The Sophisticated Innovator 

Practical Insights 

from Provocative Stories of Innovation 

in Minority Business Enterprises 

Chris Trimble 

Adjunct Associate Professor of Business Administration 

Tuck School of Business at Dartmouth 

In collaboration with the 

Minority Business Development Agency 

U.S. Department of Commerce 

Washington D.C. 

Ronald N. Langston 

National Director 

Prepared for the National Minority Enterprise Development Week 2007 Conference 

September 13-14, 2007 

This project is funded by a grant from the U.S. Small Business 

Administration (SBA). SBA's funding should not be construed as 

an endorsement of any products, opinions, or services. All SBA 

funded projects are extended to the public on a nondiscriminatory basis. 

The use of the logo of the Tuck School of Business at Dartmouth 

does not connote endorsement by the Department of Commerce 

of the organization's views, products, or services. 
2 

 
3 

Table of Contents 

Foreword........................................................................................................................................4

Preface............................................................................................................................................5

Introduction: Why Innovate? How?....................................................................................... 6 

Level 1A: Innovation in its Most Elemental Form ..............................................................10 

Level 1B: Lengthier Innovation Initiatives............................................................................14 

Level 2A: Multiple Simultaneous Innovation Initiatives....................................................16 

Level 2B: Routine Lengthy Innovation Endeavors .............................................................19 

Level 3: Managing a Series of Heterogeneous Initiatives................................................21 

Level 4A: Innovations Requiring New Organizational Forms.........................................25 

Level 4B: Building New Businesses, New to the World...................................................29 

Conclusion..................................................................................................................................31 

Table 1: Innovation Principles, One Degree-of-Difficulty at a Time ..............................32 

Appendix: Ideas about Ideas.................................................................................................34

Acknowledgments ....................................................................................................................36 

Notes on Sources and Further Reading...............................................................................37 

Author..........................................................................................................................................39 

Tuck School of Business at Dartmouth ................................................................................39 

Minority Business Development Agency.............................................................................40 

Tuck School and MBDA Partnership....................................................................................40 
4 

Foreword 

The American Competitive Initiative (ACI), launched by President George W. Bush, 

recognizes the need for U.S. companies to remain competitive in the global market 

through innovation. 

A highly-skilled workforce, greater investment in research and development, and an 

environment that spurs entrepreneurship and innovation are some of the keys to 

continued economic growth. 

The 2006 ACI report underscores the President’s message: “Our prosperity is no 

accident. It is the product of risk takers, innovators and visionaries. We owe our global 

leadership in large measure to our willingness to build an economy and culture that 

welcomes and encourages innovations and flexible, open markets.” 

Through this paper, written by innovation expert Professor Chris Trimble of the Tuck 

School of Business with the collaboration of the Minority Business Development 

Agency, we hope to challenge minority business enterprises to pursue a strategy of 

innovation for continued growth and competitiveness. 

As we release this paper during the 25th Anniversary of the Minority Enterprise 

Development Week Conference in September of 2007, we also wish to celebrate the 

achievements of minority entrepreneurs whose persistence in bringing innovative ideas 

to the marketplace have contributed to America’s global leadership in innovation. 

Ronald N. Langston 

National Director 

Minority Business Development Agency 
5 

Preface 

There are dozens of ways to increase profits. You can cut costs, you can negotiate 

more aggressively, you can raise price. Perhaps, however, you want profits plus 

something more profound. 

Try innovation. 

Some companies excel at today’s business. Those companies keep the wheels of the 

economy turning. Other companies innovate. These are the companies that build a 

better economy for tomorrow and raise living standards for all. 

The largest companies have mammoth resources at their disposal for innovation. And 

so it is, and so it should be, that the most storied innovators are always the underdogs —

those working in the garage. 

Your garage may be lonely, but you do not work alone. America stands behind its 

minority business enterprises and salutes its innovators. In particular, America honors its 

enterprising leaders of this generation and of generations past for their historic and 

continuing contribution to the America we take pride in today. To sustain its greatness, 

America must continue to foster innovation domestically, attract the most talented and 

energetic business leaders from around the world and put their skills to work in this 

nation. 

America is a diverse nation today and will be a more diverse nation tomorrow. Nearly 

20 percent of U.S. enterprises are minority-owned, and that percentage is rising. 

America’s minority population has passed the one hundred million mark, and that 

population is growing. The importance of a vibrant minority enterprise is high, and it will 

only get higher. Increasingly, the face of minority enterprise is the face of the American 

business. 

If innovation drives the American economy, then you, as a leader of a minority business 

enterprise, must be an agent of innovation. I hope that this paper and the Minority 

Enterprise Development Week conference provide at least a small push towards taking 

your innovation initiatives to the next level. 

Honest innovation researchers will acknowledge that you can learn as much from other 

innovators as you can from research. My approach is to try to give you the best of both. 

I invite you to walk in the shoes of many of your brethren in the world of minority 

enterprise. Their narratives are presented here. To the best of my ability, I’ll sprinkle a 

dose of innovation insight amidst their provocative innovation stories. 

You will enjoy the stories. These innovation journeys can be your own, if you choose it. 

Chris Trimble 

Dartmouth College 

Hanover, New Hampshire 
6 

Introduction: Why Innovate? How? 

Innovation is at the Foundation of Business Success 

and Sustainability

All companies, whether small or large, whether new or established, must innovate. 

In fact, all companies eventually reach a crisis where the options are stark and simple. 

You can innovate, or you can die. 

Many companies, even the largest, stumble when they reach that crossroads. In fact, 

the average life expectancy of a Fortune 500 company is less than that of a human 

being. As Ray Stata, Chairman of semiconductor giant Analog Devices Incorporated 

(ADI) once said: “Every business has a life, and you always need to be looking beyond 

that life. The job of the CEO is to sense [the end of life] and respond, and to be an 

encouraging sponsor for those who see the future.” In other words, the only way to turn 

a thriving enterprise into an enduring institution is to strike a healthy balance between 

innovation and business-as-usual. 

A high-stakes innovation challenge could arrive at any moment. For one just-launched, 

minority-owned company, Combustion Associates, Incorporated (CAI), that challenge 

came excruciatingly fast. (See sidebar, “Confronting the Innovation Challenge.”) Your 

own crossroads could be months away or it could be decades away.1

 To wait for it to 

arrive is to wait too long. The day to start building your company’s innovation muscles 

is today. 

