How to Create a Culture of Innovation

February 5, 2009



Marcel Côté

Partner, SECOR



John McNain

Vice-President, Strategy and Marketing, Capital One Canada



Steve Thomas

CEO, De Beers Canada Inc.



Mary Ann Turcke

Executive Vice-President, Field Services, Bell



How to Create a Culture of Innovation



Chairman: Catherine S. Swift, Immediate Past President, The Empire Club of Canada



Head Table Guests



Bai Rashid: Grade 11 Student, Westview Centennial Secondary School

Rev. Michael Clarke: Associate Priest, Christ Church, Brampton

Robin Sears: Senior Partner, Navigator Limited, and Director, The Empire Club of Canada.



Introduction by Catherine Swift



We have a different format than usual today as it is a panel discussion on the important topic of How to Create a Culture of Innovation. With the current state of the world economy, it is easy to get sidetracked from the bigger picture and permit the urgent to take precedence over what is important. There’s an old question about what is the difference between ignorance and apathy? The answer is I don’t know and I don’t care. Despite the temptation of being caught up in the day-to-day negative headlines, we cannot afford to be ignorant or apathetic about the vital role of innovation to any successful economy. In fact, as Canada is actually quite well positioned to ride out our immediate economic woes better than virtually all other developed economies, we would be wise to seize the opportunity of the next couple of years to position ourselves to take maximum advantage of the economic recovery that will inevitably follow. One key way of doing that is to work on enhancing the innovation culture that already exists in Canada.



For today’s discussion, our four panelists will share with you why innovation remains embedded in their organizations’ culture and is a key part of their business plan today and for the future. Above all, they will demonstrate how innovation doesn’t fit into a tidy box, but rather means something different for every organization. It could be such things as a revolutionary product, the development of strategic partnerships or even streamlining customer services.



Today’s discussion will be led by Marcel Côté, a partner with SECOR and a thought leader on innovation. Marcel’s extensive experience in innovation and economic growth policies has made him the ideal candidate to be a member of the Expert Panel set up by the Council of Canadian Academies. This exclusive panel has been asked by the Government of Canada to report on the state of innovation in Canada. Marcel was also a sponsor of the global survey Managing Innovation in the New Economy, which polled over 1,000 firms on their innovation practices. He will share with us the insights of that survey today.



Our first panel member is John McNain, Vice-President of Strategy and Marketing at Capital One Canada. John leads a team, which develops the overall long-term strategy for Capital One’s Canadian operations. In 2005, he managed the development of the company’s Canadian brand, and more recently he was instrumental in the launch of both the No Hassles Rewards card and the MasterCard PayPass program for Capital One customers.



Our second panelist, Steven Thomas, is the Chief Financial Officer of DeBeers Canada. Steven joined DeBeers in 2003 to establish an Internal Audit function for its global operations. He was soon promoted to Head of Finance, and in 2006 was transferred to DeBeers Canada to assume the role of CFO.



Our third panelist is Mary Ann Turcke, Executive Vice-President of Bell’s Field Services group. She previously served as Vice-President, Customer Experience and Operations, Small and Medium Business, where her team provided support for all small and medium-sized business customers through various call centres, help desks and dedicated service consultants.



Please join me in welcoming our panel.



Marcel Côté



Welcome everybody. It’s a pleasure for us to provide you with some insight on innovation. This morning before coming here I googled “innovation culture” and I got 37 million responses. So what we are talking about today is something that a lot of people are concerned with and a lot of people are working on. In fact, innovation is now the prime driver of economic growth. It used to be capital; it used to be labour. Innovation now is really what makes the difference between countries, between regions, and between cities.



So what we will talk about today is the experience of three companies that are representative of innovative companies in the economy. But first let me talk to you about a global survey that we did on about 1,000 firms on their innovation practice and performance. It was led by co-founder of SECOR, Dr. Roger Miller, and we interviewed about 1,000 firms, gave them a four- or five-hour-long interview, and we documented both their innovation practice and their innovation performance.



That gave us a huge database, led to several academic papers, and also what I would call business-oriented papers, that you can read in the Ivey Business Journal in the November/December edition.



What we got when we looked at the results initially was a lot of hard-to-understand data. We then started to analyze it with statistical tools and a clear pattern of innovation emerged which we called innovation gain. And these innovation gains are defined by two relevant comparative situations.



