The World’s Most Innovative Companies 2012


By Jeff Dyer & Hal Gregersen

Why are some companies able to create and sustain a high innovation premium while others don’t?

The answer is not complicated: People, process, and philosophies (what we call the 3Ps). They differentiate the best in class from the next in class when it comes to keeping innovation alive and delivering an innovation premium year after year.
Hal GregersenOn the people front, the behaviour of leaders matters—big time. In our initial study on disruptive innovators published with Clayton Christensen in The Innovator’s DNA, we found five “discovery skills” that distinguished innovators from non-innovators. Innovators ask provocative questions that challenge the status quo. They observe the world like anthropologists to detect new ways of doing things.  They network with people who don’t look or think like them to gain radically different perspectives. They experiment to relentlessly test new ideas and try out new experiences. Finally, these behaviours trigger new associations which allow them to connect the unconnected, thereby producing disruptive ideas.



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As part of our research we developed an assessment to determine how much individuals engage these skills. We found that top management teams’ innovation skills make a serious difference. In fact, leaders of high innovation premium companies scored at the 88th percentile on our assessment of the five skills of disruptive innovators. By comparison, CEOs of average companies scored at only the 62nd percentile. Put differently, innovative leaders spent approximately 31 percent of their time actively engaged in innovation-centered activities compared to only 15 percent by leaders of less innovative companies.  Doubling the time a senior leader personally invests in getting new ideas usually delivers significant returns.

Lessons From Leaders
For example, Fabrizio Freda, CEO of Estée Lauder (# 23 this year; #44 last year) excels at challenging the status quo by “playing the outsider”. He learned this lesson early in his career, as he moved from Procter & Gamble to Gucci and back to P&G again.

Fabrizio Freda“The experience outside [P&G] gave me a lot more authority in challenging the status quo,” says Freda, “I stayed the challenger forever.”*  The trilingual (Italian, French, English) executive has lived throughout Italy — Naples, Rome and Florence — and in Germany, Switzerland and Belgium.  During his time at Gucci, Freda oversaw international marketing and strategic planning. While at P&G, he worked in many divisions including cough and cold, laundry, health and beauty, and most recently, as president of global snacks. Freda is the quintessential observer—and as he observes he both watches and listens. After arriving at Estée Lauder, he spent six months on a “listening tour”, zigzagging across Lauder’s worldwide operations in 140 countries. “I strongly believe in the power of listening,” says Freda. Listening, he says, helps him connect the dots. “The way my thinking and creativity goes is listening, connecting and creating.”

S.D. Shibulal, co-founder and CEO of Infosys (#19 this year; #15 last) is both observer and experimenter. In his 30 years at Infosys, Shibulal says, “There is nothing that I have not done.”  He was the first sales person, has done account management, launched its internet consulting practice, is a network expert, helped design and launch its first ecommerce application, and has been the head of both delivery and sales. To get a new perspective, Shibulal took a five-year sabbatical to work for another firm, Sun Microsystems.  He’s also known as an experimenter and “gadget freak”. Shibulal has always been fascinated with taking things apart and putting them back together.  When he buys the latest device, he never uses it as it is.  He examines it, takes it apart and refits it to his needs, turning fad into art. Before PDAs were popular, he had assembled his own version with different parts from a RadioShack store. That’s why at Infosys, where geeks are a dime a dozen, he is revered as a “gizmo guru”.

