insigniam quarterly spring 2013 - innovation
TRANSCRIPT
Q U A R T E R LY
VO L U M E 1 , I S S U E 1 | S P R I N G 2 013
TI’S INNOVATION MANDATE
How CEO Rich Templeton is inspiring
his enterprise by changing the business model.
INNOVATION: ARE YOU PREPARED TO EXECUTE?[ONLY 15% OF YOU SAY YOU ARE FULLY PREPARED]
Is Design Thinking in Your Corporate DNA?This methodology is changing
strategies and conversations
within the enterprise
What the boardroom really thinks about innovationUnless your idea’s market ready,
the board doesn’t want to see it
The profitable side of creativityGet the culture right, and
creativity can lead to profits
PREMIER ISSUE
A commitment to innovation in all aspects of the business helps create an environment where people feel they are more valued and
where they enjoy coming to work more. That has a direct impact on the bottom line:
A workforce full of people who want to work and can contribute on a higher level is a workforce that provides your company with
a competitive advantage.
- NATHAN O. ROSENBERG
SPRING 2013 INSIGNIAM QUARTERLY 1
A
LETTER
As international management consultants for several decades, we have long said
that business needs a breakthrough, years before innovation became a catch-all
buzzword to address what’s ailing many organizations.
The reality is that many enterprises are mired in red tape, with leaders unsure
how to move the needle from complacency to competitiveness. One of our
2013 Insigniam Executive Sentiment Survey respondents puts it plainly:
“If we do not innovate in areas of operations, we will be consistently
bringing up the rear and not leading in our industry.”
This plea for transformative innovation inspired the launch issue of Insigniam
Quarterly, our thought-leadership journal designed to help businesses fulfill a
commitment to reaching unprecedented results.
Our publication is not about our story; it’s about tangible and lasting results
from leaders and their organizations around the world.
Inside, leaders who routinely move the innovation needle faster and further
share their breakthroughs, from Pete Valenti’s invigoration of Bausch + Lomb’s
pipeline to exploring growth and profit from creative leadership at Levi Strauss,
Glazer’s, and Ryan, the latter of which is poised to become a disruptive force
among the big four tax firms.
The willingness to boldly pursue strategic frontiers earns Texas Instruments
CEO Rich Templeton our first cover. Consider his take on the possibilities:
“We have a chance to sell something to every customer in the world. The
number of companies that can say that are pretty limited.”
If your company isn’t in that position, it’s time to move the needle.
Shideh Sedgh Bina
Founding Partner, Insigniam
MOVE THE INNOVATION NEEDLE FASTER AND FURTHER
in·no·va·tion - Anything novel or new that creates new value
SPRING 20132 INSIGNIAM QUARTERLY
TABLE OF CONTENTS
Strategic FrontierS:
By
J. D
ougl
as B
ate
and
Rob
ert E
. Joh
nson
, Jr.
The starting point for innovative growth
20STRATEGIC FRONTIERSJ. Douglas Bate and Robert E. Johnston, Jr.,
Insigniam
Create new value for your customers or they
will find it somewhere else. The authors of the
upcoming The Power of Strategy Innovation
provide the starting point for innovative growth.
32WHERE THE RUBBER MEETS THE ROADAllen Couture, Raytheon; Dennis Crosby,
Sabre Airline Solutions; Katherine Knowles-
Marchione, Teradata
The C-suite issues the innovation mandate,
but managers are tasked with execution. Our
roundtable shares a peek behind the curtain.
36THE 2013 INSIGNIAM EXECUTIVE SENTIMENT SURVEYShideh Sedgh Bina, Gregory Trueblood, and
Erica M. Wood, Insigniam
They want innovation, but aren’t prepared. As
Insigniam polls hundreds of executives around
the world, our analysts ask: Is short-term thinking
trading off tomorrow’s results?
42THE PROFITABLE SIDE OF CREATIVITYGordon Price Locke, D Custom
Growth during a recession. Verve that forces the
big four to take notice. A new global supply chain.
A creative culture pays off, even during enterprise
transition. A look at what three high-performing
organizations did to move the needle.
FEATURES
TEXAS INSTRUMENTS’ INNOVATION MANDATECEO Rich Templeton
upgraded the business
model of the 82-year-old
Texas Instruments. How
his innovation mandate is
inspiring a 35,000-strong
global workforce and
reigniting innovation
across the enterprise.
COVER STORY26
SPRING 2013 INSIGNIAM QUARTERLY 3
EDITOR-IN-CHIEF Shideh Sedgh Bina
EXECUTIVE EDITORS Nathan O. Rosenberg
Michael R. Waldman
CHIEF FINANCIAL OFFICER Ralph Gotto
DIRECTOR OF WORLDWIDE Karen Turner
CLIENT SERVICES [email protected]
DIRECTOR OF SPECIAL PROJECTS Alexes Fath
PUBLISHER Gordon Price Locke
MANAGING EDITORS Elise Anthony
Jarrett Rush
CREATIVE DIRECTOR Kyle Phelps
PRODUCTION MANAGER Pedro Armstrong
IMAGING SPECIALIST John Gay
ACCOUNT SERVICE MANAGER Caitlin Faubion
EDITORIAL QUERIES
750 N. Saint Paul Street
Suite 2100
Dallas, Texas 75201
www.dcustom.com
214.523.0300
Insigniam Quarterly is published by D Custom, 750 Saint Paul Street, Ste. 2100, Dallas, Texas 75201. Copyright 2013 by Insigniam. All rights reserved. Letters to the editors may be sent to Insigniam Quarterly c/o D Custom, 750 Saint Paul Street, Ste. 2100, Dallas, Texas 75201. No part of this publication may be reproduced in any form or by any means without prior written permission of the publisher and Insigniam. Printed in the U.S.A. Magazine patents pending. For subscriptions, please visit www.eds.com/synnovation.
Q U A R T E R LY
VOLUME 1, ISSUE 1 | SPRING 2013
“Organizations usually resist change. But they need to
know that there are startups that are hell-bent on running
them out of business. Not for making their product extinct,
but for making the need for their organization non-existent.”— JEREMY UTLEY, STANFORD
THE TICKERConferences, books, and proofpoints you need
TOP LINEInnovation by the numbers
BLOOD, SWEAT AND TEARSPete Valenti, formerly of Bausch + Lomb
Can you afford to pass up a $100 million breakthrough?
BOARDROOM POVGeorge Martinez, AllegianceBank CEO
Don’t bother pitching innovation to the board if it’s not
market ready
DESIGN THINKING 2.0Jeremy Utley, Stanford University
Why enterprises are embedding it into the corporate
DNA
THE BIG PICTURERobert E. Johnston, Jr., Insigniam
The dangers of the ‘secret’ mandate and
corporate myopia
IQ BOOSTMichael R. Waldman, Insigniam
Why commitments are more important than promises
04
08
10
14
16
18
48
DEPARTMENTS
On the coverCEO Rich Templeton
Photography by Elizabeth lavin
For Advertising Information, contact Jas Robertson at
214.937.9811 or [email protected]
Insigniam and its publisher, D Custom, distribute this editorial magazine to share the opinions and insights of companies and their leaders on impactful global business issues. Insigniam Quarterly’s inclusion of a company or individual does not indicate that they are a client of Insigniam. Remuneration is not provided for editorial coverage. Individuals appearing in Insigniam Quarterly have done so with direct consent, or provided consent by a designated authorized agent in addition to being disclosed on the magazine’s audience and purpose.
SPRING 20134 INSIGNIAM QUARTERLY
MISTAKE OR YOUR NEXT INNOVATION? YOU DECIDE …Not every innovation happens intentionally. Next time you experience an
innovation “failure,” ask if there’s a better process or product that could result
from the experience. Consider these history-making mistakes:
Could a small innovation work wonders in your industry? Sometimes something tiny —
nanotech — can change things in a big way. Consider this report from PreScouter Innovation
Journal: New “smart sutures” are being designed to speed up healing and recovery through
ultrathin silicone sensors embedded on silk strips or polymer. Researchers are working on
delivering medicine through the sutures.
NANO INNOVATION, BIG IMPACT
THE CHOCOLATE-CHIP COOKIE:
Ruth Graves Wakefield, co-owner
of the Toll House Inn, was making a
Butter Drop Do cookie recipe and
ran out of baker’s chocolate. In its
place she added a few pieces of semi-
sweet chocolate. The chocolate didn’t
fully melt, and she ended up with
chocolate-chip cookies
MICROWAVE OVEN:
Engineer Percy Spencer was
touring a Raytheon laboratory when
he stopped in front of a magnetron.
After a moment, he noticed that
the chocolate bar in his pocket
was melting. His curiosity piqued,
Spencer next put unpopped kernels
of popcorn in front of the magnetron
and watched them explode. These
experiments led to the development
of the microwave oven.
POPSICLES:
An 11-year-old Frank Epperson was
mixing powdered flavoring into his
soda water one winter evening in 1905.
He left the drink outside overnight
with its mixing stick still in it. After
record-cold temperatures overnight,
Epperson found a frozen treat the next
morning. Almost 20 years later, after
selling his frozen treat at a California
amusement park, Epperson applied for
a patent on his creation that he initially
called an Epsicle.
CORN FLAKES:
The Kellogg brothers forgot to
store their boiled wheat properly, and
once it was later processed, it came
out as flakes. The younger brother,
Will Kellogg, tried the same process
he stumbled upon with corn and
created a crispier flake.
THE TICKER
Read about other accidental innovations at insigniamquarterly.com
SPRING 2013 INSIGNIAM QUARTERLY 5
READING VROOMUp-and-coming publications to accelerate breakthrough success
THE INNOVATION BREAKTHROUGH THAT BROUGHT A DRUG TO THE FDA 45 DAYS FASTER
The new drug was behind schedule. With a looming crisis, one
biopharmaceutical company implemented a new strategy and not only met the
deadline they felt was impossible, but exceeded it by 45 days.
Johnston and Bate are Insigniam consultants specializing in innovation and
growth. Clients have included IBM, Kraft Foods, Intel, Procter & Gamble,
Nokia, Eli Lilly, and BMW.
THE HOME ADVANTAGE:
MOREPRODUCTIVEWant a
productivity pay-
out? Encourage
employees to
work from home
every now and
then. Even if it’s
only on certain
days, working
from home can
save employees
transportation
costs, commuting
time and
serve as an
employee “perk.”
Additionally, they
may be more
productive. An
experiment at a
Chinese company
showed a 13
percent increase
in productivity by
employees when
they worked from
home.
