The Money & The Magic
An “Innovation Conversation” with Pete Maulik & Todd Rovak, Managing Partners, Fahrenheit 212
Pete Maulik and Todd Rovak are Managing Partners of Fahrenheit 212, a remarkably successful, ten year old innovation consultancy with offices in New York and London. Variously described as “an innovator’s paradise” (Fortune), “a white hot idea factory” (Business Week), and “melding the best of IDEO and McKinsey” (Fast Company) Fahrenheit seems poised for even greater success as it looks to its second decade in what can only be called a challenging competitive environment.
I’ve known Pete for years. He helped launch Fahrenheit in 2005 and since then he’s led and executed more than 200 of F212’s projects spanning a wide array of business sectors and developing a host of innovations that today find themselves in various stages of commercialization. Pete holds an undergraduate degree from Harvard University, where he was a John Harvard Scholar, and an MBA from the Columbia Business School.
Since joining Fahrenheit in 2009, Todd’s developed innovation pipelines across a number of industries while developing the company’s first teaching methodology to transform innovation from a random exercise into a scalable discipline; one with underlying tactics that can be taught. Todd’s a graduate of the University of Pennsylvania, where he was a Ben Franklin Scholar, and he took his MBA at the Harvard Business School after a strategic stint with Goldman Sachs.
We dove into what Pete calls my “mosaic like approach to conversation” on a beautiful fall morning in Fahrenheit’s downtown offices. Our discussions ultimately referenced: innovation’s star turn from interesting to imperative; the maturation of the category; the growing prominence and pitfalls of the RFP, Abraham Lincoln, unicorn sightings, the pursuit of a model that creates innovators in addition to innovations, and oh yes, their mantra, “the Money and the Magic”.
Lou Killeffer: Gentlemen, let’s begin at the beginning. How do you all define your category? And how and in what way has it evolved?
Pete Maulik: Well, we’re clearly in the category of growth creation through innovation.
When we began, there were relatively few pure innovation consultancies. Corporations had a difficult choice to make when they looked for a partner to help them drive growth. On the one hand, they could go with a traditional strategic consulting firm – like a McKinsey, Bain, or BCG—who were, and still are, world-class at helping identify opportunities for growth. But these firms didn’t provide a tangible way to tap into that growth. On the other hand, companies could choose to go with a traditional design agency – an IDEO, a Continuum, or a Frog—that were, and are, world-class at helping teams envision remarkable ideas that are new and fresh, largely because they’re created outside the realities of the day-to-day business. But this too can often lead to frustration because unfortunately, when you create an idea outside the realities of your business, it’s often impossible to integrate it within the business. As our partner, Mark Payne, says these recommendations end up looking and acting a lot like unicorns – compelling and fascinating to imagine but really, really hard to corral and hitch your plow to. (Laughs)
Todd Rovak: Lou, we see our category maturing significantly in a couple of really significant ways. First, it’s expanded dramatically because the critical need for organic growth is more pronounced than ever before. And across categories, everywhere you look, you see essentially the same things – the competition is fierce, the consumer expects new and better versions of your product and service each and every year, and your investors are screaming for growth.
It’s in this context that innovation has gone from interesting to imperative. And the firms built to service the need have come to realize a great idea is just the beginning – and quite often it’s the easy part. Don’t get me wrong, great ideas are few and far between, but truly great innovations require you to develop ideas that are as compelling to the people running the business as they are to the consumers you’re trying to amaze.
These are the dynamics we see driving the category and candidly driving our own consistent growth. We couldn't be more excited about these shifts as they favor the marriage of what we at Fahrenheit call “the money and the magic” that’s been the central core of our approach since the day we opened our doors ten years ago.
PM: You know another clear sign of the maturation of the category is the rapid rise of the RFP. Five years ago, RFPs just didn’t exist because the idea of outsourcing innovation was quite novel but now they’re the norm.
LK: Pete, I hear that a quite lot lately. What do you routinely see in the RFP process? What’s the purpose of the RFP and how well does it succeed on its objective?
PM: As innovation consulting has become more and more accepted, the RFP has become the standard. Like any RFP process, the purpose is to help the company identify the firm best suited for the challenge at hand. And in many ways of course it’s a helpful mechanism for sorting through the various definitions of “innovation.”
However, I do wonder if the role and impact of the RFP as a selection tool may potentially become detrimental as innovation consultancies simply work to win the bid instead of actually solving the problem.
LK: What do you mean by that?
PM: Simply tuning their RFP responses only to the questions that are being asked. Approaching a problem in this way can mean you’re going to play within the system. And often enough, the scope of the real issues and the answer the company really needs isn’t going to come from the questions they’ve asked. Particularly the routinized questions that can comprise a standard RFP...
