Innovating: Minute by Minute!
An "Innovation Conversation" with Erich Joachimsthaler, Founder & Chairman, Vivaldi Partners Group
Started by Erich Joachimsthaler, following his successful academic career and experience in large multinationals, Vivaldi Partners is a global strategy firm helping unlock opportunities for growth through its expertise in strategy, innovation, marketing, and organization. Vivaldi excels in its focus on leveraging the dynamic and sweeping impact of the Internet, the changing behaviors resulting from today’s digital information overflow, and the profound impact of technology on businesses and innovation globally.
Our mutual friend, and Co-Founder of Innovation Excellence, Julie Anixter, introduced me to Erich last year. As Vivaldi’s CEO he’s actively engaged in strategic consulting and research for leading companies and brands. His more than forty thought-leading articles have appeared in a host of journals, including the Harvard Business Review, Sloan Management Review, and Business Week.
His first book, Brand Leadership, co-written with David Aaker, has been translated into fourteen languages and is widely recognized as perhaps the groundbreaking discussion on recent developments in brand strategy. His second book, Hidden in Plain Sight, addresses the role of brands and innovation in driving economic value and growth.
Erich thinks deeply, laughs easily, and speaks with conviction, quickly. His words flow from observations to ideas and designs to concepts. Erich touched on the defining aspects of leadership and change in innovation; the accelerating pace of change itself; driving blind; Apple; Nike; hubris; and how a great deal of useful insight and knowledge begins and ends with understanding how each of us spends our 1,440 minutes each day.
We met in a tight white room just off the open floor plan Erich shares with everyone in Vivaldi’s third floor loft on Crosby Street in downtown Manhattan. We began by catching up with some provocative fundamentals…
Lou Killeffer: Erich, what’s your definition of innovation?
Erich Joachimsthaler: (Laughs) I think innovations are ideas or insights that translate into impact, into business results. I also agree with Frans von Houten, the CEO of Philips, who said in a recent interview published by the Wall Street Journal “Innovation is not invention.” I like the idea that innovation has to do with business impact or the business results achieved. And of course there are many kinds…
LK: Do you think there’s a consensus around your understanding of innovation or does it mean different things to different people? And if so, why might that be?
EJ: Well, I think the word innovation has sort of a hype cycle to it. It was Gartner I think in the 90’s that said technology has a hype cycle to it and so innovation has sort of lived through its own hype cycle.
There are lots of different definitions but even though I’ve an academic background I’m not worried about it. It’s really only an academic question because at the end of the day whether you call it innovation or you call it something else – customer-centric innovation or brand innovation, product innovation or business model innovation – at the end of the day you’re faced with an organization you need to propel and encourage to look for new ideas and insights to generate better results for the company. And whether you call it innovation or you call it something else, it really doesn’t matter as long as it propels the organization to change, and hopefully to meaningful change. That’s what really matters.
LK: And by “better results” do you mean growth?
EJ: Not just growth because growth is almost like a bullshit term itself because people talk about brand growth, this growth, that growth. Growth is such a big word…
LK: Well, there are three things, in addition to results, in your definition of Innovation that I find particularly striking. The first is the need to “propel and encourage the organization”; should I take that as leadership?
EJ: Yes. Right.
LK: Next you say the organization must “look for and identify new ideas and insights”. These would be new concepts, correct?
LK: Ideas which are out of the ordinary; it’s not just coming to work and doing what you did yesterday?
LK: And the last thing you mentioned was “change”, which sounds by far the most difficult of all. But adapting to change is always part of going forward; getting from point A to point B. Is that what makes it so difficult? Why there’s an industry of practitioners like yourself helping companies innovate? Why can’t they just do it on their own?
EJ: Well, I think the biggest part of business, and this goes back to Peter Drucker, is management; the principles of management. We’ve created entire MBA programs just to teach management. Large companies have become so large and large companies need management. Management is all about setting objectives, assigning responsibilities, holding people accountable, developing KPIs, and running the business. There’s an art and a science to that. It’s one of the most important disciplines that people can pursue.
