The Seventh Career: Building an Innovation Keiretsu

John Kao: When Professor Nonaka introduced me to an audience, he said that I came from many contexts, which probably related to my interest in the subject of innovation and creativity...

I’ve had a number of different career goals, so maybe one of my specialties is serial retirement. Career 1: musician. The high point of my musical career was spending three months playing with Frank Zappa and the Mothers of Invention in L.A. when I was eighteen… Career 2: Jungian Psychoanalyst… Career 3: Professor at Harvard Business School… Career 4: Founding Companies… Career 5: The Idea Factory 1.0… Career 6: Producing Hollywood Films…

Priniciple 1: Every Movie Starts with One Person… Principle 2: Project-Centered Staffing… Priniciple 3: Culture of Collaboration… Priniciple 4: Weaving of Diverse Disciplines

It’s the fact that, on the one hand, if innovation practices are focused on ideation, all you’ll get is a bunch of ideas. But ideas are easy and they don’t necessarily lead to value… So the question then became, what are the practices that enable that kind of speed and continuity and volume of innovation activities to occur?

I’ll give you three core elements. One is design… The essence of design is prototyping and iteration. It’s a process for getting to unpredicted outcomes…

The second core elemenet is theater…Theater is how you transform your perspective and develop an emotional reaction to what you see that changes something profoundly.

The third and final leg is about designing integrated organizational systems. In our language, it would be designing an idea factory for a company…

What we are doing now is essentially version 2.0 of our company. Version 1.0 was that big companies would come here and we would work with them and help them change. Version 2.0 is that we want to be in the business of creating assets, leveraging the intellectual capital … In a way, it’s kind of like a keiretsu that we’re setting up here. I think of this almost like an innovation keiretsu… There are four sorts of glue that keep this keiretsu together: Cross-ownership…; people who see the whole picture…; processes…; projects…

Everything starts because somebody falls in love with an idea or an opportunity. Otherwise, nothing happens. That’s really the first thing, almost by definition. You need the initial spark...

The whole corporate culture agenda around innovation boils down to: How do you create a brand identity for innovation that allows people to be brave and step forward and do new things? …

Ideas are easy, they’re just the starting point… Having some kind of prototyping process within a certain kind of innovation-oriented environment that allows the prototype to be done on its own schedule, would be at least a next place….

"because he’s building up the other side of the digital economy" (Nonaka on Kao)

On the physical place: "We believe that physical place is really important…"

On the mental dimension of place: "That’s part of what we mean when we emphasize to companies that they need to figure out their story. There’s a big difference between what people physically do in a company and the kind of mental space they’re in, which relates to whether they’re feeling like they’re a part of the corporate story… so that on top of the literal landscape of day-to-day tasks, there’s another landscape. It has a different topology…"

On the spiritual dimension of place: "But if the story works, you progress to the third level, which is yet another landscape. The great Zen philosophers talk about how at the moment of enlightenment, space and time have a different meaning and there’s a great mental clarity. That burst of insight… has a different landscape again. It’s yet another shape imposed on the physical and the mental…

"Most companies design their architectures for physical efficiency. There is not much of a sense of how the physical place enables the story or the purpose...

I make a distinction between economies of scale and what I call "economies of discovery." Economies of discovery are about how you organize, spend, and manage resources so that you get discovery…

We often start off sessions with the curtains closed and the theater lights on, because we want people to come into a very different place from business-as-usual. Then we have spotlights that have words on them – "Welcome to The Idea Factory" – and we may have music playing… We want them quickly to get into the mood that there’s a drama about to happen, there’s anticipation...

There’s something very moving about a person who’s decided to take more risk or to change their lives to try to get something done that they really believe in. Most organizations are not that good about giving those people the extra courage or the resources to do what they do. I love trying to help out people who are stepping forward in that way…

My whole career was really influenced by reading this science-fiction book when I was ten years old…