Innovation, leadership main factors behind top companies' success: study

Hay Group, a global management consulting firm, has released its seventh annual “Best Companies for Leadership Study”, identifying the top 20 global and top 10 Asian companies for leadership and examining how they nurture talent and foster innovation in their ranks. This year, General Electric topped the global list, followed by Procter & Gamble, IBM, Microsoft and Coca-Cola. Here in Asia, Samsung Group, Toyota Motor and Unilever led the ranking.
According to Hay Group’s study, the Best Companies for Leadership (BCL) create workplace environments and processes that enable innovation to thrive. In fact, 90 per cent of the Asia’s top 10 companies reported that their leaders regularly celebrated innovation, compared with just 59 per cent of other companies. In addition, 84 per cent of Asia’s top 10 companies reported that ideas from subsidiaries were just as likely to be implemented as those from headquarters, compared with only 63 per cent of other companies.
“In Asia, there is a keen hunger to capitalise on the abundant business opportunities,” said Mohinish Sinha, leadership and talent practice leader for Hay Group Asean, India, Pacific and Africa and co-author of the BCL Asia report. “The Best Companies for Leadership recognise innovation is key to their future growth and sustainability in a fiercely competitive global market.
“Many companies prize innovation, but the Best Companies for Leadership approach it in a disciplined way by building agile organisations, promoting collaboration, and celebrating successes.”
The global top 20 Best Companies for Leadership are GE, P&G, IBM, Microsoft, Coca-Cola, McDonald’s, Accenture, Wal-Mart Stores, Johnson & Johnson, Unilever, Toyota, Nestle, 3M, Southwest Airlines, ExxonMobil, PepsiCo, Siemens, Shell, Dow Chemical, and FedEx.
Asia’s BCL top 10 are Samsung, Toyota, Unilever, Nestle, Tata Group, IBM, Sony, P&G, Coca-Cola, and Petronas.
“There are plenty of ideas that we could learn from the best companies in driving a culture of innovation,” said Thachasha Phuangpornsri, leadership and talent practice leader, Thailand. “Innovation does not happen by chance any more; the highlight this year indicates that best companies focus on promoting an environment that encourages meaningful innovations throughout the organisation. This is seen as a crucial way to survive and drive their market leadership.”

--Innovation revolution
When it comes to innovation, Hay Group’s study also found that Asia’s top 10 were driven by future customer needs and not just serving the current ones. In fact, 90 per cent of them report that employees – not just managers and leaders – constantly discussed customers’ future needs, compared with just 56 per cent of other Asia companies.
When faced with difficulties, Asia’s top 10 are willing to postpone short-term profits to continue investing in innovation (71 per cent) and treat negative feedback and performance difficulties as learning opportunities (77 per cent), compared with 53 per cent and 56 per cent respectively in other companies.
“The ability to translate future trends into new product offerings has kept Asia’s best ahead of their competition,” observed Vanessa Cen, leadership and talent practice leader in Hay Group Northeast Asia and co-author of the BCL Asia report. “The willingness to bite the bullet now by putting off short-term gains so as to continue innovation investment is their hallmark.
“In fact, Asia’s top 10 (71 per cent) do better in this aspect than even their global top 20 peers (65 per cent). Coupled with their organisational resilience, this enables them to bounce back quickly from setbacks, and the Asia top 10 are a force to be reckoned with.”

--Global best practices
However, the co-leaders of the study warned that Asian companies should not rest on their laurels as they have much to learn from the global top 20 companies in the following areas:
Develop an organisational structure that enables quick communication. This is fundamental to organisational agility, decision-making frameworks and responsiveness to market changes.
The Asian tradition of directive leadership will not work to foster innovation. Everyone must be expected to lead, even those who have no formal position of authority, and Asian bosses must learn to delegate their authority and decision-making power.
Create personally meaningful work. Having an innovation strategy is no guarantee of success, and the most innovative companies are interested in discretionary effort. Therefore, strategies must be decoded vertically and horizontally so that personal interests are aligned with corporate and interdepartmental goals.
Hay Group said it would hold the World’s Most Admired Company (WMAC ) 2012 forum in Bangkok on July 4, featuring guest speakers from Banpu, Nestle, Charoen Pokphand and Toyota.