Innovation, Emerging Technology, and Sustainable Development

Anita Brick: Hi, this is Anita Brick. And welcome to CareerCast at the Chicago GSB to help you advance in your career. Today we're delighted to be speaking to GSB alum Dr. Surinder Kumar. He's a global leader in consumer products, technology, and business innovation, and most recently the chief innovation officer with the Wm. Wrigley Jr. Company. Dr. Kumar received his PhD in food science and nutrition from the Ohio State University and an MBA in marketing and finance from the University of Chicago.

He is an honored and distinguished member of Who's Who Worldwide. He's been awarded 17 patents, published many scientific papers, and has served on several advisory boards. He has spoken extensively on the subject of innovation for business growth, and is the coauthor of Riding the Blue Train, a book on building breakthrough innovation cultures for accelerating personal, professional, and business growth in corporations.

Welcome, Surinder. How are you?

Surinder Kumar: Very well, thank you very much, Anita.

Anita Brick: We've had some conversations before, and I know innovation has played a role in your life from the very beginning. Tell us a little bit about what innovation personally means to you.

Surinder Kumar: Personally, innovation to me is really a lot more about survival. And I grew up in a very small village in India where we did not have very much, and children didn't have anything to play with, and they became a lot more innovative in coming up with ways to actually entertain themselves. In that village, about 60 years ago or so, children did not have anything to play with.

So for example, they didn't have a ball to play with. So one child said, well, we can play with this stone and we can take a stick from a tree and play hockey. Of course, this stone didn't roll very well. So the second child looked at that and said, well, if we put a string around that stone, we could make it round.

And the third child came up with a way to protect the string from unwinding. So you can imagine how need and necessity becomes almost the mother of innovation or invention. And from the very beginning, as a result of that, because of lack of things, we found ourselves to innovate, to be able to survive. And that has stayed with me through my lifetime.

I find innovation is absolutely essential for growth of the business and for growth of individuals.

Anita Brick: There've been like a bazillion books, so much written about innovation. And while of course it's essential for growth, whether you're in a highly developed country or, you know, a country that is developing, whether as a startup or a legacy firm, it's all really important. But it's become a process. And I feel like—and maybe this is presumptuous for me to say—but I feel like it's become such a process that it's lost the heart of innovation.

How are things—like the approach that you talk about in Riding the Blue Train—how does that bring the heart back into innovation?

Surinder Kumar: To me, innovation is all about growth. And when I look at growth, growth happens not because we control things through processes, but because we allow people to be able to expand themselves and expand things. So the fundamental premise we have is to create people who really do create innovations. If they need a process along the way, they will develop the process along the way.

But it's all about great people working together as a team towards common goals which are very well defined. That determines the success of innovation.

Anita Brick: But how do you do that in an environment where they're not inspired? There isn't really a vision? I mean, how does someone who's not in the C-suite, like you were, impact innovation and impact someone … kind of spark and insight and inspiration to actually take action that's going to change the company and make it more profitable?

Surinder Kumar: Well, it does start out with good leadership. A great leader has the ability to observe things, to use the experience and develop insights. A great leader has the ability to really inspire others to be able to see those insights and act on those insights, to innovate. A great leader has the ability to be able to act on those insights and let his people really act on those insights to really get the benefits of innovation.

So at the end of the day, a great leader develops a great innovation culture within which people can grow, within which people can innovate. So culture of innovation is very, very important. And that culture is created by the leader or the leadership team.

Anita Brick: So if a quote unquote, we're an industry leader, which means we must be doing it right, may not be the right spot for someone who wants to be in a company where innovation is core.

Surinder Kumar: Absolutely. As a matter of fact, any company that believes that they don't need to innovate because they are leaders will not be leaders for a long period of time. Clearly at this point, you know, the information and the knowledge is available to many, many, many people across the globe—the ability to be able to leverage technology, to integrate that knowledge.

That is very important. And that happens when people are really inspired to do things and to make a difference. It will not happen when a company or an individual believes that they are already a leader in their area. Leadership is a passing component, as you know; many, many, many countries have gone through those phases. At one time Rome was on top, another time Greece was on top, England was on top.

