The Glittering “Power of Cities” for “Luxury Growth” | McKinsey

The global economy is experiencing an unprecedented shift toward emerging-market cities. Here’s a road map of where luxury-goods companies should compete in the next decade…!!

An Economic Re-Balancing of Great Scale & Speed is occurring from the West to the East and South…In fact, we are observing one of the most significant economic transformations the world has seen: 21st-century China is urbanizing on a scale 100 times that seen in 19th-century Britain and at TEN Times the speed…This means that the shift currently making Asia—once again—the world’s economic center of gravity is 1,000 times larger than was witnessed during the Industrial Revolution..

One of the most dramatic aspects of this emerging-market economic revolution is the growing power of cities and the extreme growth concentration in a limited number of megacities. The world’s top 600 cities (measured by absolute GDP) are expected to drive nearly two-thirds of global economic growth by 2025..

Massive urbanization will continue across emerging markets, which will envelope three-quarters of these large cities. It is projected that by 2025, there will be 60 megacities—more than double the current number of urban behemoths—where GDP will exceed $250 billion, accounting for a full one-quarter of global GDP…

Out of the 25 largest growth-contributing cities, 21 are located in emerging markets, with a significant number of them in China. This represents a great leap from today’s status quo, in which only 4 of the 25 wealthiest cities are found in the developing world. Yet economic growth does not automatically mean consumption development—or luxury-market growth…Market growth in these cities is indeed conditioned by specific factors that differ from city to city. Variables such as birth rate, wealth distribution, and share of working women correspondingly affect growth in categories such as baby food, beauty products, luxury goods, and women’s fashion. To prioritize their efforts, companies will need to identify the biggest and fastest-growing cities with regard to their particular products and services..

Where Luxury Growth will come from? :

Using the McKinsey Global Institute’s Cityscope—which draws upon broad sets of economic and socio-demographic data for more than 2,600 cities around the world and combines these with deep market understanding to forecast growth at the level of individual cities—we have developed a unique road map for how luxury companies should understand and approach global-growth opportunities. Our LuxuryScope “city guide” of luxury markets organizes granular data and statistical forecasting across luxury categories. For example, several critical, market-level insights emerged from our analysis:

  • Growth is increasingly shifting toward emerging markets across all Luxury Categories

  • Luxury growth is highly concentrated in cities. The world’s top 600 cities will account for 85 percent of growth in the luxury-apparel market in 2025 versus 66 percent for luxury beauty products and only around 40 percent for consumer packaged goods. In fact, the more upscale and less “basic” products that consumers desire, the more growth will be concentrated in cities.
  • Mature cities remain critical given their absolute size
  • Growth is granular and varies by category, price point, and style. Driven by cultural fit with a brand’s value proposition and underlying growth factors by category and price point, the attractiveness of particular cities can differ significantly among luxury players. For instance, luxury women’s apparel is dominated by the traditional fashion capitals, such as Milan, New York, and Paris; spirits are strong in the Americas, while skin-care growth is concentrated in Asia. Mexico City, for instance, ranks 18th in fashion, 8th in spirits, and does not even appear in the top 20 for beauty…But within each of these categories, the attractiveness of any single brand will also vary depending upon its fit with local taste..
  • Emerging countries will drive growth, with China taking the lead.

This extreme growth concentration is great news for #LuxuryBrands and #Retailers…It will allow companies to more easily and completely focus their efforts on higher-growth areas. Analyses conducted on growth concentration by city reveal that extensive growth opportunities still exist in Europe and the United States, even in cities as large as London, Los Angeles, and Paris…The city approach to growth can also serve as a compass for companies seeking to navigate the vast sea of emerging markets, helping players to prioritize cities and focus their resources on targeted market-entry plans, whether in Belo Horizonte, Brazil, or Wuhan, China..

What Companies must do? :

Taking the city-by-city approach can help luxury companies revamp their growth strategies and gain new insights that can be used to adjust their business-development models, resource allocations, and organizational structures. How can these new business insights into potential on the city level be used to accelerate companies’ growth ?

