BCL2011 Indonesia Innovation Dec2012

Leadership
reloaded:
Innovating in the next decade

The rules have changed again. To succeed in the new normal, Asian leaders
must be game-changing innovators. How can companies in Indonesia build
sustainable businesses based on innovation?

Contents
Innovation in Indonesia 2

Redefining ‘business as unusual’ 12

The business of innovating 14

Leading innovation in Asia 16

Latitude for new ideas 18

Braced for long-term challenges 22

Plugged-in to virtual participation 26

Lessons on innovating leadership 30

Leadership reloaded 32

About BCL2010 34

4 Best Companies for Leadership in Asia

Innovation in Indonesia

Indonesia has a grand vision to become a top 10 advanced economy
by 2025, and within the top 6 by 2045. To achieve this lofty goal,
Indonesia has to attain real economic growth above 7 percent every
year for the next four decades.

For now, optimism continues to reign in In this section of this paper, we will focus on
Indonesia with foreign direct investment the lessons that organizations in Indonesia
rising 22 percent in the third quarter of can learn from the Best Companies for
2012 from one year ago, after posting 30 Leadership (BCLs) when it comes to
percent growth at the previous quarter. fostering innovation. In short, BCLs excel
the following practices:
The question is, how long will this optimism
last? What stands in the way of sustainable ƒƒ Create room for ideas to be heard
growth? As pointed out in the government’s ƒƒ Welcoming diversity
MP3EI masterplan, the key lies in building ƒƒ Grooming the next generation
an “innovation-driven economy”. ƒƒ Setting the stage for innovation

And yet, innovation is a loaded buzzword.
What does it look like in terms of
organizational behavior? What are the
conditions that will allow it to flourish? This
was the topic of Hay Group’s 2011 study
in to the Best Companies for Leadership
and is extensively discussed in the following
chapters.

©2012 Hay Group. All rights reserved

5

“ Innovation is embodied in our values. Since the
1980s we have been running annual programs
called Innov-Astra that helps channel new ideas
and innovation from the lowest levels of the

”
organization up to senior management.

Mr Ekuslie Goestiandi , Head of Management
Development Institute, PT Astra International


Figure 7: Create room for ideas to be heard

Create room for ideas to be heard
Every innovation is the result of a new way and may sometimes be viewed negatively.
of thinking: different points of view creating Subsidiaries also perceive that the headquarters
new insights, or new perceptions brought are not listening to them; that is, their ideas
to bear on the status quo. BCLs know that will not be implemented anyway.
they need to create room for new ideas to be
At home-grown diversified conglomerate
heard (Figure 7).
PT Astra International, things are different.
Leaders in Indonesia are doing well when Mr Ekuslie Goestiandi , the Head of Astra’s
it comes to gathering viewpoints from Management Development Institute at pointed
within the company for solving problems. out that, “Innovation is embodied in our
Structures are also provided for ideas to filter values. Since the 1980s we have been running
upwards. annual programs called Innov-Astra that helps
channel new ideas and innovation from the
However, unsolicited ideas are not so
lowest levels of the organization up to senior
welcome in companies here. Bypassing the
management. There is healthy competition to
chain of command is not always welcomed
secure the best idea for the year and we offer
attractive prizes to reward employees’ efforts.”


7

“ In fact, all five of our businesses units in
Indonesia are led by Indonesians.

”
Mr Handry Satriago, President-Director & CEO, GE
Indonesia

“
The opportunity to shape the minds of future
leaders was very enticing. I see that my role
as Chief Learning Officer is to setup and
build a curriculum that would institutionalize
leadership development into the core of the

”
Bakrie Group of businesses.