Read more
on page 42
Culture Clash 2.0: Managing the Global High-Performance TeamSelect Books, 2013By Dr. Thomas D. Zweifel
Since 1984 Dr. Thomas D. Zweifel has lived and worked
on four continents. Forged in the fire of clashing cultures,
he developed a fool-proof methodology for managing
across borders successfully. He has packed Culture Clash
2.0 with fascinating stories, sound research and practical techniques—the global
and intercultural competencies managers need to get the job done anywhere in
the world.
Dr. Zweifel is a management consultant, leadership professor and author.
The Power of Strategy InnovationThe American Management Association, 2013By Robert E. Johnston Jr. and J. Douglas Bate
Originally published in 2003 and ahead of its time, “The Power of Strategy
Innovation” introduced the concept of discovery-driven innovation with a
focus on the future. The revised edition, scheduled for an early-summer release,
will include successful enterprise innovation examples, updated case studies and
elevate the importance of execution.
13%Smart Sutures — like the nanofibers below — are a little innovation that could deliver abig impact.
CYCLE TIME AFTERNEW STATEGY
CYCLE TIME BEFORE NEW STATEGY
Get the full case study at insigniam.com/case-study-biopharmaceutical
6 INSIGNIAM QUARTERLY
DO PATENTS PAY OFF?
A year and a half after the
passage of the America Invents Act,
and businesses are still discussing
the implications. Consider these
perspectives:
5“I am pleased to sign the
America Invents Act. This much-
needed reform will speed up the
patent process so that innovators
and entrepreneurs can turn a new
invention into a business as quickly
as possible. I’m also announcing
even more steps today that will
help bring these inventions to
market faster and create jobs.
Here in America, our creativity has
always set us apart, and in order
to continue to grow our economy,
we need to encourage that spirit
wherever we find it.” — President
Barack Obama, Sept. 16, 2011
5“Effectively, this creates a
race to the patent office. In a
race of established, well-funded
businesses with defined intellectual
property protection strategies (and
patent attorneys in-house or working
closely with the business) versus
entrepreneurs that may not have any
experience with the patent system
and the funds to pursue robust
patent strategies, the advantage
clearly goes to the businesses.” —
Patrick Richards of Richards Patent
Law PC, at Forbes.com
5“There is a misconception
about first-to-file. People incorrectly
assume that if you give a
presentation about an invention or
idea, someone in the audience can
run to the USPTO with your idea
and patent it before you do.” — Neil
Kane, founder of Advanced Diamond
Technologies and now CEO of
GlucoSentient, at Forbes.com
DO PATENTS PAY OFF?
Join our LinkedIn discussion
at http://www.linkedin.com/
groups?gid=1775502&trk=hb_side_g
During the World Innovation Forum, hear from
industry experts such as Daniel Pink, bestselling
author on motivation, innovation, and creativity in
the workplace, and Luke Williams of Frog Design,
one of the world’s most influential innovation
companies. Sponsored by Insigniam, the forum
includes:
5 Networking with executives from 30 countries
5 12-plus mainstage speakers
5 Exploratory field trips and interactive workshops
5 Access to the online WOBI community
EVENT:World InnovationForum New York 2013
LOCATION:New York City CenterNew York, N.Y.
DATE:June 12-13, 2013
WEBSITE:wobi.com
Kevin Slavin is proving it can, saying that
the ‘physics of culture’ inspire everything from
Facebook to urban planning. Sponsored by
Insigniam, Slavin is the keynote speaker; the forum
also includes discussions on:
5 Leadership and Today’s CIO
5 360° Cloud: Failing to plan is planning to fail
5 The Consumerization Concern
EVENT:The CIO Forum
LOCATION:The Harvard ClubNew York, N.Y.
DATE:April 4, 2013
WEBSITE:cioforum.com
CAN AN ALGORITHM SPARK CREATIVITY?
CHALLENGE THE UNCONVENTIONAL
THE TICKER
SPRING 2013
Our speed-to-results process will transform your employees into an unstoppable innovation force. Learn why partnering with Insigniam helps your organization repeatedly produce dramatic results from within.
Change the game.
Speed to results is a game-changer.
Insigniam.com
Download Our App.Get To know Insigniam.
Getting a product to market isn’t enough.
SPRING 20138 INSIGNIAM QUARTERLY
MORE THAN
59KThe number of innovation-themed publications listed
by Amazon
TOP LINE
The number of dollars generated
by new, immigrant-founded
companies in 2012
— The Ewing Marion Kauffman
Foundation
The amount companies spent
on R&D in 2010, a 9.3 percent
increase over 2009 when
companies scaled back because of
recession concerns
— Businessinsider.com
INNOVATION BY THE NUMBERSCOMPILED BY JESSICA MELTON
417,000,000The number of results for “innovation” in Google
$550 BILLION
$63 BILLION
SPRING 2013 INSIGNIAM QUARTERLY 9
50%The percentage
increase of the
average compensation
per employee in
innovation-intensive
sectors between 1990
and 2007 – nearly two
and one-half times the
national average
— U.S. Department of
Commerce, Economic and
Statistics Administration
8,000,000
Only 8.5% of executives globally
feel “very well prepared” to
successfully execute innovation.
— 2013 Insigniam Executive
Sentiment Survey
(Survey results on Page 36)
82%The percentage of employees who
say they trust a company more
when members of the C-suite use
social media — Emarketer
The number of U.S. jobs new firms created in 2007.
Overall, 12 million jobs were added that year.
— The Ewing Marion Kauffman Foundation
My job is to guide Salesforce. I can’t sit in headquarters and pretend I’m in touch. Odds are, what we’re using today will be obsolete in a few years. The past is never the future. But it’s easy to get caught up in the continuum.— Marc Benioff, Salesforce.com,
from Forbes.com
The percentage
of CIOs who say
they’re operating
at close to their
innovation
potential
— CIO Insight
8.5%
Jobs created by new firms
Jobs created by other firms
67%
33%
34%
SPRING 201310 INSIGNIAM QUARTERLY
I
BLOOD, SWEAT & TEARS
Want innovations that pay off? Change where you look for them.BY PETE VALENTI
WHAT’S IN PETE VALENTI’S INNOVATION ARSENAL FOR YOU?
In studies by the Product
Development Management
Association (PDMA), only
one of every nine new product
concepts becomes a commercial
success. How do you increase
the odds in your favor? Take a
cue from Pete Valenti, who has
more than 20 years experience
as a large-enterprise innovator.
The former global president of
vision care for Bausch + Lomb
and former sales and marketing
executive with Covidien and
Johnson & Johnson is known
internationally for his innovation breakthroughs. From
innovating outside corporate walls to setting a bold
decree, Valenti shares his arsenal of ideas to improve your
innovation success rate.
SPRING 2013 INSIGNIAM QUARTERLY 11
TWO $100 MILLION
BREAKTHROUGHS THAT
ALMOST DIDN’T HAPPEN
K-Y grew into a $100 million +
brand for Johnson & Johnson after we
launched a product formerly killed
during the innovation process.
Bio-inspired housecleaning products
inspired the Bausch + Lomb’s BioTrue
line, one of the brand’s successful
launches.
A BOLD DECREE AND INTERNAL ENROLLMENT
When Bausch + Lomb was becoming too internally focused with
product development, we decreed that 40% of innovation would
come from outside our company; we forced the organization to
use outside experts and researchers who didn’t work for the company.
Employees were leery of our mandate. “They first thought we did not
believe in them or thought they couldn’t pull it off. We told them,
‘Think about how much more we could pull off with the support of
other organizations.’ ” Ultimately, they embraced it.
PROJECT STRATEGY
INNOVATION
K-Y was a big
transformation. It started
with a product “in the
closet” and connecting
it to a new position for
the brand. Placing K-Y
in a new space,“intimate
health,” and launching
products into mainstream
mass channels, K-Y is now
a $100 million + brand
and growing.
A BALANCED INNOVATION PORTFOLIO
There are incremental innovations, which keep the lights
on and drive revenue; substantial innovations—bigger plays
in a known universe—then transformational innovation,
when you’re dealing with total unknowns.
Companies often get caught up in choosing between
incremental and transformational change. With incremental
innovation, you get the short-term revenue you need to grow
and sustain growth. But if you’re only focused on that, over
time, you become a laggard in the industry.
SPRING 201312 INSIGNIAM QUARTERLY
BLOOD, SWEAT & TEARS
RISK MITIGATION
If it’s a business concept, speed it
to market by doing test-and-learns
to mitigate risk. There needs to be a
commitment to consistently invest in
and push for breakthroughs. Without
that, you become a follower.
MARKET READINESS
Re-evaluate products in the
innovation cabinet that were killed
in the pipeline or are still lingering. I’ve
done this at a number of companies; you
may find something that was passed over when the
company had been taking a short-term view or was more
focused on instant wins. Maybe the product could deliver but the
market wasn’t ready at the time.
“IT’S BRINGING IN A THIRD-PARTY LIKE INSIGNIAM TO DISCOVER WHAT WILL ACCELERATE INNOVATION AND FURTHER ESTABLISH A CULTURE THAT REWARDS NEW IDEAS AND RISK TAKING, VERSUS PUNISHING IT.”– PETE VALENTI
Pete Valenti
FAIL AND LEARN WITH VELOCITY
At Bausch + Lomb, we worked on a joint development with a
company in a different country. We were developing 24/7, back and
forth, together. Even though the product itself was not a success,
it taught us how to accelerate from design to implementation at a
transformational rate.
SPRING 2013 INSIGNIAM QUARTERLY 13
CROSS-FUNCTIONAL TEAMS
We created a process and forums where all
the functions could see, hear and contribute
to the process. By inclusion, we were able
to more rapidly build and optimize. People
at all levels need to be engaged to create an
innovative culture.
TWO QUESTIONS THAT PAY OFF
Why did it fail? Even after a product is killed from
the pipeline, put a small group to discover why; there’s a
lot you can learn from that. Some of the most successful
product launches I’ve been a part of were at one time
considered “failed,” including Acuvue Advance, one of
the best launches in contact lens history.
What best serves the customer? Vistakon, a
division of Johnson & Johnson, started as a test-and-
learn to help customers more successfully purchase
contact lenses. The result was a world-class customer
relationship management system that elevated the
brand to a recognized digital leader.
