Fall 2009: Innovation

Apple, known for being an innovation leader, has sold over 21 million iPhones since the product was launched in June 2007.

As consumers, we are always looking for the next best thing.

There isn’t anything necessarily wrong with that. After all, that is what innovation is about—new products, design, technology, processes—the ability to create in order to benefit not only ourselves, but our society and our world as a whole. In this issue of the Baylor Business Review, we look at the evolution and expansion of business innovation, as well as its role within the Hankamer School of Business.

You will be introduced to alumni working in various industries who are creative thought leaders within innovative companies. Other alumni are connecting through the Baylor Angel Network, a seed and early-stage investor group for friends and family of Baylor and Hankamer.

Within this theme of innovation, you will see how students are reaping the benefits of progressive programs at Hankamer like the Baylor Business Fellows major, where students customize curriculum within the BBA degree plan. You will also read about a student research project on social media strategies. Information has become even more accessible through online social networks, which affect how we connect with others both personally and professionally.

We continue to celebrate our 50^th anniversary of AACSB accreditation in 2009. We reflect on the history of the Hankamer School of Business and anticipate the future, as we produce business graduates for worldwide leadership and service. Innovation is a continuous process just like the process of educating our students, whom we think will be the next best thing in the business world.

Terry S. Maness
Dean, Hankamer School of Business

 

 

Baylor Business Review, Fall 2009

by Eric Krell

The phrase “business innovation” conjures specific types of images for those of us past a certain age. We imagine The Coca-Cola Company’s secret recipe locked away in a vault, Google’s mind-boggling search algorithms scribbled on a white board or brilliant IBM and P&G scientists tinkering in their research & development (R&D) lairs. Those of us past a certain age need to look again.

During the past decade, innovation has morphed before our very eyes-breaking loose from the R&D department, extending beyond products and services into internal business processes, and spilling outside the four walls of individual companies.

“Innovation has become more collaborative, inclusive and interdisciplinary,” reports Tim Brown, CEO of design-consulting firm IDEO and author of Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation (Harper Business, 2009). “It’s no longer the guys in the white coats up on top of a hill doing the geeky stuff.”

The lingering “Great Recession” may be accelerating the discipline’s evolution-at least for organizations that embrace and practice leading-edge innovation. These companies have happily discovered that innovation can:

• Reduce costs and enhance customer experiences, in addition to fueling revenue growth;
• Greatly improve nursing-shift changes, airlines check-in, corporate budgeting and other internal processes in addition to hatching must-have products and services; and
• Involve just about everybody in the company (as well as partners outside the organization and, in some cases, customers), not just the traditional R&D team.

“I think companies make a mistake in how they define innovation,” says Ric Merrifield Microsoft’s architect of business and the author of Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation (FT Press, 2009). “Many companies don’t view innovation as a day-to-day option for solving problems and addressing opportunities.”

Organizations in which innovation represents a daily priority tend to embrace an expansive definition of the term (as the following discussions show); they also tend to execute innovation through intensive collaboration, a heavy dose of outside thinking and a clear yet simple underlying mission.

Beyond Boom Times: Recessionary Innovation

Companies invest in innovation during boom times and batten down the spending hatches in economic downturns, right? Not successful companies. Studies of corporate R&D spending during recessions by McKinsey and Bain indicate that enterprises that invested in innovation and marketing during recent downturns tend to out-perform companies that spent less in these areas.

During the Great Depression, Kellogg doubled its advertising budget while its competitor, Post, trimmed nearly all expenses, New Yorker business columnist James Surowiecki points out. “By 1933,” Surowiecki continues, “even as the economy cratered, Kellogg’s profits had risen almost 30 percent and it had become what it remains today: the industry’s dominant player.”

Rita Gunther McGrath, an associate professor at Columbia Business School, studies organizational innovation. “Recessions shake up old habits and old ways of doing things, eliminate less efficient competitors, free up top talent and otherwise offer resources to innovators and investors that aren’t available during good times,” notes McGrath, co-author of Discovery Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity (Harvard Business School Press, 2009).

Indeed, Apple, Microsoft, HP and other companies are known for innovation during economic downturns. “Now is not a time for corporations to rest on their laurels,” says Rich Friedrich, director, HP Labs Strategy and Innovation Office. “It’s a time to get creative and seek out new ways to drive continued innovation growth. Innovation is vital in charting the course for future investment and company growth.”