There are rich rewards for starting now even if your life-and-death challenge is distant. 

Innovation sustains growth. No matter how successful at launch, growth rates for all 

new products and services eventually decline. Only repeated innovation sustains longterm growth. Furthermore, innovation sustains profitability. We all compete in a global 

economy that is more transparent than ever before. As a result, no cost advantage lasts 

for long. Companies sustain competitiveness only through routine innovations to 

improve efficiency. 

The reasons to start innovating today go beyond direct financial rewards. Innovation 

satisfies employees. It gives them a reason to come to work each day. Though there is 

some comfort in routine, some comfort in equilibrium, it is inevitably a short-lived 

comfort. Enduring stability deadens spirits. People come to work wanting more, 

wanting to improve the world in front of them. Humans build. Humans innovate. 

But how? Let’s start with the obvious. You need some innovative ideas. 

 

1

 For insight to the lifecycles of minority-firms, see The Life Cycle of a Minority-Owned Business: Implications for the 

American Economy by Andrew B. Bernard and Matthew J. Slaughter, 2004. Prepared for the 2004 National 

Minority Enterprise Development (MED) Week Conference. 

“Every business has a life, and you always need to be looking beyond that life.” 

Ray Stata, Chairman of Analog Devices Incorporated 
7 

In fact, when most people hear the word “innovation,” their immediate association is 

with the innovative idea itself — the romance of the “light-bulb moment.” When most 

business leaders think of steps they could take to make their companies more 

innovative, they think first about unleashing employee creativity to generate more ideas. 

However, most companies, large and small, do not struggle from lack of ideas. Most 

have plenty of ideas. The struggle, instead, is to move more of the promising ideas 

forward. 

Here is a fundamental innovation axiom: In any great innovation story, the idea is only 

Chapter 1. Ideas are crucial — but ideas are only beginnings. In the Appendix, you will 

find some ideas about generating ideas, and information about the role that federal 

government programs can play in that endeavor. 

This paper focuses on what comes after the idea. The journey from ideas to business 

results is difficult, because innovation is inevitably in conflict with business as usual. 

Tomorrow is inevitably in conflict with today. One of the central challenges of 

managing innovation, beyond ideas, is productively resolving that conflict. 

What comes after the idea? Sadly, there is no science of innovation — no by-the-book 

discipline that will get you from idea to results. While many innovations are rooted in 

scientific discovery, managing innovation is far from scientific. The community of 

innovation researchers is only beginning to uncover with any clarity the best practices 

for making innovation happen. We do know that innovators are often inspired, 

determined, and committed. But we also know that inspiration and perspiration are not 

always enough. 

Raising innovation capabilities to the next level starts with recognizing that innovation, at 

its very core, is about learning from experiments. Furthermore, some experiments are 

much more difficult than others. Experienced innovators, particularly those that 

participated in diving or gymnastics in their youth, recognize that some innovations are 

like a somersault, and some are like a triple-flip-with-a-quadruple-twist. These two 

insights lie at the foundation of this paper. 

This paper tackles the low-degree-of-difficulty innovations first, and works its way up to 

more difficult forms of innovation, one step at a time. Along the way, it illustrates 

several forms of innovation with examples from minority business enterprises. 

The criteria used to differentiate innovations of various degrees of difficulty may surprise 

you. This paper minimizes reliance on the most common innovation categorizations — 

process innovation, product innovation, service innovation, adjacent market innovation, 

new ventures, incremental innovation, radical innovation, disruptive innovation, and 

sustaining innovation. These terms can be vague. One person’s incremental 

improvement is another person’s radical change. One person’s process improvement is 

another person’s new service offering. Despite the ambiguity, many managers find 

these categories useful in conversations about business strategy or in efforts to prioritize

In any great innovation story, the idea is only Chapter 1. 
8 

innovation proposals. However, these categories are not useful when describing best 

practices for implementing innovations. 

In assessing degree-of-difficulty, the questions asked in this paper focus on the 

operational realities of the innovation experiments. For example: 

• How long does the experiment take? Hours? Weeks? Months? Years? 

• Is there one experiment? Many simultaneous experiments? A sequence of 

similar experiments? A sequence of unique experiments? 

• How costly is the experiment relative to resources available? 

• To what extent does the experiment require building new organizational subunits? With new skill sets? New work processes? New reporting structures? 

New job descriptions? 

• To what extent will the “innovation group” need to interact with the business-asusual group to implement the experiment? 

These are the questions that establish an innovation’s degree-of-difficulty. 

There are other dimensions of the innovation challenge beyond the managerial — such 

as technical or engineering challenges. A staggering complex technical breakthrough 

can be relatively straightforward for managers to implement. And, a relatively 

unimaginative idea with no technical complexity whatsoever can be extraordinarily 

difficult for managers to implement. 

Some innovations are more difficult to manage than others. The most prepared 

companies stand ready to tackle a wide range of innovation challenges. 

Onward. 
9 

 Confronting the Innovation Challenge 

Just a couple of years after they launched their new business, Mukund Kavia and Kusum

Kavia could see the end coming. 

Combustion Associates, Incorporated (CAI), a minority business enterprise, had opened 

its doors as an engineering consulting firm in Southern California in 1989. Their timing 

could not have been better. California Air Quality Management Districts had just 

passed more demanding air quality regulations. Commercial boilers of a certain size — 

those used to provide heat and hot water in schools, hospitals, and hotels, for example 

— needed to be upgraded to meet the new standards. The managers of such 

operations did not typically employ experts on boiler emissions. They needed help. 

They needed someone like Mr. Kavia. 

As a result of its fortuitous timing, CAI got off to a fast start. Mr. Kavia was a Kenyan of 

Indian descent, and he had been educated in the United States and the United 

Kingdom in the field of mechanical engineering. In starting CAI, he had found a 

satisfying way to put his skills to work and to earn a living as an entrepreneur. 

There was just one problem. What would CAI do once all of the boilers affected by the 

new regulations had been upgraded to meet the new standards? That day was coming, 

and it was coming fast. 

For CAI to survive, Mr. Kavia needed to reinvent it. He needed to find an innovative 

way to put his skills and his colleagues’ skills to work. In the course of CAI’s consulting 

work, the company expanded its expertise in the design, manufacture, installation, and 

operation of boiler systems, and deepened relationships with several manufacturers. 