But I think that companies like ours exist because we add to management, if you will, what I would call the impulse or conviction to create change. It’s not that a company can’t do it themselves. I just think it’s very hard to mobilize everyone if what you’ve been trained to do, what you’ve been assigned to do, and what you’ve been in charge of doing is run the system at peak efficiency and now you need to step outside of that. It’s like stepping off the car or putting on the brakes. It’s hard.
LK: Because companies can’t just put on the brakes can they?
EJ: No, they can’t.
LK: Everyone’s focused on keeping the enterprise on course; so you need an outside agent who brings a fresh perspective on how to enhance the current model and make it better?
EJ: Yes, exactly. Someone once used this analogy. You’re driving a car and you enter a very heavy fog or mist. Now you know perfectly well how to operate the car, you’re a very experienced driver. But there are two things you don’t want to do. One is to step on the brakes because if you step on the brakes you know somebody’s going to hit you from behind. The second is you don’t want to get out of the car to look where you’re going or where the road is because then you’ll wind up as road kill. So what do you do?
LK: You’re trapped.
EJ: Yeah, you’re trapped. You slow down perhaps because you’re trying to make an informed decision and slowly, gradually go forward. And that’s where we can help.
When you have the help of an outside firm, any one of the great ones you’ve already interviewed (i.e., SYPartners, ReD Associates, Fahrenheit 212, Landor Associates. LK) you can make more informed decisions. This is true if only because we look at entire industries, we don’t just look at your company. We know other companies. We know companies within your industry and from outside your industry. And we’ve an unbiased point of view about where the road may lead you; unencumbered by the past, by your existing capabilities, and even by the current talent across the organization.
LK: Not only unencumbered but likely better informed because of your experience with other companies?
EJ: That could be true as well, yes.
LK: I love the metaphor of the car at speed, in the mist, approaching the fork in the road, coming face-to-face with its uncertain future.
EJ: It’s scary.
LK: It is scary, and why we all get up in the morning…By the way, as you’ve mentioned him, do you know Drucker’s definition of innovation?
LK: “The re-allocation of existing assets to create new wealth.”
EJ: So wealth is what we call profitable growth, I guess.
LK: Yes, and per usual, Drucker cuts right to the chase.
EJ: Yeah, that’s right.
LK: So acknowledging the difficulties facing the CEO behind the wheel in the mist, and the role of the consulting firm, still and all, together, these smart people fail 65% to 80% of the time when introducing new products. Why, with all of the time and effort they put into it, are they so remarkably unsuccessful?
EJ: The statistics are actually much worse.
LK: My God, they’re worse?
EJ: Yeah, your numbers existed ten years ago and they haven’t changed. Just consider, with all the hype of innovation books, innovation gurus, people like yourselves disseminating the principles of good innovation, the success rate has not increased a single percent. Not 1%.
EJ: Well, there’s an awful answer and a hopeful one. The awful answer is that we haven’t learned anything, which would be the worst case.
I think the better answer is that we’d be in a far worse position today if all the innovation efforts of the last ten years didn’t exist because I’m convinced it’s incredibly more difficult to innovate today than it ever has been.
EJ: Well, for a number of reasons. I could go on and on but the highlights for me are pretty clear.
Never in the history of business, as far as I know at least, has incumbency been so irrelevant. When you think back to the industrial revolution and the emergence of truly gigantic companies there was an obvious advantage – what Michael Porter later called a competitive advantage – to scale and market share. And this has never been as irrelevant as it is today. This traces to many things, including that today industry itself is a blur, or better yet industry boundaries are a blur. You know, today the classic thinking about what industry and category you’re in is increasingly irrelevant because your competition can come at you from anywhere.
We just published a new report on social currency and how social networks drive business. One of the areas we analyzed is the healthcare sector and I had a long discussion with one of the pharmaceutical companies. They said that the classic pharmaceutical approach of creating a pill and then selling it is basically over; that the pharmaceutical rep model doesn’t really work anymore because you can’t get any access to the doctor’s office, they need to find a new way. And the new way is to connect on outcome-based healthcare, looking at what people want to do with their lives.
During our discussion with them I just happened to have the Nike FuelBand on me and I showed it to them and one of the top guys said, “Wow, we’re thinking about this now. Nike is already there!” It’s a FuelBand that basically monitors aspects of your health. I ran an eighteen mile marathon this weekend and I thought I might wind up somewhere on the road side…
LK: Congratulations on your marathon.