Many companies commit two common errors with regard to managing innovation during recessions, Merrifield notes. First, they cut costs across the board-a move that neglects the fact that some activities generate more value than others. “The second mistake is that they think innovation and cost-cutting are mutually exclusive,” Merrifield asserts. “The reality is that you can combine innovation and cost-cutting and get much more dramatic returns on those cost-cutting efforts.”

For example, by transforming the flight check-in from a labor-intensive process to a much more automated and self-service experience, airlines increased customer satisfaction and reduced labor costs. These types of innovative and valuable process-improvement opportunities exist for the vast majority of companies following nearly two decades of unprecedented economic growth.

“Many innovation discussions during good times tend to be more opportunistic,” Merrifield says. “The attitude is one of, ‘Hey, why not? Let’s swing for the fences and if we miss, we miss.'” Innovation during recessions should target specific growth-and cost-reduction-opportunities.

Beyond Products and Services: Process Innovation

Some of the innovations that most delight Merrifield and other innovation gurus might sound mundane to the uninitiated on first blush. Merrifield grins knowingly at the notion of “mundane innovation”-and the partner companies that Microsoft helps “rethink” traditional processes probably do cartwheels in response to the term; a manufacturing company in Merrifield’s book reaped $40 million in savings within three weeks from this type of ho-hum innovation.

The opportunity to apply innovation to traditional business processes is so ripe, Merrifield believes, because many organizations fall into the “how trap.” That is, they focus much more on how they do things rather than on why they do things. For example, ask a colleague what she’s doing at the fax machine, and she’ll likely respond, “I’m sending a fax, Einstein.” Well, not exactly-sending the fax is actually how she’s fulfilling a business requirement. “Communicating status” is the why or what.

Consider the flight check-in process of a decade ago: the how involved standing in long lines. The outcomes, or whats, included confirming a reservation, conducting a security survey and checking in luggage when necessary. The airlines realized that the confirmation could be conducted by customers online before they arrived at the airport, and the baggage check could be transformed into a self-service activity (alas, we remain hungry for security line innovations).

“What the airlines realized is that it doesn’t matter who does the work, where it happens or what the process is, as long as those three outcomes are achieved,” Merrifield asserts.

The airlines are hardly alone. Dell rose to prominence not by producing innovative PCs, but by innovating how the components of each PC were purchased, assembled and paid for. Similarly, Netflix did not unearth a new form of entertainment; rather, its founder realized he could never compete with the retail space Blockbuster already occupied so he leveraged Internet connectivity, the U.S. Postal Service and some nifty heuristics to deliver (and recommend) DVDs to customers in a new way.

“Innovation is about being creative, but it is also about creative destruction-and not enough people realize that,” says Steve Player, North American program director of the Beyond Budgeting Round Table. The organization is dedicated to improving upon traditional corporate budgeting, forecasting and planning processes-primarily by eliminating the expensive, time-consuming, headache-inducing, and often worthless annual budgeting process.

Twenty-eight percent of North American corporate finance executives report that their 2009 budgets were invalid before the year started, according to a 2009 Business Finance magazine survey, and more than two-thirds of these respondents expected their 2009 budgets to be irrelevant by mid-year.

Player, a former Big 4 auditor, also points out that linking incentive compensation to traditional budget targets unwittingly encourages unethical behaviors. Managers tend to negotiate lower numbers during the budgeting process to help ensure that they can “earn” their incentive payment. “Innovating can involve getting rid of something that is troublesome and finding a better way to tackle the challenge,” adds Player, author of the forthcoming Future Ready: How to Master Business Forecasting (Wiley & Sons, 2010). “The elimination of the budget is an example of this type of innovation.”

Innovation “is being applied to many, many things beyond the products the company makes,” Brown agrees. “More companies are now thinking about innovation as it applies to our own organizations and processes.”

Beyond R&D: Innovation is Everyone’s Job

The shift Brown mentions has pulled innovation out of the confines of traditional R&D function and made it everyone’s responsibility.

“Innovation needs to be on your to-do list when you look at work,” says Merrifield. “You can look at every problem and opportunity as a candidate for innovation.”

Brown has spent more then two decades exploring and harnessing innovation for clients and his own company, and he reports that A) more people are involved in the discipline; and B) people who practice innovation for a living possess a much broader set of background experience and expertise.

“In organizations there is a growing idea that innovation is a cross-disciplinary activity,” he says. “It’s not just for engineers or people who trained at art schools. It includes potentially everyone in organizations.” Even traditional R&D departments, or a consulting firm that specializes in innovative services, for example, now hire a broader array of experts. “If you come to our organization, you’ll see dozens and dozens of different disciplines and backgrounds represented,” Brown says.