The first one is whether you are in a new market or whether you are in an existing market. Innovation at Bell Canada is very different from that at Research In Motion. And what works at Research In Motion will not work at Bell Canada and vice versa.



The other dimension is to what extent you are constrained in your innovation. If you are trying to invent something and trying to get it into Walmart or trying to get it on Facebook, it is a very different type of innovation. You have to talk to different people and it will be a different process. The winners are not necessarily those that have the best product. They are those who have the best politics. The politics quite often in these complex network innovations is very important.



So that led to looking at this in six different situations—six different gains. When we looked at these gains they explained about 65 to 70 per cent of the innovation in business practice. The rest is relativity and luck and all kinds of things, but pure competitive situations explained a lot about what are the best practices in innovation in company data.



What we have to keep in mind is that in existing markets you are not reinventing something. You gain a little bit of market share every year by improving customers’ values, by lowering cost, or enlarging the market. It’s a slow evolution of market share.



In new markets it is very different. It is winner-takes-all gains most of the time. The loser tends to disappear and a market is building up very rapidly. Innovation defines the business and those who win a new market are those who know how to manage innovation and to win at the game of innovation. You have clear winners and clear losers and the losers go by the wayside.



So let’s talk about best practice in existing markets. Who are those that really succeed in existing markets? There are some companies that have been on the list of the most admired companies from an innovation point of view for several years and you’ll be surprised at the companies that are there.



They have a pervasive approach to innovation. Innovations are throughout the company in a very decentralized process. There are multiple points of innovation and somehow it is all orchestrated and can be translated into better products, into lower costs, into better business models, and having better technology. So it is a very complex process but of the companies that have managed to do it Toyota is the best example. Walmart is a very good example. Procter & Gamble is always there on the top of the list innovating in the production of soap, toothpaste, their detergent, and whatever and the same with Whirlpool providing washing machines and appliance products. They are recognized worldwide but they also show a profit on their bottom line and they’ve managed to be always at the front end in a relatively staid and structured market.



What are the best practices with these companies? It is a combination of bottom-up processes. You have direction coming from the top, you have policies, you have ambition, which defines where you want to be in the future, and in parallel you have deliverables. You have the bottom-up process of people throughout the organization, innovation-generating pods. Everybody throughout the organization tries to produce new things, better ways of doing things. And it is all more or less held together by a culture, a strong culture of innovation. The main problem with innovation is that the new has to displace the old. The new has to displace the entrenched and it is always very difficult to do in an organization. It is the culture that gives you the passion for changing and improving, that will allow the organization in a very decentralized fashion to make these choices. The organization that succeeds has a culture of innovation. A very good example of that is Toyota that managed in about 50 years to move from start-up to a large company in the automobile manufacturing industry and the market was structured all the time. They did it. Walmart did it with department stores and I can go through companies that are good at it but Procter & Gamble with soap and detergent is an achievement.



Let’s look now at new markets, a very different ballgame. This is all about a race that lasts from 15 to 20 years. Google is only 10 years old but is a very old company for a new market. In fact its market structure is about 30 years old. They have become a very large company; they have built the market and have followed the product that goes from generation to generation—1.0, 2.0, 3.0. In fact every two years there’s a new product, a new model. The ability to get the right product, to define it properly with good insight, is very important. But marketing it is also very important. You can have a great idea in a new market but if you’re not good at marketing it you are not there. It is not necessarily the best product that wins. It is the best-marketed product. The best example of that is the Beta versus the VCR about 20 years ago. Beta was recognized as a much better cassette system and yet the one that was best marketed was the VCR. Google was not the best search engine but it was the one with the smartest marketing idea, the coolest marketing idea. And in new markets marketing is very important.



You have new market gains mostly in technological areas. With the smart phone there is a very intense race. Maybe RIM will become a very large company in 10 years. If they lose one or two rounds in that race it will probably disappear. But if it wins it will become a large company in a structured market.



You can see Cisco, Google, RIM, Amgen in biotech. Not many biotech companies manage to get up there. The gain there is very different, much more tightly controlled, because innovation is really the whole story and that’s usually managed at the centre. There is a race for new customers and it’s a race that involves control of the product, improving the product, the right R&D and making sure the right marketing follows. What you have is basically an innovation-generating machine and the control is very, very central, a very tight control. And you end up with wins in the new marketplace; you win the customers. If you lose you’re gone. Look at all the technology companies in Canada that started this race and fell by the wayside.



