How much do CEOs matter to innovation? A study reported by the Marketing Science Institute (cited below) supports the notion that future-oriented, forward-thinking CEOs are the main drivers of successful innovation. How? If the CEO is the company’s “thought leader,” defines the company’s culture and places a high priority on innovation, then that becomes a guiding principle for the firm’s endeavors.
The study looked at CEOs at 176 U.S retail banks to see how successful they were at adopting online banking. How did the researchers know whether the CEOs were future-oriented? Their letters to shareholders were full of future words like will, might and tomorrow.
In essence, the study says that if CEOs pay attention to future innovation, it happens. The abstract says:
[A]uthors Yadav, Prabhu, and Chandy argue that CEOs have a positive, direct, and long-term impact on innovation outcomes. They propose an “attentional” perspective to studying innovation, suggesting that CEOs’ choice of what to focus on has significant implications for how firms detect, develop, and deploy new technologies over time.
Unfortunately, the study suggests, most CEOs spend surprisingly little time looking ahead. Only 9% of the words in those shareholder letters related to the future.
Source: “Managing the Future: CEO Attention and Innovation Outcomes,” by Manjit S. Yadav, Jaideep C. Prabhu and Rajesh K. Chandy, Marketing Science Institute (MSI) Report No. 07-110