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Where Great Ideas Come From

Tapping the world outside your company for the ideas that will keep you smart.
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The great idea that launches a business needs to be the first in a series. Here's a menu of proven methods for gathering information and tapping the world outside your company for the ideas that will keep you smart

Early last year the Inc. FaxPoll asked readers, "Are you too busy to be smart?" Between managing people, selling products, negotiating deals, and handling surprises, do you have time to read, to talk, to sit and just think?

Where, for that matter, did your last great idea come from? Customers? Magazines? (We flatter ourselves.) Simply popped into your head?

What we figured, and what we heard back, was that although daydreaming and intelligence gathering put people in business, there's little time for such things after ventures get fully under way. "So much new technology, so little time to learn," lamented one founder. "I wish I could read faster," wrote another. One chief executive noted that whereas he used to spend the majority of his time thinking about how to improve his products and be different from his competitors, he now was consumed by keeping up on and complying with changing government regulations.

The answer for most was, Yes, I am too busy to be smart.

But other CEOs said they recognize that managing a company in today's environment means more than getting today's work done well: it also means anticipating tomorrow's. "You must set some time aside for brainstorming and research, otherwise you die" is how one founder somewhat histrionically put it. Searching for ideas, they contend, is not a luxury. Those CEOs have figured out ways to stimulate their thoughts without becoming deafened by the cacophony of the outside world. They've learned how to make the time, how to filter what they hear, and how to transport ideas back into their organizations.

Many of their strategies for finding wisdom outside their own office walls aren't complicated. Most involve little more than talking, albeit with the right people and in the right places. A few take more work to establish and to nurture. All, happily, can be copied.

* * *

Get into a Peer Group
Company managers need two kinds of ideas: big-picture ideas (What new technology is out there that I could use but haven't thought about?) and specific problem-solving ideas for day-to-day operational quandaries (How do I set up a benefits plan?). Peer groups prompt both. Running the gamut from formal associations to informal clusters put together by CEOs in the same region or industry, peer groups -- small discussion groups held regularly among the same people -- are providing increasing numbers of managers the chance to share and hear everything from tactics in hiring to options for solving company crises.

In the Boston area a group of about a dozen software-company founders in noncompeting niches has been meeting one evening almost every month for four years. At a recent Software Executive Network (SoftEN) gathering, the conversation ran from how the different companies project returns on direct mail to efforts to crack down on software bootleggers. At one point member Vadim Yasinovsky heatedly outlined a trademark emergency he was facing. A much larger company was preparing to introduce a division with a name that sounded confusingly similar to that of his 19-person company, Clear Software. "I don't know what to do," he moaned. "This could destroy me." Yasinovsky's first impulse was to unleash lawyers or make a stink in the trade press -- but 15 minutes after launching the discussion he had a prescription for a more subtle course of action. Use your industry contacts, counseled the group. Have them lobby on your behalf with the higher-ups in the large company. Yasinovsky set that plan in motion; the two companies eventually reached a compromise.

"The SoftEN people called me off, which was the most important thing," Yasinovsky says. That kind of interaction is typical, he adds; the CEO colleagues are for him like a lifeboat. "They're enormously helpful; it's unbelievable. They can point to things that I would not even have considered. If I have a serious issue or self-doubt, I wait for our meeting at the end of the month."

* * *

Cultivate Mentors
"I'm a wimp, and I like the hand-holding," says Mary Baechler about her dependence on outside mentors.

An experienced outsider to bounce thoughts off and extract ideas from is a more personalized, more focused version of the peer group. Mary Baechler has cultivated three mentors she cites as invaluable during her nine years running Racing Strollers, a Yakima, Wash., manufacturer of baby strollers for joggers. The first, a local businessman, was recommended by a banker who turned Baechler down for a loan. ("That mentor taught me to love my financial statements," she says.) The second she met by cold-calling a multinational corporation and asking the chairman's secretary whom the company had used to set up international distribution. ("I cold-called the referral as well, and he told me so much about distribution in our first conversation that I kind of threw myself at him and said, 'Gee, will you teach me?' ") The third she met at a management-education program.