So I will sum up some of the key lessons. The first thing you have to know is what gain you want. If you are, for example, in an existing market you really have to decentralize to have innovation throughout the organization. If you are in a new market you have to control. It is very important to know which gain you want. If you are in a network industry you have to have smooth people at the top who can make deals and sweet-talk people into an alliance, a win-win alliance, which sometimes is very difficult. And indeed if you look at network businesses, those that won are companies usually led by charmers.



The second lesson is the top down. It is very important to have a top-down strategy, to have a CEO, to have an executive, who is going to be at the top and who understands the rule of innovation to make sure that the rule in a company will allow innovation to flourish. Thirdly what you need is a lot of bottom-up process. Innovation can’t be released by people interacting with people who are different from them. It’s a clash of ideas that gives you ideas. But it has to be structured. How do you structure something that is new and innovative? That’s the challenge of managing these bottom-up processes.



Fourthly you need a management culture throughout the organization to resolve all the conflicts that innovation can result in.



And finally you have to co-ordinate the process and we will hear from people here who are co-ordinating the process.



So without any further comment I will go to the panel and ask them a few questions.



And I’ll start with the three panelists and ask them how embedded are innovation practices in their organizations and to what degree are they tightly controlled or decentralized?



Steve Thomas



De Beers is a company that is 120 years old and working in what many would think of as a very traditional industry. Is innovation something that would be promoted to continue its success or is it something that would be stifled?



What I have found is that of course there are those traditional pockets of innovation in terms of research and development across many quarters. De Beers’ success has been driven in great part by the depth of the technological advancements we have made in both the sorting process in the mining and technologies and in the depth of the intellect we have got in specialized areas. You’d expect that of a mining house.



Secondly the innovation is shifting to an extent because as those technologies become more commoditized in mining houses, what you innovate today somebody catches up with tomorrow. You have to shift where the innovation is taking place in a company and that shift is more to the front end of the value creation part in the diamond pipeline as we call it. So we are innovating in the way we connect with our customers and the service sales proposition, and that has been a transformation for the company because we’ve had to attract, retain those diamantaires we want to do work with. Once upon a time that wasn’t an issue for the company so it has opened up a whole new form of innovation—innovation in terms of marketing skills and customer retention—and that’s manifested itself more recently in a strategic partnership we now have with Louis Vuitton Moet Hennessy where we’ve moved right to the retail end of the diamond market. Again this is something that 10 or 15 years ago De Beers would never have considered, but now it is an essential part of our value proposition, wealth creation proposition for our shareholders and stakeholders.



So the focus of innovation has moved within the business. That’s probably been the single-largest point of innovation for De Beers in the last, I would say, six years. There has been a genuine cultural transformation from what was a closed volume-driven company to a very transparent values-based company and that now is enabling innovation to become much more widespread rather than in these specialized silos, be they technical or in the marketing part of the company. There’s now a cultural expectation that everyone in the company has a responsibility and an accountability to keep transforming the business. And that has been made possible through this cultural transformation.



Marcel Côté



Thanks. Now from mining to a very different competitive situation—Mary Ann at Bell.



Mary Ann Turcke



You said in your introduction it was very important that innovation doesn’t fit into a tiny little box and what I do at Bell is all of the field operations, all the guys in the front. We have been around for 125 years and we have been installing telephones for that long as well so the trick of innovation is really not offering the latest thing, it is how to do things differently to fundamentally change the equation between quality and cost because with large operators, the pressure to improve service while keeping the pedal down on efficiency and cost reduction is what we wake up thinking about every day. Innovation for me is the freedom of innovation thought, the way to figure out what we are going to do to get things done differently and then having an execution plan to get it done, because innovation is something we can talk about but in a large scale operation if you don’t have a way of actually getting it done in a way that you can mitigate the bumps along the road it is very rare that you will actually execute on it because the risks of hitting those bumps are too big. If we add five minutes to every job that we do at Bell Canada millions of dollars go away so it is very, very important to execute a plan.