A VALUE PROPOSITION
If you can move the needle even a
little toward the big idea, it is worth
it. It is amazing how many
times when we swung for
something transformational
that we learned something
or gained immeasurable
value in ways beyond
what we even considered,
many times without the
transformation itself necessarily
coming to fruition.
EXCLUSIVE!Read more about Pete
Valenti’s test-and-learns at insigniam-innovation.com
CULTURE IS DECISIVE
You can’t control innovation. Allow risk and
creativity back into the culture with tools and
processes to support and accelerate innovation.
TSPRING 201314 INSIGNIAM QUARTERLY
Throughout his career, George
Martinez has examined innovation
initiatives from a number of different
perspectives—as CEO of a large
financial institution and as a director
of several corporate boards.
As the co-founder of Sterling
Bank and current CEO of Allegiance
Bank, he believes innovation is often
the very heart and soul of private
companies, many of which are formed
to develop and market innovative new
products or services. And, he says, from a board member’s
perspective, a company’s failure to value innovation creates a
competitive risk.
“If a company moves too slowly to embrace change, it
WHAT THE BOARD REALLY THINKS ABOUT INNOVATIONDirectors aren’t out to squelch the big idea; they just want to know it’s market ready, says banking CEO George Martinez
BY CHRISTINE PEREZ
THE BOARDROOM
SPRING 2013 INSIGNIAM QUARTERLY 15
could face pressures that could adversely affect revenue,”
Martinez says, pointing to failed bookstore chains as an
example. On the other hand, he says, if a new company relies
strictly on innovation, it could lose the game by its inability to
generate the needed revenue to remain viable, which is what
happened with many dot-coms in 2000.
Along with a few tech startups, Martinez also serves on
the board of NCI Building Systems Inc. (NYSE: NCS), a
Texas-based construction supplies
company that generated $1.2 billion
in revenue in fiscal 2012. He heads up
several financial committees for NCI,
including the audit committee.
Board members are charged with
bringing discipline to an organization,
which is particularly important when
companies are led by creative types,
Martinez says. These four areas are
critical when the board evaluates the
risks and rewards of an innovation
initiative:
5 Is the idea worth pursuing? Is
there a market for the product or
service? Does it meet a need that
isn’t already being met, or does it
improve upon existing options that
are available?
5 Will the company need to raise
more capital or does it already have
the resources to fund it? If it needs
to find money, does it have viable
channels for doing so?
5 Can management really
pull it off? Can the product be
manufactured or the service be
provided as envisioned? If so, is
the right team in place to make it
happen?
5 Is the timing right?
MARKET READINESS
IS A MUST
The potential for sales volume is critical, Martinez says.
Sometimes, even the most innovative products die because
they are before their time, and the market isn’t ready.
Entrepreneurs can also fall into a pattern of tinkering things
to death.
“Some products are never finished,” Martinez says. “Some
people can’t let go—there are always improvements to be
made. And the product never gets out to the market.”
That leaves an opening for competitors, Martinez says. He
shares a story he heard about the late Houston businessman
George Ballas, the inventor of the Weed Eater, who took
innovative steps to stay a step ahead of those who might be
tempted to steal market share.
The unlikely innovator (Ballas worked as a dance instructor)
was inspired by the spinning nylon
bristles of a car wash and wondered
if something similar could be used to
help trim grass and weeds. After early
prototypes were successful, Ballas took
his product to the market in the early
1970s. By 1976, according to The
Wall Street Journal, the Weed Eater was
generating $40 million in annual sales.
As the story goes, Martinez says,
Ballas kept competitors at bay by
consistently enhancing the product,
and releasing new models only if he
had an even newer model already
ready to go.
MEASURE THE
‘SELDOM MEASURED’
At Allegiance Bank, which has
grown from $32 million to $525
million in total assets since it was
formed in 2007, innovation efforts are
focused on operations, Martinez says.
“We measure things that are
seldom measured, like employee
fulfillment and the level of service
between departments,” he says.
“We established standards for inter-
departmental service, cooperation,
the optimization of resources, etc.
That’s not something I believe you’d
find at most other places.”
As both a CEO and a company
director, Martinez says he has found that most board members
support innovation.
“Typically what I find are directors who are really cheering
the company on,” he says. “It’s a rare minority that tries to put
the brakes on things. And, frankly, when people are that risk-
adverse, they really don’t belong on the board in the first place.”
AT ALLEGIANCE BANK, WHICH HAS GROWN FROM $32 MILLION TO $525 MILLION IN TOTAL ASSETS SINCE IT WAS FORMED IN 2007, INNOVATION EFFORTS ARE FOCUSED ON OPERATIONS...
ALLEGIANCE BANK GROWTH
20122007
$525$32
(IN MILLIONS)
3 Sterling Bank is owned by Comerica (NYSE: CMA).
SPRING 201316 INSIGNIAM QUARTERLY
DDesign thinking is experiencing
a renaissance of late. This
methodology of solving problems
with the end user in mind has
always been around in one form
or another. It is where divergent
thinking and “gut instinct” trump
incremental improvement and rigid
patterns. The inventor of the wheel
did not etch algorithms in the sand,
after all.
Engineers have long known that
emphathizing with an end user
means a better product. Design
thinking 2.0 elevates that approach
into an organized activity, a mix of
rationality and creativity. It gained
notoriety as architects and urban planners studied human
behavior to tackle issues like suburban flight.
The business world took note. Consider what happened
when Doug Dietz enrolled in Stanford University’s d.school.
IS DESIGN THINKING MISSING IN YOUR CORPORATE DNA?Formerly the domain of product designers, this methodology is changing business strategies and pivotal conversations within the enterprise. Stanford University’s Jeremy Utley explains why.BY PAULA FELPS
SPRING 2013 INSIGNIAM QUARTERLY 17
As a designer of MRI and CT machines for GE Healthcare,
the program’s applied methods of visualization, prototyping,
and emphathizing encouraged him to think less about the
machine and more about the plight of its youngest patients,
often so frightened that sedation was required about 80
percent of the time.
Instead of being slid into an ominous machine in a sterile
hospital room, Dietz redesigned the entire MRI experience
so that children enter an adventure, from a pirate ship to a
camping trip, tent included. The result? A dramatic drop in
sedation rates. Happier patients, caregivers, and families.
Once thought of as a nebulous, murky approach to solving
a problem, business leaders have embraced design thinking as a
creative way to innovate services and products. Relieved that a
needle-less vaccine exists? Just breezed through airport security?
That’s design thinking on the job. Today, enterprise leaders are
realizing an even more tantalizing payoff: A 2003 study by the
Danish Design Center showed that increasing design-related
employee training boosted a company’s revenue an average of
40 percent more than those not using design thinking.
“Historically, design thinking has been about products,”
explains Jeremy Utley, director of executive education at
the d.school. “But increasingly we are seeing people use it
not only to design services and experiences, but to design
[business] strategies. We are not just saying, ‘do we have
the right answer?’ but we’re saying, ‘are we asking the right
questions?’ Increasingly, we are seeing people move up the
food chain into much more strategic territory.”
OPERATIONS AND COST ROI
Organizations are also discovering how design thinking
can streamline distribution and increase customer loyalty,
among other strategic priorities. Kaiser Permanente increased
the quality of patient care by re-examining how nurses
manage shift changes, and Kraft has
used it to reinvent its supply chain
management.
“Now, you have gigantic
organizations trying to determine not
only how to create breakthroughs
with design thinking, but how to
design their organization using
design thinking,” Utley says. “They
are looking at things like, how are
our teams configured? How do we
celebrate successes and acknowledge
failure? It’s a whole new DNA.”
RE-THINKING
DESIGN THINKING
As more organizations either
adopt design thinking or debate
whether a process on creativity
might do more harm than good,
what’s not disputed is the risk of
complacency.
“Organizations usually resist
change,” Utley says. “But they need
to know that there are startups that
are hell-bent on running them out
of business. Not for making their
product extinct, but for making the
need for their organization non-
existent. Most of the organizations
we work with realize that they are
on their way out unless they do
something fundamentally different.”
And for many, that means re-
imagining the process of how
decisions are made, how innovation
occurs and how the principles of
design thinking apply specifically to
them. For each, the answer may be
different, but the questions are key
to discovering a viable solution.
“It’s a fool’s errand to try and go
against the culture; you have to find
the elements of your business culture
that support this kind of working/
thinking mindset. It’s about finding
where you have momentum and
leaning into that momentum.”
The d.school at
Stanford uses a six-
step methodology to
help organizations
and leaders
replicate design
thinking in any
setting:
1 UNDERSTAND.
Research the
problem’s
background.
2 OBSERVE.
Watch how
the affected
stakeholders
interact and react to
a situation.
3 DEFINE.
Combine
insight with a
needs-focused
approach to create
suggestions.
4 IDEATE.
Participants must
suspend judgment
and brainstorm
ideas. From the
silly to the savvy,
no idea is off limits
during this phase; a
single session may
generate hundreds
of ideas.
5 PROTOTYPE.
Convey ideas
quickly with a
sketch, flow chart,
or physical model.
6 TEST.
Modify solutions
based upon user
reaction and
experimentation.
REPLICATING DESIGN THINKING
Design thinking helped Doug Dietz reimagine the MRI. Photo © GE Medical
SPRING 2013
THE BIG PICTURE
THE FOUR PILLARS OF INNOVATIONThere are four pillars for creating enterprise wide innovation. Sustainable innovation isn’t possible
without addressing each of the pillars and their potential hot spots.
Mandates don’t work when they’re only given lip service, i.e. when you see it on the web site but there’s
nothing behind it.
Secret mandates — Leadership talks about mandates but doesn’t communicate them to
anybody else.
Demotivating mandates — There’s a mandate to innovate or everybody is out of
a job.
MANAGEMENT MANDATE
Needs to be clear, loud, broad, bold and spoken continuously. It also should be modeled by
leadership.
01
You can have too few resources and metrics that
limit innovation to being only incremental. Metrics in the
infrastructure need to inspire and enable breakthrough
innovations.
DEDICATED INFRASTRUCTURE Always mirrors the seriousness of the mandate. If there are a lot of resources
invested in supporting the mandate, it’s serious. If there are no resources invested in supporting the mandate,
it’s lip service.
02
SPRING 2013 INSIGNIAM QUARTERLY 19
SUSTAINABLE INNOVATION
It’s not a static process, it’s a learning
process. One size does not fit all.
The process can’t be owned by a single
“guru.” It needs to be shared.
You’re in trouble if your culture only encourages
ideas to travel from the top down – they
need to travel in every direction.