Searching for a way to build on these new assets, CAI started to take on expanded 

contracts. Rather than just giving advice, CAI began operating as a general contractor 

providing installation, training, and after-service support. 

Then, the company went a step further. Some of the manufacturers that CAI was 

working with had more orders than they could handle. CAI developed partnerships 

with the manufacturers, handling some of their manufacturing in their own facility. The 

manufacturers respected CAI and recognized that the company’s close contact with 

customers gave them insight that they otherwise would not have. CAI steadily 

expanded the kinds of products that it manufactured and tripled its revenues over the 

next five years. Through innovation, through bringing new skills to market, CAI created 

a new future for itself, and became a rejuvenated force in the California economy. 
10

Level 1A: Innovation in its Most Elemental Form 

The Story of Ryla Teleservices

 

Mr. Mark Wilson sipped his tea and listened intently to the President of the Republic of 

Kenya, Emilio Mwai Kibaki. He had just finished addressing an audience of Kenyan 

government officials and business leaders, and President Kibaki had asked for further 

dialog. Mr. Wilson had departed his native state of Georgia for the business trip to 

Kenya with modest expectations. The trip had exceeded those expectations — 

dramatically. 

Five years earlier, in 2001, Mr. Wilson and his wife Shelly had launched Ryla 

Teleservices. Ryla was a call center operation just outside of Atlanta. The couple 

named the company after their children, Ryan and Lauren. They were excited, but 

uncertain where their entrepreneurial adventure might take them. 

The Wilsons aspired to create a better kind of call center. Mr. Wilson, an AfricanAmerican, had years of experience managing call centers for a corporation, and was 

thoroughly familiar with the central difficulties faced by call centers, particularly the 

challenge of keeping employees engaged, or even just keeping them employed. 

According to Mr. Wilson, the typical call center needed to replace more than 75 percent 

of its workforce each year. The vision for Ryla was to mix the best advantages of a small 

company — a close-knit, loyal, high-aspiration workforce that delivered high quality on 

every call — with the sophisticated technology infrastructure usually only found in much 

larger operations. 

Ryla Teleservices grew quickly to several hundred employees without even hiring a sales 

force. Their quality was high, and their customers did the selling for them through wordof-mouth. Employees were as satisfied as customers. In fact, employee turnover was 

only roughly 30 percent. 

What’s Level 1? At Level 1, there is a single innovative idea. It improves or 

expands the existing business and measuring its success is no different from 

measuring the performance of the existing business. Also, there is no need 

to hire new kinds of experts or to substantially change job descriptions or 

core business process. At Level 1A, innovations can be implemented in a 

short time period — at most, a few months. 

Innovation Principles: The most fundamental innovation discipline is one of 

learning quickly from experiments. That is easiest when feedback is rapid 

and the innovation makes only limited departures from the existing 

business. The most prepared innovators identify the specific performance 

measures that are likely to be affected by the innovation, understand how 

those changes will impact profitability, and are ready to react quickly should 

the experiment produce disappointing results. 
11

Ryla’s customers pushed Mr. Wilson to do even more. As Ryla was growing 

domestically, the call center industry was growing overseas, particularly in India and the 

Philippines. Mr. Wilson had not launched Ryla with an ambition to expand abroad, but 

customers were leading him that way. Ryla could have declined, but that would have 

only limited Ryla’s growth domestically as well as globally. Ryla’s customers would 

simply have found another supplier, potentially a firm not only operating overseas, but 

owned and managed overseas.2

 

A contact of Mr. Wilson’s at the Ford Foundation, which had considered Ryla for an 

award, urged Mr. Wilson to consider Kenya and offered to arrange some initial 

meetings. Why Kenya? India was far more talked about, but as India’s outsourcing 

industry grew, India’s attractiveness for setting up new call center operations declined. 

It became more difficult to hire quality employees and salaries rose. Kenya, on the other 

hand, was as yet undiscovered, despite the fact that it had many of the same advantages 

as India — in particular, a well-educated, technology-savvy, English-speaking population. 

Mr. Wilson decided to take up the offer for a few introductions in Kenya. Soon after his 

visit, he initiated a grand experiment: to discover whether Ryla could duplicate its 

success on foreign soil, eight time zones from home. 

The use of the word experiment is deliberate. The discipline of innovation is first and 

foremost a discipline of experimentation. Innovation projects have uncertain outcomes. 

Many managers, by training, abhor uncertainty. They endeavor to eliminate as much of 

it as possible. The more accurate the forecasts, the better the decision-making, the 

thinking goes. Mr. Wilson’s reflections on the launch in Kenya are reflective of such a 

mindset. “If we had been more diligent about understanding all aspects of what we 

were doing, we might have anticipated more of the challenges we faced, and been 

more proactive,” he said. 

While innovators should, of course, resolve as many uncertainties as possible before

taking the plunge, uncertainties inevitably remain. Even the most exhaustive a-priori 

research could never have given Mr. Wilson an understanding of call center operations 

in Kenya that was nearly as accurate as his understanding of call center operations in the 

United States. Call centers were relatively new in Kenya. Mr. Wilson was making a 

pioneering effort. 

What do sophisticated innovators do in the face of uncertainty? They identify the 

uncertainties as clearly and specifically as possible, and they set out to resolve those 

uncertainties by running experiments, measuring outcomes, and analyzing. 

Even though Ryla did not have, and could not have had, complete information about 

call center operations in Kenya, the nature of the uncertainties in the innovation 

experiment was clear to Mr. Wilson, who was deeply familiar with call center 

operations. He had studied Ryla’s income statement for years. At least in the United 

States, he knew what every aspect of call center operations cost, and what price would 

 

2

 While some customers pushed Ryla to open overseas operations, others preferred domestic call centers, despite the 

higher expense. Ryla’s maintains growing operations both in the United States and Kenya. 
12

generate a healthy profit. The question was, which income statement parameters would 

vary? By how much? What would the aggregate picture look like? 

Some of Ryla’s costs would not change in Kenya. The company planned to use the 

exact same computer infrastructure in Kenya as they used in the United States, for 

example. Other parameters, such as salaries, could be researched in advance. Salaries 

in Kenya for call center employees were about one-third of salaries in the United States. 

