Why are some major companies good at driving corporate innovation in technology? For some answers to that question, Enterpriseleadership.org turned to Dr. Ron Pierantozzi who built his entire career on driving corporate innovation in a technology-related company and doing research in this area. Before retiring from Air Products, a $10 billion supplier of industrial gases and chemicals, Dr. Pierantozzi was the company's director of business development. He worked on new venture creation and technology transfer. He also served as Air Product's director of technology. Since retiring, Dr. Pierantozzi has been a member of the Radical Innovation Group, a consulting firm that works with global companies to develop their innovation capability. He lectures at the Wharton Business School, and was an executive-in-residence at Rensselaer Polytechnic Institute's Lally School of Business. The holder of 32 U.S. patents, Dr. Pierantozzi co-authored the article, Implementing a Learning Plan to Counter Project Uncertainty, which appeared in Sloan Management Review, January 2008.

Here is what Dr. Ron Pierantozzi had to say:

EL. Can you briefly describe the innovation programs at Air Products?

RP.  We had a couple of different things going on. I worked on the business development team, structured as a separate organization. It reported to the development organization and aligned parallel to the technology organization. We focused on new market entry, new business ventures, and new business starts. We also invested in startup businesses to generate new ideas and new technologies. Likewise, the technology organization had teams focused on developing products and bringing them to market. This organization reported to the office of the CTO. It had a number of different processes in place to develop new opportunities.

EL.  Did both of these organizations have people dedicated to innovation and nothing else?

RP.  In the new business development group, we had between six to 14 people whose only job it was to create new business opportunities for the corporation. They looked primarily outside the existing markets and existing capabilities. They looked to new emerging markets in technology or market trends with the goal of developing ideas around how to create large business opportunities. I managed that group. It would grow depending on how the opportunities grew. We supplemented our permanent staff with consultants. The technology organization was organized the same. We had a corporate research group whose job it was to create new long-term technology options for the company. It was a corporate entity. The funding did not come directly from the business units.

EL.  Can you describe Air Product's corporate innovation program?

RP.  The education program began with the idea for creating new opportunities in the company. The tool sets we had were not appropriate for innovation. These tool sets focused on building incremental new products or reducing the cost or improving the efficiency and productivity of our existing capabilities. We began to bring in educators to help us develop the new tool sets we needed. The process included bringing in people from the Radical Innovation Group. They worked with us on how to identify opportunities in highly uncertain markets, and how do deal with bringing folks from the Wharton Business School to work with us on the discovery-driven planning methodology. As activity grew, we began to formalize this program under the auspices of a quasi Air Products University. Within it, we were already doing things around Six Sigma and project management, and quality. Inside of this, we created the innovation college. Within it, we began to teach classes ranging from creativity to how to develop market opportunities, and assess those opportunities, right up to the execution of new businesses and new startup opportunities. At one point, we had 35 courses in the innovation college ranging from creativity to business execution. I am still involved in teaching some of those classes.

EL.  Can you describe some of the methodology that has come out of the Radical Innovation Group's seven-year innovation project?

RP.  I was involved with this Group for several years. The initial aspect of this Group and its methodologies included tools around planning for uncertainty. Most large companies operate on information culled from their existing businesses or existing experiences. As you look beyond your current technologies and current markets, you see many uncertainties. There are many assumptions that come into our thought processes. With the Group, it initially developed a set of tools that enabled us to manage those uncertainties at the very earliest stages. We called that the learning plan. It has grown not only to a set of tools, but to a set of organizational competencies.

Within the innovation process, the Group can identify the required separate competencies.  For example, discovery incubation acceleration is a competency. It is the discovery of new ideas, and new opportunities. The incubation focuses on formulating them and experimenting with them to get to a reasonable business proposition. Acceleration looks at growing them to a commercially successful entity or business or technology.

You also need a set of competencies that differ from anything else you have in the company. The idea of having a functional capability in innovation included both the competencies, tools, and the career paths for the individuals who work on the innovation processes.

EL.  How do you feel about open innovation communities such as InnoCentive?

RP.  InnoCentive and Nine Sigma are great tools for tapping the minds of the global audience. Companies need to tap into these tools as much as they can. You need to get outside of your own company. Open innovation enables you to do that. Companies not only need to do that, but they need to have their own people spending some of time outside the existing company walls. For example, although Air Products is an industrial gas company, we would have people going to conferences that dealt with IP infrastructure for machine-to-machine services. It presented an emerging market opportunity for using IP to develop decision processes and analytics. We were doing it internally to some extent to run our plant. We wanted to get out and learn how to develop businesses in those kinds of markets.