SUPPORTIVE CULTURE
It’s friendly to ideas, ranging from incremental to transformational.
Supportive culture limits corporate gravity, inoculates against the
enterprise immune system, and fights corporate myopia.
04
Pillar of Innovation Hot Spot Harmful Mandates
PROPRIETARY INNOVATION
PROCESSNeeds to reflect the unique business and assets of the company, and it needs to
evolve over time.
03
And your culture has to avoid
breeding a fear of risk and failure.
STRATEGIC FRONTIERS:
By
Insi
gnia
m
Con
sulta
nts
J.
Dou
glas
B
ate
and
Rob
ert E
. Joh
nsto
n, J
r.
The starting point for innovative growth
hen CEOs recognize the
need for adding new value
to their organizations and
commit to the creation of new internal
capabilities for growth, they are ready for
strategy innovation and the exploration
of their company’s strategic frontier.
Innovative new business opportunities
found on the strategic frontier can
provide them with the entrepreneurial
growth they need. Apple, with their iPod
technology, discovered an innovative
new business on their frontier of portable
music. Progressive Insurance used
strategy innovation when they started
sending their claims adjusters in mobile
offices to accident scenes and watched
their business quadruple in size. These
new businesses did not require decades
of dedicated R&D expenditures to
develop, just an understanding of
customer needs on their strategic
frontier and the willingness to create a
new business model to address those
needs.
The essence of such strategy
innovation is the creation of new value
for customers, which in turn creates
new value and non-incremental growth
opportunities for the corporation.
Strategy innovation can take the form
of new products and services, as in the
classic examples of Federal Express,
Starbucks, and Canon personal
copiers. Or it can be the reconfiguration
of traditional business models, the way
Amazon, IKEA, and Walmart grew their
businesses.
Editor’s note: This excerpt is reproduced with permission from
Emerald Group Publishing Ltd.,
publishers of Strategy & Leadership
magazine.
W
SPRING 201322 INSIGNIAM QUARTERLY
The capacity for strategy innovation
is within the capabilities of any
organization. It does not require a
resident genius or a wild-eyed creative
maverick. It is not something that
needs to be farmed out to expensive
strategy consulting firms. Great new business opportunities
can be created by willing middle managers working
together in a creative environment, focused on the future
and supported by top management. Exploring strategic
frontiers can be done with an ad hoc team or an on-going
department, but it all begins with the commitment of the
CEO to create a new future.
BETWEEN VISION AND
PRODUCTS – STRATEGIC FRONTIERS
Not many companies have a corporate vision that clearly
communicates a future goal or end-state that can effectively
drive new business creation beyond the current business
model. So most CEOs drive their commitment to growth
by informing the new product development, marketing,
or R&D departments that the goal is the creation of
“innovative” new products. However, if these functions are
given free rein to pursue innovative products without any
strategic guidance, the products they develop are unlikely
to fit in with the strategic direction of the company.
But outside the current business model of each company
is a space that CEOs can use to provide future strategic
direction for their companies — a “strategic frontier”
where the new growth potential for the organization is
likely to be found.
A strategic frontier might be a new market. For example,
John Deere made farm tractors, so for them, entering the
homeowners’ market for lawn mowers was a strategic
frontier. A strategic frontier can be a new technology,
which is why so many companies are currently pursuing
future opportunities in genomics, nanotechnology, or smart
materials. A strategic frontier can also be a new business
model, such as franchising, strategic partnerships, or mass
customization.
RETHINKING THE FUTURE
As a first step, the CEO should commit to the
identification and exploration of the company’s strategic
frontiers. By defining a company’s
strategic frontier, the CEO and the
senior management team clearly
communicate their commitment to
finding a corporate business model
that can be distinctly different. This
“difference from today” provides the
power of strategic frontiers. It holds the
promise of non-incremental growth
and opportunities that help motivate
and drive the organization forward.
And it threatens laggards with the
prospect of being left behind.
The identification of a strategic
frontier gives a company an
opportunity to reconsider what
business it wants to be in. Often,
this will broaden the definition of
the company business; soft drink
companies become beverage
companies, game companies become
entertainment companies, and railroad
companies become transportation
companies. Other times, a strategic
frontier will tend to focus a business.
For example, a specialty products
company shifted its emphasis from
selling primarily through retail stores
to a focus on Internet sales. Once the
company’s definition of itself changes,
new opportunities become more
visible.
Most organizations resist
discontinuous change, but in our
experience, people support change
that they help to create. Naming a
strategic frontier changes the experience
of change within a company because
it invites the managers to participate in
renewal. Asking them to help explore
the new frontier gives them a greater
sense of control over the company’s
destiny. They can help to mold and
shape the new business opportunities
that exist on the frontier. Therefore,
the eventual implementation of the
frontier opportunity will flow much
more smoothly and rapidly when
T
SPRING 2013 INSIGNIAM QUARTERLY 23
managers help design it.
Finally, strategic frontiers can improve corporate focus
and efficiency. With a corporate-wide, central focus on a
specific strategic frontier, the entire organization can align
its operations and spend organizational resources efficiently
on programs with a clear strategic intent.
CREATIVITY AND STRATEGIC FRONTIERS
The pursuit of strategy innovation requires a different
working environment and set of tools than a strategy of
incremental improvement. Where quantitative analysis is
usually the driving force in incremental strategic decisions,
creativity is the driving force in strategy innovation. It is
creativity that discovers a new way to deliver the value that
customers want. Creativity is required to design a business
model that will change the basis of competition in an
industry (and also turn a profit). It even takes creativity just
to determine how to explore a new strategic frontier —
who to talk to and what questions to ask.
IDENTIFYING STRATEGIC FRONTIERS
In presenting the concept of strategic frontiers to a
gathering of 30 CEOs, we first invited each to speculate
and write down what an attractive frontier for their
business might be. Most were able to identify several
different strategic frontiers that could help grow their
businesses in very meaningful ways.
However, when the best strategic frontier for a company
is not obvious, the CEO can select a team
and initiate a project to identify frontier
options. The team should first explore all
areas of future growth potential in, and
adjacent to, their industry, creating a long
list of potential options. Identifying a
breadth of strategic frontier options is more
important than a depth of information
in any one option. A team that is cross-
functional, cross-hierarchical, and demographically diverse
will provide the breadth of knowledge needed in the
strategic frontier identification process.
SOURCES OF STRATEGIC FRONTIERS
Where does this new team find options for strategic
frontiers for their company? We recommend a mix of both
internal and external sources.
The search for strategic frontier options begins inside the
company. Listed below are some internal sources to explore:
Management interviews – Talk to senior managers
about their perspectives on growth potential for the
company. What are the trends that they see taking place?
What is their experience with the strengths of the company
that could be leveraged in new ways?
Company vision – If your company has a vision
that describes its ultimate success, then it may be useful in
suggesting potential strategic frontiers that will lead there.
Corporate drawing boards – Ask around to find
new or future projects currently on the drawing boards.
R&D, Product Development, or Marketing may have
early stage projects that could form the basis of a new
strategic frontier.
Intranet survey – Employees may have good ideas
to contribute. Those who work with customers, vendors,
or suppliers are in a position to see changes, trends, and
opportunities at very early stages. Create a website to
collect these frontier suggestions.
The richest sources of strategic frontier
opportunities exist outside the company.
The team must spend time off-campus
exploring the following external sources:
Trends search – Trends signify
changes in dynamic markets and changes
create opportunities. The early detection
of a significant trend could make an ideal
strategic frontier. Team members should
In the early 1990s, the large-format
printer division of HP moved from San
Diego to Barcelona, Spain. Rather
than laying off those left behind, HP
leadership challenged them to identify
a growth opportunity. A diverse
team identified a small but growing
frontier in the establishment of “home
offices” where commuters were
spending more time telecommuting
to work. An exploration of that frontier
found that these new home offices
would need printers, but not the bulky
ones found in most offices. The HP
San Diego group responded with
the development of the first multi-
functional printer designed uniquely
for the home office.
A STRATEGIC FRONTIER SUCCESS STORY: 20 YEARS LATER
THE PURSUIT OF STRATEGY INNOVATION REQUIRES A
DIFFERENT WORKING ENVIRONMENT
SPRING 201324 INSIGNIAM QUARTERLY
immerse themselves in external data sources of trends –
publications, Internet, and research companies.
Technology search – We live in a world where
advances in technologies are constantly driving new
market opportunities. Learning of the new technologies
after they are commercialized is too late.
The team should spend time exploring
laboratories to learn what will be the next
“leading edge” developments in materials,
sciences, and electronics.
Business model search –
Entrepreneurs and proactive corporate
leaders are constantly experimenting with
new business model components to help
them meet customer needs in a better
way. Search business publications and corporate profiles
to learn what these innovative companies are doing. It
could suggest a strategic frontier for your company to
consider.
Outside experts – Consult people who make a living
by studying or researching markets. Their
different perspectives and in-depth views
could suggest new strategic frontiers.
EXPLORING STRATEGIC
FRONTIERS
Many experienced managers assume
they know what it takes to be successful
in a new strategic frontier. They make
judgments about its potential before even
In this phase, the Discovery Team is selected, key roles are identified, the objectives of the initiative are
established, and the team is prepared for the process.
The Discovery Team and senior management
align themselves on the focus and scope of
the initiative, agree-ing on the “strategic
frontier(s)” to be explored.
The goal of this phase is the collection of new insights on the strategic fron-tier that can form the basis of new, value-producing business opportunities in the future. Depending on the strategic frontier and the scope of the initiative,
teams will explore insights related to different exploration “vectors,” including Customer Value, Market Dynamics, and/or Business Model Innovation.
Using the new insights gained, the Discovery Team
will create, refine, and develop a portfolio of new business opportunities for
the future.
In this final phase, the team will create a strategic roadmap outlining key
events, trends, market discontinuities, and milestones to move the company
into its new strategic future.
STRATEGY INNOVATION
REQUIRES CREATIVE WISDOM, NOT
CONVENTIONAL WISDOM.
+
+
THE DISCOVERY PROCESS
STAGINGALIGNING
EXPLORING
CREATING
MAPPING
1
2
3
4
5
SPRING 2013 INSIGNIAM QUARTERLY 25
exploring it, usually by viewing the
frontier from their perspective of past
experiences or through commonly held
“conventional wisdom.” However, such
conventional wisdom tends to yield
incremental thinking and incremental
results, whether it is in current businesses
or on a strategic frontier.
Strategy innovation requires creative
wisdom, not conventional wisdom.