Fortune magazine’s annual rankings of the most desirable companies to recent business school graduates shows that future business leaders value innovative organizations. Google topped this year’s rankings while, for the first time ever, IDEO-which, with 500 employees, is a fraction of the size of most corporations on the list-appeared on the list at number 15.

Beyond Technology: Human-Centered Innovation

As innovation has moved beyond an exclusive focus on products and services, and beyond the exclusive responsibility of the “guys in lab coats,” another element of its focus has shifted. Rather than dealing exclusively with technology, business innovation now tends to address human concerns in deeper and more meaningful ways.

Brown describes this as “design thinking,” which he defines as “human-centered.” This type of innovation, Brown notes in a 2008 Harvard Business Review article, “especially when it includes research based on direct observation, will capture unexpected insights and produce innovation that more precisely reflects what consumers want.”

That sounds like it should have always been the focus of innovation. But it hasn’t.

Consider the experience would-be cyclists and mountain bikers confronted when they walked into a bike shop packed with bewilderingly technical and expensive bicycles and jargon-spewing staffers. IDEO and Shimano, the Japanese manufacturer of bike components (including those that let you shift gears), did just that with a team of engineers and marketers as well as designers and behavioral scientists. Rather than figuring out how to construct and sell another high-priced derailleur, the team set out to answer a human-centered question: why don’t 90 percent of American adults ride bikes?

The team discovered that many would-be U.S. bikers felt too intimidated by the activity’s technical wizardry to participate. In response, it created a simplified “experience”- easier-to-use coasting bikes that shift automatically; friendly, customized guidance on local bike trails; and in-store retailing processes designed to lessen, not increase, the intimidation factor-that aimed to reconnect adults with the biking experiences they recalled from their youth.

The “Coasting” campaign succeeded: eight different bicycle manufacturers signed on to participate shortly after the program appeared. Product-related, technically grounded research & development is not going away, nor should it. Brown’s point is that there are many forms of innovation; of those, the human-centered approach, deserves more widespread application.

Social Media as an Incubator

The development and use of social media technologies illustrate the expanding nature of organizational innovation.

“Many companies are taking advantage of new social networking and connection technologies to improve the way they incubate and hatch ideas,” notes Gunther McGrath, pointing to InnoCentive-an online market for problems and solutions-as an example. “Eli Lilly has used these technologies to better connect its scientists and engineers internally as well. Companies are realizing that they can’t out-innovate the world, so we are seeing far more creative exploitation of ideas that generated outside of proprietary R&D departments.”

Social media technology is ideal for connecting with customers, establishing relationships with them and, in some cases, soliciting feedback that informs the design of future products and services. “Social networking is going to generate a lot more referral business and give consumers more control,” says Merrifield. “Look at the voting on ‘American Idol’ ™ No longer does the guy who runs the record company automatically choose which band we’re going to hear next. We get to choose, and the record company executive can feel pretty confident that what we choose is going to sell.”

Successfully integrating social media technology into business workflow ultimately requires trust, notes Peppers & Rogers Group founding partner Don Peppers, whose latest book, co-authored with Martha Rogers, is Rules to Break and Laws to Follow (Wiley, 2008). “You need to be transparently responsive,” Peppers says of companies that embrace social media. “You need to be honest with consumers. You can’t let the lawyers in the room where you prepare your blog posts. You have to do it from the heart. That may sound corny, but people respond to that.”

One of the biggest hindrances to more open discussions between companies and their customers is an “overdeveloped sense of legal liability,” Peppers adds. “But a more damaging scenario for your business than a lawsuit would be a general deterioration of the level of public trust in your brand. The most valuable asset you have in the social networks environment is your reputation for trustworthiness.”

A Not-So-Secret Formula for Success

The reputation for trustworthiness Peppers describes also represents a crucial quality within organizations with successful innovation track records.

Even when companies embrace the new elements of innovation identified above, they still need to execute. Although organizational innovation practices vary greatly, experts continually return to three important success factors:

Collaboration: “At HP, we see open collaboration across companies, nations and industries as the most promising way to innovate out of the downturn,” notes Friedrich. HP Labs’ Innovation Research Program pairs scientists from universities around the world with researchers at HP Labs in an effort to derive scientific and economic benefits through collaboration. Collaboration, particularly between different organizations, appears to be increasing as a way to address increasingly large and complex problems. In the utility sector, for example, Xcel Energy’s SmartGridCity project in Boulder relies on a partnership of seven different technology and services vendors working together to provide smart in-home devices that help manage energy use and environmental impact throughout the Colorado city.

