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LEADING INNOVATION AND CHANGETHE 9 CORE COMPETENCIES TO SUCCESSFULLY LEAD INNOVATION AND CHANGE IN THE 21ST CENTURY.

RESEARCHED AND DEVELOPED BY ARTGYM 2018©

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CONTENTS

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What Does it Take to Lead Innovation and Change in the 21st Century?

What are the 9 Competencies for Leading Innovation and Change in 21st Century Business?

PERSONAL MASTERY: THE ART OF LEADING SELF

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TEAM MASTERY: THE ART OF LEADING OTHERS p.10

EXECUTIVE MASTERY: THE ART OF LEADING BUSINESS

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What Does it Take to Lead Innovation and Change in the 21st Century?

A summary of Artgym’s research, experience and approach.

We sit on the cusp of a fourth industrial revolution, with automation, robotics, machine learning and biotechnology promising to transform transport, medicine, social care, communication and more, and extend human capabilities in remarkable ways. But these new industrial advances also threaten to disrupt the labour market and create profound instability and public anxiety. For this industrial revolution to be “empowering and human-centred, rather than divisive and dehumanising“ as Founder of the World Economic Forum Professor Klaus Schwab hopes, we must think deeply about the social challenges we face, while innovating in new ways to meet the human needs of the future. Never before has the need for effective Leaders of Innovation and Change been so important.

However, according to the most credible recent leadership surveys, including Artgym’s research of over 200 international Business Leaders, more than half of all business leaders are only 'moderately successful' at leading innovation and 40% 'are not good' at it at all. And a 2015 PWC study of 6,000 senior executives revealed only 8% of the respondents turned out to be effective at leading transformation (Rooke and Torbert refer to them as “strategist” leaders). It is not surprising that most innovation and change efforts are not effectively delivered, disengaging employees and costing the business money.

“Unlike innovation and change in the last century, the rate of speed at which we need to innovate and change is ever increasing. This is a fundamental difference which means that we need new, more dynamic ways of leading innovation and change for the 21st Century.”

Although breakthroughs do sometimes come from a one-time single source, it is rare. In reality the vast majority of successful innovations are born out of a committed collaborative process involving multiple contributors. All businesses know that the speed of change is only getting faster. One time innovations or slow paced change initiatives will no longer meet the demands of your business or your consumers. It requires continuously looking to improve ways of working, systems and processes, relationships, communications and behaviours. Leaders have to create a culture of constant innovation and change.

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Interviewing successful leaders of fast-paced international businesses, the vast majority agrees it requires a total focus on the customer, the ability to think big, the courage to constantly challenge conventional ways of working and the skills to build a culture of creative collaboration across teams. That’s why, based on our research and observations through our work, we believe the future of work is creative collaboration – it’s all about co-creation. And this new way of working demands a new way of leading.

“We have identified 9 competencies for leading continuous innovation and change at the speed 21st Century business demands”

Based on this need, Artgym has extensively researched and developed the mindsets, practices and competencies it takes to lead innovation and change in the 21st Century. From our research with over 200 international business leaders in China, US, & Europe, combined with the latest research in neuroscience, psychology and leadership, we have identified 9 core competencies for leading innovation and change at the speed 21st Century business demands. We have divided these 9 competencies into three levels of mastery: Personal Mastery – the art of leading self, Team Mastery - the art of leading others and Executive Mastery – the art of leading business.

Based on this research, Artgym has disrupted traditional models for innovation and change, and replaced them with agile, accelerated, co-creative methods that are far more effective for leading innovation and change in 21st Century business.

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What are the 9 Core Competencies for Leading Innovation and Change in 21st Century Business?

PERSONAL MASTERY: THE ART OF LEADING SELF

1. INNOVATION MINDSET: How to grow your innovation mindset.

2. ENTREPRENEURIAL SPIRIT: How to release your inner entrepreneur.

3. INNER CONFIDENCE: How to build your inner confidence.

TEAM MASTERY: THE ART OF LEADING OTHERS

4. INSPIRING OTHERS: How to inspire change in others.

5. THE POWER OF TEAM: How to release the creative power of groups.

6. CO-CREATION: How to create a culture of co-creation.

EXECUTIVE MASTERY: THE ART OF LEADING BUSINESS

7. CONSUMER-CENTRICITY: How to put the consumer at the centre of your business.

8. DYNAMIC STRATEGY: How to evolve your strategy at the speed business demands.

9. THE BIG PICTURE: How to contribute to the bigger picture.

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PERSONAL MASTERY: THE ART OF LEADING SELF

1. INNOVATION MINDSET: How to grow yourinnovation mindset.

2. ENTREPRENEURIAL SPIRIT: How to release yourinner entrepreneur.

3. INNER CONFIDENCE: How to build your innerconfidence.

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1: INNOVATION MINDSET: How to grow your innovation mindset.

