Co-authored with Professor Ric Roi
Innovation to fuel competitiveness continues to be the holy grail of business success, yet despite billions invested in corporate innovation labs, design thinking workshops, and R&D centres, most organizations struggle to see meaningful returns. The problem isn’t a lack of commitment—it’s a fundamental misunderstanding of what innovation leadership requires in today’s business environment.
Drawing from our research with global executives across six continents and numerous industries, we’ve identified why so many well-intentioned innovation efforts fall short. The culprit? Five persistent myths, held by management, about innovation leadership that need to be debunked before organizations can truly transform.
Myth 1: Innovation Is a Department
Look around most corporate headquarters and you’ll spot the “innovation space”—typically filled with colourful furniture, whiteboards covered in sticky notes, and teams isolated from core business operations. This physical and organizational separation reveals a deeper misunderstanding: innovation isn’t something you can delegate to a specialized creative team.
Organizations that consistently innovate, like Haier, Mitsubishi, and Mastercard, don’t treat innovation as a siloed function. Instead, they’ve woven it into their organizational DNA. At Haier, the company operates as a network of 4,000+ micro-enterprises, each empowered to identify and pursue market opportunities. Mastercard has restructured into cross-functional teams with autonomy to test and learn rapidly, making innovation everyone’s responsibility rather than a specialized function. Mitsubishi Group expects each of the 27 operating companies to generate business model innovations that will ensure each unit remains future ready and resilient. Each year the leaders of each these operating companies work through a rigorous process to decide whether to re-invest, or wind-down, innovations based on two criteria – the ability to scale and expectations on profitability.
Leadership imperative: Stop asking, “How do we strengthen our innovation department?” and start asking “How do we rewire our entire organization for continuous innovation?”
Myth 2: Great Ideas Drive Innovation Success
The business graveyard of innovation is filled with brilliant ideas that never gained traction. While ideation matters, it’s rarely the bottleneck in scaling innovation. The real challenge is creating systems that allow promising concepts to survive contact with organizational antibodies or resistance and flourish in complex organizational environments.
Effectuation theory, developed by entrepreneurship researcher Saras Sarasvathy, offers valuable insight here. What separates successful innovators isn’t their ability to predict winning ideas but their skill in starting with available resources, accepting affordable losses, forming strategic partnerships, and leveraging unexpected developments. This approach treats innovation not as a flash of genius but as a disciplined process of experimentation and adaptation.
Leadership imperative: Innovation excellence requires less brainstorming and more system-building. Focus on creating mechanisms that test, iterate, and scale ideas through continuous learning with real users and real-world constraints. In other words, creating a system that allows for micro-experimentation across the enterprise.
Myth 3: Innovation and Efficiency Are Opposing Forces
One of today’s most damaging business fallacies is the notion that organizations must choose between operational excellence and innovation. This false dichotomy creates unnecessary tension and undermines both objectives.
Our research shows that truly effective leaders are ambidextrous—equally capable of driving performance today while building capabilities for tomorrow. They don’t view efficiency and innovation as competing priorities but as complementary dimensions of sustainable success. These leaders know when to operate as methodical operators, ensuring flawless execution, and when to switch to transformational mode, creating space for exploration and experimentation.
Leadership imperative: Develop and reward leadership capabilities across both performance and innovation dimensions. The most valuable executives aren’t those who excel at one or the other but those who can dynamically shift between modes as circumstances demand.
Myth 4: Culture Follows Structural Change
When orchestrating innovation transformations, executives often prioritize reorganizations, process redesigns, and new metrics—treating culture as something to be addressed later. This sequencing fatally undermines innovation efforts because culture is the foundation that either enables or prevents meaningful change. There is little evidence that structural change enables lasting cultural change.
Consider Buurtzorg, the Dutch healthcare organization that revolutionized home care through self-managing nurse teams. Their remarkable success—superior patient outcomes at lower costs—stems not from organizational charts or KPIs but from a culture of trust, professional autonomy, and continuous learning that founder Jos de Blok established from day one.
Reshaping organizational culture in support of innovation isn’t a structural or technical exercise. Culture is first, and foremost, reshaped through specific leadership behaviours modelled consistently at all levels. If senior executives don’t personally demonstrate comfort with uncertainty, openness to feedback, and willingness to experiment, no amount of structural change will drive innovation.