Outside Thinking: New business challenges are inspiring problem-solvers to look outside their four walls for ideas from other domains, IDEO chief creative officer Paul Bennett says in a video interview posted on YouTube. In the coming months and years, Bennett says that successful organizations and business leaders will be “inspired by other business models, other cultures, by places that have been in recession for a really long time, by people who have already been on a journey you’re going on.” That explains why consultants at Accenture have studied Hollywood smash hits to glean insights that might help pharmaceutical companies bolster pipelines in dire need of new “blockbuster” drugs; why McKinsey consultant Michele Zanini in a recent paper compared the frequency and magnitude of Southern California earthquakes to the frequency and magnitude of worldwide banking crises; and why Beyond Budgeting’s Player views the OODA (“Observe, Orient, Decide, and Act”) Loop, devised by a U.S. Air Force military strategist as a way for U.S. pilots in slower planes to defeat better-equipped enemy fighters in the Korean War, as a model for improving corporate forecasting and planning processes.

Principled Performance: Funding and executive support have long been identified as the two most crucial elements of successful organizational innovation. These factors remain crucial, but another element may be an even more important ingredient of successful innovation over the long term. Look at Nike, GE, Apple, Whole Foods, P&G and other companies that have been capitalizing on innovative products, services and processes over time, and you will find an overarching organizational purpose, notes Brown. Nike, for example, makes sports and exercise relevant and accessible to people. “If you point out the companies that deliver successful innovation over a reasonably long period of time, I think you will find that sense of purpose there,” Brown explains. “I think the purpose-driven enterprise is a way that companies can balance the need to be operational and innovative at the same time.”

The sense of purpose can foster the trust necessary for employees to take risks by looking at a product, service or process and ask whether it can be designed differently to reduce costs, increase revenue or boost customer satisfaction.

Innovation Evolves

This is not your father’s business innovation; the table below highlights the recent evolution of organizational innovation:

	Then	Now
Objective	Revenue and market growth	Revenue growth, cost reduction, recruiting and retention benefits
Key Requirements	Executive support, funding	Clearly defined organizational purpose, in addition to funding and executive buy-in
Focus	Products and services	Products, services and internal processes
Ownership	R&D Function	Everyone in the organization
Execution	Closely guarded, within a company’s four walls	Highly collaborative within companies and among external partners

 

 

Baylor Business Review, Fall 2009

There has been a shift in business innovation. Leaving behind a once internalized process, companies are becoming more resourceful and sustainable by collaborating with external sources for R&D, a practice known as “open innovation.” We take a look at the evolution of open innovation along with considerations for entering into an open innovation agreement.

View: Open Innovation

by Charles J. Brez

Over the last 10 years, many companies have realized that the traditional method of funding R&D and business development was unsustainable. Applying a percentage of shrinking revenues to fund product enhancements and new product development in a fiercely competitive world simply was not adequate to remain competitive and to satisfy shareholder expectations for growth and profitability. A new approach to R&D and product development had to be deployed, and this approach was called “open innovation”.

The traditional method of hiring the best employees, training them, building R&D facilities, and expecting employees to invent and develop new products using only internal capabilities was costly, time consuming and produced limited results. As opposed to relying exclusively on internal capabilities, open innovation reaches out for “just in time innovation” to partner with the most appropriate and best qualified innovators to complement internal capabilities, tap new ideas, and fill development gaps. Cooperating with external innovators and leveraging the global innovation community brings to light creative ideas and dramatically expands the innovation network outside of the usual experience base.

Several trends and capabilities have evolved over the last few decades to drive the adoption of open innovation. In the 1980s, major corporations accounted for over 70 percent of the patents issued. This dominance has dropped dramatically as large corporations now account for less than 40 percent of the patents. The trend continues to favor the growth in patents at smaller companies.

The growth in small companies was driven in the 1990s by the availability of risk capital. You no longer had to mortgage your home to raise money to start a new company. Private capital was becoming available from venture capitalists and public funding was available from government programs such as the SBIR/STTR program initiated in the 1980s by Congress. This availability of capital spurred the entrepreneurial spirit evidenced by incubator parks spawned by universities and other enterprises.