Southwest Airlines used creative wisdom
to develop a different business model
from the rest of the industry, one that
gained the majority of the profits in the
industry over the past few years. Once
a strategic frontier has been identified,
exploring it with an open mind will
yield insights for creative wisdom and
strategy innovation.
To explore your strategic frontier, first
establish a corporate team. Think of this
team as your corporate reconnaissance
team that you are sending on an
exploratory adventure.
This team of eight to twelve members,
usually middle-level to upper-level
managers, can be either an ad hoc/part-
time team or permanent/full-time team.
It must be cross-functional and diverse,
representing all of the major functional
areas of the company. The most effective
team members for this assignment are
those who are open-minded, curious,
and eager to collaborate with other team
members. Their working environment
during the frontier exploration should
be creative, future-oriented, and
marketplace- focused.
Most of the work of this team takes
place outside the organization. The
catalysts for innovative ideas come from
new perspectives, new information,
and new operating models — all of
which must be found outside the
company. It is our experience that
adopting an external perspective can be
a significant challenge for many teams
when the current corporate paradigm
and working assumptions are very strong
and ingrained. We refer to this ingrained
thinking as “corporate gravity.” It can
be a force so strong that team members
cannot overcome it to explore new ways
of thinking about customers, products,
markets, and business models. In addition
to getting outside perspectives, another way to
overcome the force of corporate gravity is to populate
the frontier team with people who are relatively new to
the company (especially managers from other industries)
or even include several people who are not employees.
The goal of this frontier team is to identify a portfolio
of innovative new business opportunities that exist on
the strategic frontier. The opportunities will include both
shorter-term and longer-term opportunities, smaller
opportunities and larger ones, as well as lower-risk
opportunities and riskier ones. The opportunities will
be in conceptual form with no quantitative information
provided at this point. It will be the responsibility of
another, more qualified group with quantitative skills
(strategic planners, business development) to develop a
detailed business plan and determine its profitability and
attractiveness to the company.
DISCOVERING VALUE
ON THE STRATEGIC FRONTIER
Nearly all strategic frontier teams hope that customers
will tell them what products they always wanted to have or
that marketplace experts will define the winning products
for the future. However, most customers are not able to
articulate what innovative products will meet their needs
and many market experts focus only on larger trends, not
specific products.
The focus of the frontier team must be the pursuit
and understanding of value. In order to be able to define
innovative new business opportunities, the frontier team must
understand what has value on the strategic frontier. What is
it that customers or potential customers really value? What
technologies are emerging that can deliver new value?
What are the market conditions that can create value?
How will the definition or perception of value change over
time? What forces or factors could have an unexpected
impact on value on this frontier?
MAP OUT YOUR FRONTIER
J. Douglas Bate and Robert E. Johnson, Jr. share three exploration paths for new frontier teams at insigniam-innovation.com.
TEXA
S IN
STRU
MENT
S’IN
NOVA
TION
MAN
DATE
CEO RICH TEMPLETON’S EFFORTS
TO CONTINUALLY RESHAPE THE
SEMICONDUCTOR COMPANY LEAD
TO SUSTAINABLE RESULTSBy Karen NielsenPhotos by Elizabeth Lavin
SPRING 201328 INSIGNIAM QUARTERLY
A savvy businessman and engineer, Templeton has spent
his entire 32-year career at TI, the past eight as president
and CEO. Since taking the helm, he has been steadily
reshaping the semiconductor manufacturer, moving it away
from other technologies to focus on analog and embedded-
processing growth.
Innovating the business model has helped transform the
$13.7 billion company, producing sustainable results and
strengthening its core businesses.
Dallas-based TI has come a long way since it first
began selling tricked-out calculators 45 years ago. Under
Templeton and his predecessor, the company has been
aggressively buying or selling companies to align with its
emphasis on analog and embedded processors. Since 1996,
TI has acquired 33 companies and divested at least 18 —
from defense to liquid-crystal-display operations — that
were not central to this razor focus.
Today, the company’s analog chips are
in automobiles, kitchen appliances, air
conditioners, notebook computers, and
smartphones. They make medical devices
like ultrasounds portable and enable
intelligent thermostats to adjust to user
habits and patterns. They also have vast
applications for cloud computing and
energy efficiencies not seen before.
The possibilities, Templeton says, seem endless. “Literally
every piece of electronic equipment you have at work or
home has at least one, if not multiple, analog chips,” he says.
“We have a chance to sell something to every customer in
the world. The number of companies that can say that are
pretty limited.”
§§§§ INNOVATIVE DECISION-MAKING
Many wonder how an 82-year-old company with
35,000 global employees remains nimble enough to keep
reinventing itself. Templeton says the key is to “not be
afraid of where you want to go.” His other secret seems to
be breaking through hierarchical obstacles to innovation.
Last year the company caught some industry experts
off guard when it announced it was shifting its OMAP
product line focus away from smartphones
and tablets toward a broader consumer
market.
“The outside world sees this as an event
that occurs in a more granular way,” he
says. “Our OMAP 2012 announcement
was the last step [in an ongoing plan] to
complete that. For us it’s very logical with
what we’ve been seeing in the last five to
exas Instruments CEO Rich Templeton is fond of saying that in the technology business, if you’re not changing, you’re falling behind. He knows a little something about that.
INNOVATING THE BUSINESS MODEL
HAS HELPED TRANSFORM THE
$13.7 BILLION COMPANY
“We have a chance to sell something to every customer in the world. The number of companies that can say that are pretty limited.”
SPRING 201330 INSIGNIAM QUARTERLY
Rich Templeton has shifted
TI’s focus from semiconductors
and microchips to other areas.
six years, but to the outside world it just looks like a big
momentous announcement.”
Templeton acknowledges that it’s a significant shift and
impacts a lot of people, but it’s a change that management
and employees knew was coming. In 2006-2007, his
leadership team began examining what it meant to be
an analog and embedded company — and what it didn’t
mean.
By early 2008, the company was offering hands-on
workshops for a broad section of its employees to show
them what the future looked like.
“We wanted to get everybody on board,” he says.
Templeton prefers to manage strategic direction in
a nonhierarchal fashion, delivering the message to a
broad community of employees using the company’s
communication groups. He says repeating the message
at least on a quarterly basis through broadcast company
meetings or other avenues helps engage employees. It also
prevents diluting or distorting the meaning.
“When the message is passed down, it’s potentially altered,”
he says. “You don’t know what will come out on the other
end. I don’t like to depend on hierarchal communication.”
Templeton is a proponent of involving his entire senior
leadership team in the decision-making process. Once
they’ve hashed out the issues, they pull in about 35 other
division heads to “weigh, debate, and persuade” and make
sure everyone is well aligned on the company’s direction. The
discussions are always candid and data-driven. Sometimes
they result in hard decisions to get into better businesses.
Templeton’s goal through this lateral decision-making
process is to align the company’s objectives with what’s good
for customers and shareholders.
“They’re one in the same,” he says. “If we’re making
decisions that will make the company more valuable, then
we have to communicate to (the public) why the decision
makes sense in the long term. If the company is not growing
and adding more value, then it won’t do well by employees or
customers or shareholders.”
§§§§ STRONG COMMUNICATION
Templeton has a reputation as a good communicator
inside and outside the walls of TI. Brian Toohey, president
of the Washington, D.C.-based Semiconductor Industry
Association, where Templeton serves on the board, says the
When it comes to innova-
tion and strategic change,
Rich Templeton has learned
this lesson: Don’t be afraid
to make unexpected moves
when they make sense.
“We’ve done a pretty good
job over the past 15 years,
seeing where the world is
going and knowing what
we’re good at and where
we need to move,” he says.
“We weren’t afraid to leave
businesses that wouldn’t be
successful in the future.”
MoneyGram CEO Pam Pat-
sley has served on TI’s board
since 2004 and says she has
BOLDMOVES
SPRING 2013 INSIGNIAM QUARTERLY 31
CEO is an “incredible communicator and extraordinary
mix of leadership and knowledge” that benefits not only
TI, but the entire semiconductor industry.
“He’s the real deal,” Toohey says.
§§§§ GOOD COMMUNICATION
WASN’T ALWAYS A TI TRADEMARK.
The early 1980s were a difficult time under then-
chairman Mark Shepherd Jr. and president J. Fred Bucy,
who was called abrasive and autocratic. The company
posted its first-ever revenue loss of
$145 million in 1983 because of
the recession and an unexpected
slump in demand for its home
computer, a market that TI
eventually exited.
Some analysts call those the dark
days for TI. But things brightened
up in 1985, when Jerry Junkins
was named president and CEO.
Junkins is credited with loosening
up the corporate culture and
encouraging innovation, while
helping reposition the company to
better compete in the 1990s.
“The personality of the CEO
quickly permeates the company,” says Dallas business
analyst David Johnson, who has followed TI for nearly
three decades. “Junkins did an overnight turnaround. This
is the group that Templeton came from, the new wave.
They had a laser-like focus on [digital signal processors].
That was going to be the great new thing, and they sold
all of this great technology. That’s the mold that Templeton
came from.”
Junkins died of a heart attack on a business trip in 1996,
and Tom Engibous, a 20-year TI veteran, was named
CEO. For 15 years Templeton worked with Engibous,
who helped make over the company from a broad-based
conglomerate to a semiconductor company focused on
making chips for the signal-processing markets that have
fed the wireless and Internet revolutions.
After years of grooming, Templeton stepped into the
president and CEO roles in 2004, and was named board
chairman in 2008. His egalitarian style and affinity for
change, along with sound business strategy, have made him
a leader’s leader.
He keeps his finger on the
company’s pulse by traveling across
the globe to visit with some of their
90,000 customers. He believes the
best way to know what’s going on
inside a big company is to spend
time outside of it, and he encourages
his managers to do the same. He
also schedules regular employee
roundtables to hear about the issues
on his employees’ minds.
Today Templeton says he’s
fortunate to work in an industry
that has such a great impact on
people’s lives. It’s also an industry
that’s changing rapidly, but TI’ers (as the employees are
called) are engrained in a culture that expects adaptation to
economic cycles and technology shifts.
“The idea of innovating and looking forward to new
problems to solve for our customers is at the heart of
what we do,” he says. “As a result, we’ve got as many
leaders that are more afraid of not changing than if we
are. That’s wise.” Because without change, there can be
no innovation.