Even India at one time was at the top of the heap. All these are passing phases to countries. Companies and people go through phases of leadership. Unless they continue to grow and unless they continue to innovate, they cannot keep the claim of leadership for too long.

Anita Brick: So how does one nurture a culture of innovation within their own realm of responsibility?

Surinder Kumar: It really is to a great degree— One, to me, is constantly looking at and saying, what can I do to make a difference in my area of influence? And that is innovating within the area. Your own influence can also make a good difference. The second is, be a champion of innovation. Once you show what innovation can do for a company, or for your department, or for you here, you need to communicate that clearly with your team, with your management, and frankly, do some good PR to be able to get the management to understand that innovation really pays off.

And any good leader of any company will see that if innovation pays off in terms of business growth, whether it is top line or bottom line or helping people through the process, any leader will really work on funding that innovation and funding the individuals who are making the difference through innovation.

Anita Brick: Obviously, you've been in very, very senior levels in organizations. What would catch your attention? What are the kinds of things that you would see in proposals that would make you stand up and say, yeah, we're going to fund this?

Surinder Kumar: To me, that's when somebody comes to me with an idea or with a point of view. It is very important that I see the individual's conviction in that idea or the proposal. It's very important that I see that the individual has done some homework to understand that consumers either perceive or get the benefit of that innovation in terms of a consumer benefit.

It's very important that I see that the person is willing to champion. So the conviction of the individual, some support from an innovation research standpoint, from a consumer standpoint, and the championship of the individual are the three key components that I look at to fund that individual or to fund their proposal.

Anita Brick: Well, it's interesting because there were a number of questions that came from students and alums. How do you develop a product? How do you then hype the product? How do you make sure that there's consumer need? So it sounds like there's some research that needs to happen at the same time before they walk in the door and present an idea to you.

Surinder Kumar: A number of entrepreneurs have the uncanny ability to come up with ideas. Now, some ideas are very relevant to them, and they do develop the conviction around that idea. But the ideas need to be converted into products that have consumer benefits. And those consumer benefits have to be something that consumers really want and are willing to pay. That's why even a small amount of research, which I would call “grandma research”—talk to your friends, talk to your family, talk to people outside. Watch people's behaviors with respect to what they buy and what difficulties they run into, and see if your idea either solves the problem for the consumers or offers consumers a benefit. Even if you have that much consumer research, it helps a lot.

I'll give you an example of that one. When I was working for Pepsi, we were very focused on driving colas, like Pepsi-Cola, as a key product area. One of our bottlers said, hey, you guys, come with me to Central Park in New York and see what people are really drinking. And we literally went through Central Park and watched people and what they were consuming. We went through the garbage cans in Central Park to see what people had consumed with respect to what kind of containers they had thrown away.

It was very clear to us that people had already changed from consuming colas to consuming water, juices, and other—what we consider nutritional drinks, such as iced tea. That was a dramatic change for the strategy of PepsiCo to change from becoming only a cola company to becoming a freshman beverage company. That's the kind of research, frankly, that does not require a tremendous amount of money to … behavior research, knowing what consumers are consuming or how consumers are behaving. Watch their behavior, based upon that behavior develop an insight as to what you ought to do, and then act on that insight.

Anita Brick: You know, there are entrepreneurs and then there are entrepreneurs and intrapreneurs—people inside a company. What are the things that you have seen that might help someone who wants to develop a product or develop some innovation and bring it into, you know, a relatively untapped market?

Surinder Kumar: The concepts of entrepreneur or intrapreneur are quite different from my experience. Entrepreneurs take a lot more risk than intrapreneurs. Intrapreneurs obviously are paid in a corporate environment. They live in a corporate environment. The risk profile is generally lower than an entrepreneur whose life and livelihood depends upon an idea. As a result, entrepreneurs are a lot more convicted about their ideas.

They champion their ideas a lot more strongly and they work with a lot more passion and diligence on that idea. Intrapreneurs generally run into, you know, one internal barrier of a conflict between making money from the company and working on the idea of their own. And the second barrier is the outside barrier, which is that a company has got its own strategy and intrapreneurs will have a tough time if their project is outside the strategy.

