is red hot – like dot-com’s heyday
November 1, 2006
BY MICHAEL KRAUSS
talking about innovation again. Why didn’t Procter &
Gamble’s Folgers become Starbucks? Why didn’t CBS
invent CNN? Couldn’t Microsoft have birthed Google? What
went wrong with the city of Detroit and right with the city of
Those are the questions being pondered by business executives
and even mayors. Whenever they arise the answer is innovation.
The second Internet era is here. Social media companies are selling
for big bucks. New York-based News Corp. bought Santa Monica,
Calif.-based MySpace.com for $770 million last July. In a recent
cover story, Fortune Magazine--which may itself be an
artifact of a bygone media era--suggests Google’s chaotic
management approach, which stimulates innovation, could be the
cure in an era in which Ford and GM are beaten behemoths.
Everywhere on the rubber chicken circuit, innovation gurus like
Jeneanne Rae of Peer Insight LLC, based in Alexandria, Va., and
Larry Keeley of Doblin Inc. in Chicago are earning fees, providing
answers and selling books. BusinessWeek raves about Rae,
calling her the “doyenne of service innovation.”
IDEO Inc.’s general manager Tom Kelley’s latest tome,
The Ten Faces of Innovation is a 266-page commercial
for the legendary San Francisco-based product innovation firm.
It’s a great read (though terribly self-serving) but symbolic
of today’s innovation industry.
In Chicago, innovation is red-hot. Tom Kuczmarski, founder of
longtime innovation consultancy Kuczmarski & Associates, and
the Chicago Sun-Times have more than 226 entries in their
fifth annual citywide Chicago Innovation Awards competition. The
Sun-Times recently published the names of the nominee
companies across a full page of the paper.
Funny thing: The nominees are outstanding and their innovations
range from Internet-based RSS feed management firm Feedburner
Inc. to project management software developer 37signals LLC to
new TV shows such as Check, Please!, in which real people
do the restaurant reviews. Innovation is booming in the Windy
Innovation talk isn’t limited to corporate executives. Public
sector leaders are listening, too. At last month’s CEOs
for Cities and the Mayors Hemispheric Forum meeting, Miami Mayor
Manny Diaz hosted mayors and business leaders from across the
The meeting highlight was a speech by innovative urban design
observer and author Charles Landry, who launched the creative
cities movement and recently published The Art of City Making.
Listeners were spellbound as Landry presented a photo essay illustrating
how old urban spaces can be transformed into amazing, livable
places with some attention to innovation.
As if on cue, Mayor Diaz followed Landry by stewarding the group
on a tour of Miami’s new $446 million Carnival Center for
the Performing Arts. The graceful new 570,000 square foot music
center designed by architect Cesar Pelli is a creative marvel
that adds to Miami’s already innovative urban landscape.
“Shades of 1999” I thought as I toured the new Miami
concert hall. Sitting next to Landry, I asked quietly, “What
happens to innovation when the economy cools and budgets tighten?”
Landry didn’t answer. The head of the Performing Arts Center
chose that moment to begin his lecture about the new facility
and let him off the hook. Still, my question lingered.
Innovation is as hot today as it was in the dot-com era when lavish
conferences sponsored by The Industry Standard--a start-up
Internet era publication run by John Battelle--beckoned brightly
and introduced us to the most expensive hotel venues in North
America and Europe.
All this talk about innovation is enough to make dot-com era veterans
think it’s time to buy stock in companies that prosper in
times of bust and bankruptcy. But don’t do that--at least
not yet. Yes, the cacophony of pundits pronouncing innovation’s
virtues is immense. It may signal the market has peaked, but there’s
lots of power in their ideas.
Consider Peer Insight’s Rae. She’s one of the hottest
tickets on the innovation lecture circuit. Rae’s an alum
of IDEO Inc. and the Harvard Business School. She went to Wall
Street after graduation but found herself drawn to exploring why
right-brain pursuits were failing in America’s business
“Innovation is not Six Sigma,” Rae cautions. She’s
right; companies fail at innovation because they think it’s
just another process to install. They forget that innovation requires
comfort with right-brain emotion and soft concepts such as the
search for the corporate soul.
Rae’s on a mission to analyze and assess the effectiveness
of services companies in delivering innovation. So far she has
studied 67 companies and has formulated a framework to help services
companies get more innovative.
The cornerstones of Rae’s thinking to achieve more innovation
are embodied in three principles:
leadership engagement--To achieve innovation success,
senior leadership engagement in the innovation process is crucial.
Rae cites GE CEO Jeff Immelt’s role as an example.
experience design--More attention to customer experience-based
product and service design is mandatory. She urges companies
to map out the entire experience customers have and identify
management--Rae believes there’s no innovation
where there’s no change in management and corporate culture.
“There’s no way to have innovation without change
management,” Rae says.
Doblin Inc.’s Keeley, who agrees with Rae about not thinking
of innovation like Six Sigma. Says Keeley, “The idea of
controlling innovation is the wrong place to start.” Keeley’s
a clever communicator, and his 10-step innovation methodology
might actually answer the question of why Folgers never became
Starbucks. The only problem with Keeley is he’s so glib
on the lecture circuit, you never really learn much about his
also a tad disrespectful of his forebears. At the recent Institute
for the Study of Business Markets conference, Keeley knocked Robert
Coopers’ 20-year-old Stage-Gate new product development
process model. Rather than signaling that his own work stands
on the shoulders of giants, Keeley put down Stage-Gate as passé.
I guess Keeley has to sell Doblin’s services. Praising older
innovation methods doesn’t pay the bills.
On the other
hand, isn’t that kind of narrow-mindedness the reason CBS
never became CNN? Just asking. These innovation gurus are well
worth your time, and the innovation economy still has some steam.
Just don’t forget that cost-cutting is coming back.
Krauss is a president of Market Strategy Group, based in Chicago,
and can be reached at Michael.Krauss@Mkt-strat.com