How Leaders Create the Conditions for Lasting Innovation

Innovation as a capability has become critical for organizations in today’s fast-changing global landscape. Research from PMI found that 93% of CEOs say they must rethink their operating models at least every five years. The ongoing pressure to reinvent  raises a question: why do only some innovation efforts produce lasting capability, while others deliver only isolated wins?

From what I see, the barrier is rarely access to talent or methodology, especially now that knowledge and expertise are at our fingertips. Innovation needs to drive change, and for broader organizational impact we need to achieve coherence alongside other changes that are happening in parallel. Organizations typically fall short on their ambitions because of the gap between direction clarity and what teams experience on the ground. No matter how well-intentioned the initiatives are, they will still produce disconnected wins when the rest of the system isn't pulling in the same direction. We call this the change-readiness gap. The direction is set, but  the organization isn’t ready to move.

Change-readiness research from PMI traces this gap into four breakdowns: whether intent survives the distance between strategy and delivery, whether decision rights sit with the people closest to the work, whether the operating model helps or hinders a team once it has authority to act, and whether there is enough trust for people to speak up about what isn't working.

The same research shows how this plays out. While 72% of executives believe their organization has a clear sense of purpose, project professionals report that intent dilutes as it travels down to where the work happens. And only 41% of executives believe their operating model supports rapid reallocation of capital and talent, so even a team with real decision rights on paper ends up waiting on resources that can't move as fast as the work does. That is how organizations end up with isolated wins: the results are real, but they don’t build a capability that repeats.

Creating the conditions to drive change through innovation

I recently watched a Digital Drucker session, held ahead of the 2026 Global Peter Drucker Forum, that brought Harvard Business School's Linda A. Hill and INSEAD's Gianpiero Petriglieri together to discuss the leadership of innovation.  Their central claim stood out: Leaders are shifting from directing people toward a known future to creating the conditions in which people can make the future together. Hill calls the result “collective genius”.

This view of innovation leadership aligns with our change-readiness research . The webinar explored how leaders create the conditions for people to innovate together,  while our research shows how organizations can build those conditions into the way they operate. 

Those conditions come down to four elements: purpose, decision rights, structure, and psychological safety. None of them work alone.

1. Purpose works best as a guardrail, not a script.

Purpose anchors innovation when vision is unclear.  Understanding why we are together, who we serve, and what problem we are trying to solve becomes more useful than pretending the future is known. In practice, this is exactly where organizations lose it: HBR research found that 82% of employees, managers, and executives report strategic agreement across their companies, but only 23% could describe that strategy. Instead, executives should set the mandate and the few lines a team can't cross and make sure context travels with the work instead of thinning out on the way down. Project professionals should hold that intent through delivery and send back what they learn.

2. Decision rights need to move closer to where value is created.

During the webinar, Hill emphasized leadership rather than “the leader,” and I love that thought. She supports a distributed view of leadership in which people at different levels can bridge silos, mobilize others and shape innovation. That only holds up if authority and decision rights move with the people doing the work. Executives have to design decision systems that let teams act, not just say they can. Project professionals can support this by making decision ownership visible and flagging where a decision could safely move down.

3. Structure must be built to move.

As Petriglieri puts it:  “Innovation changes the question leaders ask. In an efficiency logic, the question is whether the team is as aligned and productive as possible. In an innovation logic, leaders also must ask whether people are sufficiently free to think, act, make, and offer something new.” Most operating models are still built to answer only the first: annual budgets, layered approvals, and commitments tied to a plan signed off months earlier, all optimized for alignment and productivity, none of it testing whether people have room to act. That works until conditions change faster than the structure can. Executives need to treat innovation as a system problem and redesign the structures and governance that shape it across projects. Project professionals can supply the evidence that shows where the barriers to innovation currently sit and what they cost.

4. Psychological safety and trust make or break innovation.

Hill offers a concrete test for whether psychological safety and trust exist: does bad news travel as fast as good news? “When setbacks move through an organization as quickly as wins do, people stop concealing errors. The organization learns instead of paying twice for the same mistake.”

There's a second signal worth noting here from Hill: creative abrasion. It comes from three things working together: diversity of thought, a real marketplace where different ideas can compete, and the ability to handle the conflict that competition creates. A polite organization full of diverse people who never challenge each other gets none of the benefit of that diversity.

The key point: psychological safety is not comfort; it enables creative courage. Anxiety and shame push people back toward the familiar, while connection and belonging make experimentation possible. Executives need to reward openness, not just tolerate it, so surfacing a problem is never mistaken for causing one. Project professionals need to model that transparency and invite views different from their own.

What this asks of project professionals

Moving on just one element of the change-readiness gap doesn't solve the problem. It only relocates the friction to whichever element was left untouched. Take a program that gives a product team a clear purpose statement and decision authority. But the annual roadmap and budget cycle remain unchanged. The team can make decisions, but its plans and resources are still tied to commitments made  months before anyone knew which ideas would need more support. While that may look like empowerment,  it prevents the team from adjusting to maximize the value it could deliver.

This is the problem The Manifesto for Enterprise Agility, published by PMI and Agile Alliance, was written to address: purpose realized through adaptive plans, decision-making moved to where value is created, structure tied to intent rather than fixed execution activity, and psychological safety.

None of this is about innovation or agility for its own sake. It's about better outcomes for customers, employees, communities, and society, and alignment is what turns that into a continuous capability instead of an occasional result.

Petriglieri closed the session with a line worth carrying directly into the project profession: “leadership is always an act of creation and an invitation.” What project professionals are being invited to build, then, isn't a better project. It's a system where the parts are designed to support each other and maximize the outcome through integration and feedback, instead of pushing against each other within silos.

Tags: Innovation | Leadership | Agile | Psychological Safety | Thought Leadership

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