Not only have the mentors walked her through the business issues she first approached them about, but they've consistently helped her troubleshoot problems as well. Last spring, for instance, Baechler discovered that some employees had stopped taking orders for post-office delivery of certain items because their boxes were bigger than what the post office allowed. She was aghast -- but she had people to call for advice. To refocus her staff on the customer, she says, "one of my mentors gave me this phrase: 'You are no longer a salesperson/receptionist/ac-countant; your new title is customer person.' Another reminded me to accept responsibility whenever there is an error in communication; I apologized for not communicating clearly, and we concentrated on fixing the problem."

Baechler estimates she spends an average of two to three hours a week on the phone with her mentors, and she often will run important ideas by all three. Sometimes they offer three different alternatives; other times they support the course she's already opted for. "I'm always amazed at the generosity of people who will take the time to teach novices," she says.

* * *

Visit Other Companies
It's hard to keep attuned to big-picture ideas without getting out of the office. There's only so much, after all, that can be learned from the same group of people without some sort of external stimulus. One option: hit the road and visit other businesses.

Don Romine, president of Web Industries, puts it this way: "When we do plant-to-plant visits, it's in the spirit of friendly piracy." At Web, a $20-million contract manufacturer based in Westborough, Mass., one of Romine's biggest tasks since moving into the presidency, a year ago, has been to turn the amorphous concept of ownership -- which is talked about a lot at the partially employee-owned company -- into something that makes the company work better. Romine hasn't been shy about looking for counsel from other companies and over the past year has visited four other manufacturers and hosted several visits as well.

At one company the foreman described how it had collected 127 ideas from the factory floor the year before and had implemented more than 100 of them. "I thought, What a great idea," says Romine, "to measure not just production rate but idea generation." On many of the visits, he brings along nonmanagement Web workers, who also tour facilities, trade tips, and hold roundtables to trigger their own ideas. At one company Web line workers heard about how work teams do their own hiring and firing, and came back and adopted a version of the concept.

Though it takes time to set up and make the visits, Romine is adamant that the trips have led to both tangible changes and intangible enthusiasm. The ideas he and others come back with, he says, are "little light bulbs going off: none in particular is necessarily revolutionary, but together they've made a very significant change in the way we do business."

* * *

Create a Personalized "Textbook"
For ideas about day-to-day operations, skimming over a helpful article or book can be like calling a mentor -- the written words can spark ways of thinking about specific needs. Steve Jonak has crafted a system that's simple and low tech and, he says, ensures he's got ideas when he needs them. He's building a master file of articles categorized by management topic.

"There's a lot of information out there, and sometimes I don't even have time to absorb the article when I find it," says Jonak, who owns Industrial Steel Inc., a steel service center in Columbia Heights, Minn., doing $1 million in business. When he comes across an article that seems as if it could be useful in the future, he clips it and files it in an 18-inch box in his office -- dubbed his Run the Company box -- under topics such as Keeping Customers, Delegation, and Safety.

"When you're working on a specific project," says Jonak, "it's nice to be able to pull a whole bunch of articles and have the information right there." It's timesaving, he says; he doesn't have to flip back through books or magazines to find the article he remembers seeing. Jonak also keeps two special files for weekly reading and daily browsing. In them is "motivational stuff": paragraphs about making the transition from entrepreneur to manager, homilies about turning ideas into reality, reminders of big-picture company goals. "These two files keep me on track."

* * *

Get Out to Industry Conferences
As with visiting companies, one of the key reasons for going to conferences is to avoid the tunnel vision that can overcome managers who live and breathe their business. "I can get MathSoft-centric here," says David Blohm, CEO of MathSoft, a Cambridge, Mass., software company. He is an active member of several software associations and educational groups, but he also makes time for industry conferences. Not only do they provide informal networking opportunities (what he calls the "schmooze time in the schmoozatorium") and a chance to benchmark his $20-million company's progress, but also they enable him to catch up with evolving technologies efficiently.