Leaders of Innovation and Change are constantly curious with a deep need to explore, experiment and strive to make things better. They are not afraid to challenge themselves, and their teams, to seek out new ideas by learning from the world around them. They practice outside-in thinking, by learning from the latest thinking, trends and consider the business from an outsider’s perspective e.g. a customer or competitor perspective. This is the mindset that allows Leaders to be agile, adapt to changes at speed, to thrive during challenging times and constantly create new and better ways.

“Leaders must first understand their own personal appetite for innovation and change and then consider how to constantly challenge themselves to increase it.”

The passion for stretching yourself, even (or especially) when it’s not going well, is the hallmark of the innovation mindset. The innovation mindset always asks: why waste time proving over and over how great you are when you could be focusing on getting better and better? Why hide your deficiencies instead of overcoming them? Why look for other people who will just agree with you all the time instead of people who will challenge you to constantly innovate and grow? And why seek out the tried and tested solutions all the time, instead of experimenting?

Challenging the status quo and changing fixed beliefs can be difficult for most people but for Leaders of Innovation and Change, this inspires and motivates them. Our research shows that the innovation mindset is a skill that in general is not actively encouraged enough across middle and senior management executives. But it can and must be developed in leaders because without it, the effectiveness of innovation and change will be significantly inhibited.

INNOVATION MINDSET - IN PRACTICE: Artgym has developed a powerful psychometric profiling tool to help Leaders identify and grow their innovation mindset: The Innovation Mindset Model©. We use this to help Leaders identify areas of strength and areas for development and to coach them how to grow their innovation mindset. Leaders also learn how to use The Innovation Mindset Model with their own teams.

TOP TIP FOR LEADERS: Start seeing opportunities for innovation and change in every single aspect of your work, not just in the big initiatives but also in the smallest details of everything you do.

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2. ENTREPRENEURIAL SPIRIT: How to release your innerentrepreneur.

Because of the constraints of bureaucracy in larger organisations, it can be very difficult for employees to act like entrepreneurs. But research shows that there are specific aspects of entrepreneurial thinking and behaviour that are invaluable for Leaders of Innovation and Change. For example, an entrepreneur approach, as opposed to a standard managerial approach, will firmly believe in a yet-to-be-defined, yet-to-be-made future, that it can be shaped by their actions, and that it is much more useful and practical to work with the people who are similarly engaged to bring it into existence.

Entrepreneurs are highly outcome orientated, focusing on the effect of their work rather than the process. That’s why entrepreneurs make their decisions based on outcomes rather than following a linear process. Psychologists call this way of thinking Effectuation. Extensive research has shown that successful Entrepreneurs use effectuation in their thinking, rather than causation. Causation is the opposite of effectuation, as it relies on linear processes based on predictability. Research shows that Effectuation includes a set of decision-making principles that are highly effective in situations of uncertainty, unpredictability and change.

“Effectuation is a way of thinking that enables Leaders of Innovation and Change to identify opportunities better and create value, quicker.”

This way of thinking is particularly important to be able to think in an agile, adaptive, responsive and time-effective way in less predictable, complex situations. Therefore, this type of decision-making is critical to develop in Leaders of Innovation and Change.

ENTREPRENEURIAL SPIRIT - IN PRACTICE: Using the principles of Effectuation, We coach leaders when and how to move their decision making from process-orientated to outcome-orientated. By focusing on the desired outcome of activities, rather than pre-defined processes, their decision-making becomes far more effective in leading innovation and change at the speed business requires.

TOP TIP FOR LEADERS: Don’t be afraid to challenge - and change - different component parts of the process your team is using if they are not achieving the desired outcome, at the desired speed.

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3. INNER CONFIDENCE: How to build your inner confidence.

A Leader of Innovation and Change should avoid trying to be, or appearing to be the ‘expert’ in front of others. This ‘Egotism’ can make Leaders defensive and rigid in their thinking and behaviour. Successful Leaders of Innovation and Change are always open to learning: focusing on encouraging everyone to participate, listening to the expertise and advice of others, asking for feedback from their team and knowing when to use their expertise to make decisions when the time is right.