The Process of Innovation
We’ve found that successful leaders not only personally understand how innovation happens but they try to imprint their behaviours as processes within their organisation.
Jeff BezosJeff Bezos (Amazon, #3) looks to surround himself with people at Amazon who are inventive. He asks all job candidates: “Tell me about something that you have invented. Their invention could be on a small scale – say, a new product feature or a process that improves the customer experience, or even a new way to load the dishwasher. But I want to know that they will try new things.”  When the CEO asks all job candidates whether they’ve ever invented anything, it sends a powerful signal that invention is expected, and valued. Bezos is also a great experimenter (with multiple patents to his name) and claims that, “I encourage our employees to go down blind alleys and experiment. In fact, we have a group called Web Lab that is charged with constantly experimenting with the user interface on the website to figure out improvements for the customer experience.”  The point is that leaders like Benioff [of] and Bezos don’t just do it themselves, they think about replicating themselves and their behaviours throughout their organisations.
In contrast, we’ve seen many innovators who don’t seem to care about coaching or building innovation skills in others. They are good at creative problem solving so why delegate it to others who aren’t as good at it? This can be a huge barrier to building an organisation with true innovation capability. So having innovative leaders is necessary but not sufficient for sustaining an innovation premium.
Apple’s performance under Steve Jobs, versus other leaders, powerfully illustrates the importance of innovative leadership. From 1980-1985 during Job’s initial tenure at Apple, the company’s innovation premium averaged 37 percent.  Without Jobs, Apple’s premium dropped far below zero (an “Innovation Discount”) from 1985-1998. But with Job’s back at the helm Apple’s innovation premium eventually jumped to 50 percent. Job’s impact is undeniable. But what will happen now? Did Jobs sufficiently build innovation capability throughout Apple? Does Apple have sufficient innovation skills within the top management team and processes that encourage and support folks as they try to “think different” like Steve Jobs?
What we do know is that if the leaders of a company don’t “get” innovation, the organisation doesn’t stand a chance. The bottom line is that leaders of innovative companies consciously set the example by modeling innovation behaviours—and imprinting those behaviours within their organisation as processes. Their personal actions help to make innovation matter to others.
This article was originally published by Forbes. To read the full article go here.

Intelligence is over rated

Albert Einstein’s was estimated at 160, Madonna’s is 140, and John F. Kennedy’s was only 119, but as it turns out, your IQ score pales in comparison with your EQ, MQ, and BQ scores when it comes to predicting your success and professional achievement.

IQ tests are used as an indicator of logical reasoning ability and technical intelligence. A high IQ is often a prerequisite for rising to the top ranks of business today. It is necessary, but it is not adequate to predict executive competence and corporate success. By itself, a high IQ does not guarantee that you will stand out and rise above everyone else.

Research carried out by the Carnegie Institute of Technology shows that 85 percent of your financial success is due to skills in “human engineering,” your personality and ability to communicate, negotiate, and lead. Shockingly, only 15 percent is due to technical knowledge. Additionally, Nobel Prize winning Israeli-American psychologist, Daniel Kahneman, found that people would rather do business with a person they like and trust rather than someone they don’t, even if the likeable person is offering a lower quality product or service at a higher price.

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With this in mind, instead of exclusively focusing on your conventional intelligence quotient, you should make an investment in strengthening your EQ (Emotional Intelligence), MQ (Moral Intelligence), and BQ (Body Intelligence). These concepts may be elusive and difficult to measure, but their significance is far greater than IQ.

Emotional Intelligence

EQ is the most well known of the three, and in brief it is about: being aware of your own feelings and those of others, regulating these feelings in yourself and others, using emotions that are appropriate to the situation, self-motivation,  and building relationships.

Top Tip for Improvement: First, become aware of your inner dialogue. It helps to keep a journal of what thoughts fill your mind during the day. Stress can be a huge killer of emotional intelligence, so you also need to develop healthy coping techniques that can effectively and quickly reduce stress in a volatile situation.

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Moral Intelligence

MQ directly follows EQ as it deals with your integrity, responsibility, sympathy, and forgiveness. The way you treat yourself is the way other people will treat you. Keeping commitments, maintaining your integrity, and being honest are crucial to moral intelligence.

Top Tip for Improvement: Make fewer excuses and take responsibility for your actions. Avoid little white lies. Show sympathy and communicate respect to others. Practice acceptance and show tolerance of other people’s shortcomings. Forgiveness is not just about how we relate to others; it’s also how you relate to and feel about yourself.

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Body Intelligence

Lastly, there is your BQ, or body intelligence, which reflects what you know about your body, how you feel about it, and take care of it. Your body is constantly telling you things; are you listening to the signals or ignoring them? Are you eating energy-giving or energy-draining foods on a daily basis? Are you getting enough rest? Do you exercise and take care of your body? It may seem like these matters are unrelated to business performance, but your body intelligence absolutely affects your work because it largely determines your feelings, thoughts, self-confidence, state of mind, and energy level. Top Tip For Improvement: At least once a day, listen to the messages your body is sending you about your health. Actively monitor these signals instead of going on autopilot. Good nutrition, regular exercise, and adequate rest are all key aspects of having a high BQ. Monitoring your weight, practicing moderation with alcohol, and making sure you have down time can dramatically benefit the functioning of your brain and the way you perform at work.

