this is the second book we've written about innovation. The first one was called Collective Genius. And there we tried to understand what do leaders do that create organizations that can innovate time and again. And one of the things that surprised us is leading innovation is not about having a vision and telling people, follow me to the future. Instead, it's about creating the right culture and capabilities to get people to want to co-create that future with you. So leadership is not about followership when it's about innovation, it's about co-creation. And that requires a different mindset, different behaviors, and a different skill set.

3:34After we finished that work, we then began to understand and spend more time looking at organizations and what were they finding most difficult about really innovating. And particularly now with emerging technologies, How do you get people to adopt these technologies to create value as well as, you know, how do you create an organization that can innovate time and again? So we ended up focusing on what people told us was their problem. Maybe we can come up with innovative solutions, but we can't scale them. They never become reality. We really focused in on how do you scale these innovations? And that means really building not only organizations that can co-create, but also partnerships and sometimes whole ecosystems able to co-create.

4:15So if genius requires a collective approach, are most companies even set up to deliver on that? Genius does require more collaborative approaches or collective approaches, and most organizations are not. There are three pieces to the puzzle of what you need to do to innovate. You have to be able to collaborate, which is really about dealing with difference. You have to be able to experiment and learn, and you want to be able to do that in a pretty efficient kind of way. Because you cannot plan your way to an innovation. You can only act your way to one. So I think that's the other myth, that we can plan it all out.

4:46But no, that's not what you're trying to do. You are trying to create some discipline. So if you look at any single innovation, I suppose, you might find an individual genius can have an aha moment. But we're really interested in building organizations that can innovate routinely, making innovation a capability in your organization, not something that you happen upon and you do right once. So it sounds like that's partly about process, partly about the skills at the top. What does leadership need to look like to deliver on that? All of the leaders we have studied, and we've studied a lot all around the world, different industries, government, not-for-profits, all of the leaders we have studied have been visionaries.

5:26But one of the things we know about visionaries is can visionaries make space for other people? Sometimes they can take up, if you will, the whole room. So they figure out how to behave, how to carry themselves, how to create the space where people will be able to work with them. So one of the conversations I just had with a CEO who's very visionary, he said that he had to learn how, frankly, to be quiet, to be patient when he's very urgent. He's got lots of solutions and lots of things he wants to say. So he literally ended up saying to his organization and to his team, I'm not going to speak anymore for the first 20 minutes because he needed to manage himself in a different way if he wanted people to be willing to share what we refer to as their slices of genius.

6:10Too often, we don't use the talents and passions of the people who are around us, and we can't afford not to use them given the nature of the challenges and opportunities we're trying to address today. All right. Well, let's talk about how to extract that, because I feel like companies frequently say, we need to reach out to the leadership team or maybe the entire employee base, because the good ideas are going to come from there, are going to come from the people maybe who are on the front lines. But they have trouble actually eliciting these good ideas that should be there. So how do you do that?

6:42How do you get the good ideas? First, I have to feel like it's worth it for me to share my ideas, to share my slice of genius with you. So what are the conditions you create that I am actually going to feel like I want to do that? Because innovation is hard work. It's emotionally and intellectually difficult work. So you as a leader have to create the space where people feel willing and able to do that work. It's not surprising to me that there's so much attention paid to purpose, the purpose of the organization, because people want their work to be meaningful. Why should I take risks trying to work through a conflict with someone who has a very different point of view of mine, has a very different point of view than me?

7:17Or in fact, we're going to experiment and learn. We're going to have missteps and failures. Why should I do that unless the work is meaningful? So one of the most important things for a leader to do is to create that sense of purpose, a shared sense of purpose. The other part of it, though, is making sure that the people I'm going to be working with are people that I fundamentally trust. So what really you see these leaders do is they think about building the social environment, the social connections amongst people, so they'll be willing to take on this meaningful work that is going to be hard work.