Leadership imperative: Cultural transformation begins with consistent managerial behavioural change—specifically yours. The moment a leader publicly acknowledges uncertainty, invites diverse perspectives, or embraces a failed experiment as a learning opportunity, the innovation culture starts to shift.
Myth 5: Innovation Can Be Outsourced
In our hyperconnected era, many organizations attempt to solve their innovation challenges by establishing external accelerators, corporate venture funds, or startup acquisition programs. While these ecosystem strategies have merit, they often become substitutes for the harder work of internal transformation.
Consider Haier’s remarkable journey from struggling refrigerator manufacturer to global appliance innovator. Their success didn’t come from mimicking Silicon Valley but from systematically reinventing their internal management model to foster micro-innovation throughout the organization. External partnerships amplified their transformation but didn’t replace it. Globe Telecom, a leading telecom player in Southeast Asia, transformed itself into a diversified, digital services player, under the same leadership team that transformed the traditional telco business.
Leadership imperative: Build an innovation ecosystem, absolutely—but don’t use it to avoid developing internal innovation leadership and capabilities. Long-term competitive advantage comes from combining external insights with a uniquely adapted internal system for continuous reinvention.
Beyond the Myths: Three Principles for Future-Ready Innovation Leadership
Having dismantled these persistent myths, what principles should guide executives seeking to lead innovation in an increasingly complex environment? Our work with global organizations suggests three foundational approaches:
1. Lead Innovation as a System, Not Just Projects
Innovation isn’t a collection of initiatives to be managed sequentially, but an integrated system requiring orchestration across multiple dimensions. Forward-thinking executives use frameworks like the “Innovation House” model to ensure they’re building comprehensive, sustainable innovation capabilities:
- A solid foundation of end-to-end methodologies for identifying, validating, and scaling opportunities
- Strong internal pillars representing core innovation capabilities across technologies, markets, and business models
- An open roof connecting innovation efforts to strategic priorities and ecosystem partnerships
The most effective innovation leaders think architecturally — designing organizations where innovation isn’t merely permitted but structurally inevitable.
2. Develop Paradox Navigation as a Core Competency
Innovation leadership involves navigating inherent tensions: standardization versus customization, stability versus change, exploitation versus exploration. Rather than viewing these as problems to solve, effective leaders embrace them as polarities to be managed dynamically. These leaders are masters at context-shifting, able to accurately view challenges and take effective decisions in both perform and transform environments.
This requires developing ambidexterity at both personal and organizational levels—the ability to simultaneously operate within established frameworks while exploring beyond them. Leaders who master this balance create contexts where teams can excel at both execution and experimentation, moving fluidly between modes as circumstances demand.
3. Make Management Innovation Your Secret Weapon
While most organizations focus innovation efforts on products, services, and business models, they overlook a powerful source of competitive advantage: management innovation itself. Reimagining how decisions are made, how resources are allocated, how performance is measured, how to reward early innovation efforts, and how careers develop can unlock unprecedented value.
Organizations like Haier, Buurtzorg, and Kyocera haven’t just innovated what they offer to markets but fundamentally reinvented how they operate internally. As technological innovation becomes increasingly accessible to all, management innovation represents the next frontier of sustainable differentiation.
The Path Forward: From Innovation Theatre to Innovation Leadership
The future belongs not to organizations with the splashiest innovation labs, or the biggest R&D budgets, but to those that systematically dismantle these five myths and embrace a more sophisticated approach to innovation leadership.
This transformation requires moving beyond innovation theatre—the visible trappings of innovation without its substance—toward innovation leadership that fundamentally reshapes how organizations operate. The challenge is substantial, but for executives willing to question assumptions, build adaptive systems, and empower people to act, the opportunity is even greater.
In an era of unprecedented disruption, innovation isn’t just something organizations do—it’s what ensures they continue to exist. By replacing outdated innovation myths with these actionable principles, leaders can build organizations that don’t just respond to the future but actively shape it.
Mark J. Greeven is a Chinese-speaking Dutch professor of Management Innovation and Dean of Asia at IMD, the leading Swiss business school, and the author of Pioneers, Hidden Champions, Changemakers, and Underdogs (MIT Press, 2019).
Ric Roi, is a Professor of Leadership and Organization with IMD, the leading Swiss business school, where he heads the Institute’s Strategic Talent Initiative. He is an expert on building ambidextrous organizations with numerous studies and publications in this area.