For David Owens, innovation on a personal level can be hard-wired.
“I am genetically an engineer,” he says. “My wife remarked one day as we were traveling, ‘Why do you always have a bag full of wires when we go on vacation?’ It’s just always been part of my identity.”
On a business level, innovation is a much slipperier commodity, says Owens, who studies the subject as Professor of the Practice of Management and Innovation at Vanderbilt. Although all businesses rely on timely innovation, most of them too often block it, according to Owens’ latest book.
Creative People Must Be Stopped: Six Ways We Kill Innovation (Without Even Trying), published in 2011 by Jossey-Bass, takes a clear-eyed look at six levels of stumbling blocks we unintentionally place in front of new ideas and their implementation. “I believe that everyone is creative, that everyone can and will move toward positive change given the opportunity,” Owens says. “My interest is understanding ways we stop people from doing that.”
At each of those six levels—self, group, organization, industry, society and technology—innovation faces resistance. “Take the organizational level,” he says. “Imagine the monumental courage it would take at Kodak in the ’80s to say, ‘Guys, I think we should stop doing film.’ It would be hard even for those people who knew that film’s days were numbered.”
He cites the Segway, a two-wheeled electric vehicle, as an invention whose potential on paper hit the brick wall of societal realities. “The Segway was too fast for the sidewalk and too slow for the streets,” he says. “That’s not a technical problem. They didn’t need the battery to last longer or to make the handlebars more comfortable. It was the societal restraints that they failed to address.”
Fighting the roadblocks that we and others throw in front of our own and each other’s creativity is at the core of Owens’ work as a teacher, mentor and consultant to organizations like NASA and the Smithsonian Institution. His is an almost counterintuitive approach.
“It’s not, ‘Here’s how to be creative,’ but rather ‘Here’s how to stop your existing creative ideas from being blocked or killed,’” he says. “The punch line of the book is that there are at least six different ways to look at innovation, and you should pay attention to all of them because each one has the power to help you find the hidden barriers your innovation will face. What I find is that it’s the one perspective you ignore that ends up biting you.”
He sees creativity and innovation play out in real time as a mentor at the Entrepreneur Center, a Nashville-based nonprofit that connects entrepreneurs with investors and resources, and as Faculty Director of the Vanderbilt Accelerator Summer Business Institute for undergraduates and recent college graduates.
“Projects in the Accelerator,” Owens says, “touch all aspects of business—marketing, finance, operations, HR, manufacturing, strategy, design—and the program allows these students to experience the entire span of what happens in business in just a few weeks.”
He has watched any number of students carry ideas generated, refined or actualized at Owen into careers. He points to students who have gone on to do innovative work at places like Apple, Mattel, Microsoft, Google and Nissan. Another he cites is Jerome Edwards, MBA’04, Founder, President and CEO of Veran Medical Technologies, a St. Louis-based company that has developed cutting-edge imaging technology for surgical procedures.
Surgical Precision
Before earning his MBA at Vanderbilt, Edwards worked for Medtronic, one of the world’s leading medical technology companies. There he built a voltage-based navigation system that guided catheters inside the heart to burn tissue and regulate heartbeat. That technology, however, was spun off into another company and ultimately acquired by a Medtronic competitor in a $273 million deal. It was then that a frustrated Edwards decided to start a new chapter in his career.
“I wasn’t going to let that happen again,” he says. “Medtronic had been a great company to work for, but I decided to leave and go back to business school.”
“For us, innovation is about getting people into the field,
having them see surgeries, and coming back and sharing ideas
without barriers and without process.”
—Jerome Edwards
A Dean’s Scholar, Edwards enrolled at Owen in 2002 because he says, “I felt at home and felt the entrepreneurial spirit.” That feeling was shared by fellow student Evan Austill, BS’93, MBA’04. The two teamed up and started writing business plans for the type of technology Edwards developed at Medtronic, but for different organs. Edwards and Austill were encouraged by Germain Böer, Professor of Accounting and Director of the Owen Entrepreneurship Center, as well as former faculty member Bruce Lynskey, MBA’85. Edwards says Owen’s center “kept putting me in great opportunities in terms of business plan competitions and showcasing the plans to alumni.”
