What's the real lifeblood of every business?

With last month's release of the world's most valuable brands, topped by Apple at $142.5 billion, it seems an appropriate time to consider how organizations accrue value. Where does it come from? If we can understand this, we can apply the lessons gleaned from these thriving businesses to our own.

In Apple's case, some may point to their string of successful product launches over the past decade, starting with the iPod, then the iPhone and most recently the iPad. But while it's easy to cite tangible products like these as the backbone of a company's success, the reality is that true value comes from its most precious asset: the human creativity of its people.

Simply put, human creativity, embodied in ideas, is the lifeblood of every business. It's not Apple's innovative products that account for the $142.5 billion valuation; it's the innovative people who created those products that have made Apple into this behemoth.

So where does human creativity come from? How can companies engineer and manage it, just as Apple has? To us, the answer is quite straightforward: Human creativity is a direct function of the quality of management and the quality of leadership.

This truism is most transparently reflected in any publicly-traded company's stock, because within each of them there's a component for the quality of management and leadership. As a simple example, when news of Steve Jobs' illness broke, Apple's share price went down. And when he regained his health and retook the reigns at the company, the share price went up.

It's also important to note that although we say leadership produces human creativity, it must be accompanied by influence. Of course generally speaking, the two go hand in hand. But we have encountered the occasional leader who assumes their influence comes simply from their position or title. Title alone is not enough to garner influence; it must be earned through actions. And at the end of the day, it's those within an organization who hold influence – including those who may not be in traditional leadership positions – who can inspire and guide human creativity.

No matter how you fit into your company – as a manager or a leader or a team contributor – if you can exercise influence, think about how you can encourage and direct that human creativity amongst others. The more innovation you can stimulate, in as many dimensions of the business as possible, the more you'll be feeding the real lifeblood of the business.

Posted: 6/28/2011 9:26:31 PM by Andy Klein | with 3 comments
Filed under: creativity, leadership, management
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Comments
Brett Morris
Mark, thank you for your comment.

We're not talking about creativity in a pure unformed, artistic or individualistic sense but rather specifically creativity in business which in Fortune we define as "having the ability to understand the forces impacting upon us and then being able to utilise those forces as a means of reaching our objectives".

This 'creativity in business' is what we mean by it being a direct function of leadership >> so that rather than getting in conflict with the environment or conditions, effective leadership harnesses human creativity in business and uses the conditions and environment as a tool in achieving its objectives. Apple is again a good example of that, of using the conditions and environment, specifically developing products that integrate with the way people want to live and work. Will their success last, sure for awhile but history says at some point they'll lose touch and they'll be displaced by someone else with a better 'mousetrap'....unless they can keep reinventing themselves, which is also possible....but history tells us is much less likely.
7/2/2011 3:32:30 AM

Mark Grimshaw
There is no doubt that leadership plays a vital part in encouraging creativity. However, I wonder whether we can actually make the statement that creativity is a direct function of leadership. As we all know there are many factors that influence an individual's creativity from a range of sources, both within and outside the working environment. What is clear is leaders should be aware of the need to influence and encourage creativity in its myriad forms.
7/1/2011 9:02:14 PM

Bud Boughton
Great message Andy. And might I add, isn't this why so many businesses in America today are struggling? Inept leadership or the lack thereof is what plagues so many companies. We need to cultivate a new brand of leadership in American business, leadership that is not afraid to think creatively and take measured risks. It is not enough to think creatively, we must cultivate leaders who are willing to take action based upon their creative thinking.
7/1/2011 12:17:13 AM