Breakthrough ideas are the commerce of 21st century companies. And small businesses are the ones stealing the show.
By Kristine Blenkhorn Rodriguez
Picture this: “A cross-functional product innovation team is doing a planned ‘yoga interruption’ to help the creative inspiration flow in a special innovation workshop. The team has been assembled for an ‘innovation camp’ to solve a big problem for a major brand,” explains Mark Dziersk, a senior vice president of design at Herbst LaZar Bell, one of the top 10 design firms in the world, according to BusinessWeek. “One of the client’s manufacturing engineers from supply chain, a guy who probably hasn’t seen a gym since ’65, is struggling to balance in what the instructor refers to as the ‘Warrior II Pose.’ At that moment, you can read his mind. He’s saying to himself, ‘What the *&*+% am I doing here?’”
He is not alone. Many accountants likely would feel the same, preferring the fire escape to another yoga interruption. For the moment, however, innovation seems inescapable, even in professional fields as traditionally reserved as accounting and law. In fact, corporations large and small across all industries are paying Herbst LaZar Bell big bucks (anywhere from $20,000 to $100,000) to lead their employees through innovation camps.
The hoped for end result is a breakthrough, whether in the form of a new approach to business strategy or a new marketable product.
BusinessWeek predicted at the turn of the century that the next decade would be the design decade, one requiring innovative, right-brain skills. From Daniel Pink, former chief speechwriter for Al Gore, comes A Whole New Mind: Why Right-Brainers Will Rule the Future. Right-brainers traditionally have been the innovators in any decade; now it seems they also own the future.
(If this book hasn’t come up in cocktail party conversation in your neck of the woods, be assured that it soon will.)
Even entire countries can’t hide from the innovation police. According to the European Innovation Scoreboard (EIS), while Japan, the United States, Switzerland, Finland, Sweden, Denmark and Germany lead the pack as innovators, Estonia, Spain, Bulgaria, Poland, Slovakia, Romania and Turkey are “losing ground.” Giddyup, boys!
Closer to home, the Chicago Institute of Design has shifted focus slightly to hone in on design innovation, helping managers design consumer experiences rather than straight-and-simple products. And, to add insult to injury for all left-brainers, Samsung and Ford have added Chief Creative Officers to their executive rosters.
On the surface, large corporations seem the best equipped to be innovators. They are usually the best funded, with the most employees, and are rife with every type of internal resource necessary for successful change. History proves otherwise, however. It’s actually small businesses, from sole proprietorships to a few entrepreneurs banding together under the loose heading of “company,” that are the ones to watch.
Dziersk cites POM, the maker of pomegranate juice, as an example of a company that came out of nowhere and took competitors by storm. “It’s got all the big boys on their heels,” he says.
You may have heard the saying, “When life hands you lemons, make lemonade.” Sixty-something husband-and-wife duo Stewart and Linda Resnick did just that, but with pomegranates.
The Resnicks bought farmland in 1987. A 100-acre pomegranate grove that was part of the parcel stymied them. Business advisors told them to chop down the trees and plant other crops. Something kept them from doing so, however. Now, the sales of the Resnicks’ private company are estimated at $91 million.
The Resnicks did what many large companies would not have paid up to do: They funded research to establish the healthy properties of pomegranates after reading about the fruit’s medicinal properties, hoping that it would equal red wine’s antioxidant potency. Their research showed it exceeded red wine in potential health claims.
Seeing a possible goldmine, the Resnicks began a campaign to win over the Hollywood and New York elite, influencers who could help them make the juice hip in short order. They also handed out free samples to the glitterati at the Oscars and Emmys. They bought product placements on hot television shows. They funded further research on the healthful properties of pomegranate juice. They sanctioned the creation of a pomegranate martini and supplied bartenders with the juice to make it. “Everything done to make the product what it is in consumers’ eyes is out of the ordinary,” says Dziersk. “They created a need that didn’t exist previously. That’s innovation. It’s out of the box.” And it was done by a company that started small.
