Tuesday, April 18, 2017
Overbooked airline flights, long an inconvenient fact of life for most travelers, turned into a menacing nightmare last week. Yet the practice of offering someone some kind of compensation in exchange for giving up their seat on a flight started as the innovative idea of one person.
“That whole overbooking situation was developed by one gate agent in Dallas,” David Christian, chief innovation officer of Dominion Energy, said at the Virginia Commonwealth University Innovation Summit, hosted by the School of Business in collaboration with the da Vinci Center this month. “The auditors noticed that they had higher returns down there than in any other location, and they went down and they noticed someone had taken a risk on their own and started overbooking, and now it’s practiced by every airline in every hub in the U.S. You can call that improvement or you can call that innovation, it’s one and the same.”
This year’s summit, “Entrepreneurial Thinking in Pursuit of Innovation,” comprised speakers and panelists: Christian; Shane Emmett, CEO, Health Warrior Chia Bars; Shawn Boyer, CEO of DieHappy and former CEO of SnagAJob; and Jim Lyski, chief marketing officer at CarMax.
Insights from the panel included:
Trends in prospective innovations in their businesses
“We really have the benefit of being in a horrible industry,” Lyski said. “There's not a lot of innovation going on out there, but we do have some digital disrupters and the capital intensity of our business. … One thing we’re good at is making things to scale in our industry. All our innovation is focused on experience to scale.”
Health Warrior Chia Bars faces a huge challenge, Emmett said. The company’s product changes throughout the year, but grocers only bring in new products once a year.
“Our original chia bar tasted like a piece of bark,” Emmett said. “They were using black chia seeds. So you would eat something that tasted like a tree and then you would look like you were wearing braces. So we actually developed high-quality crops — white chia seeds — with growers out of numerous places in South America and took about a year and a half to get it right. That’s a small example. But the trends, you all see them. Gluten free. Now it’s a Whole30 diet and I’m sure it’ll be back to the low-carb, high-fat diet by the end of the year. I think it’s really hard to [keep up with trends] when you have to grow things out of the ground.”
Things don’t change as quickly in the energy industry, but Dominion does have to abide by regulatory constructs, Christian said.
“How do we meet customer needs and have a cleaner, lower emissions profile?” Christian asked. “We’ve made tremendous progress. To your question of has innovation occurred differently, I don’t think it will. I think it will just be more of it.”
Boyer said it’s important to have the ability to focus on what you do well.
Being focused on the thing that you can do really well — I don’t know if that’s so much a trend as it is a smart thing to do.
“In our space, we can be categorized in productivity and social networking,” said Boyer. “We have photos and videos. In those spaces where innovation is occurring, super quickly, I’d say there are a lot of different trends. … The longer it takes to do something — and I think that is the right way to think about it, whether you’re a startup or a bigger company — the longer it takes you to figure out if there’s something there, the more expensive it is.
“The more man hours put against it, the more likelihood there is of your competitors catching up to you or passing you. Being focused on the thing that you can do really well — I don’t know if that’s so much a trend as it is a smart thing to do.”
Maintaining adaptability in the workforce
Innovation cannot be developed and implemented without receptive employees. With more millennials entering the workforce every day, the time is ripe for innovation, Christian said.
“The new people entering the workforce are very change oriented,” he said. “They're very tech-savvy. I don’t think there are many barriers to getting people to accept change.”
At Health Warrior Chia Bars, employees must build their own desks on their first day.
“The acronym we give everyone is FIO: figure it out,” Emmett said. “For a startup, change is constant, so we felt people need to be able to figure it out. FIO is really big around the company. Everybody builds their own desk. And what we tell people is it will be a different company every three months. And if it’s not, we’ll all be in big trouble.”
Distinguishing between continuous improvement and innovation
In response to an audience question, Ken Kahn, interim dean of the VCU School of Business and moderator of the panel, cautioned against separating innovation from improvement.
“It’s all part of the innovation process,” he said. “I think it’s a bit dangerous to say, ‘Well, that’s an improvement, that’s not an innovation.’ Then you’re always trying to get the home run when sometimes it’s the simple solution that is more interesting and the one that really drives innovation.”
In either case, having a business model strategy is sound advice.
“In our line of work, you do have to have some vision that’s going to get you to a business model that works,” Christian said. “For us, we stop at the meter. We look at power from the customer’s meter and we don’t go on the other side of that. We have about 370,000 smart meters out there on which we can get data every 15 minutes.
“In the future it might be quite possible for a member to ask Alexa or Echo for assistance. [For example], ‘What does Dominion know about my washing machine? Is it going to fail in the next six months?’ And we might know based on the machine learning, the current shape of local problems in your house, we can warn you that your appliances are going to be dead.”
At Carmax, Lyski said, leadership focuses on what the outcome needs to be and teams are constructed to figure out how to make it possible.
“So, right now, that’s a primary source of innovation for us, is that we just keep focusing on what those consumer outcomes that we need to have are,” he said. “We feel that we have within these first teams a pretty good source of innovation for a while.
“That doesn’t mean we don’t have some innovation that’s not focused through these product teams. For example, artificial intelligence machinery. We think with the complexity of the purchase in our industry, that’s going to be something that will be highly leveraged. We have a massive data advantage; we think that’s a way to employ that, to monetize that. I really like the product team approach and let them remain product-driven and let them figure out ‘the how.’”