How can we tell whether a company will keep innovating? Check the language of the CEO, according to a new study.
In their paper, Managing the Future: CEO Attention and Innovation Outcomes, the researchers Manjit Yadav, Jaideep Prabhu and Rajesh Chandy analysed data relevant to the innovation process in the internet banking industry. The data was broken into three parts: speed of detection, speed of development, and breadth of deployment of technology. Then they looked at future-focused phrases in letters to shareholders over a period of time. They found that CEOs more focused on the future tended to lead their companies into more innovation.
"Specifically, we find that firms with CEOs who attend to the future more are (a) faster at detecting new technological opportunities, (b) faster at developing initial products based on these technologies, and (c) superior at deploying these initial products," they write. "We find that firms whose CEOs attend more to the external environment are (a) faster at detecting new technological opportunities and (b) faster at developing initial products based on these technologies than are firms whose CEOs attend less to the external environment."
Not so for the CEOs who focused more on internal operations.
The research is interesting, if somewhat self-fulfilling. If nothing else, it very much confirms the importance of leaders' attitudes in establishing and maintaining an innovative culture.
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