7:47And if I think I can trust you, I'm much more prone to want to do this kind of work with you than if I don't think I can trust you. And one of the things that's very important about whether I trust you is also whether I think I can influence you and that you actually respect that I have something to offer. Now, that may seem like very obvious stuff, but you talk to many people and organizations, they don't feel valued. They don't feel valuable. They don't necessarily feel that they can have influence. So let's say listeners are persuaded. How do you learn that skill? If you don't have it naturally, that skill of listening, empowering, staying quiet, as your example from earlier, how do you learn that?

8:28Well, what I see is that one of the leaders we studied. He's a Rhodes Scholar. He's a brilliant surgeon. He's a pioneer in robotics. One of the things that he did is he got a sparring partner. He found someone, his CEO, he found someone who had a very different sort of point of view about the world. He's an optimist. His other person's a pessimist. He's big picture. That other person's more detailed. And he became a sparring partner, and he actually sought this individual out to give him feedback to see if his intent was matching his impact. And when it wasn't, that sparring partner, even though he was reporting to the CEO, said to him, no, your impact wasn't what it needed to be in that particular instance.

9:11When this particular leader also had to learn, how do I actually lead virtually? How do I do this when I'm looking through a camera? He hired a coach. He moved his face this way, that way, moved his hands certain ways, asked the coach, how are you perceiving me? So it's very difficult to figure out how you're perceived if in fact you don't have feedback, because leadership is always about an emotional connection. It's always emotional. And you are trying to figure out how do I create the experience for others when they're with me that they're going to be willing and able to take on this hard work of innovation.

9:43We shouldn't assume that we all know how to do this stuff, particularly given all of the anxiety people legitimately have right now. we might need some assistance, but having someone near you who can give you that feedback is important. There's another mindset that I want to bring up that another leader brought up with us, and that is, he said, you know what, Linda, my job is to convince everybody that there's nothing called business as usual. Nothing called business as usual anymore. And consequently, everything we do is a working hypothesis. There's not certainty. So we're going to try to collect as much data as we can to help us or evidence for our decision we're thinking of making.

10:25It's going to always be very incomplete and ambiguous, if you will, data. We're going to have to act. And once we act, we won't know whether or not we're on the right track until we get feedback on the impact of our actions. And when we see that impact, we're either going to have to say, looks like we're moving in the right direction, or you know what, we need to pivot. So I think that orientation of understanding the leader's not the one who's the expert who has the answers. The leader is the one that creates the right kind of environment to make sure people have the capabilities and the tools they need to make the best decisions they can in very uncertain circumstances and to honestly, honestly pay attention to the feedback they get about whether or not that decision really, you know, went the way they hoped it would.

11:12So when I talk to leaders about innovation, they usually talk about experimentation. You have to have this mindset of experimentation. But I talked to some who say you can get caught in a trap, you know, experimentation paralysis, and at a certain point you have to simply act. Where do you come down in terms of the proper approach to experimentation so that it's really valuable and not a stalling tactic on the way to figure out a new strategy? So what you're sort of saying there is really we have to be decisive. We've done a survey of about 9 ,000 executives, and they've told us that if you want to be an effective CEO or C-suite executive today, you have to be comfortable with ambiguity.

11:51You still need to be able to make decisions in the face of ambiguity. And that is not an easy thing to do. So going back to experimentation, the issue with experimentation is, you know, again, you have to pay attention to what's the feedback, my being honest about what we're learning from this experiment. That's assuming you've designed an experiment that is rigorous and relevant. But once you get that feedback, you're going to have to make decisions. And it's not going to be black and white. It's going to be maybe gray, right? So in organizations that can innovate time and again, we see that decision-making rights are very clear.