As a result, I really normally champion the idea of an intrapreneur working almost as a separate entity within the company, where their idea is rewarded a lot more by the resolve, and they are taking personally a lot more risk. So their pay is lower, but their bonuses are a lot bigger.

Anita Brick: Kind of like what Apple does. They send people off to go develop stuff and then bring them back into the organization.

Surinder Kumar: That is a terrific idea. Even if it is a garage outside rather than being in the corporate environment. I really believe an entrepreneur is an entrepreneur, so working within the corporation becomes pretty tough for an entrepreneur.

Anita Brick: You know, one of the Executive MBA students asked, I thought, a really interesting question. So his question was, how do you recycle old technology and how do you make that attractive to investors who are seeking high rates of return?

Surinder Kumar: That is a very interesting question. As a matter of fact, you know, that is being currently utilized in a lot of companies themselves. Gillette has done that for a long period of time. Even the old technologies are sold in countries that are developing, and what they do is when they develop a new technology, they first launch in developed countries and slowly expand into developing countries through the application of the same technology.

And reapplication actually is a lot more profitable because most of the developmental investment has already been done. So the return on investment of reapplications is very high. In the three last companies that I worked in, we find that that is where tremendous profits are, which is reapplying technologies in other countries. Reapplication is based upon understanding the specific consumer needs of that country and any regulatory issue that that country may face.

So from those two standpoints, the products may have to be modified for those countries. But there is just a tremendous, tremendous return on investment when you reapply technology in other countries.

Anita Brick: So it sounds like this particular MBA student was looking at technologies that may have been abandoned by large multinationals; wanted to purchase them and then get investors. So it sounds like whether you're applying it within the organization that created it or taking it outside, there's a lot of potential.

Surinder Kumar: There's tremendous potential. I think the MBA student who asked the question has tremendous possibilities for really taking that technology and putting together a business case. Now, to put together a business case, the individual does need to do some consumer research as to what modifications will need to be made in the technology or the product, or the regulatory concerns that may be in that particular country.

But putting together the business proposal and showing the return on investment can get significant investment.

Anita Brick: OK, there was another … actually, it was an alum this time who had a small IT company, and most of their focus has been in North America and they want to branch out. This person wanted to know, how do you innovate your staff to think more globally?

Surinder Kumar: You know, I'm pretty tough on that. To me, there is some sense that developed … any company that has grown within a fairly small area where people have not had the exposure on a global basis and they have a tough time to take products or technologies in other countries. My suggestion in that case is … there are two suggestions. One is to find somebody as a consultant or bring somebody who has already worked in the global areas or globalization of technologies and bring them on as advisors, consultants, or trainers for your staff.

And the second one is frankly, add some new blood. So there are two ways to do that: train your staff, and second is add resources or add people who already have that experience.

Anita Brick: I find it incredibly fascinating that innovation is now including not just internal staff, but also vendors, consumers, and using a lot of social networking. How are you seeing the whole idea of social networking? The whole idea of web 2.0, where there's a dialogue on the web impacting innovation.

Surinder Kumar: Well, this has been happening in leadership companies for a long time. You know, Warner Lambert, where I worked a long time ago, leveraged their suppliers very effectively by incorporating them into the innovation process. Frito-Lay, even 30 years ago, had a very strong relationship with suppliers where they would share the brief with the suppliers and say, this is what the consumer preference is, what the consumer needed — This is how we will test the product. We want you to really work with us to develop those products.

Recently, with P&G making this into a strong platform where P&G has a stake in the ground saying, we want to have 50 percent of all innovation coming from outside. This has become a large, stronger platform and large, well-known platform for most companies.

It's called open innovation, where your suppliers, your consumers, any entrepreneurs have the opportunity to provide ideas for the company to benefit from the company, by working with the company from outside and to share in the business gains by the company by working on those projects. So that process or that term is called either open innovation; other companies call it connect and develop, which is connecting with consumers, connecting with suppliers, and developing the product in conjunction with them.

So that is now becoming a very strong component of innovation and innovation for growth of the company.

Anita Brick: So how do you use an innovation firm—like a firm like IDEO—as an additional partner, or do you?