TR: Perhaps we shouldn’t blame the process or the companies too much. After all they’re filing the RFP because they know they don’t have all the answers... But I do agree with Pete. I think it’s incumbent on all the innovation-consulting firms to help clients frame the question they’re asking in a manner that will set them up for success and identify the firms best suited to help them answer their questions. The RFP needn’t stand in the way of that.
I’m quite fond of a quote of Lincoln’s that I think makes the point brilliantly. When asked what he would do if he had eight hours to cut down a tree, he replied, “I’d spend six hours sharpening my axe.”
LK: Touché! So beyond the RFP, as the category expands and the selection of a firm like yours has become more and more competitive, what else enters into the equation? What’s more desired by clients these days; an enjoyable engagement or an outstanding outcome? And are these mutually exclusive?
TR: Well, I can only speak to our experience with our clients but that’s a great question.
In the first few weeks of any engagement, our clients often tell us that the project we’re addressing together is the “highlight of their week.” Innovation, by its very nature, is exciting, intellectually stimulating, and fun. People love to consider the possible, so enjoyment in any engagement is clearly the expectation.
However, about the third week – when real mutual confidence and trust has been established—our clients typically tell us something equally powerful: “If this goes well, I’m going to get promoted. If it doesn’t, I will be seriously exposed.” Because innovation is the new imperative, the expectations for performance are universally quite high. Therefore, I think it’s safe to say, clients would of course love for an engagement to be fun while they’re on the journey; but at the end of the day, every one of them would say they’d trade an enjoyable journey alone for perhaps a somewhat rougher road to a truly remarkable and successful outcome.
PM: And Lou these are absolutely not mutually exclusive. But you must clearly and carefully set mutual expectations and align incentives. If a client approaches an engagement simply as a traditional project between themselves and a consultant, they’ll enjoy smooth sailing and but risk serious frustration when the challenges arise.
However, if they embrace the engagement as entrepreneurs - where we both share focus on a common goal with a vested stake in the outcome – then they view project more appropriately as means to an end. And achieving an outstanding outcome is the only goal that matters. In this way, in our experience, they actually enjoy facing and surmounting the challenges because they realize every time they face a hurdle they’re getting closer to the real opportunity. And if they can overcome the challenge, they’re well on their way to creating something truly new and valuable.
LK: I take your point and it makes all the sense in the world. You can’t just waltz through one of these endeavors and expect to get anything done. Anything worthwhile...In addition to your fundamental approach, I’m also interested in learning more about your priorities in running your business. You’ve told me before you don’t just deliver great innovations you create great innovators; why is that and what do you mean in making the distinction?
TR: Innovations represent the output of an innovation consultancy; the new
products, businesses and services we produce that grow our clients’ companies. That’s the simple story of our business and category today.
Where Fahrenheit goes departs from the category is our belief that the people that come out of Fahrenheit 212 are as important as the work we do for our clients. Tactically, that means that we don’t run the firm as a creative boutique, which would put an inordinate focus on keeping talent at all costs. Instead, we’ve always run the firm as a talent platform, which means two things: investing heavily in training and programs that attract and develop the industry’s top talent recognizing that many of our great innovators, once trained, will ultimately “graduate” into roles as entrepreneurs, leaders at new growth-oriented companies and divisions, and even corporate Chief Innovation Officers.
It’s a little counterintuitive but we work really hard at creating and nurturing a place that’s designed to value and train people who literally may well leave. But the quality of that training acts as a magnet in attracting the next crop of great thinkers and innovators. And we certainly hope to run across our alumni in the marketplace...
PM: We believe that a Fahrenheit-trained innovation professional is already meaningful in the marketplace. And we see the demand for and career paths of our alumni already providing great evidence of this reality. It’s really gratifying!
LK: So is “innovation”, in quotes, a discipline one can teach; that we can all learn?
TR: Yes. I’d put it this way: innovation is a teachable discipline in the same way that basketball is teachable. Anyone who devotes the appropriate time and energy can learn, train, and improve. Like anything, where you wind up is often a function of where you start. Clearly there are pretty essential baseline skills, such as lateral thinking, insight generation, and pattern recognition that are required to reach a certain level of output. But, again, yes, we can all learn the underlying tactics and approaches in the same way we can learn the mechanics of a free throw. As easy as that is for some and as difficult as it may be for others...
LK: Innovation as free throw, what a concept!
PM: Well, there will always be better “athletes" than others, but the purpose of approaching innovation as a discipline is that just because it requires creativity doesn't mean innovation needs to be mystical or random. It can and should be accessible to all; and we think it is.
LK: Thank you both very much. Your views are enlightening and inspiring.
PM: Thank you, Lou. Good seeing you.
TR: That was fun. Let’s do it again sometime.