Matter/Anti-Matter

We asked Chris Heatherly, vice president of technology and innovation, Disney Consumer Products, The Walt Disney Co., to answer a set of questions--and he took the time to dive a little deeper.

How do you define "innovation"?
My favorite quote about innovation is one where Steve Jobs was asked how they systematize innovation at Apple and he said "We don't. We hire good people." I think a lot of talk about innovation amounts to a lot of dancing about architecture. People get caught up in trying to have an innovative "process" instead of having their values where they should be--making great product. To borrow from James Carville, "It's the product, stupid!" Who cares what your process is? It's what you put out there that matters.

If you want to make great products, you have to have high standards and absolutely insist on those standards. There's a great story about Pixar and the making of Toy Story 2. They completed most of the movie and then decided they didn't like how it was coming out. So they scraped it and started from scratch. How many companies have the guts to do that? Not many.

But I haven't answered your question. I think innovation is understanding people and what they need and giving them the most perfect solution you can to their problem even if they might not know they have it yet. It's giving people something new that they haven't seen before or making them re-experience something familiar in a totally new and better way. Everyone talks about Apple. The reason we all worship Apple is that there is no detail too small for them to sweat out. They don't stop at trying to make a great product. Look at the packaging. They work to reduce materials, to improve communications, to reduce shipping costs, to have better environmentally friendly materials, to create a great out-of-box experience, and on and on. Once you live and breathe these principles, you can't compartmentalize. You have to make everything as great as it can be. It becomes a way of life.

I think too many people confuse innovation and technology. I have seen a lot of designers try to make a mediocre concept innovative by putting Bluetooth or some other whiz-bang technology du jour in it. That's not innovation. It's cheating. Innovation is about solving problems for people. As I write this, I am at the New York Toy Fair. I am always so impressed and humbled by the incredible cleverness and simple innovation in small things that toy designers and inventors do every day. I think the technology business could learn a lot from these guys. The toy business has to work with very cheap stuff so they can't fall back on expensive technology. They really have to make the magic trick out of Popsicle sticks and rubber bands, if you take my meaning.

Yesterday, I saw a company that makes bubbles that you can't spill. Brilliant! I bet a lot of people have looked at bubbles and said "How can you innovate bubbles? There's nothing you can do. They're just bubbles." But this guy did and now he has a huge business because it turns out that parents don't buy as many bubbles for their kids as they might because they are afraid they will spill them and make a mess. To me, that's real innovation. A simple, clever idea well executed that makes things better for people.

What are the most important areas of innovation in your organization (product, process, IP, marketing, etc.)?

To be a creative company, you have to have a creative core, whatever that means for your company. For Disney, that's people like storytellers, animators, and Imagineers. For a company like Apple, it's designers and engineers. The people at the core of what you do have to be the heart that pumps innovation through the vessels of the organization. You can't live without your heart. But the other parts of the organization have just as important a role in innovation. Take technology, for example. Pixar is very clear that it is about telling stories and that everyone who is there is there for that purpose. Technology plays a really important role for them. They like to say that "art challenges technology and technology inspires art." They don't look at technology as being a second-class citizen to their artists. It's a respected peer. There are lots of other parts of the organization that have to be part of an innovative mission.

Here's one people don't put in a sentence with innovation very often--legal. Look at Google. They are constantly doing things with search and indexing and now with YouTube that challenge the legal status quo. If they had a legal team whose only role was to keep the company from getting sued, they would never do those things. If you want to be innovative, everyone has to be on board for the mission. Everyone has a role to play.

But one of the keys to innovation is having management that expects and drives innovation. You can have the best designers in the world and the worst management and nothing good will come of it. You have to have leaders who believe and have guts and support innovative work. You have to have leaders who hire the best talent and weed out the people who have the wrong values and intentions, but who at the same time are extremely tolerant of good people making mistakes or failing sometimes. If you manage quarter by quarter or have no tolerance for failure, you won't ever have innovation, no matter how creative your people are. You have to be willing to lose.

What would you consider your most successful innovation? How did you "find" it?
I'm very critical and I always think we can do better than we have done in the past. My favorite stuff--no matter when you ask me--is in the future and stuff I normally can't talk about it publicly.