EJ: Thanks. My FuelBand transmits directly to my doctor who has my personal history and to the ambulance and at my age they could just come and read one of two signs. One is serious and they bring the box, the wooden box, (Smiles) and the other signal is no, bring the stretcher, he still has some vital signs. It’s also connected to my health insurance company and that gets me a better rate.
LK: Wow, that’s wonderful. It’s a personal barcode for you and your real time health, and the Pfizer’s and the Merck’s of the world don’t know anything about it?
EJ: They do. They’re working on their own experiments but that’s an interesting part of innovation. Innovation isn’t just taking place where you’d expect to find it today. It’s taking place outside the center, somewhere on the sidelines.
LK: Didn’t you tell me once that the place to look for the most interesting consumer behavior is on the periphery ? That everybody focuses on the “sweet spot” or “bull’s eye” and they miss what’s important because it’s happening on the edge – hidden in plain sight?
EJ: Yes, that’s right. George Day of the Wharton Business School has written up the ideas in a book.
LK: So if successful innovation is popping up where you wouldn’t expect it, does that explain how successful innovators lose their way? Is that what happened at Sony? World famous for innovation and then for some unknown reason they hit a wall. Apple, a much different story. Do you have any perspective on why Sony one day couldn’t do what it used to do so well with music? And why Apple started doing things that apparently nobody else can?
EJ: I’m convinced there’s a very simple answer and it starts with your original question. In order to manage an existing business you need to establish the principles of management and set targets. From a marketing perspective that may mean segmenting your consumers into groups. So there’s a market segmentation and a fully aligned sales force and you apply certain targeted communication messages to certain segments in a true division of labor and effort within the organization. That creates efficiency and focus. But focus also narrows the aperture of what you see. In fact, the better you get at managing the organization you’ve created, the more you tend to lose track of what really matters: the consumer and the outside/in perspective. And this of course puts everything at risk because consumers change a lot faster then big companies can.
EJ: Someone once said “You’re in trouble when the rate of change outside is faster than the rate of change inside.” When I talk with the CEOs we work with they always, say, “I don’t know how to accelerate change inside my organization.” That’s the big topic; the leadership and relationships required to make the company aware of how – and how fast – things are changing. It’s an enormous, nearly impossible task.
So Sony exemplifies this whole principle. They were such successful innovators, their success became the seed of their own failure because everything they saw was from the inside/out – based on their success. I mean, “My God, for twenty-five years we’ve sold Walkman’s all over the world. We’re hugely successful. We’ve almost singlehandedly changed the image of Japanese products globally. We know what we’re doing.” But of course they really didn’t.
The American cliché is, “Success breeds success”. Well, far more often than not, success actually breeds failure.
LK: Erich, that’s a description of hubris, the classic storyline in Greek tragedy, yes?
LK: It’s the story of the Roman or any other empire as well. It’s the long-view of history…
EJ: That’s right, it covers a lot of principles doesn’t it?
LK: All right, if that’s what happened to Sony, why is Apple such a remarkable innovator; because they’re actively engaged with the consumer?
EJ: I don’t really have a view into Apple unfortunately…
LK: But to your comments of a moment ago, they seem to be moving at a pace that’s ahead of the consumer in some of the fastest moving markets ever known…
EJ: That may not necessarily be the case. They may be ahead. I don’t know whether they’re ahead of the consumer. I don’t believe so. I’ve actually read everything you can read about Apple, everything you can read about Steve Jobs, but I’m still only a vicarious viewer of what they do and where they’re going.
LK: Aren’t we all?
EJ: Yes…Ok, look. When you think about it, back in 2000 when they decided on the iPod it was several members of the leadership team starting to use the Rio, then the dominant MP3 player among a dozen of other players at the time. And they played around with it for several months and realized that things weren’t working very well. At the same time, my ten-year-old daughter was already using my computer to download music from Kazaa. She was beginning to listen to most of her music on my computer and I was beginning to panic about her using illegal music downloading sites.
LK: My children were warned in school. They were given lectures sponsored by FBI in the classroom telling the kids that downloading was illegal and they’d better stop.
