Half of Leaders Admit to Stagnation in Innovation

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The Global Leadership Forecast finds that leaders are underprepared for the future drive for innovation; Gary Hamel’s measures of management innovation showed that we’re not that evolved after all.

As businesses—and business practices—accelerate ahead, it seems that leadership is barely moving at all

From un-evolved leadership practices to the decreased emphasis US organizations put on innovation, leadership has barely budged in the last decade, according to the sixth edition of the Global Leadership Forecast.

Every two years for the past decade, Development Dimensions International (DDI) conducts the Global Leadership Forecast, enlisting HR professionals and leaders representing organizations around the world. This year, the study included 1,897 HR representatives and more than 12,000 leaders from 74 countries and was the largest ever. In the US, there were 522 HR and 2,796 leader responses.

For the 2010|2011 Forecast, DDI partnered with Gary Hamel and his Management Lab to identify the key factors that identify how organizations’ management cultures have evolved.

“As businesses—and business practices—accelerate ahead, it seems that leadership is barely moving at all," Rich Wellins, Senior Vice President at DDI said. “We looked at what leaders needed in the future, what organizations’ future leadership needs are, and how we can advance our practices around leadership and found that our work is cut out for us.”

The major findings of the report include:
Leader quality is low and hasn’t budged. Only 1 out of 4 organizations (as rated by HR representatives) rated leadership quality as very good or excellent. With leaders themselves, a little more than 1 out of 3 three gave themselves and their peers high marks. These numbers remain consistent with the study when it was done two years ago, indicated that little progress has been made on the quality of leadership, regardless of the microscope that leaders have been under.

Organizations are not confident in the future of their leaders. A mere 18% rated the bench strength for the future as strong. As baby boomer retirements loom and organizations on the precipice of recovery and growth, confidence in the next generation of leaders should be much stronger, however, the US is among the lowest (14%) with strong bench strength. One reason could be that organizations don’t rate their succession systems as highly effective. As one leader said: “We need to develop key talent for the future in a strategic way, not by default.”

It can also be explained by the fact that while ‘identifying and developing future talent’ was rated as one of the top skills needed for leaders in the future (taking a spot in the top 5), it was not rated as a top skill that was needed in the past, and a staggering 43 percent of leaders said they’re ineffective at doing this.

We’re falling down on innovation. Innovation rocketed up the list as a skill needed for the future, however, according to research from the Boston Consulting Group, the US is investing the least in innovation when compared to other countries around the world.

However, half of leaders rated themselves as ineffective at fostering creativity and innovation, the highest among all of the future necessary skills. “This is a grade we should be concerned with—the heart of future competitive advantage—half of leaders say they’re not effective at encouraging their teams to be creative and innovative,” Wellins said. One answer to this could be the high occurrence of leadership ‘derailers’ or dispositional qualities that HR identified were the most common personality shortcomings of leaders in their organization. The high occurrence of risk aversion, distrust and approval dependence, which were likely to be reinforced as a means of survival during the economic downturn, are qualities that will squash innovation.

Rigid management practices are holding organizations back. When looking at Gary Hamel’s factors for management innovation, 6 out of 10 leaders said that key business decisions were made by those in power with little discussion, and more than half said they’re in organizations that are rigid, siloed or hierarchical. Why the concern over updating management practices? “While we have been focused on innovating products, services and business models, we have lost sight of the need to innovative the way we manage,” Wellins says. Organizations with effective management cultures were more than two and a half times more likely to have highly passionate leaders

Some additional findings from the study include:

  • Only 1/3 of leaders rated the quality of their leadership development efforts highly—and that hasn’t changed over the last five years, for better or for worse.
  • Formal workshops and training, coaching from managers and special projects and assignments top the list as the most used—and effective—development methods for leaders.
  • Only 1 in 3 HR and leaders rated the organization’s process for selecting leaders as effective.
  • Less than half of organizations (44%) have a process to identifying high potential talent—and even fewer (37%) have a process for growing those individuals. Both have decreased since 2009.

About the Global Leadership Forecast
DDI’s Global Leadership Forecast 2011 is the largest and most comprehensive study of its kind. More than 2,600 organizations provided perspectives on the current state of leadership in their organizations and future talent-related needs. This is the sixth biennial Leadership Forecast DDI has conducted since 1999, and the largest: 1,897 HR professionals and 12,423 leaders from 74 countries responded. DDI created and distributed surveys to both HR professionals and leaders between June and November 2010.

About DDI
Founded in 1970, Development Dimensions International, a global talent management expert, works with organizations worldwide to apply best practices to hiring/promotion, leadership development, performance management and succession management. With 1,000 associates in 42 offices in 26 countries, the firm advises half of the Fortune 500. For more information about DDI visit http://www.ddiworld.com/aboutddi

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