Therefore Leaders must learn how to let go of an inner belief that they need to have all the answers to be able to effectively lead. To be able to let go of their own ego in this way requires a genuine inner confidence: confident enough to be open to advice, feedback and multiple opinions at the same time as knowing when a decision needs to be made and not being afraid to make it. Our research shows that although some Leaders feel comfortable working in this way, the majority of Leaders still believe that showing a lack of knowledge is a weakness.

“Having the confidence to say ‘I don’t know all the answers but we can work it out together’ is vital to effectively lead innovation and change in contemporary business.”

To let go ‘being the expert’ and develop this level of inner confidence requires strong emotional intelligence. In fact, our research shows that a lack of emotional intelligence in leaders is one of the keys reasons why innovation and change initiatives fail in organisations. When a Leaders’ inner confidence grows, they are more open to co-creation, more comfortable with uncertainty and more willing to take calculated risks.

INNER CONFIDENCE - IN PRACTICE: We use state of the art techniques specifically built to help Leaders to develop their emotional intelligence: their awareness of self, their awareness of others and their team awareness.

TOP TIP FOR LEADERS: Be confident that you don’t need to be the expert of everything, instead focus on bringing the right people together, at the right time, to deliver the best outcome.

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TEAM MASTERY: THE ART OF LEADING OTHERS

4. INSPIRING OTHERS: How to inspire change inothers.

5. THE POWER OF TEAM: How to release thecreative power of groups.

6. CO-CREATION: How to create a culture of co-creation.

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4. INSPIRING OTHERS: How to inspire change in others.

Successful Leaders of Innovation and Change generate energy in a team, lighting the spark that inspires a team to work together towards a common vision and make change happen. For this to work they don’t explicitly tell people what to do, Leaders of Innovation and Change are able to define a vision of what success looks like and inspire others in the possibility of that vision becoming a reality. A study at University of Oxford’s Said Business School identified that the most successful Leaders of Innovation and Change use stories, metaphors and images more than statistics to lead change in their teams. Also, latest neuroscientific research clearly demonstrates how stories, metaphors and images are significantly more effective at inspiring people to change than data alone. Therefore, Leaders of Innovation and Change must be able to use the power visioning and storytelling to inspire and motivate others.

“Successful leaders of innovation and change are highly skilled at using the power of images, metaphors and stories to capture the hearts and minds of others ”

But as well as this, Leaders must learn how to tell stories that people can personally relate to. For this, Leaders must be able to tell stories from their own personal perspective and communicate this not just through their words but through their behaviours. When Leaders of Innovation and Change effectively do this, they become effective role-models of the change they want to see in others, building trust and respect.

INSPIRING OTHERS - IN PRACTICE: Based on the latest neuroscientific research, Artgym has developed a set of creative tools and techniques to help Leaders use the power of visioning and storytelling to inspire and motivate others.

TOP TIP FOR LEADERS: Start using real-life stories to describe the outcomes you want to achieve. Describe what you want to achieve through the eyes of your customers, your potential customers, and your employees.

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5. THE POWER OF TEAM: How to release the creative power ofgroups.

History has shown that innovation is seldom created by the solo genius, in practice; different brains working together best achieve it. In fact, neuroscience has proven this. The brain is a social organ, thriving through connection and challenge from other brains. In organisations, creative collaboration fuels innovation, transformation and growth. And when done well, it enables business to continuously innovate at the relentless speed consumers demands. The future of work is creative collaboration. That’s why successful Leaders of Innovation and Change do not build teams in their own image. They actively seek out different perspectives and collaborations from other disciplines to spark their ideas and inspire their teams.

The best teams thrive on diversity: idea diversity, cultural diversity and – particularly – cognitive diversity. Cognitive diversity is defined as differences in perspective or information processing styles – it is less visible than gender, ethnicity, or age diversity – but 2017 research by Alison Reynolds and David Lewis, published in Harvard Business Review, suggests it has a bigger impact. This research shows that the more cognitively diverse teams completed tasks quicker and more effectively than more homogenous.

“Leaders of Innovation and Change create working environments that value different perspectives, encouragepeople to share their ideas and experiment with different approaches”

Leaders of Innovation and Change must learn how to create a working environment that values different perspectives, encourages people to constantly challenge conventional ways of thinking and sets high ambitions. Harvard Business School Professor Amy Edmondson published extensive research showing how successful Leaders of Innovation and Change engender a culture where different team members feel safe to participate, to make mistakes, to take risks and open up without fear of embarrassment or criticism. When this happens innovation and change will be fueled by the creative power of the whole group.

THE POWER OF THE GROUP - IN PRACTICE: Artgym has developed The Group Action Method©, a tool to help Leaders identify and develop diversity within their teams, with clear guidelines and techniques on how to develop collective creativity with teams.