But there remained several uncertainties, including price. Ryla’s clients had pushed for 

overseas operations so that they could demand price cuts. But what level of quality 

could Ryla achieve in Kenya, and what did that imply for the price customers would be 

willing to pay? Another uncertainty was the cost of hiring and training. These costs 

would multiply if Ryla experienced high turnover, which was also hard to estimate in 

advance. Ryla had proven effective in motivating and retaining employees at home but 

had no way of knowing how effective their approach would be in a different country. A 

final uncertainty was the cost of telecommunications. As of launch, costs were 

extremely high, much higher than in the United States, but Kenya was investing in 

improvements, and the government was willing to offer telecommunications subsidies to 

stimulate the growth of the call center industry. 

It took just a few months to resolve the uncertainties. Kenya did indeed have large 

numbers of educated but unemployed people, and hiring and training was as 

straightforward as Mr. Wilson anticipated. However, retaining employees was much 

harder than expected. Problems surfaced quickly. Some Ryla employees in Kenya 

simply could not adapt to the awkwardness of working at night. (Working at night was 

necessitated by the time difference between the United States and Kenya.) Others quit 

because of the difficulty of travel within Nairobi. Commuting to work was more 

burdensome than employees anticipated. Finally, Ryla hired the best and brightest that 

they could find. Many were working towards better degrees and better jobs. They 

simply did not stay in one place for long. 

Costs of telecommunications, data links in particular, also turned out to be substantially 

more expensive than anticipated. Mr. Wilson was able to offset the cost a bit by 

arranging assistance from both from the Kenyan government and the World Bank. 

There was no way to know it in advance, but operations in Kenya turned out to be 

profitable. Positive and negative variations from the familiar balanced, and the income 

statement for the Kenyan operation did not look much different from the income 

statement for the United States. All of the Kenyan numbers, per employee, were of 

course lower, but according to Mr. Wilson, as a percentage of revenue, technology 

costs and human resources costs, the two major cost components, were essentially 

equal in each country. 

What do sophisticated innovators do in the face of uncertainty? They identify the 

uncertainties as clearly and specifically as possible, and they set out to resolve those 

uncertainties by running experiments, measuring outcomes, and analyzing. 
13

Ryla had established a toehold in Kenya. They had constructed a new overseas 

operation that Ryla’s clients were eager for. Ryla had begun to establish a positive 

reputation in the Kenyan employment market, one step ahead of the competition that 

would certainly follow if Kenya’s trajectory of economic development continued. 

Should Ryla choose to continue along an aggressive international growth path, Mr. 

Wilson also has the beginnings of a model for a repeatable process for entering new 

countries.3

 

Ryla’s experiment carries a low degree of difficulty. This is not a value judgment. In 

fact, from all appearances, this innovative endeavor will position Ryla for continued 

rapid growth domestically as well as abroad. If you can achieve such high impact 

without tackling something extraordinarily complex, you should. 

There are two characteristics of Ryla’s innovation that are relevant in assessing the 

degree of difficulty. First, Ryla did not alter its model for operating cost centers. It was 

not developing a new theory for effective call center operation. It was, in fact, trying to 

duplicate, not reinvent, the way it did business — albeit in an unfamiliar environment 

with unpredictable cost factors. Because Mr. Wilson was so thoroughly familiar with the 

drivers of profitability for call center operations, he knew exactly what the uncertainties 

were. They could be reduced to specific parameters like hiring costs, technology costs, 

and price. Second, improved estimates for these parameters could be developed 

through experimentation quickly. It takes a matter of months, not years, to get a new 

call center off the ground. 

Why do these characteristics matter? Recall that the core discipline of innovation is a 

discipline of experimentation. To be only slightly more specific, it is a discipline of 

learning quickly from experiments. Some learning environments are more challenging 

than others. Under ideal conditions — when experiments depart from the familiar only 

in a small number of readily identifiable ways and performance feedback is rapid — 

learning is practically second-nature. 

In such innovation endeavors, the most dangerous pitfall is overconfidence. When 

innovation leaders presume success, they have no motivation to identify uncertainties, 

and they overlook relevant new information, even critical information that might 

otherwise lead to quick discontinuation of a project that is on a path to failure. 

Innovation is uncertain, and thus innovation invites failure. The best failures are those 

that innovation leaders recognize swiftly, learn from, and move on from before sinking 

even one dollar more in the innovation project than is strictly necessary. Thus, a core 

innovation virtue is humility. 

 

3

 See Minority Business Enterprises in the Global Economy: The Business Case by John Owens and Robert Pazornik, 

2003, Prepared fro the 2003 National Minority Enterprise Development Week Conference. 

Innovation is uncertain, and thus innovation invites failure. The best failures are 

those that innovation leaders recognize swiftly, learn from, and move on from before 

sinking even one dollar more in the innovation project than is strictly necessary. 
14

Level 1B: Lengthier Innovation Initiatives 

Learning from Sophisticated Product Development Systems 

Rapid feedback makes learning much easier. Think about the difference between 

learning to pitch in baseball and learning to launch a new product. In baseball, the 

umpire calls “ball” or “strike” a split second after the pitch. Now, that’s rapid feedback! 

Such feedback is very useful to an innovator. Immediately you can draw conclusions 

about whether what you tried had a positive or negative impact. 

Learning to launch a product takes much longer. Each time you try it, you must wait 

months, quarters, or even years before you can be certain whether the investment you 

made in developing the product has earned a healthy return. That does not mean, 

however, that you cannot begin drawing inferences about whether the product is on a 

path to success or failure much sooner. 

Large consumer products companies, from Procter & Gamble to General Motors, 

illustrate this concept well. For these companies a steady stream of new product 

launches is crucial to sustaining strong results. Rivals try to outdo each other with new 

products or improved versions of existing products several times per year. Think of 

Coca-Cola launching Dasani bottled water, or Panasonic launching their latest highdefinition plasma television set. 

Such exercises are similar to the Ryla launch in Kenya in that the companies are not 

reinventing their businesses when they launch a new product. The machinery of 

business does not change, only the product that is pushed through the machinery of 

business changes. Not all products launched perform highly by every measure of 

interest, but the measures of interest remain the same. 

The crucial difference between Ryla’s launch in Kenya and a major new consumer 

product launch is that the latter plays out over a substantially longer time period. 