My recent favorite innovation is a new technology called Clickables that we are launching in connection to our new Disney Fairies virtual world. It's a way for kids to take their online world experience into the real world. The core of it is a magical bracelet. By simply clicking their bracelets together, girls become friends in the online environment. And it's safer too because if you had to physically click with your friend that means they were in physical proximity to you, you saw them, and you know who they are. They aren't some random person online. Also, it allows kids to download virtual objects from their inventory and trade with their friends, which is another complicated thing we made simple. Most online worlds don't let you trade because it's hard to authenticate. We made that simple and seamless.

How did we find the idea? We knew that online worlds were going to be a big deal and so we got about 50 of our smartest people together from different divisions and of different job types--marketing people, technology people, designers, even finance people and lawyers--and we had a big brainstorm. We have a great process for brainstorms that's led by our head of creative Len Mazzocco. He's like the Michael Jordan of brainstorming. We came up with probably a few hundred ideas but narrowed it down to 75 really good ones from the two days. Then we narrowed it down to our top 10 and top 5 and in there was the nugget of the Clickables concept. Then we decided that this was such an important area that we would create a dedicated team around it, called our Toymorrow team that would be a little SWAT team focused on technology in the toy space. We moved really aggressively to find partners who shared our vision and had applicable technology. Speed is of the essence in these things. Len always says that "God gives everyone the same ideas at the same time." If you don't move fast, someone else will have your idea and do it before you can get it to market.

My other favorite recent product is a digital camera we made for preschoolers called Disney Pix Jr. I love it because it is so simple and so rugged and just does what it says it will do. I threw one myself down a flight of concrete stairs 20 times and couldn't break it. And the interface is so simple. We even got rid of the on button! And we have a fun feature on it called PhotoFriends that lets you pose with a Disney character in your picture. Kids are having a lot of fun with that. But for me, that is a great product because it meets the need and does what it says it's going to do. It doesn't read your mind or have Wi-Fi or cure cancer or any of that. It's just a great camera for kids. It is what it's supposed to be. Not a lot of products, especially technology products, can say that.

Which innovation "failure" did you learn the most from, and why?
That's easy. The Disney Dream Desk PC. We had all the right ideas in the beginning. We wanted to make an inexpensive computer without all the doodads in a small form factor about twice the size of the Mac Mini (you couldn't make it smaller back then because the processor was so hot) with a creative software suite a la iLife but for kids and with robust parental controls. I am proud of the way the software and Internet filtering came out. But the PC grew from this small inexpensive thing to this almost full-sized PC that was not as kid-like as we wanted and was much more expensive than we originally planned.

If we had kept with our original idea, we would have had the OLPC four years before Negroponte. That was the hardest project of my life, and I can't say I didn't fight hard. But our partner didn't share our vision. They thought it was imperative that it have all the slots and expansion and all the stuff parents probably don't really care about when they buy a kid a PC but that geeks care about a great deal. I thought we could change them, that we would convince them. But I felt compelled to launch, and I wound up compromising in some areas I didn't want to. I learned from that. Your partners need to share your vision or you will never get the result you want. I believe it's Louis Armstrong that said "There's some people, if they don't listen, you can't tell them." You have to stick to principles. If the people you work with don't want to do the project right, it's not worth doing.

What lessons can you pass on to others from how your organization has changed to make itself more innovation driven?
Anyone who reads a newspaper knows that Disney has had some major changes in the past few years with a new CEO--Bob Iger--and the acquisition of Pixar. We are getting back to our roots. Focusing on quality, incredible storytelling, and the magic people expect of us. Bob's really focused on bringing the company together as a team and put quality and innovation at the forefront of the company's agenda. What he's done is create a great collaborative environment for innovation and the rest has taken care of itself. You can see the whole company flourishing right now.

In your opinion, what are the biggest barriers and challenges that stand in the way of organizations becoming more innovative?
The organizations are their own biggest barriers. A lot of things that big companies do that they think are conservative and prudent are actually very foolhardy and dangerous. It's said that cynicism is ignorance masquerading as wisdom. Business is very simple. You have to offer a product that is better than your competition and you have to keep your customers happy. A lot of big companies get caught up in other things. Managing a P&L is important, and money keeps the lights on. But if people don't like the product or service you are putting out there, it doesn't really matter how clever you were about saving costs here and there. When you're dead, it doesn't really matter why. You can't cut your way to glory. Look at Apple. In the last recession, everyone else laid people off and cut back on R&D. Apple said "We are going to innovate our way out of this." And look what happened for them. You can't stop innovating.