EJ: Yes, yes, yes. I was getting ready to go to jail, that’s what I’m saying. So the consumers were already doing all of the behaviors that Apple popularized by creating their own closed, integrated system. They also enjoyed lots of breaks. The biggest perhaps was when Jobs came to New York. He spoke with one of my clients at a music company and Jobs convinced the CEO to give him each song for 69 cents and then he would resell it for 99 cents. If that CEO hadn’t signed off on that deal it never would have happened, no legal download.
Success takes breaks of course but we also know Steve Jobs was different. Lots of companies are what I call screwing around vigorously or SAV. By the way, Tom Peters said this well before me. A lot of companies will have an experiment here and an experiment there and my respect for Apple stems at least in part from my belief that there’s a lot less of that at Apple. And with Steve Jobs there was a perception inside Apple of what’s broken and needs fixing in the outside world. Jobs had an inner conviction of the outer world (the demand from consumers, their challenges, frustrations and points of pain) that he was able to pursue because of who he was as a person. And instead of SAV, his deep resolve, which sometimes flew directly in the face of classic management and leadership principles, drove the company and made all the difference.
LK: It’s interesting in your articulation of the Apple story, including the references to your daughter, that their ethic is behavior based; that Jobs proceeded to solve for behavior. Isn’t Vivaldi’s mantra that “nothing predicts behavior like behavior”?
EJ: Exactly. (Smiles) Thanks for reading the book. (Hidden in Plain Sight: How to Find and Execute Your Company’s Next Big Growth Strategy; Harvard Business School Press.)
LK: It’s a powerful idea that just so happens to be true.
EK: You know what we study all day long? Most companies study behaviors. They use a CRM program that studies behaviors. They sort their sales numbers to study behaviors; how many people are buying which things. But really all they rely on are consumer perceptions, attitudes, and what they say or what they can observe through “focus groups”. And we all assume that if there’s a change in attitude, brand image or perception, then there would be a resulting change in behavior. Yet, we all know how often the relationship between reported attitude and behavior is totally broken.
Then you have another group of people who say, “Oh, we’re different, we do ethnographies here. We observe people.” Now you have an $80 billion company like a Procter & Gamble and you expect them to use ethnographies to run their innovation pipeline? Wow, good luck. You know what ethnographies are? However well articulated they are, ethnographies are still anecdotes and five, ten, fifteen anecdotes are still only fifteen anecdotes. It’s still not data. Now do you think you can convince me to run a $60 billion or $100 billion company on the basis of anecdotes?
Now of course these companies have very, very good metrics on the other side, on revenues and this and that, and CRM, and how many customers have bought at Wal-Mart at what price point and what the turnover is by SKU…But on the most important part, on the innovation side, the funding and direction for growth, what do they rely on? They rely on customer perceptions from some brand tracker, right? You know, hello?!
Or they invite a “cross-functional” group of architects and designers, and marketing people and communications people, and interactive designers and technologists, to observe a few consumers together and then string four or five ideas together. Would you run the future of the company on the basis of a bunch of anecdotes?!
LK: So Erich, acknowledging the limitations of brand tracking as a guide to innovation and the “anecdotal” evidence from ethnographies that people may put far too much faith in, what does Vivaldi believe is the way to go? What’s your best practice approach toward innovation?
EK: About ten years ago, we began with working with a company called Nestlé. I had a conversation with Frank Cella who was in then charge of all SBUs about how to think through innovation. I told him about our approach, and this is the genesis of our work, I said, I don’t want to ask consumers because if I ask consumers about Nestlé they’ll tell me it’s a great company with great brands and they’ll mention Nesquik and Nescafé and a bunch of things that I already know.
EK: I also don’t want to go and do what back then was extremely popular, that is, to sit in the home of a consumer and “observe” her. What we said is we want to do something totally different. We want to track people’s behaviors around food on a daily basis without biasing them by asking them about any particular brand. And if you think of food occasions there are about ten a day. So we do that with thirty consumers and we have 300 times thirty days, that’s 9,000 observations…
LK: Independent food occasions like a cup of coffee, a meal, a snack, what have you?
EK: Yeah, anything. Whatever they do around food. But I don’t want to know just about food occasions and how to sell more stuff, more often at a higher price point into that occasion.