Surinder Kumar: We do. I really do believe that the number of companies or entrepreneurs can help a lot. The most important part, really, is to make sure there's a clear brief from the company that is trying to innovate, to make sure that brief is clearly communicated to companies like IDEO. Two is, the external companies need to have an absolute certainty as to how the success will be measured.

And the third is how the external partners will be rewarded for their success. So we need to have clear, brief, upfront, clear success measures. The third thing we have found is co-locating the teams is very important. If the external team is working, for example, in the case of IDEO, in San Francisco and you’re working in Chicago, it does become pretty difficult.

Final one is, tie the reward with the success of the proposition. Give them some upfront money, but a significant bonus for successful development execution.

Anita Brick: That makes a lot of sense. People talk about innovation—and you talk in Riding the Blue Train about insights and inspiration—and people even talk about intention: well, I have the intention to do this. How do you take insight, inspiration, and intention and make it actionable?

Surinder Kumar: Let me share a little bit about the insight. Now, I believe there are people who have tremendous ability to look at things and see something that nobody has seen. Those to me are really few selective people who've got tremendous capability of integrating observations into insights. Now, it is a trainable exercise for some and some people just happen to have it.

So developing insight is based upon being very observant and relating that to something which will provide a consumer benefit, or will solve a consumer issue. The second is, you know, once you've got an insight, you need to enroll other people who will be working on that and who will be funding that. So for those people, you have to create a picture that you see, and that is, you need a tremendous power of language to be able to paint that picture for those people who will be funding that or who will be working on that, and you need to inspire people to be able to work on that, because they can now see what you see and they become enthusiastic about that.

The third part of that one is what we call intentionality. Intentionality is our term for converting intent into reality. You know, many people have very good intentions. For example, I have very good intentions of waking up in the morning and exercising every single day to improve my health. If I don't do anything about that, just the intentions are not going to accomplish the weight loss or better health for me. Intentionality is actually doing so.

So working every single day for one hour on my exercise program is converting intentions into reality. And that is the same case in companies and with individuals. A lot of people get insights, but unless those insights are acted upon, there's no actual result of that.

Anita Brick: How do you put a team together where—because some people are great at insight and inspiration and then they get bored after that, or some people just don't get the insights and inspiration, but they're fabulous project managers. How do you identify those people and put them together on a team, so that you have a really solid array of skills and talents?

Surinder Kumar: Well, there are different ways of really looking at putting together a team, and I agree with you. I do believe that the team needs to be holistic in terms of being able to come up with ideas, being able to convert those ideas into business growth opportunities, being able to act on that consistently so that the excellence of execution does happen, and being able to motivate other people.

So a team needs to be selected based upon their interests and their traits that can be well identified through various processes, by just having conversations with individuals as to what really motivates them. So putting … a holistic team does require people who are very good at inspiring and leading and selling. There are people who are very good at observing and developing insights, and there are people who are very good at executing.

It does require having a team that consists of members who have different disciplines and different needs, as well as different strengths.

Anita Brick: It totally makes sense—and for innovation—I mean, innovation being such an important aspect of any organization, having those teams that … in fact, when I was talking to the person who was at Hallmark, their innovation teams are deliberately cross-functional.

Surinder Kumar: Absolutely. As a matter of fact, I really believe very strongly that the success of a team or success of innovation happens through integration and integration is through cross-functional R&D. People—marketing people, supply chain people, general management people— people with different skills need to be in the team and they need to work cross-functionally together to bring innovation to a successful end point for business growth.

Anita Brick: It was almost … a sort of a funny question that follows on from that. And another Exec MBA student asked if the chief innovation officer position was actually a real position taken seriously, or if it was just like an easy job. How do you view that? I think I have the answer to that, but I would like to hear it from you. How do you view that? And then also being in that role during the times that you have been, how has being in that really highly focused innovation role transformed you?

Surinder Kumar: Well, you know, the role really is dependent upon the outcomes you want. If a company really believes that the CEO or the leadership team believes that innovation is essential for their growth, then the CIO role is very meaningful. But that's … the first thing is, if you're a candidate for CIO or if you are considering a company where you are going to be CIO, the first question that you've got to ask yourself is, does the company, the management team, really believe that innovation is essential for their growth?

