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August 26, 2013

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Jonathan Ewert

Innovation is an interesting conundrum for large companies these days. IBM's excellent CEO studies show that forward-looking leadership teams are searching for new models for their businesses. But even when large companies buy innovation instead of build it, most have command and control structures that do more to stifle innovation than stimulate it. Headlines are filled with write-downs because of this fact, and the stockholders are having a say on pay as a result.

Even with the top-down support you call for in your post, disruptive innovations are almost impossible to cultivate and manage in the command-and-control structures common to most large organizations. Disruption may be the raison d'être of the Silicon Valley, but most innovations wither on barges.

The problem, and the solution, are indeed the stuff of leadership. But this brand of leadership isn’t always found in the C-Suite. There are exceptions. Steve Jobs was an exception because his innovation funnel was a waterfall. But executives like Steve Jobs are rare. It will be interesting to see what happens next with Apple.

Today, successful leaders listen to stakeholders not just talk to stockholders. Markets have become immune from the effects of advertising. Loyalty is tenuous. Hyperlinks have replaced hierarchies. Dialog has replaced monologue. Thoughts have become things.

What happens when leaders don’t listen? Customers demand more and drive margins down. Regulatory economics puts pressure on product development. Employees leave companies to create their own. Voters close markets. And entrepreneurs storm the castles that were once impenetrable.

In this new “demand side” economy, executives and enterprises that know how to listen will thrive. Executives and enterprises that don't will not.

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