Open innovation goes beyond using InnoCentive or Nine Sigma. Those two communities are part of open innovation. You need to get the innovators and the business leaders out into new spaces. They need to get outside of their existing business comfort zone and seek more insight from sources such as universities, startup companies, conferences, and emerging markets.

EL.  What is the status of innovation right now in U.S. companies given the economic downturn? Is it something we need to focus more on?

RP.  Companies are focusing less on it. Instead, they are working on improving their bottom line in this economy. There is not much top-line growth going on right now. I should clarify that I have not done a rigorous statistical analysis to know the extent of this. Obviously, there are exceptions to this comment. In reducing that cost, companies have eliminated much of the longer-term focus around innovation and new products. Instead, they have focused their new products organizations around products that have more reactive market payback within 12 months to 18 months. Because of the economic downturn, companies have cut their long-range research and development. In the long term, this could potentially prove disastrous not only for companies but for innovation in this country. That is a big issue.

The question: Should they be doing more innovation? As an outsider from the Wharton Business School, I find it easy to say 'Yes' they should be doing it. Senior managers have a difficult time deciding to spend money on things that will not happen for three- to five-years, especially when the company is struggling to get in the black. Some of the forward-looking companies have started to increase their innovation efforts. I see some light at the end of this tunnel.

EL.  What takeaways would you give CIOs and CTOs about innovation? 

RP.  If you talk to CTOs about building some functional capability around engineering or chemistry, they would know exactly what to do. They would put in place a set of guidelines, strategies, and hire the right type of people to drive the right type of programs. They need to do the same thing around innovation and around longer-term growth opportunities. We keep treating innovation as though it is something similar to what we do today. We just need to take a couple of bright people and put them in jobs to go after innovation. The reality is the way CTOs and CIOs need to think about this. Innovation is a function, but it is a different function than what we do today.

The Radical Innovation Innovation's study at Rensselaer looked at the importance of innovation as a function. This function, according to the study, needs to include a set of tools, a set of capabilities, and a group of people who see a career path in this. If you do not have these things in place, then it will be difficult to carry out innovation. You might take a one-off kind of innovation occasionally. For the most part, sustaining this type of innovation would be extremely difficult. My simple one line message to CTOs and CIOs is this: Start thinking of innovation as a function and do exactly what you have done in your other functions to build the capability.

EL.  At the Wharton Business School, you teach a course in entrepreneurship and innovation. What was the 2009 response to this course?

RP.  I teach on the West Coast in Silicon Valley in San Francisco. The course has always been popular. This year we have the highest number of students that we have ever had. At one point, enrollment was nearly doubled what we had in 2008. Is that due to the economy and everyone thinking they want to start their own business? Is it due to us doing a good job teaching the course? I cannot explain the reason for the spike in enrollments. My class a year ago was probably the most successful class I ever had. Six of our business plans made it to the semi-finals of the Wharton business plan competition. We see many young engineers and managers of large companies (this latter audience populates our executive MBA program) thinking they want to go off on their own. Perhaps, they do not see the growth and career opportunities in their own companies.

EL. What made the two different innovation departments at Air Products successful?

RP.  It was many things. We got people out of their comfort zone. We had a group of people who went out and found new things. We had a group of managers who spent time on it. We used to meet with the senior management team monthly to talk about ideas. Senior management put an enormous amount of effort into helping and thinking about the growth opportunity. It turned into the growth board comprised of the senior-level executives who controlled 90 percent of the resources of the company. They focused on what new opportunities we looked at, and what we did. This type of thinking and support contributed much to the success. Then we taught people how to do things. We learned that you could not use the existing type of Six Sigma stage gate tools to drive long-term innovation. You needed a set of different tools, like the learning plan methodologies and discovery driven growth.

EL.  Did you work with the CIO at Air Products?

RP.  Yes. We launched a couple of business initiatives that dealt with IP capabilities because the company was into this type of monitoring. The CIO sat on our advisory board. He understood the needs that we had from an IP perspective. He was a manager looking outside the company. At the time, our IT organization primarily focused on infrastructure support, which is what most IT organization in large companies concentrate on. We needed to go outside and get some development capabilities. He was a strong supporter of the innovation capabilities as they related to IT.

EL.  Are you seeing much innovation from U.S. companies?

RP.  Emerging companies right now face the challenge of lack of capital. I am on the board of two emerging energy companies that have a fair amount of innovation going on, but they have found it difficult to raise money from the venture capital community.  A decade ago, VCs had no qualms about funding companies. During 2008 and 2009, VC cut back substantially on funding new ventures.

Meanwhile, large companies face a similar dilemma around funding new ventures. They, instead, look for more sure bets rather than taking a risk. Everyone wants to put their money in a sure bet. Sure bets often do not turn into big new things. People like Andy Grove are not convinced they will see the next Google or Microsoft. I do not think there is anything like that out there now. Today's good technologies will not turn into major innovations that will drive the next generation of growth in this country.