In these types of innovation endeavors, sophisticated innovators pay a great deal of 

attention to trends when evaluating progress. How quickly are sales accelerating? 

How much has consumer awareness of our product improved? How rapidly are 

we expanding distribution? How quickly are our unit costs coming down? 

What’s Different? The only difference is that at Level 1B, the innovations 

take longer — a few quarters or even a few years. 

Innovation Principle: When innovations take quarters or even years to 

implement, innovators must routinely assess not whether an innovation is a 

success today, but whether or not it is on a trajectory to success. Thus, all 

innovation measures should be evaluated not based on today’s result but 

based on the longer-term trend in results. 
15

Trends are of course relevant for managers of mature products as well. Changes of a few 

percent per year are big changes for a mature business. As a result, managers of mature 

businesses frame conversations about performance as conversations about departures 

from normal operations or departures from plan. A fundamental assumption in financial 

accounting, the presumption that a business is an ongoing concern, encourages that 

view. Businesses are viewed as stable and continuous. 

New product launches, to the contrary, are quite dynamic. There are dramatic changes 

in business results quarter-to-quarter, even month-to-month. The difference is analogous 

to the difference between flying a commercial jet at 35,000 feet on autopilot and 

handling a take-off or landing. At altitude, the pilot looks at a dull, stationary dashboard. 

None of the needles are moving around the dials. During takeoff and landing, however, 

all of the needles are in motion. Pilots absorb not just each reading but how quickly 

each is changing. Similarly, in dynamic business situations such as new product 

launches, trends are at least as important as current performance data. 

A manager of a new product must assess not whether the product is profitable now but 

whether the product is on a trajectory to profitability. This is tough to judge based on 

current-period performance alone. When innovation projects last for a few quarters or a 

few years, the most sophisticated managers plot nearly every business performance 

measure on a graph over time so that trends are clear. Doing so best helps shape 

judgment about whether the new product or service is on its way to success or failure. 

A foundational managerial habit for innovators is reorienting discussions of business 

performance to discussions of trends in all operational measures. Two additional 

practices multiply the effectiveness of the habit. 

The first is to seek leading indicators of key performance measures. For example, in new 

product launches, the greatest uncertainty, by far, is sales. Will consumers like the 

product? Rather than monitoring only the trend in sales itself, sophisticated innovators 

seek as many leading indicators of sales as they can find. Are consumers aware of the 

product? Do they know where to find it? Are early users satisfied? Are they talking to 

friends about the product? Analyzing trends in leading indicators further helps shape 

judgment about the trajectory that sales will follow. 

The second habit is increasing the frequency of business performance reviews. The 

discipline of innovation is a discipline of learning quickly from experiments. Increasing 

the frequency of business reviews, from quarterly to monthly, for example, leads to 

earlier trend identification and accelerates learning. 

When innovation projects stretch out over several quarters or a few years, the most 

sophisticated managers plot nearly every business performance measure on a graph 

over time so that trends are clear. Doing so best helps shape judgment about 

whether the new product or service is on its way to success or failure. 
16

Level 2A: Multiple Simultaneous Innovation Initiatives 

The vCustomer Story

 

Ryla’s launch in Kenya was a big move closely managed and supervised by the 

company’s CEO, Mr. Wilson. But what if the innovation journey looks less like one giant 

step, and more like hundreds of small steps? What then? Clearly, the CEO cannot be 

involved in implementing and learning from each experiment. In such circumstances, 

the CEO’s role changes dramatically. 

Sanjay Kumar, an Asian Indian, launched his sophisticated call center operation, 

vCustomer, in 1999 in Kirkland, Washington. vCustomer was an early entrant into the 

now rapidly expanding market and grew quickly propelled by high quality and a low 

cost. 

Mr. Kumar had higher aspirations. And he had a revolutionary idea. Quite counter to 

intuition — call centers are most often paid either by the call or by the hour — Mr. Kumar 

wanted to find ways to help clients shorten or even eliminate calls coming into their call 

center. Explained Mr. Kumar: “Today, clients view customer service only as a cost. If I 

took the same view, I certainly would not want to reduce the number of customer 

service calls coming to me — doing so would only reduce my revenues. But that is a 

very short term viewpoint. If I can find ways to add new value, beyond simply providing 

an effective labor pool, clients will reward me in the long run.” 

By 2007, vCustomer was handling over 100,000 phone calls per day, almost exclusively 

for U.S.-based corporations. To maximize competitiveness in their own industries, these 

customers demanded low costs, and vCustomer saw an opportunity to locate its call 

centers in India. vCustomer invested heavily in information technology. The company 

recorded information from each call, built a huge database, mined the data with 

sophisticated search engines, and gleaned valuable insights for customers. 

What’s Different? At Level 2, instead of a single innovative idea, there is a 

system for generating a steady stream of similar innovations, perhaps dozens 

or hundreds. These innovations may even be in progress simultaneously. 

At Level 2A, the length of experiments is once again short, a few months at 

most. 

Innovation Principles: At Level 2, the role for senior managers changes 

dramatically. Their job is no longer to directly manage an innovation 

experiment. Instead, their most important responsibilities are (a) to define a 

clear innovation charter achievable given the skills, time, and resources 

available to innovation leaders, and (b) to establish as effective a learning 

environment as possible, one which enables each innovation leader to learn 

quickly from experience. 
17

For example, if vCustomer served a manufacturer of high-definition television sets, it 

could discover, through analysis, that most of the manufacturer’s customer service calls 

were tied to a misprint in the user’s manual. Or, if vCustomer served an Internet retailer, 

it could recognize a high volume of calls related to confusion over how to return a 

defective product, and then it could suggest ways the retailer could improve its online 

explanations of policies and procedures for product returns. Or, if a client was running 

several promotions, vCustomer could help diagnose which was most effective. 

Of course, Mr. Kumar himself could not be pouring through the vast data that 

vCustomer collected to find every insight himself. Instead, he had to somehow 

empower and enable his entire workforce, nearly 4,000 strong, to develop their own 

routines for finding valuable insights for clients and passing them along. But how? How 

could he establish an environment in which employees could effectively identify 

promising experiments, partner with clients to make them happen, and learn from them? 

