“Innovation: Our Competitive Edge”

A few months ago, Randall Kempner, vice president for regional innovation at the Council on Competitiveness, spoke to my firm about innovation . He contends, “the U.S. — in most regions and in most industries today — is not able to compete based on non-differentiated products or, for that matter, price. So the only thing that is left for us is to innovate faster and better than other countries.”

I found Randall's comments so insightful that I asked him for an interview so that I could share his observations with you. (By the way, he highly recommends Richard Florida's book, “The Creative Class,” for further reading on the topic.)

Your organization suggests that “in our global economy, place matters more than ever” for innovation to flourish. Why?

Kempner: We believe that regions are the place where innovation takes place, because innovation is actually a contact sport. In this highly-connected world, people still like to have personal interactions and know the suppliers, buyers and related institutions that enable new product and idea development.

Secondly, now that there are more places people can go, it has made quality-of-place all the more important in attracting the talented people that are the basis of innovation. You can live in the middle of Colorado on a mountainside with high-speed internet and still work as part of a world economy. That means that all the places that want to attract people to live there have to offer diverse amenities and a high quality of life, or people won't stick around.

What must regions do to survive and prosper in a “land of innovation haves and have-nots?”

Kempner: It begins with talent. Regions need to grow, attract and retain the most talented people that they can. If you're able to do that, companies will follow because they know that they need to be in places where people want to live … they will put headquarters and research centers where the smart people are.

When talented people are deciding where they want to live, one of the things that they will consider is whether a place is tolerant of people with different backgrounds, ideas and approaches. And not all cities, not all regions in this country can offer that. Those that can have been the most successful US regions over the last 10 to 15 years.

Those sound like long-term solutions, but are there things that regions can do to foster innovation in the short term?

Kempner: I'll just use Rochester , New York , as an example. Kodak has a bunch of orphan technologies. There you have a large company that has developed a bunch of patents and potential technologies that don't fit into their business strategy because the opportunities are too small or not in the company's core market. However, one firm's “small” $100 million dollar market is another man's fortune. But, as of yet, neither the region nor the company has found a way to get their technology into the hands of people that could actually do something with these opportunities.

In summary, it is making sure there are connections between regional economic actors and assets that enables the innovation that will expand regional prosperity.

What can communications professionals do to innovate at a higher level?

Kempner: My advice to communicators is the same as I would offer to manufacturers or bankers. Find ways in which your product or service can be differentiated in such a significant way that it actually creates greater productivity or a new model for the entire industry.

For example, Ted Turner, a brilliant communicator, is clearly an innovator. His idea of 24-hour news was a significant innovation which transformed an industry and made people lots and lots of money.

What can professionals in public relations do to encourage their clients to be innovative?

Kempner: One of the ways that companies have innovated and differentiated their products is by having a better public relations strategy. Look at some of the firms out there that are still able to maintain brand loyalty in this age when there is a multiplicity of brands.

By the very fact that public relations is often looking to the outside, it is dealing with customer needs … and that drives the greatest innovation. If companies don't recognize the need to engage their customers and other external audiences — if only to get ideas for where they should be innovating — then they won't last long in a global economy.

Technorati Tags: innovation, competitiveness, Council on Competitiveness

Learning from Your Client

J.B. Fuqua, famous conglomerateur, philanthropist, the man who endowed Duke University's Business School, The Fuqua School, and a Makovsky client for nearly 20 years, died on Wednesday, April 5, of complications from bronchitis. He was 87. It was truly a sad day for me, as I have so many fond memories of the times we spent together.


When I started Makovsky + Company, Fuqua Industries, then a $2 billion public company, was among our first clients. Ultimately, we were rewarded with the Duke opportunity as well. ("We need to make it a top ten business school," said Fuqua, and we did!) We had the good fortune to serve as public and investor relations counsel to J.B. and his various properties, and were instrumental in building the reputations of all of them. I got to know J.B. very well, and along the way, I learned many business lessons from him ... perhaps more than I have learned from any single individual I have encountered in my career.

What are some of those lessons – more or less in J.B.'s own words.

l. "Always return your phone calls, because Santa Claus may be on the other end of the line!" Sounds simple, right? Well, we all know that many folks need to be pursued aggressively to get a response. Not J.B.

2. "Use other people's brains ('opb' -- he called it)." It is always smart to hire people smarter than you are, particularly in areas where you may have a weakness. J.B. was a master at this. It was a key to his growth.