TOP TIP FOR LEADERS: Move away from assuming that only certain people can contribute their ideas and perspective to innovation to start encouraging everyone in your group to do this.

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6. CO-CREATION: How to set the frame for co-creation.

For co-creation to work effectively in teams, it is important for Leaders to employ the right systems, tools and techniques to facilitate this. However, the challenge is that the world is changing so fast, particularly with the development of new collaborative technologies, the systems, tools and techniques we use need to evolve at the same speed. Therefore Leaders must understand the underlying principles of co-creation so that they can continuously choose, adapt and evolve the right systems, tools and techniques for their teams.

Over the last 15 years, Design Thinking has become the dominant methodology for co-creation in business. The biggest appeal of Design Thinking is that it enables co-creation by putting the user at the centre of the process. Researching the application of Design Thinking in business, we find that it is still most often applied to product-oriented problems despite its value to services, systems, processes and human experiences. However, there have been many successful applications of Design Thinking in these areas also, including back office functions like HR and Learning and Development. However, the term is so common now, we have observed that it is often over-simplified and therefore loses the true business value. Therefore it is important for Leaders to have a solid and practical understanding of the value of Design Thinking in co-creation.

“Successful Leaders of Innovation and Change are not afraid to try out wide range of different co-creation tools and techniques, using what's right forright now, rather than what worked yesterday"

Our research also shows that whilst Design Thinking provides strong insights on users and a compelling process for idea development, it fails to recognise that without due consideration of systemic complexity and power dynamics of organisations, innovation and change will not be successful. Therefore we see a rapidly growing trend to incorporate the Systems Thinking method in co-creation. With Systems Thinking, Leaders pay particular attention to how the different parts of their organisation interact, they are aware that they do not focus within a vacuum, they do not perform independently and they strive to make meaningful connections across the whole organisational system and beyond.

In practice, we observe successful Leaders of Innovation and Change combining the user-centricity and practicality of Design Thinking with the wider implications of Systems Thinking for idea evaluation and strategic decsion making. Therefore, it is vital that Leaders understand these different ways of working so that they can choose, adapt and constantly evolve the systems, tools and techniques that will work best.

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CO-CREATION IN PRACTICE: We teach Leaders the best-practice principles of co-creation, including Design Thinking and Systems Thinking, and coach them how to apply these within the teams that they lead.

TOP TIP FOR LEADERS: Don’t get fixed on using the same tools, techniques and technologies all the time. Reach out and learn from other teams and continuously try out new ways of co-creating with your team.

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EXECUTIVE MASTERY: THE ART OF LEADING BUSINESS

7. CONSUMER-CENTRICITY: How to put theconsumer at the centre of your business.

8. DYNAMIC STRATEGY: How to evolve your strategyat the speed business demands.

9. THE BIG PICTURE: How to contribute to thebigger picture.

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7. CONSUMER CENTRICITY: How to put the consumer at thecentre of your business.

Whether you are looking to increase your online sales, increase the range of channels your customers use to interact with you, increase customer engagement, use artificial intelligence to improve customer contact, reduce your cost to serve, decentralise your HR processes, transform your working culture: we have moved into a ‘consumer-centric’ as opposed to ‘manufacturer-centric’ era. In this new era, ‘the consumer’, is defined as any consumer of your product or service: so depending on the context of the innovation and change you want to lead, those consumers can be your customers, your clients, your business partnerships or your employees.

Many companies today claim that they are ‘consumer obsessed’ but research clearly shows that most companies are still more marketing orientated than customer orientated. To Lead Innovation and Change at the speed your consumers demand, Leaders must orientate and design their systems, processes and working culture around the ever changing needs of the consumer, employing a continuous cycle of consumer research, experimentation, prototyping and iteration to meet rapidly changing needs. Nothing is fixed, and everything is changing at an ever-increasing speed.

“Consider consumer co-creation: go beyond consumer research and involve consumers (internal and external) in the ideation, evaluation and testing process too .”

Consumer obsession means constantly listening to consumers, and then continuously innovating and changing by testing, enhancing and personalising the consumer experience. But putting the consumer first is a challenge for most Leaders as they instinctively focus on their own internal business needs. Therefore to successfully lead innovation and change, Leaders must organise around the consumer and measure success

based on the consumer’s success. When Leaders successfully do this, they become exceptional at not just meeting consumer needs but predicting future needs.

CONSUMER CENTRICITY - IN PRACTICE: We coach Leaders how to plan, structure and measure their business practices based on consumer-centricity so that they understand the connection between consumer-orientation and the bottom line.