Mr Effendi Ibnoe
Bakrie Learning Centre


Welcoming diversity
However, companies in Indonesia not recruit
Because different ways of thinking are
enough minorities and top management
essential raw materials for innovation,
positions are predominantly filled by
the BCLs ensure that their organizations
international talent.
comprise a breadth of experience and
perspective, pursuing multiple strategies to At General Electric (GE), who is ranked
incorporate diversity into the fabric of their number one in the global BCL Top 20 list,
companies (Figure 8). localization of top management has been
undergoing since 2010. Mr Handry Satriago,
Leaders in Indonesia are fairly adept at
President-Director & CEO, GE Indonesia
juggling local and global demands that
commented that although GE is a foreign –
come with working in a multinational
owned company, they have been accelerating
environment. They are culturally sensitive
the development of local leadership and
and can work with culturally-diverse teams.
talent. “In fact, all five of our businesses units
in Indonesia are led by Indonesians,” he adds
with pride.

Figure 8: Welcoming diversity


9

Figure 9: Grooming the next generation

Grooming the next generation
Many companies have good talent Then there is also the element of personal
development programmes – giving satisfaction. As Mr Effendi Ibnoe of Bakrie
employees stretch targets, providing training Learning Centre said, “I have spent several
and encouraging employees to learn outside decades with multinationals, including as
their areas of expertise. GE’s Vice-President of HR for South-East
However, there is a vital ingredient missing. Asia. The opportunity to shape the minds
Not enough CEOs and business leaders in of future leaders was very enticing. I see
Indonesia are personally grooming their that my role as Chief Learning Officer is to
successors (Figure 9). Perhaps they view this setup and build a curriculum that would
as grooming their rivals. But, we’d like to institutionalize leadership development into
encourage a different perspective – if there is the core of the Bakrie Group of businesses.”
no one who is capable of taking your place,
then it will be harder for you to move up
your career path.


Setting the stage for innovation
Under President S.B. Yudhoyono’s vision for merely fixing existing problems. Future
Indonesia, the country must to transform revenue streams can be generated by offer-
ing customers what they will need in the
into one of the 10 major economies in the
future.
world by 2025 through increasing value-add
ƒƒ Leaders need to celebrate innovation
and innovation in the way things are done
success and treat failure as opportunities
here.
for learning, instead of punitive actions.
For this to be achieved, certain In a society where respect and deference
organizational behaviours in Indonesia must are still accorded to rank, leaders must be
be changed (Figure 10): visible in supporting efforts at innovation.
ƒƒ Employees must be given time and credit ƒƒ Bite the bullet on short-term profits and
for discussing customers’ future needs. try new things that may produce long-
The key here is not just to focus on term revenue stream.
customers’ current requirements as this is

Figure 10: Setting the stage for innovation


11

Innovation reloaded
Companies need innovation for growth. And in order to have the best execution, we
And as noted earlier in this paper, there is believe that by concentrating on the four
no shortage of clever people and smart ideas principles discussed earlier, companies in
within our workforce in Indonesia. Hence Indonesia will achieve real growth and take
the competitive edge comes from having their rightful place on the global economic
the best execution – from the time the idea stage.
is first identified, shepherded through the
corporate maze, and into the hands of the
paying customer.

About Hay Group’s Best Companies for Leadership in Indonesia
Hay Group’s Best Companies for Leadership 2011 was announced in May 2012. Globally,
6,921 individuals (managers and above) participated in the study. Out of this pool, 305
respondents are working in Indonesia from both locally-grown companies like Depo
Bangunan, PT Astra, International, PT Pertamina, Kaltim Pasifik Amoniak and Semen Gresik
and global MNCs like Nissan, Beiersdorf, Zuellig Pharma, Panasonic and CIGNA Insurance.

Contact the author
Nidthia Chelvam, Managing Consultant for Hay Group Indonesia,
helps multi-national companies and international organizations
transform their business strategies into results. Nidthia also has
extensive line and operational management experience with
global companies across three continents.
E| Nidthia.Chelvam@haygroup.com


Redefining ‘business as unusual’

Business ideas: check. Good talent: check. Performance strategies:
check. Alas, the wheels are barely in motion as a ‘new normal’ rears
its head.

