Thomas Koulopoulos, author of
The Innovation Zone: How great companies re-innovate to bring amazing success and CEO of
The Delphi Institute was our guest recently. You can listen to our conversation
here.
As founder of The Delphi Institute, Mr. Koulopoulos built it into the most prominent and well respected global consulting firm with offices in the US, Canada, Australia, Japan, South America, and England. As an author he’s written 8 books with his latest being The Innovation Zone: How Great Companies Re-Innovate for Amazing Success. And as a speaker he’s won rave reviews from audiences and thought-leaders such as Tom Peters, who said of Tom’s book Corporate Instinct:
It provides a brilliant vision of where we must take our organizations to survive and thrive.
Mr. Koulopoulos, thank you so much for your time today. I don’t encourage stalking. But where are you, what projects are you working on now?
I hope that what I’m working on is amazing to other folks. I try to find things outside of my comfort zone to keep me on my toes.
One’s a topic we might explore later in the show. It’s called Jugaad. It’s an approach that stresses quick fixes. It’s the duct tape approach to innovation. It’s what Google does. It’s letting the market develop the solution. There’s a lot of debate on both sides of this issue. Jugaad is something I think is really worth paying attention to.
Innovation doesn’t have to fall out of the sky to make a huge dent and suddenly change the world. Innovation is a series a sequence of very tiny events. Just about every great innovation happen after a series of very small steps.
The ipad, ipod, appear to have fallen out of the sky. But this stuff has have a legacy of incremental innovations.
Jugaad can be dangerous. You don’t want to use the duct tape for too longalways be taking another step. You want to make an innovation permanent. An idea is never full formed when it comes out of people’s mind.
Why are so many companies reluctant to consider an idea when it’s fully formed, all the details fully explained.
It varies. There are some commonalities among companies. What they often lack, it’s not that people are brilliant and seething with tremendous creativity, but what they often lack is a process of taking ideas and put them into a long-term sustained effort to develop them.
I ask people if you have an idea...who do you go to. And you rarely get an answer. 'I go to legal or accounting.'
There’s not a process in most companies to capture ideas and sustain the development of those ideas. It’s simple. It’s straightforward. But by and large it doesn’t exist.
Let’s talk about your book: The Innovation Zone: How Great Companies Re-Innovate for Amazing Success.
My friend, Erika Andersen coined the phrase reasonable aspiration or hoped-for future in her book titled Being Strategic. What was your reasonable aspiration or hoped-for future with writing this book?
I love the way Erika presents that phrase and the context she puts it in. And that phrase, "reasonable aspiration or hoped-for future" is a wonderful phrase.
I wanted to point out the misconceptions we have when it comes to innovation.
- We think it’s invention and it’s not.
- We think it falls out of the sky and it doesn’t.
- We think it’s someone else’s job. And it’s not.
Just because you didn’t take a course in how to be innovative doesn’t mean you can’t be innovative.
What companies lack is not the creativity. I’ve never asked the question “who is not creative” and had anyone raise their hand.
I hoped we could create an understanding with companies especially with leaders. That’s who I wrote the book for: leaders who could set the agenda and provide the resources.
Who were you writing for? Describe the reader you want to read this book. Why should they?
As I began the book I was in the middle of a project that put me in front of leaders around the world. I made a comment to Larry Ellison of Oracle. And that was:
It doesn’t appear that Oracle is doing enough to innovate and to create internal innovation and bring ideas to the surface.
And his remark was very interesting. It was:
I’m no longer in the job of educating the marketplace. I’ll allow others to do that and when they’ve done that and they’ve proven their innovation has merit, then I will acquire that company.
We are a tremendously entrepreneurial country. I’ve written the book to encourage entrepreneurs to set up that process right from the beginning.
We’re also really good at scaling innovation, better than any other country.
For a long time we’ve been able to marry the entrepreneur and the corporate CEO. How do you get an entrepreneur to build that culture from day one to build that culture from day one and how do you get the CEO to define that innovation that they should be engaged in.
You can debate Ellison’s position. I think it’s very valid for large companies to go out and acquire innovation.
But, acquiring innovation is a great way for us to fuel our economy.
The book was written for leaders in both organizations who can set the tone and the direction for innovation with their organization.
How will you know, what are the signs or metrics that will show you have reached this reasonable aspiration.
You’re putting me on the spot. All of us should be willing to ask ourselves that question.
I get these metrics in nuggets. I get tremendous reinforcement from emails of readers. I get tremendous reinforcement from companies putting these principles at work.
When my kids look at me and tell me that they can approach innovation with a method, that they can approach it with tools and procedure, then I’ll know we’re reaching this reasonable aspiration.
We’ve got to teach kids how to innovate. Not think out of the box, but how to innovate.