"There'll be whole sessions focusing on, say, new hand-held computers," says Blohm, "where they're discussing how people view the market -- and you can talk to people afterward. You can't get that breadth of information by reading." Even with travel and registration costs that go well into the thousands, the decision to attend the meetings is still "a no-brainer," he says. "After the last conference, I came back with 14 names of people who wanted significant follow-up. Can you imagine other ways of trying to get useful, productive interaction with 14 people?" He estimates it would cost him 10 times as much and take 10 times as long. He methodically debriefs himself after conferences by taking all the business cards and little pieces of paper with names he's collected and typing up a list of whom he spoke to, what they talked about, and what kinds of calls or information they agreed to trade.

Besides serving to make information more compact, Blohm emphasizes, conferences make it more visual. At a recent conference he saw three examples of how people are creating electronic books, which MathSoft has been working on, "and it became clear to us that we could be doing things better with multimedia." The value, he says, was the vividness of the hands-on experience. In fact, after seeing all the opportunities presented, he decided to hire a multimedia expert.

* * *

Consort with Competitors
Casting at least sidelong glances at competitors -- to note what they're producing, how they're presenting themselves -- is standard operating procedure in business. But talking with competitors and trading strategic information is a little more unusual -- and if it's pulled off, it can be an enormous source of ideas.

Although Joan Cooper, cofounder of $16-million children's clothing catalog Biobottoms Inc., in Petaluma, Calif., says that competitors aren't her primary source of ideas about how to run her company or what products to offer -- she cites her management team, a regional group of other catalog owners, and the company's 50 investors as other sources -- she says competitors have been able to offer rare insight into what works and what doesn't in the industry.

Biobottoms has traded mailing lists with competitors from its start. At a recent trade convention Biobottoms even went so far as to host a cocktail party for its competitors. In the spirit of "you share a little, I'll give a little," conversation ranged from customer-acquisition strategies (How did your ad in the New York Times pull? Can ad campaigns pay for themselves?) to relationships with vendors (How's their quality? How'd you get them to hold backup product for you?).

"We've made a concerted effort to open the communication in our niche of the industry," says Cooper. "It's like anything: if you go out closemouthed, you'll get a similar reaction. If you go out with good feelings, you will attract people."

* * *

Turn Customers into a Nonstop Focus Group
Perhaps the biggest source of ideas both broad and narrow is customers. Respondents to the Inc. FaxPoll named customers as the second-most-frequent idea source, after magazines. Some CEOs regularly take time to work the customer-service phones and hear what kinds of calls their companies are receiving; others visit top accounts and ask what they could do better and what their competitors are offering.

John Schaeffer, head of Real Goods Trading Corp., a $7-million catalog company in Ukiah, Calif., has taken the idea of drawing insight from customers even further. To begin with, he's turned the catalog of energy-saving products into an ongoing conversation between him and his customers. Laid out like a community magazine, with political articles and commentary, the Real Goods catalog elicits pages of passionate letters about the energy movement, previous letters, and Real Goods products. "The letters spur new ideas all the time," says Schaeffer. "When I started the company, I was taking orders, talking to vendors. Now I do more marketing and merchandising, so letters keep me in touch with the market."

Schaeffer credits letters with prompting the idea to produce a more simple black-and-white version of the catalog for steady customers who disdained the company's mainstream color version. Customers also provide tangible suggestions for products they want Real Goods to carry: Schaeffer estimates 10% of the catalog selections are customer inspired. Last spring the company put out the call for products that Real Goods ought to manufacture, and it already has received 300 responses.

But the biggest idea Schaeffer got from customers didn't have to do with products -- it had to do with cash. Several years ago customers sent Schaeffer two or three letters a week asking if there was a way to invest in the company. "I navely came up with this idea that sure, there's a way to invest -- send money." Why not, he mused, offer people 10% interest to lend money to Real Goods, which was better than the 8% they could get from certificates of deposit and was less expensive to the company than the 12% banks were charging at the time? He put a notice in the catalog, and customers promptly sent in $250,000. Spurred by the response, he took the original customer idea to its logical extreme and did a formal public offering under the nascent Small Corporate Offering Registration program, enabling Real Goods to raise $1 million with minimal paperwork. Once again, almost every investor came from the company's zealous customer base.