So is innovation embedded in my organization? I would say similar to you in part. It seems to be the domain of process and project experts in small areas of my operation. Large areas are obviously the product marketing kind of market-based areas. My challenge is to really make that thinking broaden out to every single manager in the organization because my gains are going to be small gains, but when they are scaled and institutionalized, they will create big value for me. It is really about those small things that we can do and innovate on that create the difference once scaled up, so that I can get that repetitive performance out of each and every technician, each and every time, reduce the standard deviation of performance, and all those things that kind of surround making the operation great. So for me that is the innovation challenge and I would say is it embedded, no. It is part of my challenge this year and in the coming years to really get that. For me the key challenge is cultural around leadership and getting at that front line supervisor level so that these folks wake up and ask what things they can do today to really make that customer choose Bell the next time. That is really my challenge and that is why I have been out talking to my supervisors about it. We’ll talk about it more in the next question too.



Marcel Côté



Twenty years ago there was a two-man management in the department in a suburban bank in Washington and out of this came probably the most innovative credit card company. It became Capital One.



John McNain



Well innovation is certainly very embedded at Capital One as you say. I think it is also very widely distributed because it has really been part of Capital One since day one. As you have said it was less than 20 years ago when Capital One was essentially created through innovation.



Our CEO, Rich Fairbank at the time, looked at what was happening in the industry with a sort of a one-standard product and said there was definitely an opportunity for change. He hired a bunch of bright people who knew nothing about the industry but shared in his passion to challenge that status for the sake of the consumer and with that came mass customization really starting the big changes in the credit card industry. It is important I think to have that story in context because that story is very much alive in our culture today. I think it helps represent how much innovation is really the foundation; our culture is the foundation of our innovation. It is certainly a challenge to keep that alive today. Keeping it alive is based on two things—the type of people that we hire and the environment that we create for them once they join us. In terms of the people we hire we continue to focus on people who have a certain skillset, not necessarily industry knowledge, and we have a very rigorous process for them. We really look for people who share a common set of values, values that strategically involve thinking and acting like an owner. That comes together for a certain type of person who joins our culture but then just as important, maybe even more important, is the environment for them once they join us.



I think the culture and your environment are somewhat intangible, but probably the most tangible aspect I could describe is our actual physical environment in our office. Often we have guests come to our office and after one walk around our office they tell us we are clearly not at a typical bank. It’s a very open office environment. I sit right in the middle of my team. They can all see where I’m sitting and everyone, including myself, my executive assistant, and our president, all have essentially the same work spaces. As I sit in the middle of my team, if someone has an idea a discussion just happens and people start talking about the item.



That is very different from a lot of organizations where executives are behind closed walls with an executive assistant somewhat protecting them so to speak. It is really an open environment with everyone. We have tried to extend that online. Our president started Phil’s blog where a couple of times per week on our wiki he starts opening up discussions and people from our company respond to questions. It replicates that dialogue online to a certain extent. I think the people we hire combined with the environment that we create for them really comes together for a certain powerful mix that helps to embed innovation in our culture.



Marcel Côté



Now we will be taking questions from the floor. If you have questions write them down, we will come and pick them up and I will read out the question. Now while you are doing that I’ll ask a second question. Now that the Capital One story is well known it is easy to imitate Capital One. What’s your next step? What do you have in your agenda to keep on innovating and to what extent can you always innovate and keep on innovating? What are your initiatives?



John McNain



I think our largest challenge is taking what we have and trying to maintain it as our organization grows and trying to translate it into having a larger impact on the marketplace. That in itself takes a lot of work. It is interesting. When I first joined Capital One eight years ago, we were relatively small and I would say innovation just sort of happened. As we have grown and become much larger that unsystematic innovation doesn’t happen as easily. As you mentioned, you need more systematic approaches. So our initiatives have really been about how to take what we have and maintain it as we grow by introducing some systematic approaches.



Here are some things we’ve done. One thing we did was we asked a group of directors from various areas in our organization to come together and actually own the development of our innovation capability. That’s training, reward, recognition, and trying some new innovative technologies. We had an innovation contest day, where our junior associates spent one day just focusing on an idea they had and developing that idea into a proposal. At the end of the day they presented their proposals to a subset of the executive team. A couple of them won some great awards, but they also won the support and resources to implement those ideas. That’s an example of one group of initiatives we’ve done.