“THE IDEA OF INNOVATING AND LOOKING FORWARD TO NEW PROBLEMS TO SOLVE FOR OUR CUSTOMERS IS AT THE HEART OF WHAT WE DO.”
seen Templeton lead
the company through
challenging times,
basing his decisions on
many perspectives and
a lot of data.
When TI acquired
National Semiconduc-
tor for a whopping
$6.5 billion in fall 2011,
industry pundits ques-
tioned whether it was a
good move. Templeton
called it a “bold, cor-
rect move,” given the
economy, the opportu-
nity, and his vision for
the company.
“I don’t think it’s a
risk if you look at the
industry and cycles,”
he says. “Usually most
people are cautious
at the bottom, and
that’s exactly when
you should logically be
doing the opposite. One
of the benefits (at TI)
is we have people who
have worked together
a long time. It’s a very
experienced team, and
we’ve seen the ups and
downs. This organiza-
tion is not intimidated
by ups and downs.”
32 INSIGNIAM QUARTERLY
WHERE THE RUBBER MEETS THE ROAD
83 percent of management jobs in the U.S. fall
into the middle layer of their organization.
— U.S. Bureau of Labor and Statistics
What happens when ideas leave the C-suite? Three
leaders share insights on how innovation initiatives
succeed—and fail.
Dennis Crosby, Senior Account
Director, Sabre Airline Solutions
Katherine Knowles-Marchione, Global
Vice President of Customer
Engagement and Customer Success,
Teradata Corp.
Allen Couture, General Manager of Texas
Operations, Space and Airborne Systems,
Raytheon Co.
WHERE THE RUBBER MEETS THE ROAD
SPRING 201334 INSIGNIAM QUARTERLY
Innovative ideas have little value
unless they can be executed, and
execution isn’t done by those in the
C-suite. Whether or not an innovation
initiative is successful is left to the
managers in the middle. So we took
our innovation questions to three of
them and asked what it takes to execute
on those mandates from the C-suite.
Q. WHAT ARE THE HOTSPOTS A LEADER HAS TO CONSIDER
WHEN TASKED WITH EXECUTING AN INNOVATION MANDATE?
7 Dennis Crosby: Can the
organization assimilate? Does the team
have the right set of skills to execute? Is
there sufficient support from other areas
of the organization? Can the vision be
clearly articulated and understood?
What is the current culture, and what
are the barriers to execution?
7 Allen Couture: You cannot
assume that you have buy-in across the leadership team. The
CEO may be on board, but you don’t always know which
executives are supportive or silently opposed to innovation.
They didn’t get to that level without some skills in political
astuteness. Innovation carries a stereotype of being expensive,
risky, and complicated. So be up front and honest about your
expectations and address their concerns to reduce the risk of
losing support too early in the process.
7 Katherine Knowles-Marchione: You need to make
sure whatever you’re doing from an innovation perspective
involves not only R&D, which traditionally is the tech piece,
but that you’re also focused on customers, interacting with
customers, that you’ve got the best employees on board, and
that you’re looking at how the innovation affects the brand.
You can be as innovative as you want, but until your customers
are experiencing it and using it and telling you they like it or
interacting with you and giving you ideas to make it better—
you’re not innovative until your customers agree that you are.
Q. HOW DO YOU FIGHT AGAINST CORPORATE GRAVITY—THE TENDENCY OF ENTERPRISES TO PULL BACK,
WHICH CAN KEEP INNOVATION FROM TAKING FLIGHT?7 Crosby: By gaining the support and sponsorship
of C-team members for the initiative, and by adopting and
enforcing a “no turning back” policy.
7 Couture: Be very selective of your team. Their courage
and ability to focus on the promise while avoiding the typical
corporate rackets and vicious circles will be critical for success.
Also, stay in constant contact with your key stakeholders
to maintain support and understanding of what they are
concerned with in the process. Invite them into your
meetings, reviews, and offsite activities.
7 Knowles-Marchione: We have less of a tendency
to pull back at Teradata, because we’re so singularly focused.
We also don’t take anything for granted and we’re not afraid
to reinvent ourselves. One example is how we went from
proprietary hardware and software to open source. We saw
trends in the marketplace, and we were not afraid to take
advantage of those trends. It all came back to the question:
Will this allow us to perform better for our customers? Will it
improve their cost and performance? If the answer is yes, then
we’re going to do it.
Another way we fight against corporate gravity is by being
a pretty flat organization. There aren’t a lot of layers.
Q. HOW DO YOU GET YOUR TEAM TO EMBRACE THE INNOVATION MANDATE, SO THEY CARRY FORTH THE
VISION AS THEIR OWN?7 Crosby: By empowering the team. Encourage them
to make their ideas known—and then validate their ideas.
BE VERY SELECTIVE OF YOUR TEAM. THEIR COURAGE AND ABILITY TO FOCUS ON THE PROMISE WHILE AVOIDING THE TYPICAL CORPORATE RACKETS AND VICIOUS CIRCLES WILL BE CRITICAL FOR SUCCESS.
SPRING 2013 INSIGNIAM QUARTERLY 35
Celebrate the successes, and learn from mistakes.
7 Couture: Define a noble cause; provide the picture of
“what a win looks like.” If you have the right players, you
will not need to motivate their ownership all the time. It is
important as a leader to provide the inspiration for their work
and honest coaching during the process.
I have been most successful at implementing complicated
innovative ideas by facilitating the conversation and exchange
of views, supporting their ideas, and not mandating the steps
to get there. Never assume the outcome; it’s a shortsighted
trait for a leader.
7 Knowles-Marchione: You have to communicate:
This is where we are today, this is where we want to
take the brand, and these are the technological changes
and innovation that’s needed to become better and more
enlightened with our brand. You have to be able to show
employees a vision; no one can work toward a goal
without it. The second thing is, you have to pick the right
employees. Always pick those who are passionate and who
want to really make a difference.
Q. IN THE CONTEXT OF INNOVATION, HOW DO YOU MANAGE UP?
7 Crosby: By providing clear and concise messaging to
executives on strategy, next steps, and key milestones, as well as
progress achieved thus far. Also, by soliciting their feedback.
7 Couture: I try to establish and communicate
expectations and results regularly, then follow up with
an opportunity for them to be enrolled in the process. If
executives are directly involved with an action, it will help
the momentum and morale of your whole team. It sends
the message of corporate importance and credibility to
your project.
Utilize the network of your C-suite for support, but be
prepared to perform on the promise. Strong results will lend
to an easier task of managing up; everyone wants to be on a
winning team.
7 Knowles-Marchione: If you communicate the
vision for the company and the brand initiative and how
you’re going to change it—that, along with a singular
focus, makes managing up a lot easier. It’s also important
that innovation expands beyond the traditional R&D and
goes throughout the organization. You have to be able to
innovate with marketing and sales groups, too. The more
entrenched the vision becomes, the more you communicate
about how you’re trying to evolve a transitioning brand,
the better employees understand all of that, the easier it is
to manage up.
Q. HOW DO YOU SUSTAIN A CULTURE OF INNOVATION? WHAT WORKS?
7 Crosby: For me it is about gaining consensus through
collaboration and getting the team to buy in to the vision. Also,
establishing key milestones are important; when milestones are
met, the team is invigorated by the progress it has achieved.
Always continue to solicit ideas, validate, and then incorporate
when possible. Implore a “take it to the next level” mindset.
7 Couture: Keep your core goals simple, innovation
does not have to equal science project and difficult to
maintain. And share the vision across all functions, not
just your technical teams. At the end of the day, it will be
people outside engineering development who deliver on a
repeatable product that adds value to your customers and
keeps your economic engine running.
7 Knowles-Marchione: You have to make sure you are
following trends in the marketplace, you have to be focused,
and you must be communicating with your customers.
At Teradata, we have customer committees, made up of
traditional business folks, and advisory committees, made up
primarily of people from the IT world.
Q. WHAT ARE SOME OF THE MOST SURPRISING OUTCOMES YOU’VE EXPERIENCED AS A RESULT OF
INNOVATION EXECUTION?7 Crosby: Seeing “naysayers” becoming supporters.
Seeing the project or initiative “grow legs” and take on a life
of its own (in a good way). Experiencing genuine excitement
and participation from C-team members.
7 Couture: I have been involved in breakthrough projects
that have been able to exceed on their very complex and
difficult promises. We have shattered what was expected—by
simply taking a stand for what we can be counted on for, and
working together toward a common goal. We didn’t realize
our ideas were not supposed to work and defied what was
normal; we were too focused on what was possible to notice.
7 Knowles-Marchione: We have some of the most
innovative customers in the world. They are constantly
pushing us. We’re helping them with their competitive
advantage, so that just makes sense. They’re dealing with
consumers who are becoming increasingly demanding—and
smart. Consumers are now interacting with brands through
social media, web channels, call centers, and branches or stores,
and they’re expecting that no matter the channel, they want
their interaction to be consistent. They want you to recognize
them immediately, and respond to their concerns. Companies
want to manage these close relationships as quickly and
effectively as possible.
The 2013 Insigniam Executive Sentiment Survey
Is short-term thinking trading off tomorrow’s results?QUESTION
We expected uncertainity. The U.S. debt ceiling crisis was in full debate. Abroad,
the economic outlook was much bleaker as Greece, Portugal, and the European
Union struggled to shore up banks, stave off unemployment, and rebound. As
Insigniam prepared to launch its second annual international executive sentiment
survey, we knew leaders would struggle to prioritize innovation. However, we
didn’t think 85% would be unprepared for what’s next. CONTINUED ON BACK ->
ADDITIONAL COMMENTS
REPORTING AND ANALYSIS BY
Shideh Sedgh Bina, Gregory Trueblood, and Erica M. Wood
YES MAYBE UNDECIDED READ TO FIND OUT NO
say its critically important
87% are satisfied with previous results
33%15%say they’re prepared
to execute.
THE INNOVATION DISPARITY x
SPRING 201338 INSIGNIAM QUARTERLY
What we found during the 2013 executive sentiment
survey was less uncertainty about revenue and job security
and more of an acute disparity around innovation. Even more
startling, executives expect to increase revenue, in spite of their
spotty track record on delivering successful innovation.
This is very bad news for most companies; they know
innovation is critical for success, and they are accountable
to increase revenue each quarter, but if they haven’t been
able to deliver upon this imperative in the past, they
certainly cannot deliver it now. Overall, this tepid response
leads us to the heart of the innovation disparity. It begs the
question — how do you truly drive sustained innovation
in an enterprise if you are only partially prepared?