The Right Plan:

It is well understood that having the right strategic plan is the essential starting point for any growth journey. Building this plan requires clear answers about where to go and when. Luxury-goods companies must identify growth opportunities at the city level, generating insights on where to concentrate resources to achieve the greatest impact. In addition, this approach also encourages the development of forward-looking market intelligence, a key enabler for ensuring that strategic decisions will allow companies to stay one step ahead of the competition. The city “attack plan” might look quite different from the traditional market-expansion road map. For instance, rather than discussing Asia or Europe as alternative locations—or even Spain versus France—decision makers may ask, “In what ten key cities should we establish a stronger presence? ”

Outstanding Execution to Achieve Impact:

When companies begin looking at fast-growing emerging-market cities, five key issues need to be tackled to help ensure success:

    1. Identifying the right go-to-market model for each location.
    2. Determining if there is a need for local-offer customization.
    3. Ensuring global customer service.
    4. Gauging a need for organizational changes in the longer term.
    5. Choosing how to deploy or redeploy resources.

The global paradigm shift driven by emerging-market cities is posing similar questions for Western companies for many different industries. For luxury players, cities probably matter more than for any other product category, and as retailers, most have the “luxury” of choosing, at a very granular level, where and when to open or expand a store…

In this context, Luxury Players are uniquely positioned to pioneer this new approach to accelerate their growth…!!

“Avoiding Hidden Margin Erosion” in Mid-Market Supply-Chain Operations | by: Brad Huff | Supply Chain Digital

According to the Middle Market Indicator (MMI), 85 percent of middle market executives cite the ability to maintain margins as a somewhat to highly challenging issue..

This should be no surprise, considering mid-market companies are squeezed between large and small cap businesses: they must streamline product manufacturing and delivery operations as much as larger companies, yet be as nimble as smaller companies. As a result, they have a unique set of challenges that make margin management even more critical..

Today’s combination of increasingly complex supply chain operations and the availability of more accessible/affordable technology means mid-market companies can and should take a deeper look into these areas as a means to maximise margins..

Mid-market supply chain operations explained

Hidden Planning and Forecasting Areas:

Mid-market companies often must focus so tightly on delivering quality products and services to their customers that investing resources into analyzing and fixing what appear to be minor supply chain issues might not seem practical or even feasible. It’s true that each of these less obvious areas does not cause significant margin erosion on its own; however, many mid-market companies can suffer from a number of combinations of these issues. When evaluated in that context, the impact on profitability can be noteworthy…

Evaluating materials based on landed cost instead of the item’s unit cost is a growing trend in planning and procurement. Materials planning based on landed cost allows companies to factor transportation and logistics costs into the contract item cost for more visibility into actual materials expense..

Forecasting is also an area that can impact margins. Without reliable forecasting processes and tools, a company can easily order the wrong quantity of materials. “Projecting heavy” unnecessarily consumes warehouse space, increases the risk of waste or loss, raises taxes, and impacts inventory turns. “Projecting light” drives up procurement and transportation costs, as well as increases the risk of materials run-out. Fortunately, there are a number of low-investment ways to increase accuracy, such as increasing collaboration with customers to gauge future demand, integrating marketing plans and projections to prepare for order spikes or lulls, or increasing forecast sharing and communication with suppliers via a collaboration portal or other automated workflow system..

Hidden Inbound and Receiving Areas:

Ordering and receiving inefficiencies, such as a lack of automation and collaboration in critical areas, play a quiet yet potentially large contribution to reduced profits. Automating workflow tasks between buyers and suppliers such as sending, receiving, acknowledging and approving purchase orders can enhance processing speeds by more than eighty percent while reducing costs by approximately 83 percent..

But the benefits go beyond the initial savings. Automation also increases purchase order throughput and allows you to focus efforts on quickly resolving issues that require human attention. Configurable workflow helps to ensure compliance so what is shipped always matches what is ordered. With simpler implementation and more user-friendly interfaces, these solutions can consolidate product and order communications to help minimize disputes as well as empower planners to better forecast demand..