Beyond your organization, who do you admire for risk-taking innovation, and what do you think makes them successful?
Apple is too obvious, so I'll say Target. At a time when everyone was trying to follow Wal-Mart into the bargain bin, Target had a vision that everyone deserved nicely designed products. A lot of people thought they were talking over their audiences' heads or they were full of themselves. In fact, everyone else was underestimating the intelligence and taste of their guests, and Target saw something no one else did. But Target innovated in a lot less obvious ways too. Take queue lines. At a lot of big-box stores, you could spend 20 minutes waiting to check out. At Target, you will wait less than 5 minutes most of the time. If the register is stacked up more than 3 people deep, they will open another one. That's customer service. Today, Target is beating all of their competitors' comps and doing more business per door than anyone else. Not everything has worked for Target. Remember the short-lived Philippe Starck line? But they keep trying and more often than not, they succeed.

What innovation are you still waiting for?
I think the single most important innovation we all need is low-cost green energy. Energy is the United States' #1 trade issue, #1 security, #1 economic issue, and #1 environmental issue. Green energy will have a more transformative effect on the world than the Internet, it's that big. Outside of this, I am working a lot with robotics these days and I'm very excited about all this smart technology that will make its way into lots of products. I live in LA and we are (in)famous for our traffic. I would love us all to have robotic cars that could figure out traffic flow, so I never have to sit through a traffic jam again.

This is the first in a series of interviews with innovation thought leaders. We've reached out to innovators in marketing, design, strategy, and operations -- from start-ups, small-medium sized business, Fortune 500 companies, academia, to non-profits -- and asked them to answer the same set of questions.

We're kicking the series off with Manoj Kothari, founder and managing director of Onio Design, one of the leading design and innovation consultancies in India. A graduate of IIT Bombay and the National Institute of Design in Ahmedabad, Manoj orchestrates trend research, strategic consulting, and design management practice at Onio. Manoj is a frequent speaker at various forums on innovation, trends, and design.

How do you define "innovation"?

It is as basic as food, clothing, and shelter in the broadest sense.

What was your most successful innovation, and how did you find it?

For a person whose profession is innovation, it is hard to point out one idea that "would change life." Every idea has its own destiny.

What is the best idea you've ever had and haven't yet executed?

To make a film on Siddhartha -- by Herman Hesse.

Which design "failure" did you learn the most from, and why?

Simple lessons on prototyping: We took some calculations for granted and prepared the whole pilot lot of metal stands to hold 20 liter water bottles. In front of the client the 100 stands gave way...

What lessons can you pass on to others from how your organization has changed to make itself more innovation-driven?

1. Never begin before sensing enough.

2. Do not judge an idea instantly. Hold it in your mind for some time.

3. Do not work only on one idea. Create a 'family' and the 'succession plan' before launching the work.

4. Never undermine the insights that may come through prototyping.

5. Detailing at the early stages is key to smooth implementation.

6. Unless the top team agrees, innovation is a headless chicken.

In your opinion, what are the biggest barriers and challenges that stand in the way of organizations becoming more innovative?

Unlimited vision is only with limited people.

Beyond your organization, who do you admire for risk-taking innovation, and what do you think makes them successful?

Vision, driven by guts and gut-feel. There are several small and big time people around.

What innovation are you still waiting for?

I wish cars could fly and reduce the traffic on the ground (especially in the context of India).

The Economist has a special report on innovation in this week's issue, and it's good to see the magazine recognizing "open innovation" as the perhaps most important current trend in this space: "Rapid and disruptive change is now happening across new and old businesses. Innovation ... is becoming both more accessible and more global. This is good news because its democratization releases the untapped ingenuity of people everywhere and that could help solve some of the world's weightiest problems."