Increasing globalization is a given, with Additionally, advances in technology
international competition likely to grow convergence will continue to blur the
fiercer and markets even more diversified. boundaries between private and working
The rise of India and China, coupled with lives. More business is conducted ‘virtually’,
the global economic power shift towards and power is shifting to employees –
Asia, is reshaping the world before our very particularly the rising class of digital
eyes. In the West, the number of jobs is knowledge workers, who can work anywhere.
falling; in the East, leaders have to learn how However, while technological prowess can aid
to manage in new markets as they expand innovation, digital natives’ over-reliance on
westward. technology and their lack of social skills do
not make them ready for leadership roles.
Technology convergence and the evolution
of social media have raised the bar on Hence, talent will continue to be at a
customer engagement. Customers now premium and retaining employees with key
expect an instant response to their queries; skills will be a challenge. The “youth bulge”
and even be involved in the process of in Asia poses significant leadership challenges.
product development in services like IT and In 2011, the median age of Asians is 29.5
communication. years, compared to 40.3 years in Europe and


13

37.3 years in North America1. What will Coupled with shorter economic cycles,
it take to accommodate and motivate the hyper-connectivity and restless digital natives,
“me” generation that form our next band of we believe that the only way for companies
leaders? to succeed is to innovate. Not just in new
products and services for customers, but also
The hunger to capture Asia’s abundant
in the way they treat and motivate employees,
business opportunities is challenged by
groom leaders and conduct business.
higher expectations, greater business
risks and stronger market competition.
As we know, innovation is easy.
Meanwhile, the growing scarcity of strategic
Commercializing it and building
resources such as water, minerals, metals and
organizational discipline around it is much
fossil fuels will cause price hikes and lead to
more challenging. In this paper, we will
social instability.
look at the dynamics of leadership required
for disciplined innovation, especially for
companies operating in Asia.

1 Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat
(2011). World Population Prospects: The 2010 Revision. New York: United Nations.

“ Asia’s best companies are also more receptive
to criticism than their peers – with 77 per cent
embracing negative feedback and performance
difficulties as opportunities for improvement and

”
growth.


The business of innovating

While there is no silver bullet for success, the results of Hay
Group’s 2011 Best Companies for Leadership study reveal specific
organizational practices that market leaders have adopted to
enable and encourage innovation.

“Leading companies have recognized that 1 Enable agility
meaningful innovation requires a strong Agile organizations are better able to respond
and lasting commitment,” says Susan to challenges with innovations, and capitalize
Snyder, co-leader of the study and head of on their successes. The global Top 20
the leadership and talent practice for Hay structure their organizations for speed and
Group’s US life sciences sector. “They have flexibility.
taken a disciplined approach to a notoriously
fickle process, and focused their efforts on
creating an environment throughout their 2 Create the context
organizations that invites and supports Smart innovations require a fundamental
innovation and allows new ideas to flourish.” understanding of customer needs, and
a willingness to risk rethinking them.
To establish and sustain a climate that is
The global Top 20 ensure that employees
conducive to meaningful innovation, the
understand customer needs, and support
global Best Companies for Leadership
new approaches to address them.
(Figure 1) have initiated four business
practices:


15

3 Broaden perspectives 4 Reward collaboration
New and different points of view are If innovation is the product of different
essential precursors to innovation. The global perspectives, collaboration is the process that
Top 20 encourage and embrace different brings them together. The global Top 20 do
cultural and generational perspectives, and not merely preach collaboration; they require
work to broaden the viewpoints of their and reward it.
employees.

Figure 1: Global Top 20 best companies for leadership, 2011

1. General Electric 11. Toyota Motors

2. Procter & Gamble 12. Nestle

3. IBM Corp 13. 3M

4. Microsoft 14. Southwest Airlines

5. The Coca-Cola Company 15. Exxon Mobil

6. McDonald's 16. PepsiCo

7. Accenture 17. Siemens

8. Wal-Mart Stores 18. Shell

9. Johnson & Johnson 19. Dow Chemical

10. Unilever 20. FedEx

Source: Hay Group Best Companies of Leadership 2011 survey


Leading innovation in Asia

This year, Asia’s five Best Companies for Leadership – PETRONAS,
Samsung Group, Sony Corporation, Tata Group and Toyota Motors
shared the limelight with globally renowned brands like Coca-
Cola, IBM, Nestle, Procter & Gamble, and Unilever (Figure 2). For its
transformative technologies and life-changing product innovation,
Samsung has also earned a spot among giants like Apple and
Google on the list of global honorable mentions. When it comes to
innovation, what can we learn from Asia’s Top 10 companies?