Big industry is now learning from its smaller, more nimble brethren. Robert Wolcott, fellow and adjunct professor for the Center for Research in Technology and Innovation at Northwestern University’s Kellogg School of Management, Evanston, Ill., speaks on corporate entrepreneurship, or the creation of new businesses within existing firms. Out-of-the-box thinking is required when creating a new business, just as when formulating a new product, he says. The difference is, “Ten years ago there were few to no large companies capable of accomplishing this. Just since the early 2000s, a handful of large corporations have figured out how to do this on a sustainable basis, and they are not necessarily the companies you’d expect. IBM and Motorola, for sure, but also firms like Cargill and DuPont.”
Wolcott and two of his colleagues (Drs. Mohan Sawhney and Inigo Arroniz) have formulated what they call the “Innovation Radar,” a framework for innovation that underscores the fact that successful innovation is often about more than just new products and technologies. Rather, it’s about the complete business system necessary to bring value to market. Companies can innovate on any aspect of how they do business, from their brands and customer experience, to their processes, channels, supply chain and the ways they capture value.
Sounds grand, doesn’t it? Not to Jim Throneburg. The actual process of innovation is not as hard as it’s sometimes made out to be, says the founder and chairman of the board for Thorlo Inc. “It’s a lot of hard work and a lot of long hours,” he says, “but it’s just plain common sense.” Throneburg has managed to introduce innovation into an industry that could define the mundane: socks.
In a 30-minute conversation about his company’s reputation as an innovator, Throneburg refrains from using the word “innovation” at all. It seems to make him uncomfortable. Funny thing about those innovators; they don’t consider what they’re doing to be “out of the box” at all.
“My father was an inventor also,” says Throneburg. “So inventing something that didn’t exist didn’t really intimidate me. I started out as a small goods operator who wanted to build an athletic brand—really, a more protective athletic sock tailored to individual sports. I wanted premium margins and a premium-priced brand. I began with golf, tennis, basketball and running—all sports that I knew well. And the strangest thing happened: we began to get letters from customers and doctors claiming the socks were solving all kinds of leg and foot problems. It was then that I decided Thorlo was in the preventive foot health business, not the sock business.”
It was this shift in thinking that led Thorlo to become a truly innovative small company. Throneburg and his team began to tap customers for innovative ideas. When customers asked, “Why don’t you come up with a ski sock?” Thorlo did. When designing a sock for snowboarding, Throneburg hired a “young snowboard jock” for a week. “We talked about his needs and what would work for that sport,” he explains. Afterwards, 100 snowboarders tested the prototype and gave feedback for improvements. At Thorlo, this close interaction with customers isn’t innovation; it’s the norm.
To keep this idea-generating environment strong, Throneburg tolerates mistakes in a way few companies do. “You can never be fired here for making a mistake, no matter what it costs,” he says. “I’m dealing with one right now—a $300,000 mistake. Rumors, gossip, lying and cheating—now those you’ll get fired for. But I know that when you’re successful, you’re usually not learning. It’s when you fail—make an honest mistake—that you learn and add more value the next time.”
Accepting mistakes is a key characteristic of companies that successfully nurture innovation, says John Adair, visiting professor of leadership studies at the United Kingdom’s University of Exeter; consultant to companies such as Mercedes, Shell and Unilever; and author of 26 business books, including Leadership for Innovation: How to Organize Team Creativity and Harvest Ideas.
“Japanese business leaders are very young at heart,” he says. “They create a culture of experimentation and they don’t sack their players for failures. They create a positive risk-taking environment and it shows in their ability to lead other countries and companies in innovation. They don’t lead this category by mistake or default. It’s purposeful.”
To foster innovation, managers must show appreciation for bottom-up feedback, he continues. “In Western culture, there’s still a definitive management/labor split. The idea that somebody working on a factory floor has your company’s next golden ticket is very foreign to us.” Not so for Japanese companies, which is why they trump us so often in the innovation area.
