The Power of Creative Imagination

Editor’s Note: Solutions World sought out several thought leaders outside of Chevron and the energy industry for this article to gain their perspectives on the importance of ingenuity and innovation in the business world.

If you think you’ve been reading or hearing a lot about ingenuity or innovation in the news recently, you’re right.

Both words are commonly interchanged in the business world, each referencing the notion of creativity and invention.

But why are the media reporting about it so much now? Hasn’t the need for ingenuity in business always existed?

“It’s definitely been a hot topic the past few years,” says Yahoo!’s Innova- tion programs manager, Oliver Raskin. “Part of it is perception. The media are always looking for hot buttons that help define the latest trend for consumers, but there are some real systemic things that are driving the story in today’s news.”

Chief among these systemic drivers, explains Raskin, is the emergence of the Internet, the democratization of the means for production, and the demands of the public market to deliver unsustainable growth rates quarter after quarter.

“From Chevron’s perspective, ingenuity is vital because our customers expect us to come up with new products and services for them,” says Ray Buschmann, manager, Marketing Solutions, Global Lubricants. “Ingenuity is necessary to help distinguish our products as being more consumer-worthy than the compe- tition’s, and to help us come up with new ideas to help fill the gaps for sensational introductions that might be needed years down the road.”

Essentially, ingenuity drives Chevron to seek new opportunities and out-of-the- ordinary solutions. We use our creativity to find unexpected and practical ways to solve problems. Our experience, tech- nology and perseverance enable us to overcome challenges and deliver value. Regardless of its precise definition, this particular skill or power is a precious value venerated by every industry on the planet.

Today’s Key to Tomorrow’s Success

Never before has the energy industry needed ingenuity more than today, with news headlines trumpeting stories about global warming, the record-high price of crude oil, refinery production limitations, geopolitical concerns, and the uncertainty of being able to sustain the world’s future energy needs with petroleum.

“The issue of ingenuity is most ap- propriate at this moment in time for a company like Chevron, where it is clear that the next 50 years of the oil business will be nothing like the last fifty,” says Paul Saffo, a Stanford associate professor and an Emeritus director at the Institute for the Future. “Energy companies that sit astride the lifeblood of the modern economy in the form of hydrocarbon energy have to figure out how to create an energy ecology that’s no longer a monoculture. We are going to need a va- riety of technologies and energy sources in the future, and the companies that can use their resources to innovate and figure that out will be the ones that survive.”

“By interpreting ingenuity in our own way, we’re introducing new, transforma- tional ideas and processes aligned with our long-term business strategies,” says Buschmann. “There is great strength in the processes that have been developed at Chevron. In fact, some of our pro- cesses, like CPDEP [Chevron Project Development and Execution Process, the core Chevron process for project management], have been licensed for use by other companies. The combination of benchmark processes teamed up with ingenuity makes for an unbeatable combination.”

The Ingenuity Race

One of the most potent fuels for growing or stimulating a company’s ingenuity capital is a diverse workforce that has been empowered to question the norm.

Robert B. Tucker, a best-selling author and president of The Innovation Resource, says that about 50 percent of his work as an innovation coach is with companies outside the United States.

“What I see is that Americans don’t have a lock on ingenuity or innovation, and we ain’t seen nothing yet in terms of what the rest of the world can come up with in terms of science, medicine, technology, you name it,” Tucker says. “But to me this is exciting. You and I are competing globally to create new value for people, and when we do that, we get rewarded for it whether we live in Mumbai, Melbourne or Memphis.”

According to Michael Schrage, a reporter for the Financial Times, India and China are becoming technical education superpowers, producing 1 million engineering graduates a year, compared with 170,000 per year in the United States and Europe (“The Asian Giants and the Brains Bazaar,” Financial Times, May 2006).

“The world is in a cutthroat competi- tion to find the greatest minds and most creative intellects,” according to Kiril Sokoloff of 13D Research. “The best investments of the future may well be employing the best and the brightest, but if one believes that creative success comes from ‘outside-the-box thinking,’ what methodology will create such thinkers?”

“Innovative companies chase ‘cheap smarts’ as relentlessly as today’s costconscious multinationals pursue cheaper manufacturing and call-center capacity. Try commanding a premium wage as a post-doctorate in that marketplace,” Schrage writes. “Of course, a wealth of scientists and engineers is not the wealth of nations. University dropouts such as Microsoft’s Bill Gates and Apple’s Steve Jobs persuasively demonstrate that global technology leadership does not require top degrees.”

The point being that ingenuity does not require a degree, although it’s a safe bet that university-trained students will yield more innovative brain power than their less educated peers. And by the numbers alone, more engineering and scientific brain power is being produced in China and India than in the rest of the world combined. That is a major shift from the past, when the ingenuity or creative capitals for business were centered in Western Europe and the United States, while China and India were used primarily for manufacturing products and back-ending technology and service companies.

A New Way of Creating Value

“Whether ingenuity or ‘intellectual capital’ is developed organically within an organization or acquired on the open market, it’s not just about creat- ing new products, but new business models that enable companies to survive dramatic shifts in the marketplace,” says Saffo. “EBay is a new business model for retail sales, wherein they have more sales agents than Wal-Mart has employees. Google is a new business model creating value for their company every time you or I use their search engine. Just around the corner, there is a huge need for ingenuity in companies in every industry in order to survive and profit from the rapidly advancing disruptive technology, Nanotechnology. Nanotech will change every industry and company in terms of how their products are produced and how they are used at the consumer level.”

An example Saffo likes to cite is how the railroad industry knew its business was changing in fundamental ways in the 1950s. The Interstate Highway Act was going to cut into their freight business, and civil aviation was going to take their best passengers. Yet when the industry leaders sat down to discuss their future, “Intellectually, they got it right, but in their hearts, they still loved trains so much they couldn’t let go of them, even though they could see what was coming,” says Saffo. “They ended up missing out on becoming a major player in the transportation revolution because of nostalgia.”

For companies like Chevron that are facing a dramatic turnover in human capital as a result of retirement, two factors are critical in addressing the need for ingenuity in the future: tapping into the vast reservoir of knowledge from veteran employees and promoting an acceptable risk/reward scenario for newcomers.

“Really try to absorb the collective wisdom and wealth of experience of the veterans who are retiring,” says Tucker. “Pick their brains, show interest, ask questions. When they’re gone, it’s too late. Ingenuity is built on the back of knowledge of what works while chal- lenging assumptions about how things could be different.”

“Knowledge transfer is key to compa- nies like Chevron, but at the same time, new employees need to keep a handle on the ideas and perspectives they had before joining the organization,” adds Raskin. “Newcomers need to see how old-timers have benefited from the corporate culture, but they also need to see that there is an acceptable risk/reward structure that em- braces innovative thought. It’s important to promote and lavish praise on employees who stand up and take risks. Companies that don’t take risks die off.”

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