Carrier and delivery windows:

According to Refrigerated Transporter, “Supply chain compliance is now a vital component of logistics transactions and supplier relationships.” Requiring fixed materials delivery windows from suppliers is a growing trend in supply chain management that impacts margin on both the buyer and supplier side..

In recent years, improvements have been made in receiving dock scheduling systems in an effort to help warehouse managers and supply chain professionals streamline operations and reduce unnecessary cost. As a result, more companies now require dock reservations for inbound orders, including financial penalties for suppliers who deliver off-schedule..

For example, in 2010, Walmart joined other retailers in imposing a penalty on suppliers that failed to deliver products within the company’s prescribed four-day window. Under the policy, suppliers whose products arrive at Walmart before or after that period face a three-percent penalty based on the cost of the goods..

Before the policy went into effect, Walmart requested delivery within the four-day period, but suppliers had no incentive to actually adhere to that schedule. Although it was not the first to adopt this policy, Walmart’s status as the world’s largest retailer prompted a domino effect that continues to affect supply chains to this day…as late/early delivery fees are now the norm for many industries..

Installing a functionally strong shipment collaboration solution can help to reduce and/or eliminate these less obvious/hidden logistics areas that eat into margin. These types of solutions allow order fulfillment thresholds such as delivery windows, order quantity, and carrier selection/mode to be configured and validated prior to shipment release..

Advanced Shipment Notices (ASNs) and package/container traceability are also typically included, along with pre-formatted, compliant labeling to further reduce receiving dock errors…As a result, all stakeholders across the buy side and the supply side have real time visibility for more accurate resource and materials planning through the rest of the supply chain..

“Understanding consumers” in a multi-channel world | by: Jason Nathan | Research

The Evolving behaviour set of #Customers in the world of #MultiChannelRetailing, is well documented and not always easy to follow…It’s easy to conflate the rapidly changing technology with analysis of those behaviours – while they are linked, they can and should also be thought of as apart…Let’s focus on the behavioural side…

How are these behavioural changes manifesting themselves? It makes sense to think back (briefly) to a shopping trip in the pre-internet age…#Shoppers, would take a predictable and linear path to purchase : making a list, looking for (or seeing) offers, going to a store, picking off the shelf, paying at checkout, going home and then consuming the products they had purchased…and then repeating..

In the multi-channel world, TWO Key Dynamics have changed : The path is non-linear…and different steps can and do occur on different channels…!!

If we consider a shopping trip today – a customer might log on to an account with a grocery retailer and add some items to a basket. Then, a couple of days later, receive an email with a set of offers which they activate on their half-built online basket. They might go in to store to have a look at some new products but decide not to buy them…and then buy them online…They may have an offer shared with them on social media….which they then use in a store (perhaps having found the nearest branch to them using their smartphone)…

Where to spend the Money ?

These non-linear paths and the increase in channels used by customers to shop, has commensurately increased both complexity and opportunity for both brands and retailers to divert and influence customers on those paths. The challenge for #Retailers, is that creating seamlessness in those paths costs money…The challenge for brands is that investment in media to influence those paths costs money…What both retailers and brands want to know is where to best spend that money…

More than ever before, the answer lies with an obsessive focus on the customer and the data their behaviours are generating. Retailers and brands are collecting and looking at data – lots of it – but often those data are used for specific ends. For instance, plenty of retailers will use the data for reviews to look at which products are winning, which products are in decline, but few retailers will capture and present this data to understand customers. Knowing, at the level of an individual, a pattern of review posting will be part of a set of indicators which will allow the retailer and brand to understand that customer’s propensity to purchase again and, maybe, when they would do so..

For instance, if we knew that a customer had posted two consecutive bad reviews of a product from a certain brand, could we use that to understand their likelihood to repurchase a product of that brand? And therefore, perhaps the generosity of the offer or the need to present NPD to that customer. And what could a retailer glean from a customer who had steadily posted a review every two months but was not doing so anymore ?