Adair also mentions an appreciation for new and young workers, groups very often undervalued in Western companies. “During their first six months with a company, a new employee retains ‘new eyes,’” he explains. “It’s a critical time for executives to gather feedback about how things could be different or better—or what doesn’t seem to make sense. After that time period, they’re too used to the company’s ways to bring much new perspective.”
Younger workers’ lack of conditioning is extremely valuable to a company’s innovation. “Senior people tend to have an attitude of arrogance and intellectual superiority,” says Adair. “That’s just bad leadership and certainly won’t contribute to innovation. But if executives can put those attitudes aside and really listen to their younger workers, they’ll see that these are the people who come up with lots of new ideas, because they’re not yet conditioned as to ‘why it won’t work.’ That’s invaluable.” Nurture that flow of ideas, says Adair. Don’t stem it or criticize because some bad ideas are mixed in with the good. “That flow is crucial to innovation,” he states. “Use it.”
Small businesses have an advantage, according to Adair, because every person’s input is crucial. They can’t afford to have non-participating team members. Every hand is needed on deck, so to speak. The input they receive is often more diverse, and usually results in a better product or service.
It’s respect for the input of all team members that innovation camps help to instill, Dziersk explains. “When you’re playing Mr. Potato Head Extreme Makeover,” he says of one of the camp exercises, “it’s pretty hard to defer to the usual senior leader or expert. Your most off-the-wall team member may contribute the most then. These camps shake up the usual order of things, which is what you want when looking for breakthrough thinking.”
Camp attendees participate in brainstorming activities in three categories, regardless of the type of breakthrough thinking they want to achieve. “Say we’re trying to come up with a new technology for women to use during sports,” Dziersk explains. “First category we brainstorm is things related to women between 25 and 45 years of age. Second category we might brainstorm is cool electronics that can be worn on the body. Third category could be things you do in a gym. At the end, we crash all three categories and the resulting ideas together.”
Then participants might be asked to present a name, theme song and 30-second commercial for the product their team has created—all with people they might have only recently met, despite working at the same company. “It breaks down walls really fast,” says Dziersk.
In a two-day camp, the first day will be spent “doing things that are crazy” (hence Mr. Potato Head) and not necessarily related to the attendees’ core business, Dziersk continues. But the second day is all about the client’s actual industry.
Participants are moved around a lot, as a tactic to break down boundaries. “We like to provide ‘the spaces in between’ activities quite a lot,” says Dziersk. “A lot of interesting things happen in these spaces. For example, if we’ve put a bunch of people through a pretty grueling morning of thinking, we’ll put them on a bus in the afternoon to take them to a different place. Without fail, as soon as the bus takes off, there is an explosion of conversation in the pairs seated together. This is not just idle chitchat. It’s pure gold.”
Dziersk cites the “R&D Palooza” he recently hosted for a client group at the Hard Rock Hotel in Chicago as a good example of fun mixed with hard work to yield worthwhile results. “We did everything from play volleyball at the North Beach bar,” he says, “to hold sessions at the W hotel and Symphony Hall during orchestra practice. We finished with a fake Oscar ceremony at Morton’s for all participants.”
Lest your left brain whisper “fluff” as you read about this camp, Dziersk hastens to remind you that titans such as General Mills and Chicago’s own Wrigley Company put great stock in boot-camp play that produces breakthrough ideas. “Play has enormous currency going forward,” he comments. “Even the Big Guys are paying attention.”
But, as we’ve said, size doesn’t matter when it comes to innovation. “We’ve hosted these (camps) for very large to extremely small businesses,” says Dzierk, “and everybody in between. The techniques work no matter what. Human nature is what it is whether you work with 20 people or 20,000.”
For Throneburg, it’s even simpler than that. “Look, I just barely got out of twelfth grade,” says the entrepreneur. “I’m not Harvard educated. When a customer tells us what they need, we pay attention. Or, we find a need they didn’t even know they had and we fill it. You can call that breakthrough thinking or whatever you like. I just know it works, whether you make a product or provide a service. And we’ll never get so big that we stray from that philosophy.”