No no, no we already know all that. What we said is we need to deconstruct their daily life into 1,440 minutes. We all, you and I, live the same 1,440 minutes each day from midnight to midnight. The question is how to dissect and understand those minutes and the idea is to identify consumer insights, to help consumers live their daily life, to achieve something, to give them time back, to create value for them totally removed from the existing product set or how to maximize the sales or profit impact of a meal occasion.
Today we use GPS-enabled iPhones. We call it Life Tracker, where we track the lives of 100 or 200 consumers for a month, two months, or three months. And when you work with this system you get a massive amount of data on a daily, weekly, and monthly basis. You get real data on how people really behave. During the course of a month or two we may also insert exercises, we may visit some particular households, do a deep ethnography but we’re building a truly rich database. Not just an occasional one-off survey or some ethnography-inspired visitation of a few households but a dynamic data set, an ongoing stream of information.
LK: Typically over two, three months?
EJ: Over two or three months. We’ve done it ongoing and we’ve done it for shorter periods because of costs. We’ll supplement with ethnographies because it’s important to get the richness of ethnographies and that becomes part of it. All on top of massive amounts of social information that are generated daily online.
I’m a little bit biased because I just finished our social currency study looking at where information is generated online and who’s providing it. In 2011, IBC, a tech research firm, found that individuals produce 75% of all information online: individuals!
EK: 75%! Millions of people who’re saying, “Look, I just did this or that…” For one client, we asked, “What if you could catch the conversations that take place about your product or brand on an ongoing, near real-time basis and merge that (like the Life Tracker we just discussed to reconstruct consumers’ daily lives in what we call our “Episode Reconstruction Method”), with all this information delivered in a cockpit that gives you near real-time information on how your customers behave and what’s actually happening out there?”
We brought this digital cockpit to a $13 billion technology company and the first thing the CEO said is, “Well, but I don’t know whether that’s useful for us, we already have a dashboard for social listening” but she agreed to let us look into it and we found that on a daily basis, there were roughly, and this is small, 1,000 relevant conversations taking place about the brand. For a Dell or someone there would be 25,000 or more but in this case it’s mostly B2B, one third B2C.
So we developed a system because, here’s the trick, most of the information online is just completely unstructured. You know, somebody says something and then somebody says something back. So the first part we built was a way to structure unstructured data and merge that with customer and innovation-relevant data from the market.
Then, with set up technology partnerships with a handful of companies. One was a software company called AVS. With AVS, we developed a system to visualize, to determine the truly relevant conversations taking place in the minutes or episodes of daily life, and make decisions. Because just knowing that people are talking about your brand doesn’t help you a lot in R&D. So we developed a system to filter information, to visualize it and determine what is relevant, here’s something you’re not seeing right now and is taking place outside your enterprise. And then we added a third part with a company from California, called Salorix, and we said, “So if these are the conversations and comments happening now, how do you act on it?” The key point is: merely monitoring conversations and creating a dashboard or several of them is useless. Dashboards don’t act.
Then we had our meeting with the CEO of the company demonstrating the things we’d learned. We presented on four computers and six screens that we set it up in her office and said, “Okay, let’s talk about it. This is how you can change your organization. This is how you can accelerate your innovation pipeline.”
Because now we have a system that listens and reports on what happens in the daily life of consumers in near real time. And we can dive pretty deeply into it. “Oh, look at this, here’s what happened this morning. (We were in the CEO’s office on the 24thlast month). “Here’s what’s happening since based on what happened this morning. This is what you need to review.” And then we showed her, real time, what she must do in order to activate the organization. This goes to R&D. This is going to marketing. This is going to your agency. So you can hotwire the decision-making process based on this information across the organization.
And then the third part was, now if you have these great conversations out there maybe you want to engage with some of these consumers. And we showed how to take major conversations about the brand and engage with key influencers from a community of technology influencers that cover the brand. All that happened in a matter of seconds.
LK: Erich, that’s remarkable. Analogous in its way to an SAP system, which notifies all concerned when a palette of Tide ships: the warehouse gets notice to refill, Wal-Mart is notified to expect delivery, sales learns that the group just made its quota: so all the information is disseminated.
EJ: That’s right and all that’s on the backend and, in hindsight, the backend was easy!
