The Book

By Jessie Scanlon

Economic crises can lead to fear and paralysis within executive boardrooms, not to mention a shortage of capital or credit
to act on good ideas that do emerge. But they can also create opportunities. In Exploiting Chaos (Gotham Books, 2009),
Jeremy Gutsche—an innovation consultant and the founder of TrendHunter.com, a site that tracks emerging trends—
offers, as the book's subtitle says, 150 Ways to Spark Innovation During Times of Change. What does a burger have to
do with innovation? Read on for that and 23 other ideas from Gutsche.
Find an Unmet Need
In February 1930, as unemployment spiked in the early months of the Great Depression, Henry Luce launched
Fortune magazine with the then steep cover price of $1. Eight years later, the magazine boasted 460,000
subscribers.

Lesson: Innovation is not about market timing. It is about creating something that fills an unmet need.
Adapt
In the 1950s, RCA was a leading maker of vacuum tubes, the electronic device critical to the development of radio,
television, and, ultimately, computers. But as transistors and, later, semiconductors were being developed, the company
didn't adapt, losing its dominant position in what would become the computer chip industry.

Lesson: Your focus should not be on protecting what you have but rather on adapting to the next big thing.
Focus on the Future
After the Internet bubble popped in the early 2000s, Apple (AAPL) CEO Steve Jobs was criticized for not trimming his
research and development budget. But that investment led to the 2003 launch of iTunes, and Apple now sells more
music than Wal-Mart (WMT).

Lesson: An undying focus on the future can lead to invention.

Deep Six Traditions
"Culture eats strategy for lunch," notes Gutsche. He cites a study of monkeys that shows how strongly behaviors are
imprinted on new arrivals—whether newborn or adult. In other words, a company can't change strategy or adapt
without changing its culture, which is embedded in the language employees use, their expectations, and their general
sense of "how things are done."

Lesson: The "old way of doing things" and fixed expectations are the enemies of adaptation.
Forget Past Accomplishments
"On the eighth day, God created Smith Corona." So reads the Web site of the company that
introduced so many innovations in its first 100 years—the first portable typewriter, first electric
typewriter, first electric dictionary, first laptop word processor—that it took itself for granted, unable to
envision a world without typewriters.

Lesson: Accomplishment blinds us to the urgency of reinvention.

Build on Others' Mistakes
Remington Rand, a Smith Corona competitor, did move into the computing business in 1950, and by 1975 the
company had declared bankruptcy. Smith Corona executives that had been pushing the company to expand
into computers were haunted by Remington's fate, failing to realize that those Remington execs might have
been right on strategy and wrong on execution.

Lesson: Don't let the failure of others reinforce inaction.

Develop Scenarios
In the 1970s, Royal Dutch Shell developed two future strategies, one based on stable oil prices and the other based
on a spike. When oil prices rocketed in 1973, Shell was ready.

Lesson: By developing multiple scenarios, you can avoid the certainty of being incorrect and instead prepare for
disruptive change.
Choose the Right Goal
In 2001, the Recording Industry Association of America (RIAA) sued Napster and, says Gutsche, "anyone with a cutting-
edge approach to music distribution." The music industry's focus on protecting CD sales prevented it from imagining a
legal system for online distribution. Yet it still didn't solve the problem: The demise of Napster only inspired more illegal
file-sharing companies.

Lesson: You will only answer the problems you are trying to solve.
Learn from Failure
John Grisham was rejected by a dozen publishers before getting a deal. As a startup, Cisco (CSCO) was
rejected by 76 venture capitalists before landing money. Thomas Edison, in his words, "discovered 1,000
ways not to make a light bulb" before hitting on a design that worked.

Lesson: Successful ideas first require excessive testing and experimental failure.
Create a Gambling Fund
In the late 1990s the BBC had no hit shows and was losing viewers. A new chief executive and chief
financial officer introduced one small change to the broadcaster's innovation process: They created a
gambling fund to bet on risky ideas. The first big winner: Ricky Gervais' series, The Office, which had failed
the normal screening process.

Lesson: A simple gambling fund can be one of the most effective ways to tolerate failure.
Require Failure
IBM founder Thomas Watson Sr. refused the resignation of a manager who had just lost the company
$10 million, saying, "You can't be serious. We just spent $10 million educating you." Former Warner
Bros. Chairman Steven Ross went even further, firing people for not making mistakes.

Lesson: Fire people for not failing.

Meet Your Customer
General Motors was surprised when the Escalade, an SUV targeted at older, affluent males, became
an icon for hip hop culture. To learn about his new customers, Cadillac's head of external design went
to a gritty corner in Detroit, waited for an Escalade to roll by, and asked the driver if he could join him.