Mr. Kumar’s formula begins with empowerment. In most call centers, front line 

supervisors expect operators to adhere strictly to scripts. At vCustomer, however, 

employees are expected to think on their feet and partner with callers to solve 

problems. That is demanding enough, but Mr. Kumar pushes even harder. In addition to 

solving problems from the caller’s point-of-view, Mr. Kumar asks that employees 

endeavor to understand the root cause of the problem. A defective part? Confusing 

instructions? Consumers using a product in a way it wasn’t intended to be used? 

Only exceptional call center employees can handle these demands. Mr. Kumar goes 

out of his way to recruit the best, specifically evaluating problem-solving skills in the 

interview process. vCustomer also invests heavily in training and development. New 

employees practice problem-solving skills using tapes of actual calls before handling live 

calls under the direct supervision of a mentor. vCustomer then expects each employee 

to schedule at least 2.5 hours of self-directed computer-based training each week. 

vCustomer’s talented call center operators generate many hypotheses about how 

vCustomer’s clients might improve business performance. Cross-functional teams that 

include the call center operators, client relationship managers, and technology experts 

select among the most promising of those hypotheses, analyze them based on extensive 

in-house data, and then encourage clients to run mini-experiments to test them. 

vCustomer then monitors the impact based on data from subsequent calls and based on 

changes in client satisfaction. Clients were pleased. In fact, vCustomer was the thirdfastest growing privately held company in 2004, according to an analysis by Inc. 

magazine. 

The discipline of innovation is a discipline of learning quickly from experiments, and 

learning is easiest in rich feedback environments. vCustomer invests heavily to ensure 

that every team and every employee can quickly see the results of their initiatives. The 

company distributes client satisfaction scores weekly. In fact, the company makes this 

information data visible on a performance “dashboard” on every employee’s personal 

computer. Client satisfaction scores are calculated by client, team, and individual 

customer service agent, showing trends over the past several weeks. Scores are broken 

down to such specific performance dimensions, in fact, that each employee can 
18

customize their self-directed training to areas where their individual performance most 

needs improvement. 

Such rapid feedback is motivating. It gives employees a sense that they can take 

initiatives that have immediate impact. vCustomer further motivates employees by tying 

portions of their compensation directly to feedback from clients. 

There are some elements of vCustomer’s approach to innovation that sound like 

managerial motherhood and apple pie. Hire talented people! Invest in their 

development! Motivate them! Empower them! These dicta are so universally applicable 

in business that they hardly seem worth repeating. At vCusotmer, they are necessary 

elements of the innovation engine, but they are insufficient. 

There are two additional insights from vCustomer’s approach to innovation that are 

more important and less mundane. First, if you want your employees to innovate, you 

have to give them a clear and focused innovation charter that is within their range of 

capabilities and achievable within their limited free time. Mr. Kumar’s innovation charge 

to employees was clear, specific, and achievable. Try to identify root-causes of the 

problems that callers are describing and turn those insights into usable advice for our 

clients. Many companies claim that any employee can and should innovate — but leave 

it to employees to figure out exactly what that means on their own initiative. That is a 

formula for disappointment, disengagement, and disaffection. Employees will think big, 

well beyond what is feasible within the constraints of their existing jobs, and will find 

only frustration. 

Second, if you want your employees to innovate, create an environment in which 

employees can learn quickly from their own experiments. That means providing 

employees with the clearest and quickest possible performance feedback. 

In complex business environments, employees may also need help interpreting the 

results of their experiments. Toyota, recognized for its success in motivating 

manufacturing employees to improve business performance, trains extensively on the 

proper application of the scientific method and rigorously scripts routine work processes 

so that results from experiments can be carefully compared to baseline performance. 

Similarly, Deere & Company asks small teams of employees to find ways to improve 

manufacturing processes in their immediate vicinity but then supports those teams with 

experts skilled in statistical process analysis. 

The discipline of innovation is a discipline of learning quickly from experiments, and 

that is accomplished most easily in rich feedback environments. 
19

Level 2B: Routine Lengthy Innovation Endeavors 

Learning More from Sophisticated Product 

Development Systems 

 

vCustomer’s approach to innovation generates many small-scale innovation efforts, 

those that can be handled by individuals or small groups of employees while meeting 

the demands of daily operations. It is an example not of just a singular innovation effort 

but a system for generating a steady stream of innovations. 

Consider once again consumer products companies, faced with the constant necessity 

of introducing new products. The question faced by senior executives in these 

companies is not just how do I manage a single successful product launch but how do I 

build the organizational machinery necessary to produce a steady stream of new 

product launches? This is a question that most small business owners will not need to 

confront for some time, but it is worthy of our time now. 

The techniques discussed earlier for single product launches remain relevant. Innovators 

must be skilled not just in analyzing current performance but in assessing the trajectory 

of performance by monitoring and analyzing trends, identifying leading indicators, and 

reviewing performance more frequently than usual. To achieve a steady stream of new 

products, these techniques must be systematic. They should be built into the templates 

used to create management reports. This must be done without damaging the businessas-usual machinery. The best route is often to separate planning meetings for new 

products from those for mature products. Performance discussions for new products 

are framed differently and should happen more frequently. 

As new product development operations grow, the roles of individuals within the 

product development teams become ever more scripted and ever more specialized. 

There are managers that specialize in various phases of the development process, and 

engineers that focus on one component of a typical product design. Specialization and 

process rigor is the path to efficiency in product development just as it is the path to 

efficiency in core business processes for mature products. 

What’s Different: The only change from Level 2A to Level 2B (just as 

from Level 1A to 1B) is that the innovations take longer — quarters or 

even years. 

Innovation Principles: Executives should make the innovation process 

routine and efficient as possible by breaking down the process into 

specific tasks, specializing, and assigning specific roles and 

responsibilities. Measures that resolve the critical unknowns identical 

from one innovation to the next, can be built into routine management 

templates. Caution: Managers can not approach higher level innovations 

in this way. 
20

There are several thorny balances to strike in designing new product development and 

commercialization organizations. 

• Some companies design flexibility into the process to account for inevitable 

surprises, but flexibility can be expensive. In automotive companies, for example, 

product development programs, about four years in length, are so regimented 

that managers know that interrupting or delaying the process once it has begun 

takes a level of authority just shy of an act of Congress. 

• Another tricky balance is managing risk. The opportunities to score big with 

customers with cutting-edge features must be weighed against the damage a 

failed feature could bring to a strong brand. Deere & Company has specific 

checks and balances built into their processes to ensure that they take only 

prudent risks. 