Another one is we have taken the concept of agile from the information technology world and translated it into solving real business problems. This is, I think, very similar to the innovative pods you discussed. A typical problem would arise in doing a product enhancement. Marketing completes one area of work and then it is handed off to finance to do their work, and then it is handed off to operations to actually implement it. It is somewhat sequential. If you take those three groups from across the office or across your building, put them all in the same room every morning from 9 a.m. until noon, and if a senior individual joins them for half an hour, just to provide strategic direction and help clear any roadblocks, that is essentially how we have taken a concept of agile from information technology and tried to translate it into solving business problems. There’s clearly a certain time-to-market benefit there by having everyone together at the same time, but there’s also innovation that happens by having them in the same room and somewhat replicating what we were when we were quite a bit smaller.



Here is one last example of an initiative. You talked a lot about strategic direction. It certainly became very apparent to us as we got larger just how important it is to take the time to articulate in a very simple manner what your strategic direction is so that people essentially have a framework in which to innovate. So we were very clear with our associates over the past couple of years to tell them that we were here to challenge the status quo for the sake of the consumer, that our brand value proposition was really about great value and no hassle. We have a framework and translate that into products and customer experience. We are clear with our associates but there are certain capabilities that at Capital One we need to do much better than our competitors—capabilities around our people and development, around making credit-lending decisions, and around innovation. Having that level of clarity fairly simple and articulated well is important as we grow. We certainly have a lot of challenges still and lots of opportunities, but I think we are starting to work on some more systematic approaches to ingrain innovation so that we can translate it into having a larger impact on the marketplace.



Marcel Côté



Mary.



Mary Ann Turcke



I spoke about some of the challenges that large-scale operations have and I want to come back to the idea of pods too, because there are some things that we have done in my previous role that worked really well. Where I am right now, I have three main objectives. I have only had this larger organization for a period of six months. Here is an opportunity for discussion because I’m planning the next couple of years. The issues are visibility, prioritizing and then executing. When I think about the degree of difficulty of those three things, the first for me is the hardest. I think it is the hardest and I will tell you why. The second and third I don’t think are trivial, but designing a prioritization process and an execution plan is more deterministic in nature and we can handle that.



Getting visibility is very, very interesting in larger operations. I find I spend a lot of time out in the garage talking to the guys as I have for the last couple of months. All those supervisors are there as well. There seems to be what I would call a permafrost there of information because I leave with a list as big as Santa’s list of the things that are annoying or could be changed or a good idea for the customers that they would really value.



I come back to my office and wonder why it takes a visit to the garage to find out these things. Where are the supervisor and the associate director and the five or six layers in between? What we have to do is create a fertile ground so that people actually talk about innovative ideas and act on them. How do you make it worth it to talk about it and then to do it? The only way to make it worth it is by actually starting to do some of it because for 125 years people on the front line have been wanting to fix this, fix that and indeed a lot of it does get fixed. But a lot of it doesn’t and the only way to kind of keep the land fertile in a large operation is to keep executing on things that you know you should execute on. You build credibility as a leadership team, as an executive team and then people will start thinking bigger and broader. You start with a no-brainer fix as I call them, you execute on it, you celebrate it and then people start thinking larger.



I’ll give you an example. How do we bring intimacy back when technicians are out on the road and they have to call in to Bell because something didn’t go right? A hundred years ago they knew the person they were calling because the company was very, very regionalized. They knew their dispatcher, they knew everybody they spoke to. How do you think of a pod kind of structure to bring that intimacy back when the folks out on the road have to get that job fixed? Every month I’m going to ask them how many jobs per day one of the technicians did. It is a constant to and fro between getting as many jobs as they can do in the day, and doing the best job they can. How do you create an innovative way to support them? How do I find out what those ways are if I’m not going to hear it from the people actually doing the work? That is the challenge I have.



We did have a very good experience when I ran the operation in a smaller division, a small to medium business, of creating pods and creating innovation. We created little cells of folks in an operation by collapsing jobs, but it is very, very hard to do because there is no such thing as a super person who can do three or four different jobs. By creating a pod of people and getting away from the silos you will create innovation. We meaningfully stepped up the level of the service that we gave to our bigger kind of customer, not the enterprise customers or the big banks, but that next level down, those small to medium business customers with 100 to 500 people. We gave them a dedicated person to call. There were no more call centres. We created this and we had a much lower cost structure than we had before. Those are some of the things that we have done and the experience I’m bringing into my new role for the whole company.