The report is an expansive tour de force through the entire innovation landscape, covering a lot of ground (open innovation, mass- or user-driven innovation, product vs. process innovation, creativity vs. operational excellence, innovation policy, innovation in Asia, innovation in developing countries, Six Sigma, innovation measurement, the "Innovators Dilemma," the importance of "Fast Failing," etc.) and quoting the usual suspects (GE, P&G, Eric Von Hippel, Toyota, Doblin, Nokia, etc.).

The Economist concludes with a seemingly trivial recommendation for putting "the debate over creativity versus execution" to rest: "For a start: firms need to do both. But that does not mean they have to do it all themselves. On the contrary, the double act is best managed with a loose and open approach during the wild and woolly idea-generation phase, and a tighter, more concentrated one to turn ideas into products or services." John Kao, author of "Jamming: The Art and Discipline of Business Creativity," likens the process to playing jazz: "There is no fixed score in any given improvisation, but that does not mean there are no underlying principles either."

So, open, yes, but also rigorous and tightly managed. But is that really news? And what about Apple, arguably the most innovative company in the world and yet the most un-open you can imagine?

At the end, innovation remains a fuzzy concept, or as one of the quoted senior executives puts it in the famous words of Potter Stewart: "Like pornography, I know it when I see it." And in contrast to the Economist's claim, I don't see much evidence at this point that the innovation process will be "steadily becoming a practical science to be measured, taught, and managed."

Management's focus on innovation comes and goes in cycles. Right now, it is all the rage again (although it remains to be seen if that's still the case as innovation budgets may be cut when the looming recession hits the US), and the business press is covering it all across the board. Managing innovation is one of the most critical tasks companies face, and yet it remains one of the biggest challenges. Not only do companies need to come up with new ideas, but they also need to nurture a culture that consistently encourages and rewards innovation. If they don't, well, then they may be the next Dell or Motorola -- both companies had gained major competitive advantages as the result of major break-through innovations (Dell with process, Motorola with design) but failed to follow-up on their successes with new innovations and instead focused solely on most efficiently exploiting their one "big idea."

It's the old antagonism between excellence and efficiency that is at play here, and along with it, the conundrum of creativity versus process. In a recent issue, BusinessWeek questions the value of Six Sigma, the Holy Grail of process (and performance) optimization in which many corporate heavyweights fervently believe. The Six Sigma methodology, with its emphasis on quality management, was once understood to be a strong innovation enabler. However, as competitive advantages are increasingly built upon top-line growth, in other words, explorative rather than exploitative strategies, it suddenly seems to be a little dusty. Six Sigma was developed to minimize risk and variation, but for free-spirited innovation to blossom, allowing risk and variation is paramount.

Process-obsession may in fact be opposed to the new age of creativity that propels hyper-customization and attempts to save brands from the death spiral of commoditization. If you measure everything you manage, risky ideas will not spark. Employees need to be able to dream, and they need to know that their company not only encourages risk but in fact exhibits a high tolerance for failure. Culture is key. A risk-taking environment, an open-source conversation with internal and external contributors, and a high agility to develop ideas, test them (and sometimes fail with them) are the main attributes of truly innovative organizations.

Gary Hamel, professor at the London Business School and "management innovator without peer" (Financial Times), argues along the same lines in his new book "The Future of Management" (excerpt published in Fortune). He understands the importance of organization-wide innovation and contends that the reigning management paradigm -- efficiency above excellence -- discourages innovation and is in fact an outdated model that needs an innovative overhaul itself: "Most of the essential tools and techniques of modern management were invented by individuals born in the 19th century, not long after the end of the American Civil War. (...) Now think back over the past 20 or 30 years of management history. Can you identify a dozen innovations on the scale of those that laid the foundations of modern management? I can't. Our Industrial Age management model is languishing out at the far end of the S-curve and may be reaching the limits of its improvability."

Referring to the cases of Whole Foods, W.L. Gore, and Google, Hamel prescribes radical decentralization, flatter hierarchies, more incentives for employees at all levels, and stronger ties between results and recognition: "The sooner your company starts sloughing off its legacy management beliefs, the sooner it's going to become truly fit for the future. As we've seen, a few companies are already traveling light, having left a lot of their outdated management baggage back there in the 20th century. In the end, there's really not much of a choice: You can either wait for tomorrow's management heretics to beat the orthodoxies out of your company, or you can start coaxing them out right now."