Lesson: Customer obsession can be the fastest ways to gain perspective.

Act Crazy
A senior leader can unintentionally squelch the creativity of a group. Instead, he or she should
throw out a wild, impractical idea at the start of a brainstorming session. That will help others in
the group to think more freely (and to feel free to express themselves).

Lesson: The role of a leader is not to suggest great ideas, but to create an atmosphere that
fosters the ideas of others.
Hire Freaks
As Tom Peters says, "freaks are the only—only—ones who make it into the history books."

Lesson: Nontraditional thinkers offer the maverick ideas and the personality a company needs to
adapt.
Become Leaderless
Rigid, centralized structures can squelch creativity. Organizations in which employees or members share a
common mission and the freedom to pursue it are better incubators of new ideas and will grow and adapt more
quickly. Two examples: 3M (MMM) and Alcoholics Anonymous.

Lesson: To navigate chaos, organizations require the speed and capabilities that can only exist when
employees are empowered.
Cross-pollinate
When Goldcorp, a small mining company, published the data for a site its geologists thought was barren, it
received 110 new strategies for finding gold. The ideas came from chemists, mathematicians, military
officers, and others, and the new methodologies helped the company find 8 million ounces of gold.

Lesson: The problems you are addressing have likely been tackled in parallel industries. Open the door to
new methodologies.
Tear Down the Walls
Ask Brett Wilson, the CEO of FirstEnergy Capital, how his startup became No. 1 in the energy-trading
industry, and he'll tell you it's because his office has no walls. He believes that formal offices and fancy
chairs are a detriment to teamwork.

Lesson: Remove the walls that separate people and ideas.

Don't Be Paralyzed by Change
The Benton Foundation didn't let Microsoft (MSFT) digitize its Encyclopedia Britannica for fear of cannibalizing
book sales, creating the opportunity for Microsoft Encarta. Years later, Microsoft was slow to move to the Web
for fear of cannibalizing Encarta CD sales, which in turn created the opportunity for Wikipedia. If either the
Benton Foundation or Microsoft had been willing to sacrifice the sales of their existing product in order to forge
a new marketplace, they might still be the most-sourced encyclopedia today.

Lesson: Destroy value. It may seem impossible, but resistance will cause your organization to be displaced.
Prototype
Whether it's a rough foamcore model of a product or a video representing a service, prototypes
allow you to interact with a developing idea and uncover problems that could hinder its success.

Lesson: The act of creating a physical prototype allows you to visualize the concept and obtain
useful feedback.
Budget
When Michael Eisner took over a money-losing Disney (DIS), he imposed strict project budgets, insisting that employees
fit their creative ideas inside the financial box. When the opening scene of the movie Outrageous Fortune required an
additional set, for instance, the writers were forced to rewrite—and came up with a cheaper and more effective opener.
Eisner's philosophy helped Disney grow from a $2 billion market cap to more than $60 billion.

Lesson: Be creative within the box.

Leverage Uncertainty
Scanning the collapsing economy in 2009, Virgin Atlantic founder Sir Richard Branson saw opportunity: The price of
planes was sure to come down, making it a good time to expand into Brazil and Russia.

Lesson: Uncertainty makes innovation less expensive.

Packaging Matters
In 2007 violinist Joshua Bell, who earns some $1,000 a minute when he's on-stage at a high-end
performance space such as Carnegie Hall, played Bach in the DC Metro during rush hour. Just seven
people stopped to listen, and he earned $35. Bell is one of the world's best violinists, but when he wasn't
packaged right, he didn't sell well.

Lesson: The medium can ruin your message.

Articulate a Clear Mantra
Of the 15 major airlines flying in 1982, only one is profitable today: Southwest Airlines. That success is largely
attributable to its founder's relentless focus on being "the low-fare airline." The mantra guides every employee's actions
and decisions, helping Southwest consistently deliver on its brand promise.

Lesson: A powerful mantra helps a company stay focused during times of dramatic change.
Hone Your Message
From product names to brand promises, strive to be simple, direct, and "supercharged." The "I've got to tell someone"
factor leads things to go viral. The Las Vegas restaurant Fleur de Lys missed an opportunity when they named their
super deluxe hamburger the Fleurburger. A more simple, direct, and supercharged name: The $5,000 Hamburger.

Lesson: In traditional marketing, there is an emphasis on cliché, clever wording, and invented words. Instead, adopt a
message that is simple and direct.