To BRIC or not to BRIC? Is Brazil nurturing the leadership style it takes to innovate?

We have seen a lot on leadership and its impact on performance, but much less on leadership’s impact on innovation; however, the latter is crucial to business competitiveness. One would imagine that a leader cannot be truly effective if his organization’s innovation capabilities are inhibited because of the leader’s style. However, we know little on what leadership style would be most effective to promote innovation in business.

It may help to figure out what type of innovation we are talking about, because business innovation can be incremental or radical. The first improves on what already exists. The last creates something new. Most innovation is incremental. Radical innovations, like television or the sewing machine, are rarer. Still, however radical, an innovation is not such until business can deliver it, and that requires business can make a profit on it.

Markides tells us in Fast Second that, for business to deliver an innovation, it takes transforming what may not be much more than a good idea into something that people will want to pay for at a price that business can make a profit on. This is why, Markides argues, that the company that takes a radical innovation to the market is seldom the one that developed the product in the first place. This happens because the company that developed the product frequently lacks the organizational skills that it takes to transform that product from the best possible into an affordable one and to market it and perhaps even support it after sales, Apple’s iPod and iPhone excepted.

That Apple’s leadership is exceptional, though perhaps not more than, say, Virgin’s Branson, suggests that, usually, firms that create radical innovations are led by people different from the ones that lead firms that produce incremental innovations. In the words of Stanford’s James March, a business that delivers incremental innovations chooses to exploits old certainties rather than explore new possibilities.

To explore new possibilities requires business to be comfortable with risk and ambiguities, it calls for an organizational culture that nurtures curiosity, which pays attention to needs and derives pleasure in satisfying wants. Oke et alli suggest that this type of leaders fits best the transformational type, which woo’s followers through charisma and by providing vision and generally making followers feel good about pursuing objectives, like radical innovation.

On the other hand, transactional leaders operate under the “carrot and stick” paradigm, which may seem dull but is operational in making modest things happen consistently, like delivering incremental innovation, which is most of what one appreciates on the shelves of department stores. Perhaps this is why, Markides contends, run of the mill corporations make so much fuss only to deliver marginally different goods.


Yet that is not the whole story. Run of the mill corporations have the knack to transform prototypes into products, brand them and distribute them. Chicopee Mills, a unit of Johnson & Johnson developed the first disposable diaper, Chux, in 1932; but it was Procter&Gamble that spearheaded Pampers in the 1960s by making them cheap and practical enough for everyday use. P&G’s current leader, A.G. Lafley, is generally regarded as exceedingly effective in prodding his team to remain innovative, but it is innovation of the incremental type that P&G delivers.

What about businesses that deliver commodities, which is what most Brazilian big business delivers? There may still be innovation in the processes, though not in the product. Yet we know that the Brazilian leadership style is of the paternalistic kind, in my view, a substantial variation of transformational leadership. If the Brazilian leadership style were transformational we would have filled the basic leadership condition for nurturing innovation, which by and large, Brazilian corporations do not. Embraer is an exception, and it does not produce commodities.

Perhaps it is high time for large Brazilian corporations to enter into the market for products in order to train to focus on innovation. India’s Ratan Tata, with his low cost Nano automibile, has made a wake-up call; so has China’s Yang Yuanqing by turning IBM into Lenovo; and IBM is now bidding for Sun Microsystems. Should a Russian tycoon come up with an innovation Brazil would be left last among the BRICS.

Alfredo Behrens
FIA, International MBA
alfredob@fia.com.br

Read more

• Constantinos Markides, Paul Geroski. Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets. John Wiley and Sons, 2004.


• Adegoke Oke, Natasha Munshi and Fred O. Walumba. The Influence of Leadership on Innovation Processes and Activities. Organizational Dynamics. Volume 38, Issue 1, January-March 2009, Pages 64-72.