After receiving $65,000 in grant money, Edwards and Austill founded Veran Medical Technologies and paid for the first patent, which was written in the 810 Café at Owen. That patent was for a device that acts like a GPS system for the human body. An electromagnetic field and sensors are used to steer the device inside the body and then help sample or excise tissue that is suspected of being cancerous. The innovation is in making the device work in the lungs, which continue to move during surgery.
“With cancer,” Edwards says, “it’s about diagnosing as early as possible. In this case, we can get to the deepest, darkest regions of the lungs, get tissues from suspect lesions and progress to therapy if it’s cancerous.”
With just 28 people on staff, Veran is a small company where, Edwards says, “everybody participates in R&D—everybody does everything.” The company’s small size and flexible approach have helped it overcome the types of adverse group dynamics and organizational missteps that, according to David Owens, hamper innovation.
“One engineer in a small company can do the same amount of work as three in a big company because you’re freer,” Edwards says. “Process is good but it can be burdensome. Here, rather than meeting after meeting after meeting, you just walk in and ask a question, then go back to your desk and get to work again.
“For us,” he adds, “innovation is about getting people into the field, having them see surgeries, and coming back and sharing ideas without barriers and without process. Once you get to a level where it’s going to be turned into a real product, then you fold it into effective process.”
Renter’s Paradise
For a small number of students, innovative ideas and an entrepreneurial spirit lead to the business world prior to graduation. That has been the case for Adam Albright, BE’10, an MBA candidate for 2012. Albright is Co-founder of RentStuff.com, which he describes as “a marketplace similar to eBay for renting rather than selling household items.” He teamed up with his two fellow co-founders when they needed someone with a technical background. Albright, who has been doing freelance software and website development since he was 10, earned his bachelor’s degree at Vanderbilt’s School of Engineering.
Participation in a summer-long incubator program at the Entrepreneur Center provided RentStuff.com with $15,000 in seed capital, mentoring and networking, and the chance to refine their presentations with the help of Michael Burcham, Lecturer of Entrepreneurship and President and CEO of the center. The program also gave them temporary office space.
“We have a couple of desks and white boards, and we make a lot of to-do lists and brainstorm ideas,” Albright says. “Part of my job is to explain the technological complexities behind what we want to do.”
The RentStuff.com model takes advantage of a fundamental shift in the way people access everyday goods. Albright cites a phenomenon called “collaborative consumption,” which he says is when “people try to own less stuff and rethink how they consume assets.” He and his partners have drawn inspiration from Zipcar, a membership-based car-sharing company, and Airbnb, which matches people needing short-term lodging with those offering everything from sofas to castles.
RentStuff.com handles payment transfers and security deposits, and offers reviews of people who use the service and the items rented, which include bicycles, cameras and even cocktail dresses. Recognizing that the target demographic skews younger means part of the innovation lies in finessing potential backers.
“Someone making six figures is not going to be renting golf clubs for $20 a day,” Albright says. “You have to explain to investors how it would work and who would be interested because it’s a new model and the math doesn’t add up for them. The investors aren’t the ones using it, but they’re the ones we need on our side.”
In other words, Albright and his business partners have faced some of the societal innovation constraints that David Owens writes about in his book. Society’s adherence to a conventional way of doing business sometimes prevents more creative approaches from gaining traction.
In the case of RentStuff.com, part of the solution lies in bringing small stores on board and offering to link them to potentially large audiences through the website. “We can emphasize the rental business side of RentStuff.com to investors, and then add that individuals can do it, too,” Albright says.
He finds that as a businessman, youth can be a mixed blessing. “Being young, you get a lot of helpful advice,” he says. “People are very willing to tell you about experiences they’ve had and pitfalls they’ve faced, and it speeds up the learning process. But when you go to an investor looking for half a million dollars, maybe they’d feel better if you were 50.”
Nashville, he adds, has been a good place to get attention and work out the kinks before carrying the concept to a larger city, where high-density neighborhoods and apartments concentrate the potential market for rental items like carpet cleaners and sporting goods.
Albright also attributes their early success to the company’s domain name. He believes that it has been crucial in driving people to their website. “RentStuff.com is a pretty identifiable name,” he says. “It’s easy to figure out what we do.”
Wallet Allocation
A great name is also the capstone of a highly regarded customer loyalty measure developed by Bruce Cooil, the Dean Samuel B. and Evelyn R. Richmond Professor of Management, and alumnus Tim Keiningham, MBA’89, with marketing research firm Ipsos Loyalty.