If that is the case, then the CEO is really the champion of innovation. CIO, which is chief innovation officer, is really the catalyst for growth, and CIO ensures that an innovation environment is built—a culture which encourages innovation is built—and that innovation really delivers. So the CIO role then becomes very important in selection of people and development of people, in developing the right culture, creating the right environment and providing people the support as well as the funding to encourage innovation.

And frankly, at the end of the day, innovation is going to be measured by the results, which is what kind of return did the company get? I was really fortunate in our case: very clear growth from $2.1 billion in 2001 to $5.4 billion in 2007. Our topline compounded annual growth rate was 14%; our bottom-line, compounded annual growth rate for seven years was 10 to 11% while we invested the remaining money back into—constantly into innovation and into the business.

So we delivered. And when you deliver, the management team—and, frankly, the investors—are willing to invest behind innovation. So the role of chief innovation officer is dependent upon the management's belief and conviction that innovation is essential for their growth, and two, is the ability to deliver against the set goals.

Anita Brick: How is being in that role? How did that transform the way you viewed the world?

Surinder Kumar: It has been personally really rewarding. I have looked at — I've shared with you, or you've shared, I have both the technical degree as well as the business degree, you know; applied both of those to driving innovation for growth, looking at technology which will transform or provide distinctive products or improve productivity on one side, and two is constantly looking at being able to prioritize what we need to focus on to be able to get the highest return on innovation.

So the result of that one for me personally, has been extremely rewarding because I've seen the growth of people, I've seen growth of our business, and I have become not only a strong believer that I was, but a strong champion for technical people and strong champion for innovation, because those two are very essential components for growth. And technical people normally do not champion themselves.

It is very important for a business person to champion their technologies, their ideas with the business people to be able to get the best out of them.

Anita Brick: This rolls right into another question that came from an evening student, and I wonder if he read your book because he was just talking about a company that in a few years went from being $2 billion to $5 billion, and he asked, or he or she asked, when you think of sustainable development, it has a very elastic meaning.

When you think of it, do you view it as the trajectory or the new trajectory of a company, or the broader meaning of development that preserves opportunities for generations down the line?

Surinder Kumar: To me, sustainability has two key components. One is consistency; the second is time. To me, consistency of delivery on business growth is very essential. And time, to me, is that of generational growth, which is making sure that for generations to come, innovation will deliver results which can be only delivered through people.

So one is what we call horizon one through horizon three—business growth—horizon one being between 0 to 2 years, horizon two being between 2 to 4 years or 2 to 5 years, and horizon three being past five years— those are the components from an innovation standpoint for business growth.

The second part of that one is people who will ensure that the results of innovation in terms of business growth and people growth continue over a long period of time. And that is developing our people, developing our leaders who will continue. So sustainable growth to me, is sustaining business growth consistently better than the competition. And is building great people and great leaders who will ensure generational growth.

Anita Brick: Great. I have one final question. If that's OK.

Surinder Kumar: Sure.

Anita Brick: Where do you see the greatest opportunity to innovate innovation?

Surinder Kumar: Well, that is a tough one.

Anita Brick: Well, I don't like to ask the easy questions. What can I say?

Surinder Kumar: The greatest opportunities for innovation are really in my opinion, in total business. At this point, there's tremendous focus of the companies in product innovations. I think we need to look more strongly on business model innovations. There are a lot of business models that have been stagnant for a long period of time. The teams need to look at, in the current environment—where the information is available across the globe very quickly, where, you know, countries like China, India have tremendously strong resources from a technical standpoint and are significantly less expensive —We need to start looking at our business models in the US and start looking at, how do we innovate our business model to be able to grow our business on a continuing basis?

Anita Brick: OK, great. Well, we're going to check back in and see if there are any other new things that you see a little bit down the line. Thank you very much for taking the time. I know you're very busy and have lots of things to do, so really appreciate your sharing your insights.

Surinder Kumar: Thank you very much, Anita.

Anita Brick: And if you want to learn a little bit more about Surinder’s approach to innovation, you can go to www.RidingtheBlueTrain.com. And thank you all for listening. This is Anita Brick with CareerCast at the Chicago GSB. Keep advancing.