“ The hunger to capture Asia’s abundant business
opportunities is challenged by higher expectations,
greater business risks and stronger market
competition. Meanwhile, the growing scarcity of
strategic resources such as water, minerals, metals
and fossil fuels will cause price hikes and lead to

”
social instability.


17

Figure 2: Asia’s Top 10 best companies for leadership, 2011

1. Samsung Group 6. IBM Corp

2. Toyota Motors 7. Sony Corp

3. Unilever 8. Procter & Gamble

4. Nestle 9. The Coca-Cola Company

5. Tata Group 10. PETRONAS


Latitude for new ideas

Overall, Asia’s Top 10 companies are driven by future-oriented
innovation. Furthermore, employees – and not just the managers
– are constantly involved in addressing customers’ future needs
(Figure 3). The ability to translate future trends into new product
offerings has kept Asia’s best ahead of their competition.

The Tata Nano, despite its glitches, remains Furthermore, no good deed goes unnoticed.
an achievement for the Tata Group – one Leaders regularly recognize and publicly
of Asia’s top 10 companies. It fulfils the celebrate innovation in most of Asia’s top
need for safer transportation as Indians 10 companies. This simple but vital act is a
travel through the streets, sometimes with critical part of maintaining discipline around
four family members piled atop a wobbly innovation.
motorcycle. By all measures, the “one-lakh
car” has been regarded a breakthrough
innovation, making a fuctional vehicle
available to India’s masses at an extremely
low cost.


19

Figure 3: Innovating for the future

100% 100%
90% 90%
90%

80% 81%

70%

60% 59% 56%

50%

40%
30%

20%

10%

0%
My company’s leader Employees spend much time
Employees spend much time
regularly celebrate innovation discussing customers’ future needs
discussing customers future needs

Asia Top 10 Rest of Asia Global Top 20


Toyota: Steering performance to new heights

It takes true innovators like Toyota to show us that kaizen can lead to more than just
better quality. The fact that Toyota is focused on improving factory processes rather
than showroom products can make their innovations difficult to see. However, a “value
innovation strategy” is proof that it’s not about cost-cutting on Toyota’s shop floor – it
is about delving deep into design processes to achieve savings spanning entire vehicle
systems2.

By 2008, both strategy and disciplined process paid off – for Toyota was no longer just
the industry’s most profitable and innovative firm3, it also overtook GM to become
the world’s largest car manufacturer. According to Forbes, Toyota topped a list of 25
multinational firms in 2011 in terms of corporate R&D budgets4.

It is clear that what differentiates Toyota is innovation philosophy – its way of thinking.
Here is a company that cared enough about customer requirements to have a dedicated
team observing how people used their trucks before it developed the Tundra.

And certainly, one example of Toyota’s success and long-term view towards product
innovation is the Prius hybrid. According to Toyota Motors’ spokesperson in North
America, the Prius was not about “a fast investment return” but a slow and long-lasting
one. Ten years ago, he said, when the Prius made its debut, the questions were: “Will fuel
get cheaper or more expensive in the long term? Will oil become more or less plentiful?
Is the air going to become cleaner or more polluted? Do we do something proactive and
innovative, or do we hold on to where we are, and don’t let go to the bitter end?5”

Thanks to the Prius hybrid, Toyota is garnering greater respect as product innovator. It is
also ramping up collaborations with suppliers to generate greater innovation6.

As number-two among Asia’s Best Companies for Leadership, it is obvious that Toyota’s
innovative edge does not lie in rolling-out new products – it is about transforming
business processes and identifying new markets for future customer needs. It is about
driving the right culture, and having the tenacity to see things through.