3. "Use other people's money (he tagged it -- 'opm')." Debt or equity in the right amounts can spur growth. He advised to use other people's money at the right time.

4. "Ask those who are responsible to you: What did you do for me today?" J.B. was direct and did not mince words. He was not the client for someone who could not handle tough talk. I heard his "What did you ..." many times on the phone. It taught me to stay way ahead of our clients.

5. "Listen more than you talk." This guy must have been one of the inventors of the art of listening. He said so little that it was downright intimidating (until you got to know him very well). But it forced the other party to talk. The advantage went to J.B. The lesson is clear.

J.B. never said anything to me about being loyal ... but loyalty was at the core of his personality. He always gave you time to fix things that went wrong, and in a nearly 20-year relationship, things occasionally were imperfect.

He wanted ideas. He told me he had four homes and gave me all four phone numbers. He said: "Call me till 11 any night if you get a good idea!" I did. If he liked it, he told me to develop it. If he did not like it, he said, "I don't like that idea. Call me with another one sometime," and the conversation was over.

I will miss you, J.B. Thanks for your confidence throughout the years.

Technorati Tags: client relationships, loyalty

The CEO: One Key to Success

What are the boundaries of a global CEO's job ... or for that matter any CEO's job? Focus only on shareholders or serve as the company's ambassador-at-large to all of its constituencies?

In today's internet-oriented universe — where a single person can bring down a company — profit-making is inextricably linked with a broader mission: forging good relationships with every stakeholder. Nevertheless, there are critics who see this approach as distracting a CEO from his main job, building shareholder wealth.

To the contrary, says A.G. Lafley, CEO of Proctor & Gamble. In a recent interview with Alan Murray of The Wall Street Journal, Lafley didn't talk much about shareholders. Instead, he talked about stakeholders.

In addition to P&G's 2-½ billion customers and its shareholders, investors and analysts, who are the company’s stakeholders? Employees, retailers, distributors, wholesalers, suppliers, members of the communities in which it does business, regulators, retirees and a wide range of special interest groups concerned with everything from animal testing to the company's policies on global warming.

"We will never agree that a rat is as important as a human being," says Lafley, but talking with various groups helps define legitimate issues. The CEO routinely reaches out even to leaders of groups with diametrically opposed points of view (e.g., gay activists and Christian conservatives) to find a middle ground that works for all parties.

Lafley calls this approach "constructive engagement"; and he has employed it to solve boycotts and deal with a range of other challenging issues. He says that fostering a dialogue among stakeholders "is not an exercise of choice; it's a requirement of the job."

So what are the lessons every CEO can draw from this?

• Outreach is critical. Parse your "corporate community" — break it into its constituent groups, analyze them and proactively dialogue with each.


• Forecast potential issues. Examine the current and potential issues facing the company and the constituencies linked to them. Establish a discipline of checking such issues monthly, or even biweekly, to assess the relative degree of risk and urgency. Are they red light, green light or yellow light issues?


• View your role as broadly as possible. Because your company's future rests with all its stakeholders, not just the shareholders, you must recognize that your job is global, political and demanding. It takes the skill of an ambassador to ensure your company’s ongoing success and profitability.

Technorati Tags: CEO, shareholders, stakeholders

Innovation: The Power Shifts

The cover story in this week's TIME magazine is called "The Next Big Thing Is Us". It's all about the notion that big, bold ideas used to come from "a small, shadowy elite," and everyone else was the market. The arrow pointed just one way.

The Internet has changed that.

As the author, Lev Grossman, says in the article, "The authorship of innovation is shifting from the Few to the Many." He cites as an example the fact that — when Apple launched iTunes and the iPod — it had no idea that podcasting would be a big deal. It was the users who told Apple what the product was for.

Another new phenomenon, which he calls "intellectual altruism," has accelerated this transformation. For example, one of the most useful references ever created is Wikipedia, the free encyclopedia that anyone can edit. It has been written entirely by 13,000 anonymous experts who have freely donated their time and expertise to work on over 3,800,000 articles in more than 100 languages.

Says Grossman, "Admittedly, it's counterintuitive: until now the value of a piece of intellectual property has been defined by how few people possess it. In the future the value will be defined by how many people possess it."

Technorati Tags: innovation, intellectual altruism, wikipedia