Angela Ahrendts, the CEO of Burberry, puts it best when she said, “We’ve optimized our backend, SAP system, now all the innovation takes place on our front end, customer interface.” She’s made their runway videos shoppable so now you can click on those and buy things instantly. Actually, when you use your credit card, Burberry gets their money before they order any stock and actually stitch the garment together!
So making decisions near real time, based on a consumer’s conversation taking place right now about your product, that really is innovation of a different kind. It’s not, “Let’s go create a brief, let’s hire some consulting firm, let’s study consumers’ needs or wants or jobs to be done and then let’s go to R&D and we’ll schedule this into the queue a year from now.” The process takes too long! If you really want to create the change that we talked about at the beginning of our conversation, you’ve got to create the change when it takes place, when it’s really hot, not later.
LK: And with your real-time “digital cockpit” you’ve given the CEO approaching the fork in the road in the mist the timely intelligence to make the best decisions today and for her future.
LK: And it’s being distributed to the management team, to the people who can actually take the necessary action, so it becomes part of the everyday running of the company as opposed to an occasion or event-driven approach, “Let’s go have an off-site on innovation.”
EJ: Exactly right, and the most important thing is it breaks down the silos inside an organization and it’s interesting to see how consumers participate in this. In the first week they’re very conscious about it, very careful. In the second week they click away on their iPhones like it business as usual. In the third week they send an email saying, “Actually I’ve been enjoying this, I’ve been making pictures.” Now all of a sudden their entire private life becomes our laboratory.
LK: It’s amazing what people are willing to share.
EJ: Yes. Then we visit them in their homes and they have boxes of stuff that they’ve kept that they want to tell us about. “I had a problem, there’s this package and the description didn’t work. This recipe didn’t work. And this utensil always breaks. There should be a better utensil.” And all of them say “Thank you. This is actually really fun, I’ve learned so much about myself.”
So here’s what’s key in this day and age, as we all live real-time online, it’s that: today’s conversation is tomorrow yesterday’s conversation. That’s the insight and we need to find a way to make companies responsive to it when it happens – not months later.
LK: So this technology enables data-based insight, identifying opportunity, and the tool is the centerpiece of how Vivaldi manages innovation for its clients?
EJ: Yes. We have a separate business here that says here’s how we build a cockpit. Here are the technologies that come together because it’s very hard to bring the decision making tool that tracks with the amplification tool and the disseminating tool, inside and outside the organization to stakeholders. And we created, to me it’s a black box, to make all of these different technologies work together. It took our working with three companies; a large automotive company, a large technology company, and a consumer company, where we said, “Look, we did this, we’ve gotten this far. We want to build further.” And they all said, “Okay. We do too.”
LK: So what do you call this?
EJ: We call it the Digital Cockpit.
And what it does is demonstrate there’s a lot of information as part of the rate of change outside. And it can bring that rate of change inside the organization.
You know there’s this assumption that people don’t want to change. I think people do want to change. I think that they’re smart and are on to things. It’s the management structure that teaches them not to change, because they’re in charge of managing the business rather than managing the future. That’s the problem of management if you will.
The other part is that they’re not fed the right information in a timely manner. If you tell a CMO, whose tenure averages two years on the job, this is going to be key down the road, well the reaction is: “It’s not going to happen on his watch. Why should I worry about this now?” But if you can give CMO real-time input “This is happening right now. Look at this.” And not just some anecdote from some psychologist or design firm with beautifully produced info-graphics but real data and you can say, “Look, this is happening right now. Are you ready to do something about it?”
LK: I take your point that people are not inherently afraid of change, businessmen and women would embrace change more readily given the appropriate tools. And it’s intriguing to consider the promise of bringing the pace of change in the marketplace inside the enterprise as the solution to successful innovation. Do you think, when you refer to management, that innovation also requires a degree of creativity separate and apart from the practice of management. Is that what’s typically missing or is that just a cop-out?
EJ: No, no, no, it’s not a cop-out I absolutely agree that that’s the case. When we run an innovation project, from the strategic analysis of the business to what are your growth areas, my biggest problem is that I need so many different people along the way.
LK: Internally, within Vivaldi?
EJ: Yes, internally, within Vivaldi.