21

2 “The World’s Most Innovative Companies”, BusinessWeek, 24th April 2006.
http://www.businessweek.com/magazine/content/06_17/b3981401.htm

3 “The Open Secret of Success”, The New Yorker, 12th May 2008.
http://www.newyorker.com/talk/financial/2008/05/12/080512ta_talk_surowiecki#ixzz1rbBNOu1A
4 “Top 25 Corporate Innovation Budgets”, Forbes, 5th July 2011.
http://www.forbes.com/sites/williampentland/2011/07/05/top-25-corporate-innovation-budgets/

5 “From 0 to 60 to World Domination”, The New York Times, 18th February 2007.
http://www.nytimes.com/2007/02/18/magazine/18Toyota.t.html?pagewanted=3&ei=5090&en=27f821bf31ad515
b&ex=1329454800&partner=rssuserland&emc=rss

6 “The World’s Most Innovative Companies”, BusinessWeek, 24th April 2006.
http://www.businessweek.com/magazine/content/06_17/b3981401.htm


Braced for long-term challenges

In Figure 4, we see that the global Top 20 companies are not only
good at planning and budgeting for innovation, they also beat
their peers at managing the peaks and troughs of research and
development.

Interestingly, Asian firms do better than companies are prepared to postpone short-
their global counterparts when it comes term profits in order to continue investing
to ‘biting the bullet’. In other words, even in innovation, compared to 65 per cent of
when projects do not turn profitable at the global best companies.
expected juncture, 71 per cent of Asia’s best

“ Asia’s best companies are also more receptive
to criticism than their peers – with 77 per cent
embracing negative feedback and performance
difficulties as opportunities for improvement and

”
growth.


23

Asia’s best companies are also more receptive organizational resilience, the best companies
to criticism than their peers – with 77 per exemplify that acceptance of feedback – even
cent embracing negative feedback and negative ones - is necessary if they are serious
performance difficulties as opportunities for about gaining market share.
improvement and growth. As a measure of

Figure 4: Biting the bullet

100%
94% 95%
90%
80% 65% 77%
70% 71%
61%
60% 56%
53%
50% 47%

40%

30%
20%
10%

0%
My company runs unprofitable My company is willing to In my company, negative feedback
projects to try new things postpone short term profits in order and performance difficulties are treated
to invest in innovation as opportunities to learn and grow

Asia Top 10 Rest of Asia Global Top 20


Asia’s top-ranked company, Samsung to new ideas, different cultures and best
Electronics, posted record profit 1Q2012, practices – wherever they can find it.
thanks to phenomenal sales of the new
Analogically speaking, Asia’s Top 10
Galaxy Note – a ‘pha-blet’ half the size
companies do more than plant new trees –
of an iPad. The device typifies the kind
they weather the seasons and persist through
of innovation that creates new markets.
bad harvests. They do not just grab at low-
According to news reports7, market-driven
hanging fruits, which competitors also do.
innovation has also improved Samsung’s
Instead, they balance current prospects with
global rankings for smartphones, which
long-term investment returns and are willing
commanded nearly one-fifth of market share
to explore new paths to success. Coupled
in 2011, up from just 3 per cent in 2009.
with resilience, Asia’s best companies recover
The ‘willingness to improve’ corroborates our quickly from their setbacks and are more
findings in an earlier paper “Leading Asia: It’s responsive to challenges, compared to their
time to change the rules”, where we identified peers.
openness as a key competency among Asia’s
best companies. This includes receptivity

7 “Samsung posts record quarterly profit “, The Globe & Mail, 6th April 2012.
http://www.theglobeandmail.com/report-on-business/samsung-posts-record-quarterly-profit/article2394031

8 “Samsung aims to become a global innovation power”, Bloomberg News, 5th September 2010.

9 “Apple reigns as world’s top smartphone vendor in Q4”, CNET, 26th January 2012.
http://news.cnet.com/8301-1035_3-57367213-94/apple-reigns-as-worlds-top-smartphone-vendor-in-q4/

10 “ Samsung Electronics Announces Fourth Quarter & FY 2011” news release, 27th January, 2012.
http://www.samsung.com/us/aboutsamsung/news/newsIrRead.do?news_ctgry=irnewsrelease&news_seq=20096

11 “Samsung Chairman Lee Urges Innovation as Global Economy Slows”, Bloomberg Business Week, 2nd January,
2012.
(http://www.businessweek.com/news/2012-01-02/samsung-chairman-lee-urges-innovation-as-global-economy-
slows.html


25

Samsung: Innovating new frontiers

Global electronics giant Samsung has come a long way from being
“manufacturer” to “innovator”. Scoring top spot in Asia’s Best Companies for
Leadership for the second consecutive year, there is no doubt the Galaxy Tab
inventor and pioneer of the seven-inch tablet market transformed the world of
consumer electronics by first reinventing itself.

