The Fundamentals of Innovation

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To generate this incredible volume of ideas, the organization has built a world-class creative center at its Kansas City (Mo.) headquarters. Imagine an art studio the size of a Super Wal-Mart. But, like everyone else, Hallmark has had to face financial realities. Not long ago, consultants recommended that the company cut costs by outsourcing creative work. Hallmark execs rejected the idea, recognizing that creativity is the heart of their business. They're able to take a 5¢ piece of cardstock and turn it into a sentiment that people will buy for five bucks. That focus has helped Hallmark ride out the Great Recession with minimal declines.

Punish Inaction

Great execution is every bit as important to innovation as empathy and creativity are. Now is the time to bring ideas to life faster. To make changes that let great things happen. To develop a bias for action. As Stanford University engineering professor Jim Adams once noted, "Good companies reward success, punish failure, and ignore inaction. Great companies reward success and failure and punish inaction."

Since Steve Jobs returned as Apple's CEO in 1997, the company has been celebrated for its design-driven approach to innovation. What's rarely discussed is the well-oiled execution machine that gets Apple's products out the door. Soon after his arrival, Jobs unleashed operations whiz Tim Cook on Apple's troubled supply chain. For years, Apple struggled to clear out older models. Cook reduced Apple's inventory from 54 days to less than a day, going from near-worst in the industry to leaner than cost-leader Dell. Fixing the supply chain and slashing nonessential businesses freed up resources for new ideas, such as the iPhone and the iPad. Steve Jobs is renowned for saying that "real artists ship." And he has made shipping new products an art form.

Focus on the Fundamentals

Companies that innovate sustainably over time don't choose to focus on empathy to the exclusion of creativity or execution. They're great at all three. After all, you can't be a great runner with just a good right leg or left leg. Execution isn't a trade-off for creativity, and neither is it a trade-off for empathy. Two out of three won't cut it. Great companies focus on all three.

The past few decades have seen too much moving the money around and not enough basic value creation. To get out of the Great Recession that continues to dog our economy, companies need to get back to the fundamentals of innovation.

Dev Patnaik is founder and chief executive of Jump Associates, a growth strategy firm in San Mateo, Calif., whose clients include Nike, Target, and Hewlett-Packard. He is also the author of Wired to Care: How Companies Prosper When They Create Widespread Empathy.

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