Competing in the Global Ideas Economy


Winning in a Global World: Douglas Oberhleman
The New Calculus of Value Creation: Doug Conant, Kurt Schneider, Murray Martin
Performing while Transforming: Abhi Talwalkar, Bill Nuti, Mark Dorman
How U.S. Companies Can Lead in the New Global Economy: David Novak, Nick Akins, Chris Kearney
Building a Capability for Breakthrough Innovation
What’s Next for Governance?

Building a Capability for Breakthrough Innovation

Innovation—it’s often heralded as something of a corporate Holy Grail, alluring and elusive. Ironically, even companies founded on an innovative breakthrough—think Xerox or Kodak—often fall prey to a dearth of innovation down the line. Typically, the trouble stems from an inability to foster inventiveness, rather than failing to recognize the importance of innovation, agreed CEOs participating in a CEO Summit roundtable discussion sponsored by FedEx, who identified the following four ways to build an organizational capability for breakthrough innovation.

Divide and Conquer

“Like every other company, we struggle with the fact that if you’re doing your normal job, you have very little time for innovation,” asserted Andrew Gadomski, CEO of Aspen Advisors. “So we created an innovation department whose focus was to find ways to tap the whole organization and our customers to come up with ideas, which then go through a vetting process.”

Makovsky, an independent communications consultancy, takes a similar approach, with an innovation committee that meets monthly. The all-volunteer committee idea came about after the company held a crowdsourcing exercise to canvas employees for ideas, explained CEO Kenneth Makovsky. “The entire company participated, presenting ideas they thought our strategic planning committee should consider. It was very successful—three ideas came out of it that we decided to implement.”

Cross Boundaries

Ideally, ideas should percolate from every level and every area of a company, noted Doug Evans, CEO of Organic Avenue, who says a lack of cross-fertilization inhibits innovation. “Companies are still too siloed,” he said. “They’re not bringing people from different areas of the organization to work together to solve problems.”

Often, the potential of younger workers to fuel the innovation engine also goes unrealized. “People take for granted that today’s [Fortune 500] companies exist, but a lot of them started from nothing or—like FedEx—from an idea that wasn’t thought possible,” said Evans. “Someone once asked Steve Jobs what he would have done differently launching Apple after what he’s learned. He said, ‘I wouldn’t have started the company. It wasn’t possible.’ That’s why young people are critical, because they don’t understand that it can’t be done. It’s important to tap that energy.”

Harnessing the potential of next-generation employees often demands reaching deeply within the organization, said Topaz Lighting CEO Tim Gomes, who sees efforts like the aforementioned crowdsourcing strategy session as ways of achieving that end. “I’ve found open source a powerful form of engagement,” he noted. “Enabling that avenue—whether it’s internal or includes your client base—gives people the ability to engage, to transverse departments. That’s very empowering, and it’s something younger workers really like.”

Know When to Listen—and When to Ignore—Your Customers

Is the customer really always right? Not necessarily. After all, back in the 1980s consumers roundly panned the concept of computers for home use. Tales of focus group findings that backfired abound. Witness P&G’s foray into laundry detergent pouches. Spurred by positive consumer polls, the concept failed spectacularly.

Instead, the trick is to focus on identifying problems and developing solutions for those problems. That’s the strategy FedEx employs when introducing new technology or services, reported Cary Pappas, who is leading the $40 billion giant’s move into computer repair as CEO of FedEx TechConnect. “It fits nicely into what our company is all about, which is creating time for our customers,” he said. “We’re leveraging the transportation networks we have in place and our sorting facilities to help customers who don’t want to wait a week or two weeks to get their PC back—who would rather have that [process] turned around in 24-to-48 hours.”

Embrace the Incremental

In the race for the Next Big Thing, equally critical enhancements can be sidelined. That’s a big mistake, says David Goldring, CEO of Overseas Military Sales. “Everybody is always talking about the next killer category, and that’s great if you have the ability to throw out your current business and start anew. But if you have a successful business, innovation can be more incremental—finding new markets within the same core, enhancing the core. Your expectations about innovation are as important as innovation itself.”

At Organic Avenue, Evans seeks to embrace a broad spectrum of inventive ideas by categorizing innovation into three areas. “We have tactical innovations, something someone does to make a customer happy that we want to repeat; operational innovation, things that improve the way we do business and strategic innovation, game-changing technology,” he explained. “Most people think innovation in the software business is all about products and features, but process is actually as or more important to us.”

Ultimately, one size doesn’t fit all,” summed up Pappas. “There are a number of different ways to innovate, and you have to figure out what’s the best model for your company, for your culture and for your organization. However, at the end of the day, you have to innovate constantly. That means finding the model that works for you and going after it.

CEO Roundtable Participants

Joe Burgess, CEO, Aegion • Christopher Connor, Deputy CEO, Wallenius Wilhelmsen Logistics • Doug Evans, CEO, Organic Avenue • Briggs Forelli, CEO, Precision Gear • Andrew Gadomski, CEO, Aspen Advisors • David Goldring, CEO, Overseas Military Sales • Tim Gomes, CEO, Topaz Lighting • Tee Green, CEO, Greenway Medical • Bill Hewitt, CEO, Kalido • Dawne Hickton, CEO, RTI International Metals • Christopher Kearney, CEO, SPX • Jack Liles, Director of Business Development and Reliability Consulting Group, Life Cycle Engineering • Kenneth Makovsky, CEO, Makovsky Integrated Communications • Bill Nuti, CEO, NCR • Larry Nusbaum, CEO, Ronco • Brian Olesen, CEO, Centro • Cary Pappas, CEO, FedEx TechConnect • Anshu Prunet-Sharma, Director of Innovation and Strategy, WDHB Strategic Learning • Todd Roberti, CEO, PHX • Larry Senn, Chairman, Senn Delaney • Sandy Postell Stojkovski, President, Scenaria • Rajiv Tandon, CEO, Technosoft • Mike Wicks, CEO, i3 • Richard Wise, CEO, Lippincott