New ways to think about innovation on display at Kellogg summit

Kellogg Innovation Network brings together top leaders to explore turning ideas into market success; ongoing partnership with practitioners creates dynamic conversation

By Kevin McKeough

June 29, 2007 — “Innovation’s a contact sport,” Motorola executive Jim O’Connor ’96 told executives at the Kellogg Innovation Network summit, held June 18 and 19 at the James L. Allen Center. “If an idea doesn’t tick off someone or isn’t disruptive,” added the vice president of technology acceleration, “it’s not a good innovation.”

The invitation-only event, titled, “Lost in Transition: Innovating for Marketplace Success,” drew about 50 senior executives from companies such as BP, Caterpillar, DuPont, Chamberlain Group, Raytheon and others to share their experiences with managing innovations’ disruptions and opportunities. Of the 45 managers in attendance at the July event, more than half have participated in more than one KIN event previously, a fact that indicates the continued value these leaders see in the initiative.

The Kellogg Innovation Network (KIN), which hosted the summit, conducts innovation research in collaboration with corporate supporters, many of whom are KIN members. KIN holds three annual summits to promote dialogue about innovation among leaders from a range of industries, and often times KIN members collaborate outside of events.

Interactive lectures, dynamic breakout sessions and networking were all part of the summit’s agenda, which focused on turning innovation into real products and services by bolstering delivery systems — supply chains, channels, sales teams and support infrastructures. Unlike conferences structured heavily around lectures, the KIN initiative is designed to create maximum engagement and value among the participants by getting them talking with one another so that they can exchange ideas. In addition, the summit strives to move ideas forward, making the abstract something that participants can deliver on. For instance, KIN itself launched a major new research project called the Transition and Scaling Initiative to study critical, but often underserved, delivery issues.

“The core value of KIN is bringing the best, smartest people from industry, academia and government together to talk about innovation challenges,” said Robert C. Wolcott, adjunct assistant professor of entrepreneurship and innovation and KIN director, who led the summit. Wolcott co-founded KIN in 2003 with Mohanbir Sawhney, the McCormick Tribune Professor of Technology and director of the Kellogg Center for Research in Technology and Innovation, which includes KIN.

On the summit’s opening afternoon, Wolcott framed the discussion by considering transition and scaling challenges associated with accelerating innovation. “Since the tech crash, an increasing number of global firms have built capabilities to pursue opportunities outside the realm of business units,” he said. Some have even built entirely new businesses to foster innovation, since innovation can “stress a company’s functions, systems, partners and people.”

Afterward, Albert Manzone, president of shelf-stable juices at PepsiCo with $800 million in annual revenues, contrasted case studies of Propel Fitness Water and Izze fruit juice to illustrate how the rules have changed for bringing innovative products to market. Manzone, far from simply flying in to deliver a talk, is also an active KIN member who has contributed to the vibrancy of this Kellogg network by commitment his time and intellectual capital to the initiative.

He explained that PepsiCo developed Propel to supplement its Gatorade brand of sports drinks, offering dedicated athletes bottled water with a variety of flavors, plus vitamins and antioxidants. The company introduced the product in a controlled market test in 1999, expanded it regionally the next year and used advertising to promote brand awareness in 2001. Propel now has annual sales of $600 million and an annual advertising budget of $40 million, Manzone said.

By comparison, Izze — a line of drinks that combines natural juices and sparkling water that PepsiCo purchased last September — began in 2002 as start-up venture that established markets in Chicago, Los Angeles and New York and then focused on smaller cities. With only $400 thousand for marketing in its first year, the company relied on face-to-face promotion, offering free samples and inviting college students to act as brand ambassadors.

“The market is really fragmenting,” Manzone observed. “Everyone is geared to their own solution, and [PepsiCo] is not geared to do that well. We’re a mass marketer.” Instead of being able to take three years launching a product, companies only have a few months to succeed now, he added.

To create more innovations, PepsiCo has created a new position — chief innovation officer — within each of its divisions. This person collaborates with the divisions’ chief marketing officer. The company also has created “innovation republics”—separate organizational structures within each division with entrepreneurial leaders. “It’s important to empower people who know how to do it,” Manzone said.

On the summit’s second day, O’Connor discussed the methods Motorola is using to promote innovation. He noted that the communications company spends about $4 billion on research and development annually, holds more than 21,000 patents worldwide and has more than 3,000 patent filings in process. O’Connor, who, like Manzone and most of the other participants, is also active in KIN as its chairperson. He offered insights from his role as founder and lead for Motorola’s Early Stage Accelerator, a four-year-old organization responsible for speeding innovation development. Each division within the company also has its own entrepreneurial teams. Innovation leaders within the company choose the ideas that seem most promising for being funded; these are then are managed as start-up ventures within the company.

To solicit ideas internally, Motorola uses a Web site to collect suggestions. “If you don’t have a systematized method for collecting ideas, you waste a lot of time,” O’Connor said. The company also has established technical account teams to meet with top Motorola customers to discuss possible inventions.

In the last two years, the company has established international innovation leadership teams to generate ideas for its large overseas markets. One result: a touchpad that allows Chinese cell phone users to draw Chinese characters when text messaging. “You’re just not going to see those things jump out of the labs in Schaumburg, Ill. [where Motorola is based],” O’Connor said.

Even with these systems in place, innovation remains unpredictable. When Motorola’s wildly popular Razr phone was proposed, it met with almost universally negative reaction.

“At the time, no one wanted it,” O’Connor recalled. “Our best successes are those that we least expected to be success.”

Reflecting on the success of the summit, Wolcott emphasized that the event, like KIN, is an ongoing effort to help foster innovation among participants, many of whom are cultivating deeper working relationships with Kellogg. “This is a real community,” said Wolcott. “The discussion gets richer all the time.”