• Handoffs between product development organizations and teams that manage the 

existing product lines are delicate. Months of overlap and overstaffing may be 

safest, but it is also expensive. 

• Managers with years of experience developing and launching new products are 

extraordinarily valuable. However, career rotations in and out of product 

development may develop more well-rounded senior leaders in the long run. 

As effective and efficient as practiced, specialized new product development 

organizations can be, they can also become their own worst enemies. Specialization 

breeds efficiency but also inflexibility. For example, teams of engineers that have 

learned to work together to design cars may have to be completely broken down and 

rebuilt before they can tackle a completely new design. Some automotive companies 

are facing this challenge now as they confront radically new energy efficient designs. 
21

Level 3: Managing a Series of Heterogeneous Initiatives 

The Story of Interchez Logistics Systems, Inc. 

 

Large consumer products companies can develop specialized processes for product 

development because there are vast similarities from one product launch to the next, 

similarities both in the design of the products and in the way they are commercialized. 

However, how can a company manage a sequence of innovation efforts when each is 

unique? 

Mark Chesnes had worked for years in the transportation and logistics industry. His 

wife, Sharlene was chair of a collegiate foreign languages department and of Puerto 

Rican descent. They had always wanted to start their own business together, and in 

2002, they did. Their story is one of growth propelled by three distinct innovations. 

What do you get when you cross a transportation expert with a languages expert? A 

new minority business enterprise that can provide solutions to problems faced by 

gaggles of mid-size companies as they grow and expand across borders. In addition to 

making the most of logistics expertise, Interchez found a way to turn foreign language 

skills into a business advantage. Many minority business enterprises could consider 

similar opportunities. 

The economy is much more globally interconnected than it was twenty years ago. As 

small companies grow, they are making decisions earlier than ever to globalize their 

operations. Imagine you own a $50 million manufacturing operation and you have 

decided to build your next manufacturing facility in Central America. Initially, you may 

focus on building the facility and hiring employees. But you will also need to solve 

logistics problems that are more complex than they are at home. You have to ensure 

suppliers can get raw materials to you, and that you can move manufactured goods to 

the market. And, you have to overcome language barriers along the way, translating 

documents and communicating effectively with customs agents and other government 

officials. Interchez supports companies in overcoming these issues. 

The Chesnes’ business could easily have evolved into two distinct operations — one for 

transportation services and one for translation services. Some clients, in fact, use just 

one of the two services. One of Ms. Chesnes’s clients, for example, is a law firm with 

international operations. The firm has no transportation needs, just translation needs. 

What’s Different: Level 3 is different from Level 2 only in that successive 

innovations are distinct. 

Innovation Principles: Each innovation must be treated as a unique 

problem, and the innovation process cannot become routine and 

repeatable. The most prepared innovators develop a clear and distinct 

theory of how each innovation will succeed, and test the critical unknowns 

in each theory as quickly as possible. 
22

Nonetheless, the Chesneses had a hunch that there was power in co-marketing their 

services. It was a hunch they began testing at conventions. This first innovation proved 

powerful. 

By 2007, Interchez employed twenty-four people, most of whom worked in two 

transportation logistics centers: one in Ohio and one in Michigan. In addition, the 

company had contracts with numerous translators who could handle clients’ translation 

and interpretation needs, 24/7, on demand. 

Interchez signs long-term logistics contracts with their clients and manages their 

transportation needs from end-to-end. They negotiate partnerships with transportation 

providers around the world, and measure and monitor their performance on behalf of 

their client. At the heart of the transportation operation is Interchez’s Transportation 

Management System (TMS), an Internet-based application that tracks all client’s 

shipments minute-to-minute. 

The Chesnes’ second innovative insight was that the data on their TMS had value to 

clients. Perhaps you have tried tracking a specific shipment on the website of a major 

carrier like UPS or FedEx. Gathering information, one package at a time, would be 

extraordinarily cumbersome for a supply chain manager working for one of Interchez’s 

clients. But on the Interchez TMS, customers can get information about all of their inprogress shipments on a single page, even if there are numerous transportation 

providers involved. Users can customize the page to highlight the performance metrics 

that are most meaningful to them. They can even set goals and monitor performance 

against those goals. 

Not all transportation needs can be planned in advance. A damaged shipment, for 

example, might lead to an urgent need to send a replacement, which could be very 

expensive. 

That is the problem that inspired the third innovation. For unexpected and urgent 

shipments, Interchez added a new service to its website, dubbed “Premium Freight 

Optimization.” The service enables Interchez’s clients to run a “reverse auction” to 

locate the least expensive carriers for their urgent shipment. Competing transportation 

services providers submit bids, and the customer may select the lowest. The entire 

process can be completed in about twenty minutes. 

By 2007, Interchez had grown to roughly $20 million in revenues per year, all fueled by 

reinvestment of earnings. The company continues to make aggressive new investments 

in its technology infrastructure, including a major reinvestment in the TMS. 

To review, Interchez’s three innovations were: co-marketing transportation and 

translation services, providing customers with detailed supply-chain visibility, and 

enabling reverse-auctions for urgent shipments. Consider for a moment what these 

innovations have in common. Right! Almost nothing! 

Each of the three innovations was a significant investment. Interchez made the 

investments with little, if any, precedent. Unlike businesses that expand geographically 

like Ryla, there is no similarity in financial drivers between existing and new. Unlike the 
23

experience of product development groups in consumer products companies, these 

innovations were not similar to past experiments. They offered new kinds of value to 

customers. They had distinct cost-benefit characteristics. They were unique efforts with 

uncertain impact. 

All innovation involves at least some departure from the familiar. The greater the 

departure from a well-understood precedent, the higher is the degree of difficulty. The 

greater the departure from familiarity, the greater the learning challenge. In cases like 

Interchez’s three experiments, there was no baseline comparison point. There were no 

financial statements from a similar operations in a different geography. There was no 

database of experiences managing similar innovations in the past. 

Without such precedents, there is no obvious framework for evaluating whether the 

innovations are succeeding or failing. The evaluation framework must be invented. 

All business experiments test theories. When there is a precedent, the theory is a 

statement of similarity. Mark Wilson at Ryla tested a theory that call center operations 

could be profitable, with numbers similar to those of his call center in the United States. 