Retail Data :

Similarly, and specifically in the world of grocery and FMCG, retailers will capture the levels of substitutions and rejections in baskets composed of dozens of SKUs (stock keeping units) when they are delivered or collected. This will be done to optimise the supply chain and picking process. Again, how many retailers are looking at the data through the customer lens? Would a customer who had received 20% of their basket as substitutes three times in a row (and rejected half of those on each occasion) as against a customer who had received three consecutive perfect orders, be more or less likely to lapse ?

The challenge for retailers and brands is technical and commercial. Technically, linking their data assets to understand the multi-channel path to purchase is difficult – legacy systems built for specific ends and ambiguous data ownership structures are significant barriers to overcome. Moreover, in many cases the capture of the data at customer level may not even yet exist. Retailers and brands will need to ensure that their technology plans seek to plug these gaps in understanding..

A Greater Challenge :

Despite appearing to be easier, it may yet be that commercially, the challenge will ultimately be greater: customers will be more aware of the value of the data they are generating and expect to be compensated for it. For that compensation to be sensible, attribution of investment (always a challenge in marketing) will need to be tighter than ever. Was it the coupon on Facebook or the free sample at the Click and Collect point or the interrupt media on the app which activated that customer ? The data will exist but how will we cut it to understand the key to orientating the path to purchase ?

The next few years are likely to continue to present opportunity: technological innovation will lead to more data and more opportunities for customers to exhibit non-linear behaviours – some of which may yet prove even more disruptive in some sectors (such as peer-to-peer selling)..

Getting on top of the current behaviours and using existing data assets to do so will be one of the key differentiators which will define the retailers which win in this turbulent period.

In “Omni-channel Retail”, It’s Still About Detail | BCG

“As omni-channel retail increasingly moves from concept to reality, consumers are sending a clear message : Convenience is king…”

But the days when convenience could be defined solely in terms of drive times and the in-store experience are long gone. In today’s reality, “convenience” means letting customers decide when, where, and how to shop. They want to order anytime, anywhere, and from any device; to get their purchases in the store, at a separate delivery location, or through home delivery; to determine their own shopping and delivery or pick-up windows to fit their busy schedules; and to be able to return items at any of the store’s retail locations, hassle-free..

The Rise of Click-and-Collect Retail:

The emergence and growth of click-and-collect retail—which allows shoppers to order an item online and then go get it at a nearby store location or pick-up point—is evidence of the power of convenience in the omnichannel world. For many shoppers, the click-and-collect experience offers a more convenient mix of speed, quality, and flexibility than either traditional shopping or standard home delivery…

Already, 35 percent of shoppers who buy items online have used click-and-collect retail to pick up their purchases, and that proportion will increase to more than 75 percent of shoppers by 2017, according to retail researcher Planet Retail. Shoppers in France can pick up their groceries at more than 2,000 “click and drive” facilities. On the basis of our experience with leading retailers, we expect substantial growth in the use of such services.

Done right, click-and-collect retail can be a way for brick-and-mortar retailers to differentiate themselves from pure-play e-tailers by leveraging their existing store assets to offer fast delivery, low prices, and even greater convenience. That’s why many traditional retailers are eager to capitalize on this opportunity..

But click-and-collect retail can also pose real risks for retailers that fail to execute it flawlessly. A recent survey by market researcher E-consultancy.com found that as many as 60 percent of online consumers in the UK and U.S. said they would not shop at retailers that failed to deliver on their promises. This is as true for click and collect as it is for home delivery—particularly when it comes to apparel, a sector where customers expect to pick up the exact size and color they ordered and not a close substitute. In a hyper-competitive retail environment, an annoyed customer is likely a lost customer..

Supply Chain Imperatives:

So, for retailers that seek to make click-and-collect retail a core component of their omni-channel #RetailStrategy, many specific #Supply-chain capabilities are required. (See Exhibit 1)..All are important, but in our experience, it all begins with providing shoppers—and store associates—with accurate, real-time information on product availability…

One way to manage this critical capability in a click-and-collect retail environment is to deliver the customer order from a distribution center to the store, as UK retailer John Lewis does. Centralizing click-and-collect fulfillment in distribution centers concentrates and simplifies the inventory management challenges. But it also adds precious time to the order-to-pick-up cycle, putting off impatient customers who might simply buy the item elsewhere next time. And many retailers’ legacy distribution networks are ill equipped to fulfill customer orders from existing distribution centers, which are typically designed to pick large orders for stores.

