Recently I was fortunate enough to attend the Wisconsin Innovates Conference in Milwaukee.  This event was hosted by the Wisconsin Department of Commerce and the Wisconsin Innovation Network.  The intent of the conference was to showcase how some of Wisconsin’s most successful companies have developed their businesses.  Executives from these companies provided presentations and panel discussions about how innovation in their business practice has helped them to grow and maintain a robust business.  Tom Peters of In Search of Excellence fame was the keynote speaker.

 

Because there were concurrent sessions, it was not possible to hear all of the presentations, conference attendees needed to pick which sessions to attend.  Every session I attended proved to be interesting and confirmed the belief that in order to be successful in business a company needs to deal with change.   The need to change, the requirement to innovate was the central theme of the conference and the main message of Tom Peters’ 3+ hours of presentation. 

 

Tom began by describing the changes that have occurred in the business world in the last fifty years.  The emphasis was on the changes in the world business world and the impact it has had and will have on the U.S. business world.  The statistics and observations he cited came from a variety of sources, but he knit them into a cohesive picture that clearly illustrated the challenges and opportunities for businesses in the next century.

 

Some of the points he made were:

 

“There will be three billion new capitalists – Clyde Prestowitz.”   In the next few years as capitalism spreads and grows in the rest of the world we can expect to see increased competition in all business areas.

Emphasis on cost-cutting and efficiency has helped companies, but increased competition coupled with disruptive new internet technologies and business models will require businesses to innovate more and faster.  Relying only on cost-cutting and efficiency will result in obsolescence.

From Foster and Kaplan, Creative Destruction: Why Companies That Are Built To Last Underperform the Market , “Forbes 100” from 1917 to 1987: 39 members of the class of ’17 alive in ’87; 18 in ’87 F100; 18 of F100 “survivors” underperformed the market by 20%; just 2, GE and Kodak outperformed the market 1917 to 1987.   S&P 500 from 1957 to 1997: 74 members of the Class of ’57 alive in ’97, 12 outperformed the market from 1957 to 1997.

Tom spent time explaining and giving examples of how companies have been able to grow and prosper through innovation in business models and practices. He emphasized the importance of not trying to follow industry leaders, but to develop your own business niche.  A key, in his mind, is to have enough “freaks” or “weird” people in the organization.

Tom defined a new value added ladder starting from “Raw Materials” and progressing through: “Goods, Services, Gamechanging Solutions, Spellbinding Experiences, Dreams Come True, Lovemark.” Each of these terms was illustrated in the context of how companies have innovated to bring these qualities to their business.  The examples and illustrations are too lengthy to capture here with the exception of “Lovemark.”  This was attributed to Kevin Roberts.  This is illustrated in the picture above.

 

If a product is low in Love and low in Respect it is in the lower left quadrant.  This is a commodity.  If the product is low in Respect, but high in Love it is likely a Fad; if high in Respect but low in Love it is a Brand.  A Lovemark is one that falls in the upper right quadrant with high Respect and high Love.  An example is Harley-Davidson.

Tom talked about how the leadership of a company needs to insist on: Talent, Speed, Enthusiasm and Action.  The bottom line is that companies cannot continue to do what they have always done or they will go out of business.  Companies must change in order to stay competitive, and the required rate of change is increasing.  You can see the slides that Tom used for his talk at: http://www.tompeters.com/slides/content.php     There are two versions, the WIN/Wisconsin Innovation Network version and the WIN, Long Web version.

 

While Peters was the highlight of the conference, the other sessions featured speakers from successful Wisconsin companies.  These included: Harley-Davidson Motor Company, Johnson Controls, Culver Franchising System, Inc., Serigraph, Inc., ThedaCare, Inc., Manpower, Rockwell Automation, and Trek Bike to name a few.  The clear message was that all of these companies needed to change their business and their business practices in order to be competitive.

 

One thing that struck me was that prior to the conference, my mindset with regard to innovation was primarily directed at the innovation involved in new product development and R&D.  This conference demonstrated that innovation is not simply a matter of managing technical issues, but rather is a broader activity that spans the entire organization.  Every part of an organization needs to be examined and evaluated with regard to improving performance through innovation.  Wikipedia describes positive innovation as the process of making changes to something established by introducing something new …. that adds value to the customers.   A key in this is knowing your customers as we ALL have customers.  I’ll have more on innovation in the next newsletter.