Also, North America and Western Europe used to graduate most of the scientists and engineers, but today China and India graduate many more technologists. Those that are educated elsewhere are returning to their home countries for employment. The developing countries also account for the major growth in consumption.

Another major driver of open innovation was the rapid development and widespread adoption of the Internet by technology communities around the world. It is now possible to reach and communicate with thought leaders around the world easily and effectively. The National Science Foundation estimates that there are over 3 million scientists, technologists and engineers in the world. Even the largest corporation has less than 1 percent of the global technical capability.

Therefore, years ago large corporations could succeed using only internal resources, but with the expansion of technology to smaller companies and dispersion of technologists to geographic locations around the world, the practice of open innovation begun around 2000 is necessary for survival. The Internet allows technology seekers to reach the innovation community anywhere in the world at universities, research institutes, government labs, large and small industrial companies, and individual innovators.

Open innovation provides benefits to both sides of the partnering equation: the technology seekers (representing the “needs”) and the solution providers (representing the “seeds”). Since the Internet is in the public domain, the sharing of information between the two sides exploring a partnership should be on a non-confidential nature to protect intellectual property until proper agreements are in place.

The technology seekers’ reach is dramatically expanded into the global research and innovation community to find unobvious and previously unknown technology solutions. It reduces risk by reinventing fewer wheels and leverages proven solutions that already exist in the marketplace. Time to market is considerably shortened to respond to competitive threats, and costs are dramatically reduced to achieve differentiable advantages in the marketplace. The solution provider benefits by accelerating commercialization of their innovations and bridging the so-called “valley of death” by connecting their creative technologies with leading companies who have access to markets.

Those who embrace open innovation practices benefit by changing their culture from NIH (Not Invented Here) to PFE (Proudly Found Elsewhere) and enjoy broader business success.

Charles J. Brez has a wide range of technical and commercial experience in large corporations (Monsanto and ABB) as well as being an entrepreneur in a startup company, NineSigma. He has been responsible for general management, global sales, marketing, international alliances, business development, product management, project operations, and acquisitions. He has led open innovation practices since 2001 and has been invited as a thought leader on open innovation and technology transfer at over 20 forums on five continents in the last few years.

 

Review: Guidelines for Entering Into an Open Innovation Agreement

by Dianne M. Proia

In this era of multi-billion dollar government stimulus packages and massive company layoffs, U.S. businesses are increasingly willing to embrace “open innovation,” the concept under which businesses use external sources to either develop new technology or acquire pre-existing technology.

When done properly, open innovation technology transfers can be mutually rewarding to the company developing the technology and the company acquiring the technology. But when a technology transfer is done incorrectly, it can result in technical and financial devastation for one, or both, of the companies involved. Before entering into a technology transfer agreement, consider the following:

1. Determine the driving factors behind the deal for each party.Each party should identify what its own needs, goals and objectives are, and then try to determine the needs, goals and objectives of the other company. You may find that the deal your company initially sought is not what is really needed.

2. Assess your proposed strategic partner. Consider what is being said about the other company in the press and your business community-especially with regard to the quality of their products and their current market share. Investigate whether they have been involved in any lawsuits; you do not want your company’s reputation, or finances, destroyed as a result of your association with them.

3. Protect the confidentiality of your company’s technical and business information. Enter into a Nondisclosure Agreement (NDA) before engaging in any discussions with the other company. The NDA should cover the disclosure of both technical and business information, and should clearly state, and limit, the purposes for which one company may use the other company’s information. Always mark written information you provide to the other company with the words “confidential” or “proprietary.” Failure to protect and mark your company’s information might result in the other company using your technology for its own purposes and without your company receiving any compensation.

4. Don’t be afraid to limit the amount of information being disclosed.Many companies make the mistake of thinking that because an NDA is in place, they are required to, or should, provide all information the other company requests. That is not the case. Carefully consider what information the other company really needs to evaluate your technology and business, and deliver as little information as possible. Never provide source code or lower-level diagrams as part of the technology evaluation process. If the technology is pre-existing, do not disclose your development costs. It may be best to demonstrate the technology and describe what the technology can do- but not disclose how it is done.

5. Conduct due diligence. Seek written assurances in the agreement that there are no legal barriers to the transfer or receipt of the technology. Make sure all of the developing company’s employees have assigned their patent rights to their employer. Determine whether there is any third-party technology embedded in the technology, and whether additional license or royalty fees must be paid to third parties. Check your other contracts to determine whether they prohibit or restrict the transfer of the technology. Being pro-active now may prevent costly and harmful lawsuits in the future.