For many retailers, then, a better solution is to pick click-and-collect orders from store stock. But getting the basics of in-store inventory management right presents a real challenge in terms of meeting customers’ expectations about availability. In our experience, a store’s balance-on-hand accuracy can be as low as 60 percent, which would be disastrous for click-and-collect customer satisfaction. Search online for “click and collect” for many big-name retailers, and you will see a slew of messages from customers describing poor experiences and products not being available when buyers turned up to collect them, even though the website had indicated that the goods were in stock. That’s why at Best Buy, for example, clerks physically doublecheck the availability of every item in every click-and-collect order in the stores themselves to overcome unreliable in-store inventory.

Why the poor performance? In support of their initial omnichannel offers, many retailers have chosen to focus first on building new infrastructure—pick-up points, distribution centers, delivery networks, IT systems, and even new stores. No doubt, these solutions can be critical components of a successful long-term omni-channel strategy, but getting the basics right, including in-store inventory, is often the most important first step to creating immediate impact and options for the future…

Back to Basics:

Best-in-class players focus on making in-store processes efficient, rigorous, and self-correcting; their processes are consistent with our six “golden rules” of inventory management. (See Exhibit 2.) No IT system can account for products mistakenly left in the back room, inaccurate distribution-center deliveries, removal of damaged goods from shelves that is not captured by the inventory system, check-out errors, and theft. These unavoidable issues, and their consequences, must be accounted for and captured, accurately, by the inventory system. This often needs to be done by a real person, properly incentivised and managed. Ideally, every touch of inventory at every point in the process should validate, correct, or improve inventory accuracy. In our experience, major retailers with such self-correcting systems and processes can achieve balance-on-hand accuracy of greater than 95 percent; at that level, the impact on items popular with customers is marginal…

Building such an approach, however, requires getting all the details right: understanding where errors occur, why they occur, and what solutions can be implemented consistently and effectively by store employees. In this endeavor, the devil really is in the details…

Eventually, emerging technologies will likely become a key part of the solution as well. Radio frequency identification, or #RFID, for example, has the potential to dramatically improve the accuracy of the information that supply chains depend on. Unfortunately, the ability to tag individual items economically and to scale up the technology to the needs of large retailers is still several years away. In-store cameras are a promising alternative for monitoring store stock, but they will require further developments in high-quality processing and image recognition if they are to make a difference. But even the most advanced technology will never entirely substitute for the disciplined in-store behavior needed to drive true inventory accuracy…

Thriving in an #OmnichannelRetail environment will require a host of different fulfillment capabilities. Retailers must design and execute the best possible customer service across all retail channels, build the infrastructure needed to ensure consistent pick-up and return processes, and continually capture and analyze the data needed to understand their customers and customers’ expectations of each channel so that stocking and flow strategies can be adjusted accordingly.

But that’s a longer-term goal. Near term, #Retailers, that seek to capture their fair share of the growth in click-and-collect shopping should focus first on getting the basics of stock accuracy right. Doing so will deliver near-term benefits to the #Bottomline and position them for success, no matter what #OmnichannelStrategy, they decide to pursue…

“Corporate Team-Building”: Exercises in “Workplace Collaboration” | by: Edward Iwata | Concordia

Team-building may be the most studied and elusive concept in the management and leadership field…Clearly it remains one of our most valuable practices. And it applies equally to companies and nonprofits, to small groups and large organizations..

#TeamWork, influences nearly all of us in our lives and careers…Think of the many scenarios that involve successful (or failed) team-building : Job-related projects and partnerships…College studies and internships…Volunteer church or school activities…Sports teams and performing arts groups..