In making Samsung a responsive market player, CEO Choi Gee-Sung said his
job was to re-orientate the organization for the next generation so that it is
constantly ready to evolve. Not surprisingly, its culture of top-down management
and obedient employees were among the first to go8.

The Korean conglomerate has also not allowed the shifting strategies of a fast-
paced industry to faze its innovation mission. Where other global corporations
have hesitated, Samsung has gone ahead decisively to create and capture new
opportunities. Its long-term goals are backed by a USD20 billion investment plan
for new technologies by 2020.

In the last decade, it has dug deep to overtake Sony Corp. as the largest flat-
screen TV maker. It also superseded Hewlett-Packard in the market for all-in-one
color laser printers, and became the biggest brand for LCD TV sets and computer
monitors. In the smartphone arena, Apple and Samsung went neck-to-neck in
2011. While Apple took the top spot in terms of handsets shipped on a quarterly
basis Samsung became the market leader in annual terms for the first time
with19.7 per cent global share, beating Apple’s 19 per cent9.

With the Galaxy Note, Samsung is poised to set new trends in consumer
electronics. The timely introduction of this half-phone-half-tablet has bolstered
annual revenue – an all-time high of USD145 billion in FY201110. Not resting on
its laurels, Samsung is intent to more than triple this to USD400 billion by 2020.

At the core of its lofty ambitions, Chairman Lee Kun Hee says, is greater openness
and stronger collaboration amidst the intensified competition: “Samsung’s future
hinges on new businesses, new products and new technologies. We should make
our corporate culture more open, flexible and innovative.” 11

Today, Samsung is responding to Lee’s call by encouraging creativity over
obedience. “We are at an inflection point,” says Choi. “We want to transform
ourselves to create new value.” As a progressive company at the forefronts of
technology, it owes its success to a great knack for spotting emerging trends.
Annually, the Samsung Advanced Institute of Technology has a USD300 million
budget to explore technology that is deemed to become “mainstream” in the
next decade.


Plugged-in to virtual participation

With openness to feedback, geographical distance is no hindrance
to productivity among Asia’s Top 10 companies. In fact, they are
more likely to solicit ideas from everywhere within the company,
harvesting the best suggestions for implementation. As seen
in Figure 5, a majority of Asia’s Top 10 agree that ideas from
subsidiary leaders are just as likely to be implemented as those from
headquarters, compared to 63 per cent of their peers.

With the rise of social media networks and Unfortunately, virtual networks and
cloud cultures, today’s organizations are impersonal relationships are two sides of the
bestowed with higher mobility, constant same coin. For such cloud teams to work
connectivity and easier collaboration. optimally, we recommend that members
Plugged-into the latest digital lifestyle, it is no forge an “analog bond” through face-to-face
wonder that 84 per cent of Asia’s Top 10 cited meetings first; this will help seal the digital
higher productivity even though their leaders one.
are in different physical locations, compared
to 49 per cent of their peers.


27

Figure 5: Crowd-sourcing for better results

100%
90% 90%
90%
84% 84%
80%

70%
63% 62%
60%
49% 49%
50%

40%

30%

20%

10%

0%
In my company, more work between In my company, ideas that come from
leaders is conducted when they are subsidiary leaders are just as likely
in different physical locations to be implemented as those from headquarters

Asia Top 10 Rest of Asia Global Top 20 Rest of Global

“ Kodak is one picture-perfect example. Today, not
many remember that this 132-year-old company
invented the first digital camera in 1975. And even
if the digital onslaught did not ruin Kodak’s analog
film and camera-making business, the arrival of
smartphones complete with built-in cameras

”
certainly drove the final nail into the coffin.