What You Really Need To Succeed

It doesn’t matter if you did not receive the best academic training from a top university. A person with less education who has fully developed their EQ, MQ, and BQ can be far more successful than a person with an impressive education who falls short in these other categories.

Yes, it is certainly good to be an intelligent, rational thinker and have a high IQ; this is an important asset. But you must realize that it is not enough. Your IQ will help you personally, but EQ, MQ, and BQ will benefit everyone around you as well. If you can master the complexities of these unique and often under-rated forms of intelligence, research tells us you will achieve greater success and be regarded as more professionally competent and capable.

Richard Branson on Office Ties … and the Company Dress Code

Reprinted from Entrepreneur

Richard Branson on Office Ties and the Company Dress Code

While out walking in London recently, I passed a group of uniformed schoolchildren moving in an orderly, single-file line, with teachers in front and rear.

Nothing unusual, except for one thing that made me laugh out loud: their identical school ties. Or more accurately, what was left of them. More than half the kids had cut their ties so that only three or four inches remained below the knot.

Intrigued, I asked the teacher who was bringing up the rear, “So what happened to the ties?”

He chuckled and said, “Well, the kids hate wearing them, but school rules say they have to. What the rules fail to specify, however, is how long they have to be — so, snip-snip!”
Why didn’t I come up with such a naughtily innovative solution when I went to school?

This caught my eye because Virgin just got into the banking business with the acquisition of Northern Rock, a British bank that we are gradually rebranding Virgin Money. In British banking, few things strike terror in the heart of a customer quite as much as the prospect of facing a tie-wearing, three-piece-suited bank manager across a huge mahogany desk. So we redesigned the banks.

Related: Richard Branson on Decision-Making For Entrepreneurs

One of our first changes has been to start to remove the traditional counters and replace them with informal seating areas. We also thought that the staff’s formal business attire was almost as solid a barrier to customer-friendly experiences as those counters were. Our newest group of Virgin employees were told they could dispose of the ties.

This would suit me — I have always hated ties, maybe because I’ve never seen the point. They are uncomfortable and serve no useful purpose. I am lucky to have always worked for myself, and therefore have never been a victim of corporate dress codes. For years, a sweater and corduroy trousers were my standard business attire. Someone once joked, “The day Richard shows up at the bank wearing a suit and tie, you’ll know that we are in serious trouble.”

Lately I have taken to wearing a jacket, which is handy since I encounter many different climates and situations through my business travel, but I will only wear a tie under extreme duress, which usually means some ultraformal official occasion, such as the state dinner at the White House that I was fortunate to attend.

Suits and ties in an office are just another type of uniform, but in an arena where uniforms no longer serve any useful purpose. At one time they probably showed that the wearer was, at the very least, able to purchase and maintain a fairly expensive piece of fabric. Now, however, in an individualized, interconnected culture, your achievements speak for themselves. The suit and tie is an anachronism.

It used to be that the one male in the room with an open neck (which was usually me) would be self-conscious about it (which wasn’t me). Nowadays, however, I am delighted to note that it’s the man wearing the tie who is most likely to be the odd person out.

Related: Richard Branson on Strategies for Success

Probably one of the biggest breakthroughs in the gradual demise of the suit-and-tie dress code came, rather surprisingly, in some lofty political circles. Tony Blair was one of the first British prime ministers — Maggie Thatcher excepted — to frequently appear in public without “proper” neckwear. Now President Obama has carried it to a level where he seems to be tieless almost 50 percent of the time.

I have always prided myself on throwing out the rulebook when something proves a barrier to business — or is just plain silly. And there is no viable argument why “gentlemen” should wear ties. The best anyone can muster is: “It’s expected,” or “Everyone else will be wearing one.” One of the signs that business culture has changed is that when people arrive for a business meeting with me, often the first thing they ask is, “Do you mind if we remove our ties?” They surely never thought, “If we don’t wear our ties we’ll stand a lesser chance of getting the deal done.” So why did they wear them in the first place?

So on behalf of the oppressed tie-wearers of the world, here is my appeal to those corporate despots who still force their male employees to put nooses around their necks every day: Please think again.

