In contemporary organizations, innovation is required to meet constantly changing conditions. Leaders who demonstrate a transformational style are most likely to inspire innovation.
In a rapidly changing business landscape, ideas impossible suddenly become possible, and ideas that made a vast deal of sense yesterday do not make sense today. Drucker (2002) defined innovation as a discipline involving three key ingredients: focusing on mission, defining significant results, and conducting rigorous assessment.
Business organizations must decide what they need to do to maintain competitive advantage. Organizations need an elucidate focus on mission. Organizations need to specify the results they want, continually assess their actions, and determine if what they are doing makes sense. Organizations have to be willing to abandon processes that do not capitulate results and search for authentic opportunities. According to Drucker (2002), when organizations find an opportunity, they should decide where they could make the greatest discrepancy, hone in on that distinction, and continually evaluate and reassess results. Drucker (2002) stated innovation does not equate to being brilliant. Innovation involves being conscientious. Though implementing innovation sounds easy to do, many organizations are not innovative.
Based on the theoretical constructs, it seems one requirement for innovation is transformational leadership. Transformational leaders communicate to followers they can make a difference can promote positive change, and can benefit from hard work, good faith, and respect for others. According to Drucker (2002), innovation is about making a difference, and so many organizations struggle to innovate.
Senge (1998) stated one reason organizations do not innovate is leaders do not realize the domination of their role in the innovation process. Though most leaders would assess themselves as participative (Theory Y) managers, the autocratic style is the predominant leadership style in corporate America. Few individuals in high-ranking positions would admit their behavior contradicts what they say their values are. This inconsistency is why self-awareness, the ability to conduct an honest self-appraisal, is the hallmark of leadership and the foundation for innovation. If leaders look honestly at themselves, they should be able to determine if their behavior matches their words. If leaders look honest at how their organizations manage people, they would most likely see an autocratic (Theory X) approach and an approach that discourages innovation. As De Geus (2002) stated organizations view people as a means to an end. Business operates to generate profit, not to promote collaborative communities. Organizations with this transactional approach will be ineffective in engaging and encouraging employees to innovate.
If leaders adopt a participative (Theory Y) belief that most people enjoy working and want to contribute, failure to innovate becomes a more complicated issue. Failure to innovate requires accord why dedicated and talented people consistently fail to produce results, and failure to innovate also requires examining each of Drucker’s (2002) ingredients for innovation more closely.
Most organizations have mission statements, but employees may not know the organization’s mission. One possible explanation is when employees do not know the organization’s mission statement, and maybe few mission statements have made a difference in the employees’ performance. Another elucidation might be that most mission statements do not align with what is genuinely happening inside organizations (Senge, 1998). A further explanation might be that employees do not distinguish between the company’s mission, vision, and values. Leaders must be careful how they use language and communication to convey these messages. According to Senge (1998), mission is "purpose, reason for being" (p. 17). Vision, however, is "a picture or image of the future we want to create" (p. 17). The mission defines a direction, not an end state, or ultimate goal. Mission statements help organizations distinguish important from unimportant results, and identify actions, and initiatives not aligned with the organization’s purpose.
Defining results emanates to be easier than defining an organization’s mission. Most managers are pragmatic, and results-driven and have a vision for what they want to accomplish. The mission provides a purpose, and vision translates a mission into intended results. Vision guides the allocation of time, energy, and resources. Senge (1998) believed that a compelling vision is what inspires peoples’ passions and that human beings have a purpose and reason for being, which is expected to make a positive distinction. This passion is what promotes innovation. Most managers probably would say people work to earn a paycheck; therefore, the objective is to create the right incentives so people will do what the organization requires of them. Senge (1998) attributed to work organizations primarily use extrinsic motivation and Theory X thinking, which premises stifle innovation.
The third ingredient of innovation is assessment, which involves evaluating what is and what is not working. According to Drucker (2002), abandonment precedes innovation because organizations have to abandon what is not working. Albeit the idea that abandonment precedes innovation sounds remarkably easy, most organizations are reluctant to abandon obsolete processes, practices, and policies.
The most obvious way organizations can practice innovation is to enable individuals to express their opinions without fear of reprisal. Creating this culture is a challenge for many organizations. It is not uncommon for employees to sit in a meeting and shakes their heads in accordance, when they, disagree with their manager’s point of view. Therefore, conformity stifles innovation (Drucker, 2002).
It is easy to determine if an organization is truly open to innovation. Simply ask: “How quickly does bad news go up the chain of command?” In most organizations, good news travels upward quickly, but bad news and mistakes get ignored or denied. Innovation requires accepting and admitting failure and is a continual learning process (Senge, 1998). Drucker’s (2002) components of innovation are the mission, vision, and honest assessment, which build a foundation for authentic leadership and organizational innovation. These ingredients encourage employees at all levels to craft the organization’s future.