6. Determine what kind of a technology transfer will take place.Clearly state in the technology transfer agreement whether the technology is being licensed or purchased, and the conditions, if any, under which it may be transferred to or used by third parties. Specify exactly what technology and supporting information will be conveyed as part of the tech transfer (i.e., software object code, user manuals, technical drawings, etc). Determine for each company what restrictions, if any, will be imposed on its ability to transfer the acquired or similar technologies to other companies, and evaluate what impact such restrictions might have on your business.

7. Identify possible post-technology transfer business opportunities. Before the technology transfer agreement is signed, each company should consider how they might want to work together after the agreement has been signed. Follow-on services (such as developing enhancements or upgrades to the technology, providing maintenance and support services, training users or installing equipment) can be a source of future revenue for the developing company and secure the ongoing technical integrity of the product for the acquiring company.

8. Pricing. Consider each party’s motivations, needs, strengths and weaknesses before finalizing a price. Explore your payment options carefully. Clearly state in the agreement what amounts are to be paid, when each payment is due, and under what conditions, if any. The agreement should also state what your legal and business remedies are in the event of non-payment or any other breach of contract.

9. Always seek expert advice. The agreements that accompany open innovation technology transfers can be extremely complex. Try to avoid the impulse to keep costs down by doing it all yourself. Seek appropriate legal, tax, accounting and strategic planning advice from experienced professionals throughout the open innovation process.

These materials are presented for general information purposes only and do not constitute legal advice or create a client relationship between the author and reader. Always consult with your own attorney for advice on legal matters.

DIANNE M. PROIA, JD/MBA, is a contracts attorney and government contracts consultant with over 20 years of comprehensive commercial, government and international experience. Her firm, Proia & Associates, LLC, serves client companies that specialize in advanced technology products and services. Contact dianne.proia@verizon.net or 617-965-4642.

 

 

Baylor Business Review, Fall 2009

by Godfrey Sullivan

As hockey legend Wayne Gretzky once noted, you will always miss 100 percent of the shots you don’t take. It’s a hockey player’s way of saying, “Don’t fear taking risks,” and it’s valuable advice for anyone trying to figure out where to go from here.

Taking a shot-or in my case, a road I had not traveled much before-brought me to California immediately after I graduated from Baylor. The road led me to a variety of places, most recently to Splunk, where we solve technology challenges for companies with large, complex IT infrastructures.

When I left college, I didn’t know exactly where this road would lead. However, I felt I needed to break out. I spent the first 20 years of my life growing up in Texas in a safe and secure “bubble.” Baylor exposed me to a larger world and expanded my horizons, but I knew I needed to break out and free myself from the limits and comforts of my surroundings. My most courageous decision was to pack that car and leave the security and comfort of Texas behind. I had to take a shot and try something new. So I headed west.

Here are some of the lessons I have learned along the way that might benefit others:

Travel hungry.
It sharpens your focus. Figurative and literal hunger helps you step out of your comfort zone; knowing where the road goes is not always so important if you are curious about what you see along the way and feed that curiosity. I went from the shelter of family and college life in Waco, Texas, to being a broke young man not knowing exactly what would happen next. My first couple of years out of college, I almost starved trying to find the right thing to do. I vividly remember eating on $3 a day. But that hunger also fueled my search for innovation. My revelation came in 1980 when I was working at a bank. I saw a spreadsheet that took five minutes to finish a job that took us six days to do at the bank. That really was a life-changing force. I soon left my banking job for Apple Computer. To this day, I am thankful to Apple for inventing its computer and for being a mile away from where I lived in Silicon Valley, which was the epicenter of a revolution.

You cannot mandate innovation. 
This is related to traveling hungry. Most people can’t summon or enforce innovation. Forward thinkers typically have the vision and guts to look at something differently, to dig deeper for creative answers. Innovation usually happens because there is an intense need or a specific challenge that requires a creative solution.

Thinking and acting creatively requires a certain type of person, one who has that “hunger to solve” encoded in his DNA. In Silicon Valley, we have an outstanding pool of innovators due to the early successes of companies like Apple, HP, Sun and others. Over the past 20 years, this innovation has sustained itself in Silicon Valley largely through venture capital firms. Their investments have attracted some of the best and brightest to this area. If you want break out, go where the innovators are and join their teams. Hang out with the people who think differently and aren’t afraid to take a chance.