(Original article available here)

BCS to recognise The Open Group certifications towards CITP status

LONDON, March 9th, 2012 – BCS, The Chartered Institute for IT and The Open Group have signed a new agreement that will allow Open Group certifications to be accepted towards Chartered IT Professional (CITP) status.

The agreement allows individuals who hold The Open Group Certified Architect (Open CA) and Certified IT Specialist (Open CITS) certifications at Level 2 (Master) and Level 3 (Distinguished) to be exempt from the initial review and interview elements of the BCS Charted IT Professional (CITP) process. Applicants will still need to take and pass the BCS breadth of knowledge test as well as be Professional members of BCS to achieve CITP status. The Open Group certifications complement CITP status as they are globally recognised, credible qualifications which demonstrate that IT professionals have the knowledge, skills and expertise required to complete certain jobs.

The CITP assessment process was developed by BCS in response to industry and government demands for deeper expertise and relevance from the IT profession.

Adam Thilthorpe, Director of Professionalism, BCS, The Chartered Institute for IT, explains: “We have assessed The Open Group’s Open CA and Open CITS certifications and are happy that the criteria and processes established by The Open Group meet the level of experience and competence demanded for CITP. Globally there are about almost 6,000 IT professionals who will be able to take advantage of this new agreement when it is launched supporting our objectives to champion global IT professionals and give practitioners the professional development and career support that they deserve. This is important as employers are increasingly demanding CITP recognition from candidates for key IT roles.”

James de Raeve, VP of Certification, The Open Group adds: “This agreement is great news for IT professionals who want to complete both a qualification from The Open Group and achieve CITP status without duplicating effort. The chartered status demonstrates the same degree of professionalism recognised in other chartered professions in the UK and provides independent validation that Level 2 and 3 of The Open Group’s professional programmes are at least equivalent to SFIA Level 5.”

CITP status shows that senior practitioners possess a broad technical knowledge and can demonstrate business experience, commercial accountability and competence in their individual IT specialism(s). Applicants need to have eight to ten years experience with at least three of the last five years in a complex IT role requiring business insight. Professionals also need to demonstrate competence in their chosen specialism(s) and interpersonal skills via an online interview with expert assessors.

Holders of The Open Group certifications forming part of this agreement can register their interest in achieving CITP status through the scheme at: [1]

About The Open Group

The Open Group is an international vendor- and technology-neutral consortium upon which organisations rely to lead the development of IT standards and certifications, and to provide them with access to key industry peers, suppliers and best practices. The Open Group provides guidance and an open environment in order to ensure interoperability and vendor neutrality. Further information on The Open Group can be found at [2].

The Productivity Paradox: How Sony Pictures Gets More Out of People by Demanding Less

Read the spotlight article.

Companies are experiencing a crisis in employee engagement. One of the problems is all the pressure companies are putting on employees to produce. Workers are trying to get more done in less time-and are burning out. But while time is finite, energy is not; people can increase their reserves of personal energy. The key is to establish rituals-such as shutting down your e-mail for a couple of hours a day so you can focus on priorities, or taking a daily 3 p.m. walk to get a breather-that renew your physical, emotional, mental, and spiritual energy. These behavioral changes are sustainable, though, only if leaders at the most senior levels of an organization are willing to set a context for them, both by creating their own rituals and by setting a tone where people feel safe taking time out of the day on a regular basis. This is just what the leaders of Sony Pictures Entertainment did. Working with Tony Schwartz of the Energy Project, they implemented energy management training that has reached nearly half the company so far. To date, the reaction to the program has been overwhelmingly positive. Eighty-eight percent of participants say it has made them more focused and productive. More than 90% say it has helped them bring more energy to work every day. Eighty-four percent say they feel better able to manage their jobs’ demands and are more engaged at work. Sony’s leaders believe that these changes have helped boost the company’s performance. Despite the recession, Sony Pictures had its most profitable year ever in 2008 and one of its highest revenue years in 2009.

The new normal means constant change. Companies must reinvent themselves if they want to survive. This HBR Spotlight section looks at organizational change through two very different lenses-the first examining the connection between restructuring and improved performance, the second making the case for reorganization as a means of keeping a company’s structure in tune with the human dynamics that drive creativity and innovation. A third article suggests new ways to keep overworked employees engaged and productive in an economy struggling to recover from global recession.