EL.  Where do you think the next information technology innovation will come from?

RP.  We now have the Internet and tremendous IP capability. This entire issue of smart services will probably be the next area of innovation. Much of the runway there can create a tremendous amount of value, particularly in the energy space, as well as other industries. Many service layers need to be on top of this capability to drive not only Web 2.0 kind of stuff, and social networking, but real industrial-type analytics that allow us to drive smart services and decision-making. This one area of the IP space still has opportunity.

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com

If you ask some C-level executives what they might do after they retire, you could hear something like, "I've thought about writing a book which chronicles what I learned running a major company." Unfortunately, few CEOs write management books after they retire. Furthermore, it's rare to find a senior executive who has written one while he or she is still actively on the job. Bob Seelert, the chairman of Saatachi & Saatchi, one of the world's largest advertising companies, is that rare kind of executive. He is one of the most insightful executives to emerge in this troubled business landscape. His new book, Start with the Answer, is a back-to-basics primer for anyone in a leadership capacity.

Seelert has been with Saatchi & Saatchi since 2003. After graduating from Harvard Business School, Seelert spent the next 23 years with General Foods Corp. where he eventually became CEO of Worldwide Coffee and International Foods. He closely observed one of the largest mega-mergers in United States' corporate history - Philip Morris's acquisition of General Foods. His career also included leading the turnaround of Topco, a grocery industry co-operative, and Kayser -Roth Corp., a leading U.S. manufacturer of leg wear.

Enterpriseleadership.org recently sat down with Seelert to talk about the management challenges CEOs, as well as other C-level executives, face dealing with the economic downturn.

EL. Why did you decide to write this book?

BS. A creative person at Saatchi & Saatchi told me that my wisdom set me apart from other executives he had known. After he said that, I got to thinking that, in fact, I dispense advice, council, and perspective. It's based on my collective experience. Perhaps, I know quite a bit about many things. I decided to put down the wisdom I have collected over a career that spans five different companies and 40 plus years.

The book consists of a series of easy-to-understand points about things that can lead to success in your career and high performance in companies. My book is drawn both from business and my life. You can pick up this book, read a few sections, and then put it down. It is biblical in that sense. That's the one comment I hear frequently.

EL. What are the three top lessons you learned as a CEO?

BS. Leadership begins at the top. Having the right person in the CEO seat can make all of the difference for a company. You can cascade that down the organization as well. Next, you always have to be open, honest, and candid and get a straight forward assessment of the facts. Some times the truth can be pretty ugly. Until you get it on the table, you are not in a position to deal with it. Unfortunately, many people do not look down the pike at the truth. It is one of the reasons they don't make progress. Throughout the book I adopted the predominant philosophy which became the book's title - Start with the Answer.  Before you go off and spend much time and money, you have to assess all of the facts about where you want this to end up. In essence, if you start with the answer, then you are in a position to work your way back to the solution.

EL. According to industry consulting firms, such as Gartner Group, the average CEO tenure is about four years. Why is CEO turnaround so high?

BS. In some cases, you may have the wrong person. He or she may not have the right vision for the company. Also this person may or may not have established the right standards of the performance expectations and may or may not have delivered against what he or she had initially proposed. He or she may or may not have unleashed the energy in the company for building the right kind of rapport and relationships with all of the employees. Impatience heightens all of these things. In this short-time world, others judge executives by what have you done for me lately? You have to deliver against what you said you would do. It's a combination of factors.

EL. What challenges do CEOs face in this economic downturn?

BS. They are coming under more pressure now. This is the most challenging environment that businesses have faced in decades. A recent article I wrote about leading in tough times lists the 10 things you need to do to lead successfully. First, you need to get the truth on the table. Make sure you start with a good cold heart assessment of the facts. Second you need to establish the right kind of standards for the new reality. You can establish a performance expectation in terms of how you will perform relative to the market.

At Saatchi & Saatchi, we do not know how far off the media environment will fall. We know that we want to beat whatever happens by 50 percent. That is a relatively high expectation in an assured market sense. We want to use this as an opportunity to grow our share of the market. Others include the following: Think long term but act short term. Communicate, communicate, and communicate. Do whatever it takes to get in front of your people to reassure them that you are going to lead the company to see a better day. Tough times call for extraordinary efforts by everyone in the company. Get with your customers to see how their needs are changing and how to best respond to those needs.

EL. What companies do you most admire and why?