Kodak vs. Fujifilm: Turning negatives into positives

Retailers say the strategy to success lies in knowing what customers want. But often, innovation is only
half the battle – the downfall of great innovative predecessors being a grim reminder of the fact that
innovation discipline remains the trickier issue.
Kodak is one picture-perfect example. Today, not many remember that this 132-year-old company
invented the first digital camera in 1975. And even if the digital onslaught did not ruin Kodak’s analog
film and camera-making business, the arrival of smartphones complete with built-in cameras certainly
drove the final nail into the coffin.

It is hard to imagine that Kodak has entered into Chapter 11 given its industry dominance not too long
ago. Back in the seventies, Kodak commanded 90 per cent and 85 per cent of the US market for film and
camera sales respectively; and indeed, until the nineties, it was one of the most valued brands in the
world.

Yet, the main differences between Kodak and its long-time rival Fujifilm were a culture of complacency,
failure to read emerging trends, sluggish market response and inability to adapt strategies from the
lack of innovation discipline. News reports suggest that executives “suffered from a mentality of perfect
products, rather than the high-tech mindset of make it, launch it, fix it.”

While both companies saw their traditional businesses rendered obsolete, Fujifilm became a highly
profitable business. Where Kodak sold cheap cameras and counted on loyal customers buying rolls
of expensive film, Fujifilm diversified its operations swiftly and successfully. Leadership, too, played an
important role – and Kodak’s inconsistency appeared to stem from strategies that changed with each
new chief executive.

According to Fujifilm’s President and CEO Shigetaka Komori, the organizational overhaul was a painful
experience: “Without it, nobody could survive. So we had to reconstruct the business model.” For
Komori, this involved the undoing of processes put in place by the person who handpicked him for the
job. This was a big taboo in corporate Japan, but Komori understood the impetus for business survival.

Driven by technology evolution, Fujifilm moved quickly into digital photography, but they
complemented the strategy by diversifying. Harnessing their expertise in imaging solutions, Fujifilm
went on to producing camera lenses, as well as mobile phones and pharmaceuticals. Applying its
knowledge on anti-oxidation, it also produces cosmetics and is launching high-end skin creams
in Europe. It also inked a USD995 million deal to acquire Sonosite, a US manufacturer of portable
ultrasound machines.

Where technology has turned the tables on Kodak, Fujifilm backed its strategies with something
elementary: providing customer value – a plan that required innovation discipline. Today, profits from
its analog films may have gone from 60 per cent in 2000 to practically zero, but it has earned six times
more income from other businesses, including its 75 per cent share from the Fuji Xerox printer and
photocopier company.


29

Sources

1. “The last Kodak moment?”, The Economist, 14th January 2012.
http://www.economist.com/node/21542796

2. “Kodak versus FujiFilm”, INSEAD blog, 23rd January 2012.
http://blog.insead.edu/2012/01/kodak-versus-fujifilm/

3. “One negative too many for Kodak”, Financial Times, 19th January 2012.
http://www.ft.com/intl/cms/s/2/2a591538-42af-11e1-97b1-00144feab49a.html#axzz1ru8l8HdB)


Lessons on innovating leadership

In order to run globalized companies, Asian leaders must set the
direction and discipline for innovation. Insights on individual
leadership styles, ensuring strong leadership pipelines etc., have been
useful preludes, but they are no longer enough for sustainable success
in the new economy.

Our latest research urges Asian firms to delegate their authority and decision-making
catch up to global Top 20 companies in the power. This, we found, leads to higher
following ways (Figure 6): employee engagement and motivation12.