Go for growth.
There are growth industries and shrinking industries. Try to find one in the first category that suits your vision of what you want to do. Growth industries feed the imagination and allow you to take more chances that result in innovation. An expanding environment attracts innovators to your team, offering critical mass—even more opportunity for expansion and creative thought. Growth and innovation go together, and they create an energetic atmosphere. You cannot have fun innovating if the only innovation you practice is the cost cutting that goes hand-in-hand with a shrinking industry. In short, growth fosters innovation.

Mentors really matter.
Look for mentors who speak your language and can help you grow. Two people who were of great importance to me were Bill Campbell, current chairman of the board of Intuit, and Carol Bartz, CEO at Yahoo!. I worked for Bill Campbell at Apple and for Carol Bartz at Autodesk. Both of them helped me grow and challenged me to do more. A mentor who understands what you want, who knows what you need, and who is willing to teach you what he or she knows can shape your life in ways that will benefit you for years to come. Good mentoring is critical for development, along with transferring this knowledge to others over time.

Win with integrity.
This is the business version of the Golden Rule. There are multiple ways to win, but at Splunk, we want to win the right way. This means that our success makes our customers, our employees and our shareholders happy. If you are fair in business, you will discover a formula that pays off for everyone in the long term. If you are not fair—if you break the rules—you will ultimately pay the price. As proof, we have only to look at the recent conditions on Wall Street, where people tried to win at any cost and defined success as big monetary gain in the short term. At Splunk, we want to be the market share leader—the best—using practices that benefit everyone. This might sound simplistic, but we really need to be mindful of the road we travel versus having a singular focus on the destination.

Breaking out is what really set me free. I took a risk and traveled west. This hunger to grow and learn helped me discover a whole new world, a world of technology filled with pioneering companies and brilliant people who were literally changing the world around me. Surrounded by this passion and innovation I discovered my calling and was fortunate enough to work with great companies and found talented mentors along the way.

The lessons we learn-and the shots we take-create the successes and failures that determine who we will become. And while not everyone is an innovator, no one can innovate in his chosen field without taking a chance along the way.

Which path will you take?

 

Technology veteran Godfrey R. Sullivan is president and CEO of Splunk, an innovative Silicon Valley company that has created large-scale, real-time indexing and search technology that companies use to manage, secure, and audit complex IT infrastructures.

As Sullivan explains it, the name “Splunk” is a shortened version of the word “spelunking,” also known as cave-diving. Splunk goes into muddy holes to find creative solutions for its customers, says Sullivan. The software helps organizations find things in the “deep, dark places.”

The 4-year-old company offers customers a free download, and more than 350,000 users have taken advantage of the offer.

Formerly the president and CEO of Hyperion Solutions, Sullivan grew the company from $500 million in 2001 to revenues of almost $1 billion in 2007, when Oracle acquired it for $3.3 billion. Before that, he was CEO of Promptu Corp. He also spent eight years at Autodesk in senior management positions, and 11 years with Apple, where he led business marketing and other operations.

Sullivan holds a BBA from Baylor University and has completed executive programs at Stanford and the Wharton School of Business. He lives in Saratoga, California, along with his wife Suzanne and two daughters, Hayley and Shea. An active family, the Sullivan’s passions include travel, snowboarding and endurance racing on their Arabian horses.

 

 

Baylor Business Review, Fall 2009

by Barbara Elmore

In the fast-paced world of social networking in general and Facebook specifically, the question is not whether changes are coming. Instead, it’s “What’s next?”

One answer is using the massive people-connector to link workers and jobs.

Research that Dr. Hope Koch’s Management Information Systems Leadership class conducted in early 2009 for Wal-Mart reveals that at least for students, sites like Facebook are the preferable way to find jobs. Students said they trust social networking more than they trust company websites. And with a vast shortage of information systems workers nationwide, companies need to find new professionals by doing what recruiters have always done-go hunting where the workers are.

Facebook could be a brand-new hunting ground. Eighteen-to-25-year-olds are the typical users, making up 59 percent of the total. And student researchers in Koch’s class discovered that 66 out of 76 students they interviewed said they would take seriously a recruiter approaching them via Facebook. “When we asked students in the survey their preferred way to find a job, most said they would much rather look at a social networking site like Facebook than to go through a more traditional method,” said Chasidy Griffin, a senior MIS major and 2009 ConocoPhillips intern.

