Falling into Step in Innovation and Entrepreneurship

CEOs and B-schools identify synergies

04/04/2014 Barcelona

Andrea Morante

For companies and business schools alike, innovation and entrepreneurship are taking center stage. Scholars and business leaders came together at IESE Business School to share their experiences in integrating these two areas into their culture and business models and how their synergies in leadership development can take on the challenges of an uncertain and complex global business environment.

Changing Mindsets

"We need to start at the macro level," said Jorge Aisa Dreyfus, HSBC Bank PLC, Group Co-Head of Learning, Talent, Resourcing & Organizational Development. He explained that an organization had to have the right DNA in place and that, "in the absence of the right culture, things won’t stick together even with good leadership development programs in place."

His point was a common theme throughout the day: Innovation is first and foremost about culture and mindset. Companies can foster a shift in mindset by diffusing values in alignment with innovation throughout an organization. For HSBC, it’s about creating a culture that is open, connected and dependable and diffusing these values throughout the organization, explained Mr. Aisa Dreyfus.

For Abertis, a company that runs 6,713 km of motorways in Europe and operates more than a dozen airports, innovation is not about a new product, but about strategy. With its impressive international expansion to countries including to Brazil, France, Puerto Rico, Canada and the U.S., a new approach to strategy became key to its growth, said Francisco Reynés, the company’s CEO. Part of this strategy involved placing new expectations on managers about their cost and investment decisions and a commitment to resolving all human resource needs internally. The company held fast to this decision, moving and training employees around from within, something that was innovative for the company’s culture.

Reynés attributes much of the success to this consistent top-down approach, even when "Changing culture is the most challenging role you have within a company." He underscored that it is the repeated behavior that makes a shift in culture part of the company’s DNA. "Talking about values is not effective. At the end of the day, it’s about acting as you said you would act; running a company by example is much more important than through PowerPoint presentations about values."

Creating Customer-Centric Organizations

Rosa García, Chairwoman and CEO of Siemens, discussed the importance of implementing management approaches that are conducive to creating an innovative culture and fostering new ways of interacting with customers.

She highlighted the virtual about-face that management has taken in the 21st century, in response to many social and economic shifts, especially technology. "It used to be that power was on the production side. But from one day to the next, the Internet came and the power was transferred to the demand side, to customers," she recalled.

And thus, companies like Siemens underwent a customer-centric transformation. "We needed to stop having customers and start having fans," she explained. At the heart of the strategy to attract "fans" was innovating in people management. "How will I make my company the best company to work for with the group of people I want to attract in mind?" Ms. Garcia asked herself upon taking the helm of Siemens, Spain.

As CEO, accomplishing this has a lot to do with a major shift in management style. "I need to create a value proposition that would make employees proud to work for us," she explained, insisting that a CEO needs to gain the respect of his or her employees, and this is not by "having all the answers, but rather the right, thought-provoking questions."

Discover, Disrupt and Deliver

Daring to drastically change the conception of a product is another way that companies like Pomellato have achieved corporate growth. Despite being a relatively new kid on the block, the company’s CEO Andrea Morante explained how Pomellato joined the ranks of traditional luxury jewelry brands that include Cartier, Chopard, Bulgari and Tiffany. To achieve its place as the fifth top seller of jewelry, Pomellato spotted the disruptive social shifts in the 1960s and 1970s and built its strategy around that: to target women exclusively who now managed their money and purchasing decisions. "In our case innovation has been the name of the game," said Morante.

Whether a company builds roads, crafts jewelry, develops electronics, or provides telecommunications solutions, innovation has to do with, what Marta de las Casas Telefónica’s Global Talent and Development Director cited as "discover, disrupt and deliver," concepts which represent Telefónica’s Universitas leadership development approach. She emphasized that as a company, "We need to be sure leaders have the right mindset, embrace new technologies and work in a cross-functional manner."

According to De las Casas, this requires changes in company systems and measures of "success." The impact of new initiatives may not be measurable in economic returns, but instead "in terms of leadership development and in how leaders think about innovation," she said.

Never too Big to Innovate

Though large companies are notorious for having much more trouble grappling with innovation and change, Erwin Lebon, GGO Europe HR Leader for GE, underscores that large companies cannot afford to look the other way. "We need to learn how to be entrepreneurs again," he said, adding that it is essential not to know just about the entrepreneurial competitors that are already out there, but to worry about the ones developing the next innovation in their garage. For a large company such as GE, "Learning agility will become more and more important," he continued.

He also highlighted the importance of attracting and supporting leaders who understand their role as an enabler of teams and a connector of people with processes.

B-schools and Corporations Align Efforts

Innovation and entrepreneurship have been integrated into the curriculum of MBA and executive education programs at top business schools, to varying extents and with diverse approaches.

In China, executives gain exposure to innovative ideas and knowledge sharing just by virtue of participating in executive education programs, explained Dean Zhang Weijiong of CEIBS. He pointed out that in the Chinese context, on the job, CEOs and top management are unable to tap into new ideas due to cultural resistance to transcend hierarchy for the sake of sharing and developing new possibilities.

In Europe, schools have had to take a very proactive approach to helping students experience entrepreneurship and innovation while they are on campus. "At Oxford, we do a simple exercise," explained Dean Peter Tufano of Saïd. "We ask our students what the forces will be in society and economy that in 25 years will create tremendous opportunities." With several ways for students to experience entrepreneurship while at Oxford, the school strives to develop "not learners, but problem-solvers," said Tufano. Similarly, Franz Heukamp, Professor and Assistant Dean, explained that IESE fosters an entrepreneurial spirit through the MBA program content, yet it continues to reach out to that spirit amongst its alumni through FINAVES, Business Angels and the EMBA program’s entrepreneurial club.

MBA programs indeed are shifting their mindsets, not just as a response to new corporate needs, but also, explained Wendy Alexander, Associate Dean of LBS to the very different expectations and aspirations of their applicant pools and student body. She discussed how at LBS they are striving to personalize content, experiences and coaching. "The challenge is how you support hundreds of unique career journeys," she said.

Many b-school speakers agreed that they have a central role in inspiring, encouraging and fostering the critical thinking in leadership development to support innovation throughout their careers.

Developing Critical Thinkers

Srikant Datar, Professor and Associate Dean of HBS, discussed how to help students break traditional problem-solving patterns in order to find unique solutions to complex issues and situations. His course is founded on the premise that innovation can actually be taught, learned and practiced. "A typical approach goes from problem to solution," he pointed out. He continued explaining that being in "the gap" where something hasn’t yet been developed, where the process is not linear, can be an uncomfortable place to be.

Overcoming functional fixedness, and developing and exercising empathy that leads to human-centered design are at the heart of the course which takes them through a process in clarifying, ideating, developing and finally implementing solutions.

Marching to the Beat of the Same Drum

Though academia is known for moving at a different pace than corporations, when it comes to innovation and entrepreneurship, the two worlds should focus on marching to the beat of the same drum. Bernard Ramanantsoa, Dean and Professor of HEC pointed out that if business schools focus only on responding to immediate business problems, the lag from program design to implementation may in some cases not appropriately respond to problems.

Instead, he and other speakers agreed that corporate and b-schoolsynergies will help them fall into step with each other when it comes to innovation and entrepreneurship in leadership development.