What do these great companies share in common? Size, Leadership, industry, stage of development? Why is that important?
They do share commonalities. But, these companies are not alike in most respects. Their philosophies may be different. They may be in manufacturing or service-based in industries.
Different companies, different leaders, will approach this differently. their stakeholders will be different. Their moment in the market is different. Apple’s moment in the market is different from 3M’s.
Good innovators are companies the market looks at and says Hey, they’re innovative.
That’s the ultimate commonality.
There are three other things.
- They tolerate some degree of failure. The market appreciates that transparency and candor.
- They have leaders who put a high value on innovation as a process and a result. They focus equally on both.
- They closely collaborate with the marketplace in ways that create intimate bonds with the marketplace. Ultimately, the product is owned by the market.
These companies have a commitment to innovation and understand that innovation has to be measurable and that consumers must be able to affiliate with that brand.
You have 7 Lessons of Innovation, where the hard work of innovation builds enduring value. What are they? Which one is most important? Which one is most often overlooked by business today?
The most important part depends on the company and the culture.
I’ll talk about my favorites. A couple to me really resonate, they’ve been cornerstones for companies who continually innovate.
The first is failing fast. Failing is critical. they don’t ask for permission. Google seems to be in perpetual beta. In beta there is an expectation you will fail but you will overcome it. If the market collaborates with me then the product and the market will be bigger and better.
If I could do one thing I would take away the impediments. One of the biggest is punishing failure. It kills the appetite for risk. That conservative culture creates a culture unwilling and unable to innovate. Eventually this will catch up with you.
A wonderful quote from a CEO in the service industry: Tom, you don’t understand. We have limited upside and unlimited downside. We cannot take risk.
That’s fine. But realize you will not be an innovative company. So don’t pay lip service.
Play it out.
3M does a great job of cataloguing ideas.
The 2nd is building for the future. A lot of companies try to put in place business plans that create high levels of certainty around innovation and inn processes. But that doesn’t work in innovative companies. Look at Apple. Even Apple in all their arrogance can predict how much the market place will want of their products.
Keep moving forward. That requires an appetite for uncertainty.
I don’t fault companies for wanting security. But in recessions, downtimes, the innovative companies double down on innovation. Apple introduced that ipod in 2001. GE started during a recessionary period. That becomes aprt of the DNA of their culture.
Let’s talk about this tendency of innovative companies to double down. Let’s talk about your audience being entrepreneurs and companies being good at scaling innovation. There looks like a disconnect between those two audiences and our economy. What happened to that relationship?
It’s a very complex set of issues. To boil it down to the essentials...with any sufficiently mature economy, companies will develop on that landscape that are as the saying now goes...too big to fail. We relay on them to create certainty in our economy, so heavily, that ultimately we almost force them into a position where they cannot innovate.
Clearly there’s a lot of fault to be applied to the automobile and the financial services industries. You have to ask if there’s something fundamentally wrong with our system.
There’s not anything wrong in our system But you have to make a conscious decision to make innovation more a part of the national agenda.
Think about what we did for small businesses. Less than 1% of TARP money went to small businesses. There was no money there. And yet they’re the engine that generates all the ideas that companies acquire.
We can’t just pin the blame on government. We have 26 million small businesses. Every job created in the past decade has come from small business. There’s a 7:1 ratio for patents created by small business compared to big business.
The problem is we have focused on the headline players and we’ve done nothing to help small business and the entrepreneur.
I think all of our listeners are looking for ways to re-innovate, to make their department their company, their community great. What 3 things can they do today to start that process?
I’m going to give you three really simple ways. But they are profound beyond measure and unfortunately not considered profound by large companies.
I mentor and am on the board of small businesses over the years. For me that’s where the passion exists in the economy. Look, there’s no economy better for small business than ours. You can create a small business overnight.
US is just behind New Zealand for starting a small business.Right behind us are Canada and Australia.
If you think of Canada, New Zealand and Australia, these are small countries. But everyone knows everyone.
We're a much bigger country, but here it’s very easy to connect. We’re very open to creating these connections. We have a strong VC community. So far this year the number of companies being funded has doubled as compared to last year.
The number one thing to do is: GET OUT THERE AND BLOG. Blogging is the single most powerful way to create serendipity. What you can do for others, how you can help others, altruism. Whether it’s twitter or formal like with wordpress. Get out there. Make your opinions known and make connections.
The second thing is make sure your web presence does talk about your core presence. This is where you conduct dialogue with the marketplace.
The third thing is you have to define what is your core competency. And how does that translate into value for your customers. What are you great at? What value do you bring to your clients that no one else can touch.
This is how you create a platform that can be leverage a number of ways.
Unfortunately small business is too busy to take the time out to articulate those answers. ...And it doesn’t take any more than 45 minutes a day to generate a strong return.