Another student researcher, MIS major Steven Follis, believes that finding jobs on Facebook is “certainly coming, but not enough companies have adopted it yet as an important tool for recruitment.” Follis, who interned with Protiviti in Dallas during the summer, got the job when a recruiter visited Baylor. He views social networking sites as an opportunity for recruiters. “The fundamental need to know people and where they are and be able to contact them will be important the next several decades if not longer,” he predicted.

This is the second year for Koch’s Management Information Systems Leadership class, and the program earned recognition in June with the Bobby G. Bizzell Innovative Achievement Award from the Southwestern Business Deans’ Association. In addition to working in a service-based learning environment, this year they added consulting to the mix by working with Wal-Mart to investigate how the company could use social networking as a tool to recruit IS workers, Koch said. “That field has a big shortage of workers. It ties into why we have the class and why we did the project.”

Between now and 2016, Koch said, IS fields will be among the fastest growing in the United States. That growth comes at a time when workers are scarce thanks to the dotcom bust about 10 years ago. Few students entered the area after that, and many universities closed their programs. Those remaining programs have problems attracting students. “We have to work hard to recruit students,” Koch said. “But at graduation, they are the best paid and get jobs.” Baylor graduates about 20 IS majors annually.

In a conference call with Baylor students, a Wal-Mart IT strategy chief laid out his vision for the student project. Their approach included traditional academic research, with the students first reading the book Groundswell — Winning in a World Transformed by Social Technologies.

“The students found what they could about social networking and recruiting, but they did not really find anything,” Koch said. So they started interviewing other Baylor students to discover how companies could use social networking in recruiting. “The real thing that my students brought to Wal-Mart is access to 20-year-old information systems majors,” she added. “They brought information to Wal-Mart that it could not get otherwise.”

The students presented their findings at corporate headquarters in Bentonville, Ark., with everyone from the students to Koch to the Wal-Mart executives surprised at what the research revealed. “I knew Facebook was very popular, but I had not realized how prevalent it was and how many college students were using it,” Follis said.

Griffin said the most surprising finding was that students overwhelmingly prefer social networking to search for jobs. The survey revealed that:

• 73 percent of the students had used social networking to search for internships or jobs
• 43 percent wanted to use social networking to search for a job, compared to 8 percent who preferred a company website and 13 percent who would rather use a career fair
• 61 of 76 students surveyed said they would research a recruiter’s overture on a social networking site further; five said they would follow through with that approach
• 84 percent would join a company-established social networking group.

The students also interviewed company recruiters to find out if they were using social networking. Some are using it as an evaluation tool rather than a recruiting tool, Griffin said, which can create image and credibility problems for students. “Your friends can write comments and put pictures on your profile. We told Wal-Mart they needed to be careful about judging students on things students cannot control. They can take things off (the profile) but sometimes can’t get to it quick enough.”

Corey Thompson, a 2002 Baylor graduate who is a manager of an applications development team for Wal-Mart Merchandising Systems, agreed that such information could create an inaccurate picture of job candidates. Because of privacy issues, Wal-Mart uses social networking sites “as a way to tell our story and engage potential candidates in a career opportunity with Wal-Mart.” The company uses LinkedIn, a business-oriented site, as a recruiting tool, he added.

Sites like Facebook can give employers a way to reach candidates they might not have encountered through traditional means, Thompson added. “It also provides potential candidates an easy way to stay up-to-date on recruiting events without having to go to a different website. Wal-Mart is working to create a Facebook fan page.”

Eventually, he said, more companies will combine social networking with traditional recruitment methods. “Both are important tools to engage and recruit talent. Social networking can help attract a larger, more diverse talent pool, but cannot replace traditional face-to-face interactions.”

No matter what tools students use, IS graduates have few worries about finding jobs. “It’s more resilient than other degrees,” said Follis, who will graduate in 2010. “We had a short supply of MIS majors for years, and it’s still not as popular now as it was 10 years ago. There are not enough workers to fill the need. It’s simple supply and demand.”

For Koch, whose students gained consulting experience with Wal-Mart and made recruiting suggestions that the company is considering, the picture is also rosy. “Now my students are friends with Wal-Mart recruiters. It was a very timely project.”

 

 

Baylor Business Review, Fall 2009

by Kristin Todd Stires

Whether they are streamlining processes, providing technology solutions, connecting people through online channels, or challenging the realm of creativity, these alumni are involved with innovative businesses that are changing the way business is done. All found through social networking sites, we wanted to connect with these bears in innovation to find out more.

Jenny Olender

David Grubbs

Bruce Ballengee

Kirk Leitch

 

 

 

Baylor Business Review, Fall 2009