As management consultant Patrick Lencioni writes in “The Five Dysfunctions of a Team”, #Team-building “remains the ultimate competitive advantage because it is so powerful and so rare.” If an organization and its people can work toward the same goal, it can whip any competition and rule any market or industry, according to Lencioni…

Teams have been around for centuries, since ancient humans hunted and farmed together. Team-building grew in complexity through the Industrial Age, mass manufacturing and the computer era. Globalization and competition among the United States, Japan and Germany raised team-building to an even higher level, according to Harvey Robbins and Michael Finley, co-authors of “The New Why Teams Don’t Work.”

For certain, all employees can use team-building skills, including the setting of tasks and goals, building trust and community, communicating well and tapping into diverse thinking and backgrounds.

Benefits of collaboration illustrate value of Team-Building:

Why do we rely on Teams so much ? For many reasons, according to Robbins and Finley :

  • Teams save money.
  • Teams increase productivity.
  • Teams improve communications.
  • Teams create better-quality goods and services.
  • Teams lead to improved processes.

Similarly, the best teams share concrete goals, develop trust, define their roles as team members and engage in clear communication and other team-building practices, say Charlene Solomon and Michael Schell of RW3, an online cultural training firm.

Team-building approach helps multiple industries:

Strong team-building can be found in every field and industry. In healthcare, for instance, hospitals are finding that well-run, interdisciplinary teams of healthcare professionals may reduce costs, improve the treatment of patients, shorten their average hospital stay and even reduce death rates, according to AMNHealthcare.com.

More hospitals — from Long Beach Memorial Hospital in Long Beach, Calif., to Unity Hospital in Rochester, N.Y. — are deploying teams of doctors, nurses, administrators, social workers, pharmacists and case workers who meet throughout the day to share information and assess patients.

At the Cleveland Clinic Center for Multidisciplinary Simulation in Cleveland, Ohio, doctors, nurses and administrative staff train as teams in the clinic’s simulation center. They study and review their performance in simulated medical situations, such as stroke or heart attack patients arriving in the emergency room.

In the nonprofit world, the Children’s Defense Fund in New York City became a leader in child health issues by using cooperation and team-building with government agencies, labor unions, churches, daycare centers and other partners, according to a report by Venture Philanthropy Partners and McKinsey & Company.

The fund quickly achieved its first goal: to increase the percentage of children receiving proper vaccines, as the percentage of vaccinated children in New York City rose from 52 percent in 1995 to 85 percent in 2001. Then the organization and its partners went further, persuading Congress to fund the multibillion-dollar Children’s Health Insurance Program for youth nationwide.

The team- and alliance-building strategies of the Children’s Defense Fund “allowed it to tap into the strengths of existing organizations without threatening them” and also “add value to the whole (child health) sector,” according to the McKinsey & Company report.

Global teams can outperform Local Teams:

In global business, well-run teams based around the world can significantly outperform and collaborate better than local teams, according to a study of 80 software development teams by Boston Consulting Group and business professors.

The study looked at 28 research facilities in the United States, China, Brazil, Denmark, France, Germany and other countries. The researchers found that virtual teams with strong task-related processes — mutual support, work coordination, open communication and full contributions from team members — performed more strongly than local teams.

“Managers have typically viewed dispersion as a liability rather than an opportunity,” the authors of the study point out. “But dispersion can provide substantial benefits if companies can take advantage of the diversity and varied expertise of team members at different locations. … Our research shows that virtual teams can outperform their (local) counterparts when they are set up and managed in the right way.”

What causes setbacks in Teams:

Team-building isn’t easy, of course. Unless it is encouraged and practiced widely by an organization, many employees will work only with their goals in mind, with little interest or incentive in broader teamwork throughout the workplace.

Even well-meaning teams suffer severe setbacks. In their study of 55 teams, London Business School professor Lynda Gratton and Tamara Erickson, president of the Concours Institute, found that collaboration and cooperation decreased when:

  • Teams grew larger, especially over 20 members.
  • Teams became more virtual and spread among many locations.
  • Team members had higher education levels and a greater proportion of experts with specialization.
  • Teams had a higher proportion of strangers and a greater diversity of backgrounds and experiences.