Up until now we’ve all thought of innovation in terms of cool new products or services: the iphone, twitter, a black and decker nail gun that rotates 90 degrees. You write in your book we are at the tail end of that era, innovation for new products and services and at the start of an era that focuses on the innovation of business models.
Why are new business models so important for innovation and our economy?
My perception is we have gone through a hundred years of rampant invention. Invention is not a bad word. I encourage people to be inventive every day to find new solutions. A daily dose is necessary.
However, you probably have more than enough inventions that you are not applying, repurposing. From a company standpoint there are incredible resources already there under lock and key you are not applying.
Before A.G. Laffley joined P&G, P&G was sitting on 90% of their patents doing nothing. This stuff is just getting older. 90%? Let’s sell half of them....which is what P&G did.
This is a revelation for many companies.
Look, there is a lot we have grown up with that forces us to protect our ideas. So many are afraid to try their ideas out. Someone may steal it. I have to wait to patent it. I don’t have money to patent it.
When you look at what Amazon did or eBay did. These aren’t new. But their collaboration with the marketplace was new.
The ipod wasn’t Apple’s idea. It came to them from an outside source who had presented it to every mp3 manufacturer. Apple created an experience around it using a series of existing components.
For Apple back then to enter the music business would have been like buying the notion that Whirlpool could succeed in the luxury car business.
They didn’t invent anything. That took pieces from existing components and created an experience around it.
It is less about creating something entirely new and instead about bringing together pieces that already exist and reforming them into a new model to extract value from the marketplace.
We're entering an era of reapplied invention. We can take the enormous library of stuff that we’ve created and apply it in a way that creates value.
Do you have a favorite business model you have seen and that’s just about ready to hit.
I call it the my generation trend. It’s all about being able to personalize your products. We’re starting to see at Land’s End you can create custom-made pants and at Nike you can create your personalized shoes. They’re leveraging the internet w/ a tremendous capacity and inexpensive manufacturing to create entirely personalized products.
There’s a premium I’m willing to pay. It’s a fascinating trend to watch. It will have a tremendous impact on how we behave. Putting the power to innovate into my hands and allowing me to design and build that gadget.
There’s a wonderful company called blank-label.com. They manufacture custom-ordered shirts. If you go the site, the detail you can apply to your shirts..you can build your own shirt. I guarantee you will wear that shirt until you wear it out.
It’s a completely different shopping experience from walking into your retail store and crossing your fingers and hoping.
You have an ebook out titled Living in the Cloud. I recommend it to everyone. A. It’s free. B. it’s very clear about why life in the cloud will change how we live.
What’s so important about The Cloud?
It’s a short 16 pager. I thought we were getting too wrapped around the computing axel. Cloud is not just about the computing. It’s certainly there. Cloud is not about the platform or buying storage space from Apple.
The cloud will change the way we work, play, think about relationships. It will fundamentally change the way we think about our careers.
That to me is the long-term play. It’s all driving us towards an economy where personal responsibility for success and career matters. It puts responsibility on us to build our life, to build our career.
It goes without saying that the greater opportunity yo u have to choose what you do is the greater passion for what you do. We are moving towards a free agent society. it means we have a portfolio, it’s our Intellectual Property, our social network.
The asset moves from the employer to the employee. As that asset base increases it makes us more valuable.
I could foresee someone in their will having left behind their social network to an heir.
These assets grow. It creates a tremendous impetus towards creating a free-agent society.
Kids today have a rolodex coming out of high school we would kill for as adults. It’s all about how can I make it better, not who owns the idea, for them. They’re not going to sit still and allow the constraints to govern how they use these tools.
It blurs the line around ownership. IF we’re willing to take responsibility for shaping those assets.
Leaders are readers. What 3 books are you reading?
The Big Short: Inside the Doomsday Machine by Michael Lewis. It gives you insight into the financial crisis.
Drive: The Surprising Truth About What Motivates Us by Daniel Pink
Switch: How to Change Things When Change is Hard: by Dan and Chip Heath.
Where can we find you in the cloud?
Web site
Twitter. I recommend people follow you there. That’s where I connected with you. And how could a guy in rural Iowa connect with you?
Next Week's Guests:
Jill Konrath author of the bestselling book Selling to Big Companies has a new book out aptly title: Snap Selling: Speed Up Sales and Win More Business With Today’ Frazzled Customers. We’ll talk about her book and how it can help you speed up your sales, shorten your sales cycle. That’s Wednesday, May 26 at 9:30 AM, Central.
Sam Harrison, author of IdeaSelling: Successfully Pitch Your Creative Ideas to Bosses, Clients and Other Decision Makers joins the show the very next day on May 27 also at 9:30 AM, Central.
Have a great week.
