What effective leaders do to lay the groundwork for innovation

effective leader1. They actively encourage entrepreneurship. Forward-looking companies continually reinvent their business models through experimentation and innovation. To let such a culture flourish, leaders have to be willing to share authority, challenge the status quo, encourage creativity and accept failure.

2. They set clear priorities. As important as entrepreneurship is, a leader ultimately has to lead. The person at the top frequently and sometimes uniquely enjoys an ideal vantage point for choosing between the short and the long term, and among markets and sectors. But no matter how clear their vision, leaders can’t manage innovation on their own. Companies need rigorous processes for assessing which ideas should move into development and which should not. Being able to say no is an essential driver of innovation productivity.

3. They strike a balance between efficiency and innovation. Some companies may be under pressure to cut costs and drive efficiencies, but the increasing pace of change means they also need to emphasise innovation. Resolving this contradiction requires the ability to both explore new avenues and fully leverage existing ones.

Combined with a healthy appetite for innovation, these leadership qualities have the potential to unleash a new wave of business creativity – and with it, perhaps, a new generation of global competitors.

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