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December 19, 2012

It takes an Innovator to lead a culture of Innovation

Posted by Sandeep Dadlani (View Profile | View All Posts) at 5:44 AM


Harvard Business School professor Bill George speaks at the Infosys Executive Leadership Summit.

Bill George teaches leadership at Harvard Business School. Imagine my delight when he announced to at the recently convened Infosys Executive Leadership Forum that one of the first cases he ever wrote at Harvard was about Narayana Murthy, the founder of Infosys.

Mr. Murthy's achievements are well known to those of us who have worked for the company he founded. Beginning in 1983 and with just $250 in his pocket, Narayana Murthy would build a global corporation within one generation. The rapid rise and initial success of Infosys came from Mr. Murthy's invention of the Global Delivery Model, now the gold standard throughout the services industry. His accomplishments also helped pioneer what has become a formidable economic force: the Indian technology industry. Just why did Bill George decide to write one of his first business school cases about Mr. Murthy? Because the Harvard professor says he's astounded at just how many large corporations lack the kind of senior executives that Mr. Murthy had when he was building Infosys. That is to say, Mr. Murthy recognized the importance of making sure his corporate leaders were innovators at heart. Why, asked Prof. George, do so many large companies, with all their resources and access to talent, fail to innovate? And why aren't their top people natural innovators?

It turns out his two questions are inexorably linked. Bill George said that an innovative company begins with a CEO who is deeply committed to creating a culture of innovation "right from the top." We all know about executives like Mr. Murthy and the late Steve Jobs at Apple. But there are other sterling role models who possess their same level of passion for innovating, he said. Take the medical doctor Dan Vasella, who was CEO at Novartis for 14 years. "Here's someone who was down in the labs all the time where his pharmaceutical counterparts were in their offices reviewing their numbers," said Prof. George.

One day Dr. Vasella was reviewing some clinical data sent to him because he asked to see everything that came out of the company's labs - no matter how small the study. One seemingly minor study caught his eye. He walked down the hallway to meet the team responsible for the research. It turned out that they were on their way to developing a drug that could potentially treat and cure a rare and potent form of leukemia. Only 28,000 people in the world are known to have this form of the disease. Until that point, people diagnosed with it had a mortality rate of 80 percent. And the Novartis team he was speaking to seemed to have a cure on their hands. Dr. Vasella asked the researchers when the drug was going to market. Their answer startled him. According to Prof. George, they told their CEO that they weren't going to market with the drug because they didn't have money in their budget for clinical trials. Apparently the drug was being killed because people in the company's marketing department simply didn't see how a drug that treated such a rare disease could command a large and lucrative market. If, for example, the entire market topped out at $250 million and Novartis secured 100 percent of that market, in the end it was a $250 million prize. Instead, the prudent business strategy was to go ahead with so-called "me too" drugs that could command $500 billion in sales and up. Remember, Prof. George said that innovation begins at the top. That's why he enjoyed telling the rest of the Novartis story. Dr. Vasella made an executive decision that only an innovative CEO could make: He told the team that he would make sure they had all the money they needed to take the drug to clinical trials. Plus, he told them that they should do all they could to get FDA approval in two years. (It was looking as though it would take four years.) To help things out, Dr. Vasella personally visited the FDA and spoke about the drug's potential to help an ailing portion of the population. Ten years after the company introduced the drug to the market, it has sales of $4 billion and is approaching $5 billion. That's because Dr. Vasella and his team discovered other afflictions that can be treated by what is now a mega-drug, according to Prof. George.

Another innovation-led CEO is Howard Schultz of Starbucks. He enjoys putting on a sweatshirt and baseball cap and blending into the Saturday morning gaggle of coffee customers in whatever Starbucks he happens to be visiting. Schultz chats with the customers and sometimes just sits back and observes a morning routine. Doing so, says Prof. George, inspires Schultz to think up ideas that he wouldn't be able to hatch in a boardroom. Such as the company's relatively new "blonde" roast blends, which came about when Schultz realized many customers wanted a lighter roast of coffee more similar to what they could buy in grocery stores. Starbucks has also moved into selling music that's promoted within their stores, making the chain an arbiter of what's cool - beyond just the realm of breakfast drinks. And, of course, Schultz is just cool with it all.


This is absolutely true that narayan murthy is a true innovator.But the trend now looks completely different with more and more entrepreneurs concentrating on the product segment rather than mere services.
Nevertheless, thanks for a good read!!

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