One executive summed up the innovation disparity this
way: “We invite people to share innovative ideas and tips,
but we do not provide them with funding and resources to
get those ideas to market.”
These sentiments take on deeper significance considering
the need for organizations to expand innovation efforts
beyond product development and technology and into
the entire spectrum of the business, including strategy
development, operations, the supply chain, go-to-market
processes, and customer service.
Says one executive: “If we do not innovate in areas of
operations, we will be consistently bringing up the rear
and not leading in our industry.”
PEOPLE AND PERFORMANCE
Innovation was just one aspect of the annual survey.
Insigniam polled 214 global leaders on their forward-facing
sentiments for business in 2013. The sampling included
C-level executives, vice presidents, and directors of Global
1000 companies in multiple industries, most from the United
States and Europe. Annual revenue at the surveyed companies
ranged from $2 billion or less to more than $50 billion.
We wanted to know — how are leaders prioritizing
their responsibilities? Respondents say the “most critical”
element in their accountability over the next 18 months
87% BELIEVE INNOVATION IS
IMPORTANT TO SUCCESS
32% FEEL VERY SECURE ABOUT THEIR JOB OVER THE NEXT 18 MONTHS
27% FEEL PEOPLE ARE THE MOST IMPORTANT ELEMENT IN THEIR ACCOUNTABILITY
IF INSANITYis doing the same thing over and over and expecting a different result,
executives are facing an innovation predicament. Nearly 87% say
innovation is very important to their company’s ability to succeed or
strengthen their competitive advantage over the next three years. The
bad news — only 15% are prepared to execute it.
SPRING 2013 INSIGNIAM QUARTERLY 39
is operational excellence in specific areas (29%); people
development, performance, and retention (27%); and
meeting business targets and growth (26%).
This could be a sign that leaders are looking at the
future more strategically. Critical accountability factors in
the 2012 survey ranked operational excellence in specific
areas at 57%; people performance and retention 30%; and
business targets 13%.
During this year’s survey, 16% of the respondents say
innovation was most critical. Interestingly, business leaders in
Europe, whose economies are in recession, rated innovation
as more critical for success in their own accountability (23%)
than did the respondents in general.
C-suite executives in Europe and the United States,
where the rebound from economic recession has been
disappointingly slow, also ranked “meeting business targets
and growth” as more important than the total population
of respondents did (43% and 50% respectively, versus 26%).
THE INNOVATION TRADEOFF
This focus on day-to-day accountabilities and meeting
business targets creates a tension between delivering
immediate profitability and structuring the type of
transformative innovation that may take five, 10, and even
15 to 20 years to fully realize true growth.
One respondent discloses why the most profitable
innovation — the type that is transformative — is
shortchanged. “In the end, the need to generate
profitability with new products and services in year
one kills many real innovations in an early stage. We are
constrained by the amount of non-schedule-driven time
available to innovate.”
Or, as one leader elaborates, transformative innovation is
at the mercy of corporate culture. “A bureaucracy is like a
huge aircraft carrier. You can make fine adjustments now
that will slowly turn the shift in the direction you want,
but you eat up miles of ocean before you turn. The culture
inhibits radical change. We are all not pulling — or pushing
— in the same direction.”
IS CULTURE THE
CULPRIT?
Executives also
expressed concern in
the Insigniam survey
about people and
their performance at
their companies, and
frustration over the
amount of time and
resources available to
them.
Plainly put, “we
need to change the
way we do business,”
one confided.
Especially challenging,
respondents say,
are keeping people
motivated and
productive, especially
after layoffs have reduced team sizes.
Interestingly, however, the C-suite may not share that
sentiment. The No. 1 worry by far of the survey’s C-suite
occupants were financials (60% of the Europeans) and the
economy (37% in the U.S.). European leaders in general
37% OF THE C-SUITE BELIEVE FINANCIALS TO BE
THEIR BIGGEST WORRY
16% ARE FRUSTRATEDBY PROCESS
73% RATED A MANAGEMENT MANDATE TO INNOVATE STRONG OR
SOMEWHAT STRONG
YOU CAN MAKE FINE ADJUSTMENTS NOW THAT WILL SLOWLY TURN THE SHIFT IN THE DIRECTION YOU WANT, BUT YOU EAT UP MILES OF OCEAN BEFORE YOU TURN.
SPRING 201340 INSIGNIAM QUARTERLY
also rated people as much less of a worry, with more than
30% of them putting the economy at the top of their lists.
When it comes to elevating the performance of the
individuals and groups they lead, executives pointed
to “resource and time issues” as their biggest source
of frustration (nearly 20%). They also named their
organization and its processes (16%), alignment and focus
(11%), and accountability and reliability (11%). The top
impediment for European C-suite occupants, however,
was the way their organizations were aligned and focused;
“people engagement” ranked a close second.
Last year when we asked a similar question,
frustrations and concerns about people ranked at 38%;
operations 29%; strategy 18%; external concerns 15%.
‘ALTERNATIVE INNOVATION’ TO THE RESCUE
With such challenges ahead, it’s not surprising that
more than 33% of the survey respondents circle back
to innovation as the most important factor in their
organization’s ability to succeed—and strengthen their
competitive advantage—over the next year to 36 months.
But wait; the innovation disparity continues to deepen:
A whopping 55% say innovation will be very important,
while nearly 12% say it will be somewhat important.
Many respondents noted the importance of “alternative
innovation,” the type of enterprise-wide innovation such
as improved processes and marketing and sales solutions
referenced earlier in this article.
In recent years innovation—the ability to continuously
revolutionize, reinvent themselves, or make positive
changes—has become more and more important to
companies as competitive pressures have increased.
Many more C-suite executives in the United States
(60%) seemed to recognize this, rating the ability
to innovate as most important for their companies’
future success, compared to just 25% of their C-suite
counterparts in Europe.
INCONSISTENT TRACK RECORD
These trends were also reflected when the executives were
asked to rate the effectiveness and value of their companies’
innovation efforts over the last three years. While most
(57%) say such efforts were only somewhat effective, 40% of
C-suite leaders in the U.S. said their companies’ efforts had
been “very effective.” Only 25% of the Europeans occupying
the C-suite gave the same answer. A number of respondents
cited inconsistent levels of success with innovation across
companies, even though there may be small pockets of
successful innovation in
specific departments.
Drilling down deeper
into their preparedness
levels, the executives
said their main strengths
in innovating were
in mandates from
their top leaders to
encourage and act
on innovation—73%
rated that “pillar of
innovation” very strong
or somewhat strong—
and in their culture
enabling innovative
thinking and action
(56%). Forty-nine
percent cited their
dedicated infrastructure
and resources needed
for innovation, while
35% named a creative
process at their
companies dedicated
solely to nurturing
innovation. These results show that while innovation
is acknowledged by senior leadership, managing such
innovation often remains problematic given time and
profitability pressures.
CREATING A MANDATE
What does all of this mean for business prospects
in three to five years? Without direct and intentional
intervention and funding, it is predictable that many
organizations may end up with a shortfall of new
opportunities, leading to continued “borrowing” from
the funds for the future in order to deliver on the short
term. Eventually, this innovation “Ponzi” scheme can
have significant ramifications for the overall health of
our enterprises. Leaders need to create a mandate, fund
innovation infrastructure, create a process for creativity,
and build a supportive culture. As one survey participant
expounded: “Good leadership can make the difference
to ensure people and teams focus on the same priorities
and in the same direction. Unfortunately, we have (like
many organizations) more career managers than leaders
and entrepreneurs.”
IT’S NOT SURPRISING THAT MORE THAN 33 PERCENT OF THE SURVEY RESPONDENTS CIRCLE BACK TO INNOVATION AS THE MOST IMPORTANT FACTOR IN THEIR ORGANIZATION’S ABILITY TO SUCCEED
SPRING 2013 INSIGNIAM QUARTERLY 41
33%Say current innovation efforts are effective
11%Are frustrated by lack
of alignment and focus
15%Are fully prepared
to innovate
7%Directors are
frustrated at lack of change
Say innovation is ‘very
important’
87%
Are worried about time and resource issues
20%
11%Are frustrated by lack of accountability and
reliability
MORE ABOUT THE SURVEY
In terms of annual revenue, nearly 45% of the leaders responding represented companies bringing in $2 billion or less. Nineteen
percent had revenue ranging between $2 billion and $5 billion, while more than 13% had $5 billion to $10 billion in revenue. Five percent
had $10 billion to $15 billion in revenue; 7% had $15 billion to $20 billion; 5% had $20 billion to $50 billion; and nearly 6% had more than
$50 billion in annual revenue. Respondents were from the North and Latin America, Europe, Asia, Australia, and Africa.
INNOVATION AT A GLANCE
SPRING 201342 INSIGNIAM QUARTERLY
HHighly creative companies like Disney, Apple, Nike,
Chrysler and consumer-goods upstart Method all reported
increases in profitability in 2012. Their mutual strong
performance and growth were all complemented by
enigmatic leaders, the expected unexpected new ideas,
great decisions, product design—and, highly creative,
customer-tuned cultures.
Over the last decade, companies once known as highly
THE PROFITABLE SIDE OF CREATIVITYRevenue-making creativity is not confined just to new consumer brands. Get the creative culture right and it pays off, even during times of transition. Three high-performing organizations share their approach with Gordon Price Locke.
BY GORDON PRICE LOCKE
creative industry leaders
have waded into the waters
of poor performance or
irrelevance, some slipping
away entirely. Among these
are Kmart, Kodak, Digital
Equipment to name a few
and narrowly escaping,
possibly, JC Penney and HP.
So, what is the difference? Creativity as a shared attribute
across leadership teams is a critical missing ingredient. If
you don’t value or foster creativity as a C-suite executive,
the warning signs of irrelevance can develop slowly. You
risk leaving a legacy of unintentional outcomes — a stalled
balance sheet, battered egos, disenchanted customers, late-
to-market products and eroding brand equity.
SPRING 2013 INSIGNIAM QUARTERLY 43
LEVI STRAUSS & CO.Inspired culture, Innovative solutions
Too often creativity is branded as the sole domain of the
marketing department. So to test that theory, we asked an
executive with one of the world’s more recognizable brands,
Levi Strauss.
Robert Wiley, Senior Vice President, Sourcing, in the
global sourcing division of Levi Strauss, knows a few things
about using creativity in unconventional places – in his case,
it’s the global supply chain. Wiley flies 200,000 miles a year
and has seen it all in the last 20 years at Levi Strauss.
Wiley says this about creativity: “It is about approaching
challenges differently and leading teams in a new way.”