* * *

Take Advantage of Internal Technologies
Talking with people in a growing organization becomes more difficult as the number of players expands and the interaction with each shrinks. "Usually, managers get information from other managers, but I knew there would be bottlenecks or control freaks who'd clog the process," says Mac Lewis, CEO of Computer Network Technology Corp., a $22-million Maple Grove, Minn., company with 200 employees. One modern prescription for spreading ideas and comments more widely is electronic mail. In addition to giving greater access to information to greater numbers of people, electronically connecting a workplace means that ideas can more easily flow to the CEO. In companies connected by E-mail, anyone can "carbon" (that archaic term) a message to company managers. And at companies with electronically connected computers, a CEO can tap into common files and get updates on issues that might otherwise not pass his or her way.

For example, Timeslips Corp., a 70-person software publisher in Essex, Mass., has developed a suggestion database. CEO Mitchell Russo says it "probably has more than a thousand suggestions in it, from customers, from letters, from me, from developers -- every possible source." The database centralizes all those comments, whims, and fleeting thoughts, with entries including a synopsis of the idea, who originated it, and the date of the suggestion.

Russo peruses the collection every week or so to keep up with what's coming in and to provoke his own imagination. "Fifteen to 20 of the items are what I consider great ideas," he says, "and they end up on a short list in my personal database." Some are simple, such as suggestions for added product features; others are more sweeping, such as new product concepts or major (and expensive) product enhancements. All, he says, help him set his agenda for how the company should be steered.

More than a hundred of the electronic suggestion box's entries were incorporated in the last Timeslips release, Russo says, and he is now overseeing the development of a new product that bubbled up through the idea-exchange system.

* * *

The choices people make about where they look for ideas are often not as deliberate as they might seem -- there is a strong dose of serendipity in finding methods that work. John Schaeffer received letters and thought it only natural to print them in the company catalog. Vadim Yasinovsky was invited by an acquaintance to a peer-group meeting just to see how he liked it. Probably only because she was being turned down for a loan did Mary Baechler take her banker's suggestion and ask a local businessman to teach her about financial statements.

What's more, the nature of how ideas themselves pop up is often equally serendipitous. Timothy DeMello, founder of Replica Corp. -- a Dedham, Mass., company that puts on national competitions for people growing fictitious stock-market portfolios -- is a firm believer in the power of randomness: the best ideas, he says, come from sources that appear totally irrelevant.

"I want to talk to a few people who have nothing to do with what I do rather than a million who might," says DeMello. When he was running Replica, he spoke regularly to a friend who runs a travel company. "We'd spend days going over his phone system, the way customers are kept in the computer, how to customize operations to deal with some customers quickly and others more leisurely. I'd read offerings for companies such as the Franklin Mint -- I study all prospectuses -- and you think, What does a company that sells Rhett Butler dolls have to do with me? But it's a direct marketer of products and might have ideas about listening to customers or software-support systems."

Pierluigi Zappacosta, president of $200-million-plus Logitech Inc., based in Fremont, Calif., likes to tell the story of people who were studying the effect of light on workers. The workers became more productive when the lighting was increased from 100 watts to 125. Then the lighting was decreased from 125 to 75. "And once more," he says, "they noticed a new increase in productivity. What they realized is that people were reacting positively not so much to the light but to the fact that someone was trying to find the ideal environment for them. Every attempt they were making was taken as a good thing." The point, he says, is that the specific methods people use to look for ideas are less important than the fact that they "invite themselves to allow things to happen in a more chancy way" -- to be a conduit for ideas.

Which means, for company builders, finding the time -- and establishing the habits -- that will give ideas a chance.

Last updated: Jan 1, 1993




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