• Develop an organizational structure • Create personally meaningful work. Having
that enables quick communication. This an innovation strategy is no guarantee of
is fundamental to organizational agility, success, and the most innovative companies
its decision-making frameworks and are interested in discretionary effort.
responsiveness to market changes. Therefore, strategies must be decoded
vertically and horizontally so that personal
• The Asian tradition of directive leadership
interests are aligned with corporate and inter-
will not work. Everyone is expected to
departmental goals.
lead, even if they have no formal position
of authority, and Asian bosses must learn to

12 2009 Hay Group study of 1,249 high-profile organizations in India, cited in Leading Asia: It’s time to change the
rules


31

Figure 6: What Asia can learn from Global Best Companies

100%
95%
90%
85%
80%
74%
70%
60% 58%

50%
40%
30% 26%

20%
10% 5%

0%
My company has an organizational In this company, you are only Leaders in my organization work hard to
structure that favors quick expected to lead when you have connect people with projects that are
communication paths a formal position of authority personally meaningful to them

Asia Top 10 Rest of Asia

“ To develop this combination of skills and qualities
– and adopt what is, in effect, a ‘post-heroic’
leadership style – they may need to abandon much
of the thinking and behavior that propelled them

”
to success.


Leadership reloaded

In an uncertain business environment of rapid and irrevocable change,
innovation is no longer a luxury. It is a necessity. To be successful,
leaders need to be adept at conceptual and strategic thinking, have
deep integrity and intellectual openness, find new ways to create
loyalty, and relinquish their own power in favor of collaboration.

To develop this combination of skills and Leading in the new normal environment
qualities – and adopt what is, in effect, a will test executives’ virtuosity in switching
‘post-heroic’ leadership style – they may between leadership styles. To envision and
need to abandon much of the thinking and then sell a concept of customers’ future
behavior that propelled them to success. needs will require an authoritative style of
What will be the required leadership leadership that many leaders in Asia already
competencies to navigate this landscape? exhibit. However, to encourage and enforce


33

discipline around innovation will require a The global Top 20 and indeed, the Asian
more collaborative style of leadership – this is Top 10 companies already have a running
where Asian leaders need to step up. start in building innovative companies:
canvassing the entire organization for ideas,
In addition, keen influencing skills will
thinking about customers’ future needs, and
prove to be the key ingredient for managing
postponing short-term gains. What about
productivity in the “cloud”, where leaders
your company?
are responsible for multi-function and cross-
border teams, some of whom may not even Building discipline around innovation has
report to them! become just as, if not more important, than
innovation itself. And innovating leadership
Finally, leaders need to tap into their
is perhaps the most critical step to survival.
emotional maturity and lead their teams to
bounce back from negative feedback and
failure. This calls for both emotional and
mental resilience.


About BCL2010
Leading Asia: It’s time to change the rules
Asia has enjoyed an Likewise, our ability to leverage business as a
enviable boom for the past social good has led to greater success in Asia.
20 years. However, will the What are the strengths and shortcomings
leadership competencies of Asian talent management and leadership
that brought us such development practices when it comes to
success serve us well for sustaining the leadership pipeline?
the next 20 years?
Revealing insights from Hay Group’s survey on
Asia has made great strides in leadership the Best Companies for Leadership will change
competencies in the past 20 years. To meet the the way Asian companies manage to get better
growing demands of business here, companies performance out of their people.
have done a great job of developing and
Click here to download whitepaper:
accelerating talent. Is there more to be done?
http://goo.gl/eyxzu (Registration is required
The desire to be number one has driven and will take no more than 3 minutes.)
greater openness to new ideas among Asian
firms, bringing about stronger inter-divisional
collaboration and diversity.

Authors
Vanessa Cen
Leadership & Talent Practice Leader,
Northeast Asia, Hay Group
E| Vanessa.Cen@haygroup.com

Mohinish Sinha
Leadership & Talent Practice Leader,
Southeast Asia & India, Hay Group
E| Mohinish.Sinha@haygroup.com

Andreas Raharso
Director
Global R&D Centre for strategy execution, Hay Group
E| Andreas.Raharso@haygroup.com


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Hay Group is a global management consulting firm that works with leaders to transform
strategy into reality. We develop talent, organize people to be more
effective and motivate them to perform at their best. Our focus is on making change hap-
pen and helping people and organizations realize their potential.

We have over 2600 employees working in 86 offices in 48 countries. Our clients are from the
private, public and not-for-profit sectors, across every major industry. For more information
please contact your local office through www.haygroup.com.

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