ONE IN A MILLION

The wicked leader is he who the people despise. The good leader is he who the people revere. The great leader is he who the people say，‘we did it ourselves

It is a long-standing routine to have Chinese companies in the covers of western media： companies that regularly hit the news with their success stories， ambitious acquisitions to the rescue of troubled business partners or incursions into western markets. But until recently， the western public considered all these enterprises to be just part of the homogenous mass of “Made in China”. It has not been until recently that people have started to put faces to the stories.

Today there is a generation of Chinese business leaders， particularly in the IT sector， who are becoming media stars also in the west. So people now talk of Jack Mas Alibaba， listen carefully to Mr. Yangs explanations on Lenovos relentless success， and know that Mr. Ren Zhengfei is behind Huaweis very particular approach to corporate governance.

There is no doubt that these leaders have played an immense role in the incredibly fast development of the organizations and their products. What is not always so clear is that a big chunk of that improvement might not come from what they did， but rather from what they didnt do.

Traditionally， leadership has been understood as the individuals with the charisma and empowerment to initiate， plan and command actions， enforce obedience， make decisions and reward subordinates. In such a view， leaders are omniscient， all-powerful entities that control every aspect of the organization and take over all the important decisions. As complexity in industrialization led to larger companies with a deeper specialization of roles， leaders enforced routines and mechanisms of standard reporting and information control in order to keep a close eye on the daily activities of the employees and be able to take informed decisions.

In the 1960s this narrow view of the leader was challenged and expanded to include soft powers such as interpersonal mediation， conflict resolution and information dissemination. Under this approach managers are individuals with a privileged position in the company which enables them to have wider experiences and multiple sources of information， and as such they play key roles to keep the different building blocks of the organization together， watch for consistency of information across departments and align the different interests and motivations into a set of common goals.endprint

There is one aspect of this new breed of Chinese businesses that came as a real shock to western opinion： their ability to innovate at a very high pace and without showing signs of fatigue. Are there any shared features in innovative companies and， by extension， in their leaders？

As argued before in this column， the absolute minimum requirement for internal innovation is technology ownership. It is impossible to bring in innovation into a product in a cost-effective way without understanding the technical implications within it. It is also necessary to have a clear and deep understanding in the market， because innovations will only be perceived as such by the customers if they give answer to existing problems （even if sometimes to problems the customers were not aware of?。? I have also suggested useful approaches to keep a firm but flexible grip on technology， such as modular strategies or platforms， or to connect the product features to market opinions. Like characteristics management. In such a sense， one could see mergers and acquisitions as a shortcut to acquire a technology standard， a customer base， or both. But there is a third aspect that heavily determines the value of a company or its ability to innovate： what scholars call the organizational capital： its collection of mindsets， practices and processes； in other words， its way of doing things.

Many managers have tried to implement best practices and business school recipes into their organizations， too often with little success. This is due to the fact that it is very difficult to identify all the complementarities and environmental factors that contribute to a given success story： the same mindset that produced one given solution to a specific problem might come up with a totally different approach under different conditions. It was mainly the scarcity of space that prompted Toyota managers to develop Justin-time supply， and it might not be of the highest priority to implement it in regions where storage is cheap. But of course， mindsets are much more difficult to copy： they are highly dependent on the quality of leadership.

Becoming or staying innovative means building and trusting an ability for self-judgment， turning cross-departmental work into a routine， and motivating employees to take risks out of their comfort zone. But it also means to execute a different form of leadership where decisionmaking is empowered further down the line of command and employees are mentored rather than controlled. The centralized model of management so typical of state-owned manufacturing industries confronts a serious handicap to innovation： decisions require control（and sometimes creation） of information， and it is difficult to avoid unnecessary bureaucratization of information transfer and enforcement of control mechanisms that hinder innovation by instilling a culture of “correct answers” and destroy self-confidence of employees by “killing the messenger” responses.endprint

As P. Senge puts it in his seminal paper “Building Learning Organizations”， leaders responsibility starts with defining a clear and concise corporate vision all members of the organization can align with when exercising self-judgment and decisions. This vision has to be accompanied of a sharp and realistic analysis of the current situation of the firm， and it is in the nature of the gap between them that the creative drive of an organization will emerge.

Then， leaders need to design set of policies and structures that will help members to translate the corporate vision into business decisions. Under such circumstances， business strategies are an emergent phenomenon grown out of the engagement of the people at all levels of the organization， rather than top-down rational plans. And finally， leaders need to act as stewards to the company， with an attitude of service rather than dominance. As the master Lao Tsu correctly put it， true respect doesnt come out of fear， but out of shared commitment and identification.

One could argue that innovation in the automotive industry comes at a slower pace than in IT， and such attributes of a leader are only secondary. But with technological break-throughs such as selfdriving cars， ultra-light materials and alternative powertrains only years away from becoming realities in the industry， it is clearer than ever that coping or buying a given technology standard will not suffice anymore to guarantee a survival in the business. True technology ownership， corporate flexibility and continuous innovation are a must. And they set very high requirements on the organizations， as well as a new type of leader to serve them.endprint