There really isn’t a simple answer to this. Innovation is becoming widely accepted as a key to long-term business success. CEOs as a standard are much more likely to have backgrounds in law, sales or finance, and as such lack the experience on fields such as research and development. Some fantastic recent research from Harvard Business Review found that in situations where a breakthrough innovation can prove critical for growth, it should be the case that CEOs have at least some specialist background in order to take the lead in the company’s innovative attempts. Interestingly, when you look at the numbers in some sectors, a so-called breakthrough innovation may not be as important to overall performance as would be expected.
When looking at the tech sector, only two of the top 10 outperforming CEOs of the last 20 years had a specialist background and oversaw breakthrough innovations.
With Apple’s development of the iPhone, alongside NVIDIA’s development of the Graphics Processing Unit, both Steve Jobs and Jen-Hsun Huang respectively managed to draw on their extensive experiences in product development, and helped drive the successes that were to come. But, as these results show, technical knowledge in a specialist background isn’t necessarily required for a CEO, but it does come in handy if you’re leading an innovation process.
While not many of these ‘top CEOs’ made breakthrough innovations over the 20 years of the study, every company listed would have had to adapt to stay ahead of an incredibly rapid period of market development, so some fluidity of development and change has most certainly occurred, otherwise these companies would have long since been left behind.
The value of having a CEO with specialist experience seems somewhat apparent, but those with a background in product development seem to be the most likely do oversee a breakthrough. When you compare how only 28% of pharmaceutical companies have a CEO with a specialist background to the figure closer to 60% in tech and retail industries, it appears relatively self-explanatory how the tech and retail sectors are always updating, while pharmaceutical companies are overwhelmingly far more set in their market positions, and often have to outsource their R&D to smaller firms. However, it must be noted that tech and retail companies often are much smaller and flexible organisations, and openness to and ease of change is much easier when you have a smaller workforce to displace.
Breakthrough innovations across all sectors are generally rare, and if a great idea occurs, it’s usually pre-IPO, but at the very least having a CEO with a product development background allows your firm a good deal more flexibility and choice in staying fresh and relevant compared to those without.
If this interests you, why not check out our Beginner’s Guide To Idea Management.
You also might be interested in our upcoming report : Everyday Innovation. Working with industry experts, we aim to deconstruct what Innovation really means, and show you our own best practices, and how to stay ahead of the market through the power of innovation.