Over the last few weeks, we’ve had news of a lot of changes within the leadership of some major brands. At the end of January, it was announced that Justin King, the chief executive of Sainsbury’s will be stepping down in July, after 10 years as head of the company. This month Microsoft announced Satya Nadella, a veteran insider and previous head of the company's cloud computing division and enterprise business, will take over from CEO Steve Ballmer. It isn’t unexpected that in a time when companies have to contend with a very real and immediate sense of market disruption, that these management changes receive intense scrutiny as businesses look to safeguard their future.
Even the leadership of the mighty Apple continues to be under the microscope. Tim Cook, despite presiding over some spectacularly successful sales since he took the reins from Steve Jobs, continues to be subject to criticism as the market expects more from the business and looks to the leadership to facilitate further innovation. So much so that Forbes published a column last month, asking if he would be the next "Steve Ballmer."
Whether through regulation, market consolidation and/or new technology, businesses are being forced to undergo substantial change in order to keep or grow their market position and often new leaders are pushed to the helm to help overcome these disruptions and deliver profitability and growth.
Leaders have a key role in enabling and informing the strategy of innovation. Unless a business can innovate then it risks becoming obsolete. Just look at BlackBerry’s swift decline, which was reportedly down to infighting at its executive level that ultimately prevented it from being competitive.
Microsoft has placed a bet on the cloud and mobile markets, explaining that conquering them remains critical to its future success. The company will now need to try and find its identity and manage wholesale change as the markets it dominated historically, such as the personal computing market, decline or vanish. Microsoft is only just beginning to tackle this challenge in its consumer business, with limited reports of its success.
Similarly, when his time comes, Mike Coupe, who is set to take over from Sainsbury’s CEO Justin King in July, has a tough market to battle in. In his 10 years, King has delivered unprecedented growth through a period of intensifying and aggressive competition in the retail sector. As one of the most vocal proponents of big data and analytics, King credits the Nectar programme with delivering much of Sainsbury’s competitive edge and in delivering sustained margins in an industry famous for discounting.
Although well placed to do so, Coupe will need to build on this in the years ahead as he takes the top job. As I outlined in my joint paper with Joe Peppard of the Cranfield School of Management, all CEOs need to harness the potential of data to drive their decision-making and spearhead a path for growth. And, in equal measure, Sainsbury’s will need to continue to invest in its customer experience online and in-store, drawing on the wealth of insight available to it via the Nectar programme and beyond.
Facing change in established markets can take significant courage: as technologies like smartphones start to redefine human behaviour around everyday things, from shopping to routefinding, businesses may find themselves needing to completely redefine their operating model. As part of a report I authored recently, called EMC Leader 2020, I commissioned research to explore the attitudes of UK business leaders to change, risk, technology and innovation. It found that some two thirds of CxOs at large companies in the UK say they are experiencing disruption in their markets right now. 85 per cent are ready to embrace change but, somewhat worryingly, over half of them find change difficult to handle. In the UK, we’ll need to get better at this if we are to maintain our global competitiveness.
So how can we discover these next great innovations? And how do you capitalise on it? Well, my first prescription would be decisiveness. Almost all of CxOs surveyed for my report said their teams were sometimes unable to take decisions due to information overload and a focus on consensus. Cutting through this syndrome, often referred to as analysis paralysis, is a crucial first step to delivering innovation.
Secondly, I believe the CEOs role should be that of a sponsor and champion of innovation, rather than necessarily being the innovator-in-chief. That means fostering an adaptive culture that is open to change, and persuading all staff that experimentation should be part of their role, then exercising good judgement when picking which ideas to develop. It’s an approach that requires driving, nurturing and encouraging innovation across all levels of the business.
In the UK, it’s crucial that we do everything we can to achieve this. PwC’s recent Breakthrough Innovation and Growth paper showed that British companies think innovation is much less important than most countries in the world, in particular China and Germany. The same paper showed that the most innovative 20 per cent of companies grow an average of 50 per cent faster that the least innovative – which does a lot to illustrate the impact that an innovative culture can have on the bottom line.