The Wallet Allocation Rule, as it’s known, came about because traditional metrics gauging customer satisfaction and loyalty “do a terrible job of linking with the share of category spending that customers allocate to the brands they use,” says Keiningham, the firm’s Global Chief Strategy Officer and Executive Vice President.
That need prompted a two-year study in collaboration with Lerzan Aksoy, Associate Professor of Marketing at Fordham University, and Alexander Buoye, Vice President of Analytics at Ipsos Loyalty. The study examined more than 17,000 consumers in nine countries and covered purchases in more than a dozen industries. A key datum was the number of brands being considered along with relative rank.
In the end, Cooil and his collaborators found that companies would be better served paying attention to how well they rank in comparison to rivals, rather than concentrating on achieving high customer satisfaction levels. According to their research, being a customer’s first, rather than second, choice can have a significant financial impact.
“What we found shocked us,” Keiningham says. “Our research uncovered a heretofore unknown relationship between customers’ perceptions of the brands they use and their share of wallet that could be easily calculated using a simple mathematical formula: the Wallet Allocation Rule.”
The rule makes it simple for managers to determine the financial implications of rank and of moves up or down, he says. Its implications include the fact that customer satisfaction is best understood in the context of competition, since it can rise even while per-customer spending declines.
“We looked seriously at alternatives,” says Cooil, who analyzed the data. “You see other papers that look at converting ranks to market shares using industry-specific parameters. We were expecting to have to go that way, but Alex suggested this other approach, and more complicated methods couldn’t do any better.”
It’s an approach that breaks through the kind of industry constraints and societal barriers that David Owens studies. “We all start out with an idea of how things work,” Keiningham says, “and this view causes us to seek out information that supports that view and discount information to the contrary. As a result, we get a lot of ‘motivated’ research to prove what we want to believe.”
Keiningham and Cooil have become close friends through the years: Cooil was a best man at Keiningham’s wedding in Istanbul and has collaborated often with Keiningham and Aksoy, who are husband and wife. Their collaboration plays off their differing approaches and personalities.
“They get me interested in projects I might not find interesting otherwise,” Cooil says. “I have very different talents from Lerzan and Tim. They’re much more organized, much more focused on what industry really needs to know about, what would really help companies—and they get projects started.
“They’re the ones asking the questions and telling me what the current theory is. I go through and see how the models are working. Then they ask, ‘What can we do? We have this really interesting data. Can we come up with another approach or do something different with the data or clear up an issue that everyone’s convinced they understand but we’re convinced they don’t understand?’ They’re pretty demanding. They want answers and they keep projects going.”
Their four-way collaboration with Buoye on the paper “Customer Loyalty Isn’t Enough. Grow Your Share of Wallet,” published in the October 2011 Harvard Business Review, earned them the Next Gen Market Research “Disruptive Innovation” Award. It’s a major acknowledgement, although Cooil laughingly dismisses one of the accolades that went with it.
“They called us ‘thought leaders,’” he says, “It’s a mixed blessing because I’ve always hated the phrase. Doesn’t it sound Orwellian? But they did give us these really artsy trophies. I can’t even put mine in my study because my wife wants to put it on the mantel as an art piece.”
Special Resonance
Cooil’s and Keiningham’s work is another example of the worldwide impact of innovation with Owen ties. It is a key to what makes Nashville a city with special resonance as a business center for David Owens.
“I feel a real energy here once again,” he says, “with new startups and tech companies and a level of creativity in Nashville that really make it exciting for me.”
His work in breaking through innovation barriers is aimed at helping to keep the Owen School in the thick of that creative energy, as a meeting place of education and innovation that is as good for human development as it is for business development.
“With Accelerator, as with everything else,” he says, “we want to help students find that part of the wide spectrum of business that talks to them. I try to expose them to a lot of things to do, to give them enough diverse projects and experiences that they find something that makes them say, ‘I like marketing’ or ‘I’m good at managing teams.’
“I want to offer a perspective on business’ role in society, one that often gets lost,” he says. “It’s so much more than making money. It’s about feeling good about what you do and helping make the world an amazing place. How can you be a contributing member of society? Business is a great way to do that.”