Eschewing anything contrived or forced like “we are all
going to wear purple hats today to be creative,” his instinct
about creative leadership is that it cuts through the noise,
attracting the notice of your team.
CHALLENGING ‘BUSINESS AS USUAL’
While he could not comment about the company
itself, it is public knowledge that Levi Strauss is profitable,
has launched a plethora of highly creative marketing
campaigns and has remained a leader and legend in the retail
fashion industry. In fact, in 2012 it held its own against a
commoditized and saturated jeans market according to
many news reports, despite drastic increases in cotton costs.
It is safe to say that for Wiley and his peers, business as
usual won’t win. Wiley shared, “In my role, I work with
people all over the world, they bring their own culture to
the table and integrate it with the team. What inspires my
Miami team versus, say my Hong Kong team, is different
and I cannot pretend to have it all figured out.”
And, there it is – as a baseline for the creativity discussion
just like the discussion that follows in this article — not
being afraid to not know something.
Wiley further stated that in the sourcing game you have
to question conventional wisdom and get creative. “At first
it was all about China, until it was all about Vietnam, then
Burma. It might be about all, or none of the above, and your
teams have to constantly challenge conventional wisdom, or
business as usual.”
You can feel a level of excitement from Wiley when he
talks about this topic and as we close the conversation he
says, “so many executives go on autopilot as they lead, but
that is a recipe for failure. Habits are powerful, and bad habits
can stagnate innovation.”
UNDERSTANDING CREATIVE LEADERSHIP
To better understand how creativity can drive growth
and profit, it must be understood first. Creative leadership
isn’t about being soft. To the contrary, creative leaders tend
to have imagination and conviction, the ability to see
alternatives, envision something new, embrace multiple
points of view, to inspire, let go of ego and be aggressively
willing to take risks and be tolerant of mistakes.
Creativity itself could be explained how author Mihaly
Csikszentmihalyi describes it in his renowned work
Creativity - Flow and the Psychology of Discovery and Invention.
He states that creativity is any act, idea, or product that
changes an existing domain, or that transforms an existing
domain into a new one.
He goes on to state that creativity manifests in people as
expressions of unusual thoughts, people who are interesting,
positive, and stimulating – and, whose perceptions are fresh
and judgments are insightful.
Leonard Nemoy hosted a wildly popular and creative
television show In Search Of (1976-1982) that prompted
the viewers to draw their own conclusions around many
of the world’s mysteries. In search of how creativity drives
profitability, a handful of leaders at three large enterprises
explained the link between highly creative culture and the
balance sheet.
SPRING 201344 INSIGNIAM QUARTERLY
GLAZER’SExpanding EBITDA, 12% year-over-year growth
In the consumer goods distribution business, Glazer’s
Distributors, a $3.8 billion (U.S.) company, hired maverick
President and CEO Sheldon “Shelly” Stein in 2010 to
make big changes.
This former investment banker’s challenge was to tackle
opportunities from a new perspective to differentiate the
brand amongst many old-line, family-owned dominant
distributors. Glazer’s is now the fourth largest in its category.
“If I were starting from scratch,
how would I do this … what is the
best way to run this business?” was
Stein’s first application of creative
thinking. He stepped back, asked
questions and moved away from the
typical systems in this market, adding
that many executives aren’t willing
to “not know the answer,” quoting a
former mentor of his as saying that
a bad executive is one “who thinks
his or her own body odor smells like
perfume.” The point being you have
to be willing to be wrong or naïve
and entertain alternatives to your
beliefs to harness creativity.
“Creativity is thinking outside the
norm, knowing what really matters
in making your company win, and finding a better way to
do it,” Stein says.
Glazer’s growth has been astounding. The company has
seen 12 percent year-over-year growth since 2010 and,
going into 2013, expects more. This growth is underscored
by expanding EBITDA.
However, you can’t drive creative solutions by just
starting at the balance sheet. Stein attributes some of his
success to:
5 His belief in his team
5 An open-door policy
5 Staying aware that asking the most senior people their
opinions means junior employees will never give you
the real answer.
FROM ‘NO’ TO ‘YES’
You have to drop the attitude, get out there, and talk to
employees and customers in a meaningful way.
Stein was asked for an example of alternative thinking
and creative problem solving to overcome a “no” to get to
a “yes.” His answer was, “I have about 20 of them.” He went
on to describe how a leader had
said the current sales and account
management process could not be
redesigned to save money and make
customers happy at the same time (it
had been that way for 50 years).
His employees and leaders, who
are free to express their feelings
and make mistakes, quickly went
to work and designed a new
approach. Since that change,
profits have doubled.
When you hear Stein speak, you
immediately hear the spark, the
energy, and the passion. He creates
comfort without losing a very
aggressive edge. On the topic of
assertion versus aggression in pushing
creative ideas, Stein says that creativity and being aggressive
go hand in hand. Otherwise taking “no” for an answer and
dealing with basic, safe assertions will rule.
When asked if a COO and a CFO can be creative, he
says, “I wouldn’t hire one who wasn’t, so I do not see why
they can’t be.” Whether it is working on the front lines,
in the distribution center, or fostering employee opinion,
Glazer’s executives think differently about how to lead
and the results are showing.
CREATIVITY IS THINKING OUTSIDE THE NORM, KNOWING WHAT REALLY MATTERS IN MAKING YOUR COMPANY WIN, AND FINDING A BETTER WAY TO DO IT,
Glazer’s President and CEO, Shelly Stein, shares his approach to fostering creativity, which has been profitable for the consumer-goods distributor:APPROACHES TO CREATIVITY
FROM SHELLY STEIN
5 Make sure
employees enjoy
their job or they will
spend their creative
energy looking for
another job.
1
SPRING 2013 INSIGNIAM QUARTERLY 45
“Shelly” Stein,
president and CEO of
Glazer’s Distributors.
Don’t penalize
mistakes.
People aren’t
willing to try new
things when
they are afraid.
Truly tie
compensation to
performance and
reward creative
ideas. This is what
changes behavior.
Aggressive is not a bad
word. Embrace leaders
who are constructively
aggressive to spurn
creative outcomes.
Have a “no jerk policy.”
Everyone’s opinions have
value. Leaders should not
think they are too good to
be wrong, no one should
feel diminished or feel a
lack of respect.
2 3 4 5
SPRING 201346 INSIGNIAM QUARTERLY
RYANCreative culture, Blockbuster performance
The corporate financial consulting field is a huge
space. Companies like KPMG, Deloitte Consulting and
PricewaterhouseCoopers dominate. There is one CEO who
came from the big firm space, started small in the corporate
tax services space, and is rocketing back up the competitive
ladder with 20+ diversified corporate tax and financial
accounting practice areas – profitably. That would be Brint
Ryan, CEO of Ryan in Dallas.
Ryan has been awarded just about every award you could
imagine from best places to work to a leader in customer
services. Ryan was set to break the $300M mark in 2012; it
could reach $400M in 2013, and in the next three years is
poised to reach the $1 billion mark.
Part of what’s created that growth is creativity.
“I have never been afraid to push the envelope and reach
for the stars in services, client satisfaction, and technology, and
I ultimately realized I needed to take the same approach with
our work environment,” Brint Ryan says.
CREATIVE CULTURE
Delta Emerson, Executive Vice President and Chief of
Staff — and Ryan’s right arm — went on to say, “once we
applied the same level of creative thinking to our culture as we
did to functional areas, the results have been unbelievable – a
company’s bottom line and creativity are intertwined.”
Ryan eschewed the rigid culture typical of big financial
consulting firms for a flexible work environment.
Called MyRyan, the employee engagement program not
only supports flexible work arrangements, career growth and
opportunity, it’s a way of empowerment. Employees may
work from home, remotely or in-office, as long as they are
delivering the expected results.
Team members are empowered to do what is best to get the
job done. The same applies to how time-off is administered.
SCALING FOR GROWTH
Although a creative work environment can drive growth
and profit, it’s not a switch that can be turned on and off,
Emerson says.
The Ryan executive team has shown that organizational
learning, managerial flexibility and constantly deploying
innovative business practices go hand-in-hand with gains
against the competition.
In asking about the C-Suite at Ryan the discussion
turned to how the CIO/CTO and CMO could use
creativity. Emerson states that typically C-level executives
have been functional domain experts and “they need to be
comfortable working outside their area of expertise to get
creative.”
Ryan’s CIO, for example, has played a role in looking
at community outreach for the company and developed
Ryan-teering [volunteering] to track and recognize peer-
to-peer community outreach and giving. The CFO was
very involved in helping think about metrics for MyRyan.
“Sometimes leaders kill their own good ideas because
they go off in a dark corner or stay hidden in the C-suite
and do not involve people to explore,” Ryan says.
It is evident that creativity is critical, whether you are
on a climb to the top of your market or protecting your
position and want to ensure you have all the ingredients
for sustained and meaningful growth and profit.
As Csikszentmihalyi describes in his work, creative
leaders possess the ability to be both extremely smart and
very naïve at the same time. They naturally tend to balance
extroversion and introversion. Leaders are able to navigate
both and they know the importance of seeing and hearing
others’ ideas.
Imagine the possibilities if you and your leadership team
mastered these same characteristics. Get creative. Anything
is possible.
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consistent Growth
FORTUNE places to work SCORE
Client Satisfaction
36%38%
6%
21%
8%11% 8%
50%
92% 92% 92% 90%96% 96% 96% 97%
67%
79% 78% 71%85% 90% 90%
92%
RYAN’S PATH TO $1 BILLION NUMBERS ARE ROUNDED TO THE NEAREST TENTH
IQ BOOST
BY MICHAEL R. WALDMAN
Failure and innovation go hand in hand. A corporate culture that allows for appropriate risk and failure is a culture that allows for innovation.
When the currency of the business is promises kept rather than quality or impact of the work, then employees will be afraid to make the kind of promises that will stretch their thinking.
Can you imagine at the beginning of the AIDS/HIV crisis researchers thinking they would discover a treatment without having any failures along the way?
Rather than focusing on keeping a promise, the question should be: Is what you’re giving your word to worthwhile? Instead, strive for the tension that’s generated by standing for something that’s out of the ordinary. Stirring up those creative juices may lead to failure – or a whole new way of doing things.
AN INNOVATION COMMITMENT IS MORE IMPORTANT THAN THE PROMISE
Michael Waldman is one of the founding partners of Insigniam. Subscribe to his innovation blogs at insigniam-innovation.com.
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