Marcel Côté



Diamonds are forever? You don’t want to change that.



Steve Thomas



We certainly don’t want to change that but I mentioned earlier the challenge that we’ve had and I will just go through some of the points that Mary Ann made. The idea of the pods for De Beers is at the selling end of the challenge within De Beers. We have had to create a new relationship, a new value-ad relationship with our site holders. It was no longer enough just to say that we have provided them with the products. They are now on their own two feet. That’s the end of the relationship. So necessarily the Diamond Trading Company, which is the selling and marketing arm of De Beers, transformed itself and brought in the concepts of key account managers, who were instructed to overcome a particular problem—how to demonstrate to our customers who have bought the product that that’s not the end of the value that we create to them in their businesses. How do we get more meaningfully engaged with this customer base?



Now you could say therefore that we innovated out of need to create value for ourselves and our customers. But once we stepped into that space, once we created these idea pods for demonstrating value, it really opened up a level of engagement amongst the staff. They thought there were other things we could now be doing for our site holders, other services we could be providing. It was on the back of that momentum coming out of the marketing and selling department that the managing director of the Diamond Trading Company moved the game on to bring in the finance people, to bring in some representatives at the producer end of the market, those people who have been mining the product who historically would be completely separated from and not a relevant part of the selling process. So there was a new joining up of all of those mines that would be affected by the value proposition we were putting out for the customer base and that’s been very successful.



It’s really from that that the ongoing challenge for De Beers, as for other diamond producers, is how do you continue to differentiate in the value space to your customers and to your shareholders and move into retail opportunities such as Louis Vuitton and licencing the De Beers brand. That has created a new momentum in the company, a new excitement, for there aren’t boundaries that we previously drew for ourselves. Our business was contained to mining and selling. Now we have started to push the boundaries to say our brand name could mean a lot more to the globe and could be more influential. It has energized the work force.



I’m compelled to mention that the values that we now see introduced into the company in the last two or three years are represented by icons to overcome the language issues that we face across the 20 or so countries in which we are represented. One of those icons has shaped the future and therefore we engaged the work force explicitly to tell them they have a responsibility to help us shape the future welfare of this company and the communities in which we operate. And that’s been a massively beneficial galvanizing effect.



Marcel Côté



Thank you. To any one of the panelists is there in your company a special incentive or a compensation package that is associated with innovation or is it just part of the general structure?



John McNain



I think one of the foundations of having innovation in your culture has to be the rewards and recognition structure. We do have some informal rewards called the maverick awards associated with innovation. We have also ingrained it to a certain extent in our performance management process. Our values for example are part of how we assess people. Competencies that are associated with innovation. I think it is really important that you give people a certain bandwidth of their time to focus on things more in the innovation space. You need to think about that within their results and recognize that not every initiative is going to come to fruition. I think we have tried to really rank that component of it in our reward and recognition program.



Mary Ann Turcke



We have a similar kind of maverick award in our organization called merit. When folks do things that are different and interesting on the one hand or go above and beyond for a customer on another hand we do celebrate that and we recognize people for it. I think that in general the business plans that we have require innovation to hit them. For us innovation is a tool in the toolbox. In order to meet business plans we have to take the cop out of the driver rather than we have to drive. We have to use the kind of reward and recognition program rather than a specific kind of cash compensation. We have to reward recognition to create the behaviour and the attitude to drive the necessary things.



Steve Thomas



I wouldn’t say our infrastructure around reward and recognition is as you specifically described there John. Within the values by which we assess people and the specific criteria for competency and annual assessments we certainly have innovation and creation as part of the criteria of assessment. But we don’t have maverick awards and that sounds very interesting, something we can maybe speak about afterwards.



Marcel Côté



Can you tell us what you have seen as the two innovation killers in your company? Don’t give me more than two in very short answers.