In studying successful teams, however, Gratton and Erickson found that team leaders and employees leaped past obstacles by focusing on key factors, such as:

Building and investing in “social relationships throughout the organization” :

At Royal Bank of Scotland, new corporate headquarters near Edinburgh featured an indoor atrium with shops, restaurants, biking and jogging trails, athletic facilities and green space for picnics and barbecues. The goal: to create more open communication, a free flow of ideas and a sense of community among employees.

Training in team-building skills:

It’s not enough to encourage employees to collaborate. They must be trained in the skills of collaboration, from conflict resolution to building personal trust. PricewaterhouseCoopers, for one, trains its employees worldwide in networking, coaching, communicating values, having difficult conversations and other team-building practices.

Using leaders who are task- and relationship-oriented:

The most successful teams have leaders who are skilled at setting tasks and goals, and at building relationships and a climate of trust and goodwill. In performance reviews at Marriott, managers are assessed by their growth in both types of skills.

Moving up to ” Team-Learning “:

After Team-Building 101, some leadership experts recommend Advanced Team-Building in “learning organizations.”

In his classic leadership manual “The Fifth Discipline Fieldbook,” management consultant Peter Senge calls it “team-learning,” which involves high-level dialogue and group dynamics that go beyond simple agreement to create real alignment, or new ways of thinking and working as a powerful and unified whole.

In short, team-building won’t vanish soon…And leaders and employees who use the best team-building techniques are sure to strengthen their teams, colleagues and companies…

How to Find “Tomorrow’s Leaders of Innovation” | Chief Executive

Great leaders of innovation see their role not as take-charge direction setters, but primarily as creators of a context in which others are willing and able to make innovation happen…!!

The question this raises is simple and critical : where will today’s organizations find tomorrow’s leaders of innovation ??

Because leaders are more made than born, organizations must iden­tify people with “the right stuff” for leading innovation and provide them with the experiences and resources needed to develop the required mindset and skills. Yet, if today’s high-potential leaders of innovation don’t fit today’s popular conception of a good leader, many of them will be invisible to cur­rent systems for identifying and developing tomorrow’s leaders..

“ Organizations must identify people with “ the Right Stuff ” for leading innovation and provide them with the experiences and resources needed to develop the required mindset and skills…”

WHAT WE BELIEVE TO BE THE RIGHT STUFF:

Leadership concerns not only what a person knows and does, but also who he or she is. Despite differences in culture, age and gender, the leaders we have studied share certain personal qualities that allowed them to lead in ways that fostered the growth of innovative communities. They were idealists, yet pragmatists. They were holistic thinkers, yet action-oriented. They weregener­ous, yet demanding. Perhaps most importantly, they were human, yet resilient..

Take, for example, Jacqueline Novogratz of Acumen. In 2001, Novogratz founded Acumen to identify, invest in, strengthen, and scale early-stage enterprises that provided low-income consumers with access to healthcare, water, housing, education, alternative energy and agricultural inputs…

“We were looking for ventures with visionary leaders who were using business approaches to solve big social problems,” Novogratz said. “Their enterprises had to demonstrate the likelihood of financial sustainability and hold the promise of reaching a million customers over time…”

From the start, however, finding good candidates proved difficult. For one thing, Acumen’s mission required leaders who fell outside the typical mold. It relied on individuals who could manage nonprofits or public-sector organizations, but who also had the necessary business and oper­ational skills. Acumen was also seeking leaders who could think and collaborate beyond traditional systems, work with longer-time horizons, and succeed in spite of limited resources…

“ Finding sustainable solutions to vexing and intractable problems requires leaders who know how to build innovative ecosystems, not just organizations..”

Few individuals could meet these standards, and so in 2007, Novogratz created the Global Fellows Program, a yearlong training program aimed at building a corps of leaders for the sector at the intersection between business and society. Eight years later, 75 individuals from 24 countries had already participated in the program…

As the success of the Fellows Program demonstrates, providing a critical mass of promising individuals with leadership tools that cut across sectors can create global ecosystems of innovation leaders…

Novogratz and other business leaders who think like her realize that finding sustainable solutions to vexing and intractable problems requires leaders who know how to build innovative ecosystems, not just organizations…!!