TOP TIP FOR LEADERS: Start helping each of your employees to become a consumer expert. Encourage your employees to reach out and actually speak to customers on a regular basis – listening to their real-life experiences and stories.

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8. DYNAMIC STRATEGY: How to evolve your strategy at the speedbusiness demands.

In this age of disruption, perhaps the most important part of the strategy process is “strategic learning”. As Professor Roger Martin at the University of Toronto said, “Every model is wrong and every strategy is wrong. Strategy helps you learn what is less wrong.” Strategies must be constantly challenged by perpetually scanning the critical drivers of the strategy, which ultimately should be the value for your customers.

“To lead innovation and change at the speed business requires, strategy formulation must be seen as more ‘real time’ than ‘one time’.”

Execution must be less prescribed and more dynamic, with greater empowerment at the front-line and a much better and quicker process for driving insights up the hierarchy. The front line sees the results of strategy each and every day. Therefore, we see a major shift in how successful Leaders of Innovation and Change formulate strategic plans. They spend far more time thinking about what employees can tell them and less time on what they must tell employees.

Developing strong strategies for Leading Innovation and Change requires a mindset shift from an internal bias to an external bias. The decision-making process should be biased towards what the customer/market/employees are telling you in order to understand what will most impact the value delivered to the customers/market.

According to our research and field observations, there are three key drivers of strategic failure that Leaders need to constantly keep front-of-mind:

1. Hanging onto beliefs, methods and tools that are outdated2. Failure to create deep connections with consumers3. Unwillingness (or inability) to adapt to changes at the speed occurring around them

“Leaders open up to innovative opportunities by inviting different people to the strategy table (employees, customers, business partners, advisors, etc).”

The key strategic question that successful Leaders of Innovation and Change need to constantly ask is what we call the “relevance” question: Is what we are doing still relevant to our consumer? Relevance means constantly questioning the strategy and its execution

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hypothesis, getting closer and closer to the consumer (think co-creation) and relentlessly innovating throughout the whole life cycle.

DYNAMIC STRATEGY – IN PRACTICE: We coach Leaders how to shift from a linear planning process to a dynamic strategic planning process, by teaching how to co-create strategic plans with relevant stakeholders and constantly revise these through real-time consumer insight and learning.

TOP TIP FOR LEADERS: Establish internal mechanisms to run frequent strategic planning refreshes (annually to bi-annually to quarterly to monthly) depending on the required speed of change.

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9. THE BIGGER PICTURE: How to contribute to the bigger picture.

Organisations of the past have used a different model for work. In an environment of command and control, the focus was on following rules, with little place for personal initiative. But today, that model cannot thrive in our global, highly competitive, constantly changing, highly networked world. Successful organisations today are characterised by high energy, a sense of purpose, focus, passion, agility and perseverance. So how do Leaders of Innovation and Change help their organisations generate the enthusiasm that propels it toward prosperity? The key is to be guided by the bigger picture view of the innovation and change you are leading. However, as PWC’s study of 6,000 Leaders revealed, only 8% are effective at leading transformation because there is a deficit of leaders who think and act with the bigger picture in mind.

As research consistently suggests, people must see the bigger picture in order to appreciate and find meaning in the work they do each day. If an employee’s daily activities contribute to the organisation’s values and strategy ambition, then work feels more meaningful. This also applies to your customers and other business stakeholders too. When they genuinely feel a deeper sense of ‘why’ you are doing what you are doing and ‘how’ it connects to them, they are far more compelled to engage. Leaders must reframe all innovation and change within the context of the bigger picture by joining the dots and showing ‘why’ and ‘how’ the initiatives they are leading connect to:

1. The consumer experience: their current and future needs and desires.2. The organisation’s purpose and values: the guiding principles of why your

organisation exists.3. The organisation’s strategic ambitions: the areas of focus that create value for your

organisation.4. To each and every employee: what is relevant and meaningful to his or her role.5. The wider community: the communities and environments that your employees and

customers live in.

When Leaders define and continuously communicate the bigger picture ‘why’ and ‘how’ to others, they connect to the human spirit and it yields a surprising, positive impact. It creates the motivation and the mindset that focuses attitudes and behaviours on the outcomes that make a difference.

THE BIGGER PICTURE - IN PRACTICE: We coach Leaders how to strategically position their work within the wider business context, and how to use this in their strategic planning, their communication and the delivery across Innovation and Change initiatives.

TOP TIP FOR LEADERS: Make sure everyone shares the same bigger picture of the innovation and change you want — a picture that is clear, credible, relevant and meaningful for your customers, your employees and all your business partners.