CORVALLIS, Ore. - When Wall Street analysts look for corporations with strong "upside" potential, they often are anticipating future payoffs based on the current creativity and innovativeness of that company's research and development team.
But a new book suggests that many major developments, from Hewlett-Packard's inkjet printer to the creation of NutraSweet, are unexpected and come from people throughout the organization, not just from top managers, engineers or scientists.
Authors Sam Stern of Oregon State University and Alan G. Robinson of the University of Massachusetts say in their new book, "Corporate Creativity," that managers cannot predict who, where, when, or how creative ideas will happen.
"Through our investigations of creativity in companies around the world...we came to realize that the majority of creative acts, whether dramatic innovations or tiny improvements...are not only unplanned, but completely unexpected," the authors wrote.
A professor of education at OSU, Stern is a well-known adviser on creativity to organizations in the U.S. and abroad, including HP, Polaroid, Seiko-Epson, NEC and NASA. In 1990, he became one of the first non-Japanese to hold an endowed professorship in Japan. As the Japan Management Professor of Creativity Development, he led a research team that studied creativity in more than 200 companies.
One of Stern's favorite stories involves Japan Railways East, the largest rail carrier in the world, which was digging a tunnel through Mt. Tanigawa when water seepage began to cause problems. As the engineers gathered to draw up plans for draining the water, a maintenance worker stepped forward with a different suggestion.
It seems that the workers inside the tunnel had discovered the waters from Mt. Tanigawa tasted wonderful. The quick-thinking worker suggested that the railway company bottle it and sell it as premium mineral water. Equally quick-thinking managers listened and agreed.
Under the brand name "Oshimizu," the water soon became so popular that Japan Railways East installed special vending machines on nearly 1,000 railroad platforms and eventually launched a home delivery service.
Within a few years, Oshimizu mineral water was a $50 million-a-year new business venture.
"This didn't happen in a corporate boardroom," Stern said. "It happened because a maintenance worker noticed something, went to a manager, and the manager listened."
Stern and Robinson traveled throughout the U.S., Europe and Asia gathering stories about creativity. The book, published by Berrett-Koehler, suggests that companies which are most successful have a culture in which creativity is the source of company pride and not based on a reward system.
The authors also point out that success is often the result of serendipity - the combination of a "fortunate accident" with the insight to understand its implications.
Such was the case in 1965 in Skokie, Ill., when a young research scientist named Jim Schlatter was testing anti-ulcer compounds. Through a series of "fortunate accidents," Schlatter happened to spill a few drops of a certain compound on his bare hands. Later, while trying to separate ultra-thin sheets of glassine paper, he licked his fingers and was astounded at the sweetness of the compound that remained.
Unwittingly, he had tumbled onto a new use for aspartame which would lead to a low-calorie sweetener known as NutraSweet, and a billion dollar industry.
In the case of Hewlett-Packard, the success of the inkjet printer wasn't a case of love at first sight, Stern said. In their book, the authors describe how a pair of HP employees discovered that by heating ink, they could succeed in creating small "explosions" that allowed the ink to shoot out in controlled bursts.
The problem, Stern said, is that neither the engineers - nor anyone else in the company - could understand exactly how the process worked. And that became a barrier to its development.
"HP never intended to develop the inkjet," Stern said, "and, in fact, resisted it."
Once the company realized the potential, it invested heavily in the development phase of the inkjet. Today, Stern said, HP's inkjet-related enterprises are so vast that, with $5 billion in annual sales, the division by itself could be a company in the Fortune 500.
How does creativity get from the employees to the decision-makers? In some cases, like with American Airlines, a modern variation of the good old suggestion box is used, often with great success. Those suggestions, Stern pointed out, usually help the company cut costs by refining current procedures.
In Japan, a system called "kaizen teian" dominates. Instead of financial rewards, workers suggest improvements or new ventures for the good of the company. And participation is unbelievably high - in fact, higher than at companies offering monetary awards for suggestions.
"What is surprising," Stern said, "is how kaizen teian systems outperform suggestion systems by an order of magnitude. The employees really feel a personal stake in the company. Since suggestion systems are prevalent in U.S. companies and almost every Japanese company of size has a kaizen teian system, this difference in performance shows up at a national level."
A sidebar on Corporate Creativityaccompanies this release.