12:25Everybody knows who's going to make the decision. And actually, in many organizations, we don't like to be clear about who's going to make the decision because it makes people feel bad when they're sort of told, you're not the one. Two of the leaders that we've studied, actually three, they've rewarded people for killing ideas. So when your idea is not working, people aren't receiving it, we can be rather reluctant to let it go. So one of the leaders that we studied basically said, I will give you a bonus if you kill your own idea. Also, we see that our peers don't like to tell us when they know something isn't working because they don't want to hurt our feelings.

13:02A lot of people are polite and literally they have to learn how to say, you know, we've tried this, Linda, once, twice, three times. It's not working. Perhaps we need to move on. So I think decisiveness is one of the things we actually see in innovative organizations. And they have very clear rules about how decision making is going to happen, who's going to do it, whose voices should be heard before the decision is made. One of the things that we actually learned at Pixar is that you don't want one group to dominate. You don't want the bosses to dominate, and you don't want the experts to dominate.

13:38And the experts are particularly dangerous when it comes to trying to innovate. One of the things I like about the book is that it's almost journalistic, you know, smart journalistic in terms of, you know, their detailed stories, case studies, not in the classic sense, of companies that are going through innovation journeys. And I'd love to talk about a couple of them. So, you know, MasterCard, as you wrote, was a risk-averse organization when And Ajay Banga took over in, I think, 2010. Talk about what happened there. Ajay, as you know, came in and he first talked about purpose. He came in and he decided with the board that really MasterCard was facing an existential crisis.

14:18FinTech was going to overtake them. And they needed to move from being a credit card company to being a tech company in the payment space and now in the e-commerce space. And he knew this was going to be a big shift for an organization that actually had, it It was a very proud organization and had a lot of success, had recently just had a very successful IPO. And the first thing he needed to do, get people aligned, was around purpose. And he declared that the purpose was going to be financial inclusion. And financial inclusion was going to be the way that he really developed a narrative about why they were going to need to become a tech company.

14:53Because if they were going to include those individuals and those medium and small business people who didn't have access to the financial system, they needed to have very affordable solutions. And only digital tools would allow for those affordable solutions. Then he laid out really very clearly what the strategy was going to be, three pillars. And he also said about those three pillars, we're going to spend 50 % of our time on the core business, but 50 % of our time and our resources, I should say, are going to really be spent on diversifying the business and growing new businesses. And he was very deliberate about that.

15:29So if you brought him a budget that didn't have that kind of division, then he went back and said, you need to think about it differently. But perhaps one of the more critical decisions he made is he asked another manager, an entrepreneur who they'd acquired his company to come in and help catalyze the change that need to be made. That individual, Gary, ended up creating a series of innovation labs around the world to help drive innovation. He really understood he needed to get other leaders engaged to help both change the culture to be more supportive of innovation, as well as bring in someone who could help them develop new innovation, really innovative solutions based on digital capabilities and bring those capabilities into the organization.

16:14So he really engaged a number of leaders to play these catalyst roles in moving the culture and developing these innovative solutions. What Ajay did is select leaders who knew how to sort of be the bridge between tech and business, you know, if you will, the future and the present, so that actually these solutions got scaled. So that's, I think, what's really a critical part of that story. So the takeaways are having a sense of purpose, driving strategy based on that kind of true north, changing out the tough leadership to make sure everyone's aligned and make sure you have some of these skills you just talked about.

16:53You know, a bit of genius maybe in Ajay's ability to kind of put his finger on the vision that they needed. The one that I would just pull out a little bit more is in Genius and Skill, we talk about three interrelated leadership roles. The first one is you do need to architect the organization to be able to innovate time and again. And IJ worked on that a lot. The other is you need leaders who know how to bridge, who know how to work across organizational boundaries, and also, I mean, literally find partners even outside the organization to help them bring in the talent and capabilities they need.

17:27So these bridgers are really critical. And then the last role that we talk about in the book is the catalyst role. These are the leaders who actually know how to create what we refer to as movements across all ecosystems to get some innovation done. So if you actually get those architects in place, that's good. But to move at the pace you need to move today, particularly with technology, you need these bridgers. So I've been talking to lots of C-suite executives, and what they tell me is, we don't have enough people in our organization who know how to bridge between the tech side and the business side.