Mary Ann Turcke



For me innovation failure or innovation killing happens when people come up with great ideas and for one reason or another they are stripped down in front of others because of it. Or the idea they come up with doesn’t work and it doesn’t work out as well as they thought but it is still better than it would have been without the idea and they still get stripped down in front of us. It’s about creating a leadership file in a culture in a company that just accepts that. That for me is the single biggest killer. Someone comes out of his office, is gung ho, and just hits a brick wall of yes that is not going to work. That is the kind of attitude in the new culture that we are trying to get away from because we know we can’t do it like that.



Marcel Côté



Short answer.



Steve Thomas



Single biggest killer—lack of time and still needing to innovate.



Marcel Côté



How about you?



John McNain



I think the killer really comes down to how you can take what you have and actually scale it up as you grow. We think we have a wonderful product, but how do you actually take it and translate it into the Canadian marketplace with communication that really stands out and people take notice. Credit cards are not on the top of mind to them. For us the struggle is even when we have a great idea how do you actually get it into the marketplace?



Marcel Côté



Given the current situation, the tough economic times and layoffs, companies tend to hunker down and be inward focused. How do you get innovation in these times? What would be your toughest challenge of the next 12 months to keep some innovative spirit at a time when there is not that much life in the organization?



Steve Thomas



Obviously a tough question and there’s no easy answer to that. Again it comes back to the basic commitment from the top down with the CEO of the company letting people know that you don’t cost cut your way to success at a time like this. You need to build top line. You need to maintain client relationships and let people know that no idea is a bad idea. You need a CEO and a top team that are committed to that sort of culture. You need a signal from the top.



Mary Ann Turcke



This will be an interesting contrast because I think in this environment resources are constrained and there has been a downsizing in the work force. I think times like these create innovation. Those people who are left create an environment where they can figure out how to get the job done with what’s left. That is really a big challenge. It’s been great and it’s been positive for us over the course of the summer. Through Christmas it’s been hard but it has created pockets of innovation that we haven’t seen before.



John McNain



I think that’s a good point. In these times how you take innovation and spread it around is what’s needed at the current time. It is a different type of innovation. It might not be as product or market driven. It might be about other things like efficiency during that time. And the second thing I would say though is the actions that executives are doing during this timeframe are still important in terms of the communications, because you talk about a culture of innovation. That takes years to develop and during these times is certainly a test of your values. I think there needs to be a certain amount of consistency during these tough times to show that what you mean is true even in tough times.



Marcel Côté



The final question comes from the floor. One of the greatest innovative companies in the past 30 years is Apple. Apple got a lot of its ideas through interaction with its customers. The whole trend on the Internet is to work with customers, work with users, to define the product. To what extent are your organizations interacting with your customers? To what extent are you structured to interact with your customers to get their ideas into your company?



Mary Ann Turcke



We do a lot of classic customer surveys and we hear from the sales force in operations loud and clear about what we need to do differently in terms of serving our customers. What I spoke of earlier about creating a single point of contact for that mid-market small to medium business customer came directly from hearing from a business. They simply could not talk to a different person every time when trying to get their order serviced. It was too complicated. We needed to do things differently. It kind of came from the sales force of the larger customers and via our customer surveys. We heard it directly through our customer feedback. That is how it works at Bell.



John McNain



I think 20 years ago the way we handled this was much different with our information-based strategy approach of using data. Certainly today you need to adapt very differently. We need to have face to face online and figure out how to do that. I think our U.S. organization has come up with a really interesting approach and that is something for us to think about in the Canadian organization also. They have something they call card lab. What you do is you go online and basically design the components and the different levers of your product. I think there is a component there of online interaction that we still have to tap more into and we are starting to think about.



Steve Thomas



We are in a luxurious position where we have 79 customers and we get to send 100 per cent of our product to those customers through ten sales events a year. Amazingly it has only been in the last five, 10 years, that the company has thought about our unique position where we have that level of interface, that level of captured audience and therefore we need to use that moment to sit down with those 79 worldclass diamantaires and ask what they need from us to transform their business. We have had that very powerful touch point to create value-added services as they were certainly once called and change the portfolio of services that we put forth. So that really is a powerful and perhaps unique opportunity that De Beers has capitalized on with its customer base.



Marcel Côté



Well thank you all. That is all the time we have. We have to go back to work and innovate this afternoon.



The appreciation of the meeting was expressed by Robin Sears, Senior Partner, Navigator Limited, and Director, The Empire Club of Canada.