BS. I admire the leadership of Toyota and Procter & Gamble. Toyota has done a good job of driving innovation and making continuous improvements. Even through automobile sales have fallen, Toyota has continued to add enhancements to the third generation Prius. In fact, some auto manufacturers do not even offer a hybrid. Toyota's new Venza fills a gap this company had in the market. Toyota continues to stay true to its long-terms goals of innovation and continuous improvement. Meanwhile, Procter & Gamble has reframed the value of some products to better fit the economic environment. For example, it has introduced a low-cost version of Tide. The company reminds people that Tide will help them keep their new clothes looking that way longer. This feature and benefit appeals to consumers in this type of environment.

EL. So what type of a balancing act do CEOs need to do in this environment?

BS. Despite the rough times, you have to add some people and create some new capabilities. Whenever you add people, however, you need to look at where you can reduce. Adding a new capability also means thinking how you can eliminate something you no longer need. You need to make tradeoffs in this kind of tight environment. To pay for the additional staff and capabilities, you need to think about the reductions and the elimination.

EL. As the CEO of a major advertising company, are you seeing your business evolving more to social media?

BS. Absolutely! Our world has moved from talking to people to building connections with them. We want to create information that is useful in peoples' lives so our clients will be invited in their homes.

EL. Can you briefly describe some of the technology trends you have seen in your career?

BS. When I worked at General Foods and Philip Morris, hardware and a centralized IT environment dominated the company landscape. Today, we can disburse software applications so they are closer to meeting the needs of disparate, decentralized entities. People at Saatchi & Saatchi not only need to understand technology, but to understand how it affects the way they access information, the way they lives their lives, and the way they make decisions. We have various centers of expertise that touch all of these things. You need to embed these things in every operating unit today. You cannot have a periodic get together with some center of expertise that tells you about this that and the other thing. You need to be living these things on a day-in and day-out basis.

EL. You prefer to talk about corporate dream as opposed to operate vision. Is that something that can be applicable to any company?

BS. It can be and should be. I have a story in the book called Tape Your Strategy to Your Forehead. There is a big difference between a dream and many mission statements. You should be able to express your dream in 20 words or less. People should be able to tape it to their forehead. You see a lot of vision and mission statements that go on and on. People do not have a way to quickly state back to what is this company all about. When I did the turnaround for Kayser-Roth Corp., we said our dream was to become the best leg wear company by meeting customer needs better and faster than competition through total quality. It is 20 words. It said this is what the company is all about. At Saatchi & Saatchi we want to be revered as the top house for world changing ideas to create sustainable growth for our clients. This is a pithy, meaningful statement. We expect everyone in the company to take this forward and know what the company is about. This kind of thinking energizes every employee.

EL. When you were at General Foods, the company went from a centralized to a decentralized structure during the acquisition by Philip Morris. How did you deal with the CEO so everything was harmonious?

BS. In the book I say that centralization and decentralization can be the nitroglycerin of organizations. Individually they are fine. However, together they can create some real problems. You need to be one or the other. One company highly centralized, while the other one was highly decentralized. It just never got to be a happy marriage. There was no way to bridge that kind of gap. General Foods was a matrix organization with many centralized resources, such as IT. We had ways of cross roughing them with the line organizations to get out of the decentralized needs of the various businesses. Centralization ends up often times being a one-size-fits-all environment. It is a difficult approach when your business comprised of an entire bunch of disparate business with no relationship to each other.

EL. What is your organizational structure at Saatchi & Saatchi?

BS.  We are disbursed geographically across 83 countries. In some areas we deal with affiliates. We have an entire series of company beliefs that we distribute around the globe. We start with our inspirational dream ad. Our local management and applications are highly decentralized. We will give them the beliefs, values and principals. The applications and the plans are in the hands of local managers.

EL. Can you describe the differences in the strategy process at the companies where you were CEO?

BS. General Foods had an intensive strategic planning process. In fact, it could drag on for a year and wind up being a three-inch thick book.  By the time it got done, it was time to start the next strategic planning process. At Saatchi & Saatchi, we have the entire thing down to a single page that tells you everything you need to know about our strategic direction. Most companies will never get to that type of an environment because spend too much time strategizing about the future. Instead, they should spend more time thinking about it and making it happen.

We operate on two types of beliefs - 'one team, one dream' and 'nothing is impossible.' We have an entire series of beliefs and character statement. We have the challenge to become the agency of the year in every market in which we operate. Our organizational focus includes filling the world with love marks, which is a strategy to elevate brand to customer loyalty and beyond.  We can put all of this stuff on one piece of paper.

The next thing we do is to put together an annual plan. We try to cascade what we call our 100-day plans throughout the company. It consists of the half dozen things you want to get done in the next 100 days. If you knock those things off, you get your next 100 days. That makes up a year.

Elizabeth M. Ferrarini -She is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com