18:02That's the way they put it. We just don't have people who know how to do co-creation across tech and business. And that shortage is slowing us down. So I think what we also need are these leaders who understand about co-creation across organizational boundaries, or even across, like with electric vehicles, whole ecosystems that need to be put in place to support electric vehicles really becoming something that many of us are willing to buy and enjoy. The best B2B marketing gets wasted on the wrong people. When you want to reach the right professionals, use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals, including 130 million decision makers.

18:48And that's where it stands apart from other ad buys. You can target your buyers by job title, industry, company, role, seniority, skills, and company revenue, so you can stop wasting budget on the wrong audience. Spend$250 on your first campaign on LinkedIn ads and get a free$250 credit for the next one. Just go to linkedin.com slash ideacast. That's linkedin.com slash ideacast. Terms and conditions apply.

19:18So I would have thought that the catalyst, that the bridger, that that happens organically. But it sounds like you're saying, no, you actually have to be very purposeful about, if it doesn't happen organically, that you have to create the structure where these roles will be in play. Think about it, Adi. Too many organizations are siloed, even to this day. And when you ask anyone, what is it going to take for you to make sure that these investments you're making in Gen AI and Agentic AI are really going to pay off? They all say almost immediately, horizontal work, right? But we still haven't learned how to work horizontally within our organizations, nonetheless, with others outside our organizations who have different priorities, different constraints, different working styles.

20:04So what you see in the Ajay Banga story is how they learn to work with startups, to learn and bring them in to give them talent and capabilities. Then they learn how to build even a broader ecosystem where they bring their clients to work with these startups, and they facilitate those relationships to create different kinds of, I'll call them coalitions necessary to get change done if you want to start doing business in a country you've never done business in before. So I think that those leaders who can have that big picture and think about, you know, you can't do this all. You need lots of bridges.

20:38You need lots of catalysts. I think that that's what we're seeing is new, and it has to do in part with the speed of the emergence of new technologies, as well as people have become very aware, maybe partly because of the pandemic, I don't know, or the political issues going on, that you need to think about creating an environment, a broader ecosystem in which your organization is working so you can be successful. So that's what we see. It's become tougher. So another example from your book, a fun one, you write about Osteria Francescana, an Italian restaurant that has twice been named the best restaurant in the world.

21:19What are some lessons that the rest of us can draw from their success? Massimo and Lara, who are the couple who have created this whole global network of both Michelin-rated restaurants as well as soup kitchens called Food for Soul. And they see these as very interconnected because for them, being in the restaurant business is about what they call the slow food fast car movement. that is embracing tradition, but also innovating. So one of the things that they really worry about is how do they develop chefs who have their own identity? So none of his restaurants are named after Massimo. All of them have their own names and actually are restaurants that really suit the local environment.

22:06And so if I'm going to Tokyo, I need to be a chef. I'll work for a while in Modena at the main restaurant, but then I'm going to go off to Tokyo and I'm going to create a restaurant there that reflects on what I've learned from Massimo and Laura, not only about, you know, the food and how you do restaurants, how you create a really world-class restaurant, but also how do you get to know the community and figure out how you can serve the needs of that community, help with the unhoused. So whenever a chef goes into whatever city location they go into, they actually have this sensibility about we want to become a part of this community.

22:43And part of that is making sure that we source local food, we source locally and develop relationships with the suppliers in a particular region. But it's also about understanding what the needs are of that community and figuring out how we can serve those needs. So they develop chefs who are really values-driven chefs about all that they do. And that shows up in all of the work. You talk generally about great leaders as being wayfinders and not pathfinders. I like that distinction, but talk about what that means to you. Well, I have to tell you, whenever you are writing the epilogue of a book, by that time as an author, you are tired.