So we have divided ourselves into three different businesses. There is a team leader from our consulting business that leads the process and these are very different people, wired in a different way with different skillsets. They understand how to run a company and manage processes. But there are other skillsets that you need for innovation. I’ll put consultants with good process and operating experience from very good companies on an innovation project. But if I put them on the wrong part of the innovation process it’s like root canal. It’s literally as painful. But if you combine these skills in the proper way with other people with other skills, it’s like music it’s so beautiful.
LK: So how does Vivaldi make music? No pun intended. What are the three skill sets?
EJ: So we divide the company in three pieces. An innovation project covers all three businesses. One is what we call strategic consulting, Vivaldi Partners, and there we have typical strategic consultants, you have managers, usually four or five years after an MBA and you have partners. Most have relevant managerial experience with our former clients, or existing clients and across industries and categories.
LK: Finders, minders, and grinders?
EJ: Yes, it’s a classic model that requires a person who’s very good at strategic analysis and managing the entire process of a project.
The second business, we have is Fifth Season, which is our agency, where we do creative work, deploy technologies, and build the digital cockpit. We have a chief creative director, a chief technology officer, we have writers, we have very different kinds of insight-driven people. It’s very interesting. They will manage our innovation workshops and translate findings into design solutions and the like. There’s a lot of cross-fertilization, a lot of the process consultants like to go and manage a project in Fifth Season. They say, “I actually like this.” I say, “I wonder why?”
The third group is E-Edge. And for many years now we’ve done innovation culture sessions based on driving an organizational change model and E-Edge leads that. One of the financial services companies we’ve helped for years in brand building, came and said, “Well, we need to be customer-centric. How do we go from being brand-centric, organized by brands, to a customer-centric mindset? Can we take customer-centricity to a new level? And by the way our existing business is being undermined by new competitors in this particular space. Can you help us? Not just tell us about innovation and how we manage brands but create the change.” For that one we have people that are expert in organizational change and they have a teachable point of view. They facilitate change. But it’s not about walking over hot coals or falling backwards into your colleagues’ arms or…
LK: Singing Kumbaya?
EJ: (Laughs) Or singing Kumbaya. It’s a very smart organization that teaches innovation culture and how to look at customers in a new way.
LK: Erich, what about you, yourself, professionally? Given your quite extensive and successful academic career why did you leave the halls of academia and start your own entrepreneurial venture advising corporations on how to innovate?
EJ: I think probably because I am a slow learner.
LK: A very successful slow learner I would say.
EJ: I may have realized this a few years too late, but I was always attracted to making an impact. At some point in time there is a desire to do something meaningful. And in some ways the academic environment is, well, very academic. You know you can have an impact studying the role of market share on profitability and it changes companies perception about the role of market share but that’s very general, very academic in a way, and I wanted to…Well, so often I felt like an architect who draws the blueprint and never sees the house go up.
LK: Excellent analogy, yes.
EJ: And it became so frustrating because the most prestigious CEOs and their leadership teams, they loved me as a teacher, as a facilitator. And I would think well, I’ve just solved the problem. But then I never saw the house go up because while they thought it was an extremely great session, which they were charged a lot of money for, I thought they should really do something with it. But then I never heard from them and after a year I’m told, “Well, you know our CEO changed, our marketing guy changed, this guy changed, that guy changed and nothing happened”.
LK: And it became just another meeting.
EJ: Yeah, and I had the blueprint. I knew exactly what to do. So then I thought that coming to New York and starting this company…
LK: Now ten years ago?
EJ: Twelve years ago. It was the way to get past the blueprint, to help great companies do what we think is the right thing to do. And the more we’ve done, the more you do in our business, the more challenging the work becomes. Part of that’s because our clients give us permission to do more work today and part of it’s because we’ve never had to know so much in order to help our clients.
It’s very stimulating and always changing. You know I never thought I had to become digital or technology savvy in order to solve a client problem but without it today you’re totally left-footed. Ten years ago you could solve a brand problem and you’d have plenty of work to do right there. Today all these things come back to the same question that we talked about at the beginning, why it’s so difficult to innovate. It’s gotten more and more complex.
LK: Erich, I know a lot of people are glad you started your firm and have kept innovating its many offerings. Thanks again for sharing your thoughts and time with us today.
EJ: Thank you. It was fun.