I have been looking forward to speaking with you – especially because I have the opportunity to address a topic I feel to be of great importance – innovation and its role in our world;

Northeastern students are receiving an outstanding education, and many of you will be taking on leadership roles over time.  My hope is that you will see innovation as a leadership imperative as you go forward.

I work at a global defense technology company named Northrop Grumman.  We employ about 65,000 people; roughly half of our employees are technologists.  Together, our mission is to support the security of our nation and that of our allies consistent with our national security strategy.  That strategy relies on two fundamental pillars: having the best trained and equipped service men and women; and ensuring technological superiority for them. 

While about half of our employees are technologists, all of our employees have to be innovators – people who employ new and different ways of doing things to create value where it didn’t exist before.  Innovation is the heart and soul of our national security system and has been since the start of the Cold War after World War II.

Innovation allowed us to maintain our military strength indefinitely without bankrupting our economy.  In fact, I think it is a misreading of history to say that we won the Cold War by “outspending” the Soviet Union.  Rather, we out-innovated them.

But innovation is the heart and soul of our non-defense world as well.  Let me give you a few examples:

The advances occurring in the field of biology are amazing – from genomics to the manufacturing of cells designed to do specific jobs – these innovations are enabling new treatments for diseases; creating new understandings of our world, and  revolutionizing biology;

The robotic exploration of space – from the Mars landers to the new great observatories – is rapidly building our knowledge of our Universe.  One of our programs, the James Webb Space Telescope, promises to revolutionize our understanding of our universe; it is essentially a time machine, designed to look at the receding edge of the universe formed 14 billion years ag;.

Cognitive Intelligence: This is the future of many vectors of technology; it is becoming cheaper to design CI into a system than to program a system for every contingency; it is the natural follow-on to the information revolution; it will make it easier to translate the vision of innovators into tangible results that will benefit us all;

And speaking of the information revolution – technology innovation results in business model innovation almost every day – just think about the transformation in retailing, or even how you get a ride or find a place to stay;

Cybersecurity: With our reliance on information technology, everything we do, from national security to entertainment to the infrastructure needs of daily life, we must innovate new ways of ensuring the security of our networks and computing systems.

This list represents just a very small sample of the dramatic transformation occurring in our world, driven by innovation.  This transformation has profound impacts on how organizations, whether they be companies, universities, or other enterprises, operate and are led.  Clearly, when everyone in an organization is committed to innovation in whatever they do, it makes for a great place to work.  But no organization exists in a vacuum, at least not for very long.

Because innovation is the product of the human mind and of human vision, it thrives or withers in direct relation to the health of the ecosystem we create for it.  We have collectively worked hard over many decades to create a robust innovation ecosystem in the U.S.  Let me describe some of its key features:

A healthy innovation ecosystem requires an innovative spirit that leverages what I believe continues to be the best higher education system in the world; Northeastern being a part of that great system.  It requires a high cultural value placed on free inquiry and expansive thinking.  It thrives on diversity of thought, ideas and perspectives driven by the diversity of teams doing the work.  It also needs the property rights that incentivize innovative endeavors and the rule of law that makes possible those property rights.  And it has to have capital markets that support the transition of innovation from the theoretical to the practical – that is to say, from a great idea, to real benefit in our lives.

We must always guard against taking the health of this ecosystem for granted and we must constantly nurture it to keep it vibrant because it does not really exist everywhere around our world.  For example, the fracking revolution, which has reduced our dependence on foreign oil, reduced our need to drill for crude on land and at sea, and kept gasoline prices comparatively low, may never exist in Europe because privately-owned mineral rights are virtually unknown there.

Our commitment to innovation – and to the ecosystem it requires to thrive – will be critical to solving the many challenges facing us today and in the future.  I believe that humankind, in general, and the human condition in particular, progresses or stagnates based on the quality and vitality of our innovation.  So we must support the ecosystem, and we must also ensure that our enterprises are healthy elements of that ecosystem.  This requires leadership.

How do we cultivate innovation at the level of “enterprise” – those areas where ideas most frequently translate into tangible benefits?

First, if it is to create value over any meaningful period of time, any enterprise must have innovation as a core element of its culture.  Let me discuss two components of a healthy innovation culture: Discouraging risk aversion and ENcouraging diversity.  There are many others, but I’ll focus on those two now and perhaps we can touch on some others in the Q&A session.  Let me start with risk aversion. 

There is often a negative public perception when something new fails.  Usually that negative perception is accompanied by speculation that the system was faulty in its conception, or shoddily constructed.  Certainly those accusations are occasionally warranted but that perception is most often uninformed because warranted or not, risk is inherent in innovation.  In fact, one could argue that prototypes that are not pushed to failure in testing represent a testing program that is not giving the customer its money’s worth.  After all, how will the engineers ever know what a system is capable of if they don’t push it to failure in testing?

So there is an inherent tension between the necessity of failure on one hand, and the uninformed negative responses they often induce, on the other.  And that tension makes it easy for a culture of risk aversion to take hold in an organization founded on innovation.  But business leaders in any industry must work hard to squelch the very human trait that often drives people to avoid failure – or even the perception of failure.  That tendency needs to be squelched because failures are inherent in pushing the technology to its maximum.  If you’re going to have real innovation, you’ve got to push technology.

When we’re risk averse – that sends a very dangerous message to an organization’s best innovators that the place where they work is not devoted to the true research, unlimited development, and pioneering innovation that drives them and energizes them.   

Risk management is the better perspective in innovative enterprises – it recognizes the necessity of failure, plans for it, and provides the path forward to success.  Too many leaders hear “risk management” and translate it to “risk aversion” to the detriment of their enterprises.  Leaders need to understand this difference, and incorporate its implications into their own, personal leadership style.

Another critical piece of the innovation puzzle is diversity.  One of our company’s primary goals is to ensure and expand diversity and inclusion within our company at all levels of the organization.  We know that diverse thinking and an inclusive environment generate better ideas and foster stronger team commitment, collaboration and engagement – all of which are vital components of innovation.  I see diverse teams out-perform non-diverse teams so routinely that I include a review of team leadership diversity when we are launching a new effort or assessing a problem in the business.

But diversity alone is not sufficient – it must be coupled with an inclusive environment that enables the power of diversity.  In addition, an inclusive workplace makes our company more attractive to a broad array of valuable talent in a very competitive business environment.  Leaders play a key role in promoting diversity and inclusion, and I believe that leaders who genuinely value innovation also genuinely value diversity and inclusion.

To sum up, I think it is clear that innovation is the underpinning of the U.S. economy and for many economies around the globe.  It works best when there is a healthy innovation ecosystem – a “perfect storm” of free inquiry, great education, property rights, the rule of law and strong capital markets.  Leaders have a critical role in fostering innovation, and it often comes down to these personal values that drive their decisions.  Nurturing innovation, I believe, should be one of those values.

I encourage each of you to give this some thought as you develop your own leadership framework.  There are many other aspects of the leadership imperative associated with innovation, and I look forward to the opportunity to explore this more fully in our discussion.

Thank you.