When there is no precedent, the theory is original. Mr. and Mrs.Chesnes tested three 

theories. First, they tested a theory that a combination of transportation services with 

translation services would attract customers. Second, they tested the notion that 

customers would value TMS data, and that the increase in customer satisfaction would 

justify the cost. Finally, they tested the hypothesis that the Premium Freight 

Optimization service would satisfy customers, and that it would have a positive financial 

impact on their business. 

Innovators learn by comparing actual outcomes with predictions. When the innovation 

is a major departure from the familiar, as was the case for Interchez’s three innovations, 

it may not even be clear which outcomes to predict and measure. A crucial skill for 

innovators, particularly when stepping so far from the familiar, is clearly articulating the 

“theory of investment” or “business case” for the innovation. What specific assumptions 

support the investment? 

For Interchez, the theory of investment in each case would have involved some estimate 

of the impact of the investments on variables such as the price they could charge for 

their services, the rate of new customer acquisition, the growth of existing client 

relationships, and the customer retention rate. Before making the investments, Mr. and 

Mrs. Chesnes could only make an estimate of these parameters. To maximize learning, 

they could have formally recorded their best estimates, retained those estimates, and 

later compared them carefully to actual results. 

Innovators learn by comparing actual outcomes with predictions. When the 

innovation is a major departure from the familiar... it may not even be clear which 

outcomes to predict and measure. A crucial skill for innovators... is clearly articulating 

the “theory of investment” or “business case” for the innovation. What specific 

assumptions support the investment? 
24

In practice, investments which test new theories in small companies are often made on 

the basis of judgment, experience, and intuition. But as companies grow, and the stakes 

grow larger, formal practices for articulating, recording, and formally testing theories of 

investment become more and more valuable. 

Companies making the effort to learn from innovative experiments have seen many 

pitfalls. Most frequently, the effort to learn from experience is crushed by the 

managerial machinery designed for mature, proven operations. The core assumption 

underlying that machinery is that business is predictable. As a middle manager, your 

prediction is your promise. If you fall short, you have underperformed. But innovation 

is not predictable. The practice of holding managers accountable to the predictions in 

their plans undermines learning and unwinds motivation to innovate. 

Another pitfall is that many managers lack skill in expressing, retaining, and explicitly 

testing the assumptions in their theories of investment. Even where those theories are 

clear at the time of investment, the rigor in reviewing those assumptions several months 

or quarters later is often lacking. It can be difficult to recover the theory that you used 

to justify an investment unless managers are extraordinarily diligent about documenting 

assumptions. 

The ability to clearly document a theory of investment is a core skill of a sophisticated 

innovator. A rigorous subsequent practice of testing each assumption in the theory by 

comparing actual outcomes to predictions completes the learning loop. 
25

Level 4A: Innovations Requiring New 

Organizational Forms 

The Story of V-Sim, a Product of Magnys, Inc. 

 

While the Chesnes’ innovations lacked precedent, they did build upon a business that 

was already running, one that they understood well. The next higher level of difficulty 

for innovators is launching an adjacent business. The newly launched business generally 

leverages at least one existing asset, thus the term “adjacent,” but, otherwise, the 

business is vastly different from what already exists. It may serve different customers, it 

may offer a distinct value proposition, it may be composed of a very different set of 

business processes, or all of the above. Past experience, particularly in evaluating 

business performance, is almost entirely irrelevant. 

This was the case for Magnys, Inc as it launched an adjacent business. 

Joe Hugan watched conveyor after conveyor move baggage through the Detroit 

International Airport, watching for bottlenecks and breakdowns. Mr. Hugan was not at 

the airport, however, and he was not watching a live video feed. In fact, the airport was 

still under construction. Mr. Hugan was watching computer simulations. His employer, 

Magnys, Inc, a minority business enterprise led by an African-American, had developed 

the simulations to test the baggage system design as thoroughly as possible before it 

was actually built. 

Magnys is a professional engineering services firm with offices in Michigan, Alabama, 

and India. The company helps their clients, mostly manufacturing firms, particularly the 

automotive industry in Michigan, run their operations faster, better, and cheaper. 

What’s Different: At Level 4, the innovative ideas constitute new businesses 

that serve new customers, offer new kinds of value, or both. Level 4A 

innovations take a company into a market that already exists — there will be 

proven, profitable competition from day 1 — but the innovation gives the 

company a unique competitive advantage. 

Innovation Principles: The most common stumbling block in these 

situations is assuming that the organizational machinery that makes a 

company excel in its existing business will also work in the new one. Such 

innovations often require building a new and separate business unit, 

frequently one staffed by new hires with new areas of expertise, with new 

job descriptions, new processes, new performance measures, and new 

reporting structure. It is much like launching a new company from scratch. 

Links between the new business unit and the established one are important, 

to enable the new business to leverage existing assets, but these links are 

common managerial trouble spots. 
26

Magnys’s professionals have deep expertise in manufacturing processes and 

manufacturing technology. 

Clients frequently hire Magnys to build simulations of industrial systems. One client was 

a major automobile manufacturer that had struggled to install new conveyor systems. 

Schedules for installations were always tight because the company halted manufacturing 

operations only twice per year, for two weeks each time, to install new equipment. As a 

result, the supplier fully constructed the conveyor systems offsite and tested them, and 

then disassembled them and reassembled them during the two-week window. 

Despite the thorough advance testing, installations were distressingly difficult. 

Conveyors in and of themselves are uncomplicated, but the control electronics for 

systems of dozens of conveyors were quite complicated, and it was hard to duplicate 

factory conditions during the offsite tests. 

Magnys found a way to improve the testing process by building simulations rather than 

pre-assembling conveyor systems offsite. They linked the simulations directly to 

duplicate factory controllers, replicating actual conditions as closely as possible. The 

approach was faster and cut installation costs by 50 percent. It was also more reliable. 

The automaker succeeded in installing new systems perfectly the first time. 

Mr. Hugan had experience working for software companies. Naturally, he wondered, 

should Magnys, in addition to offering professional services that often involved building 

simulations, launch a simulation software product? Mr. Hugan envisioned a product that 

professional engineers could use to simulate a wide variety of manufacturing situations. 

He could estimate the effort it would take to develop such a package for commercial 

sale. It was within reach for Magnys. After further investigating the available simulation 

packages on the market and concluding that Magnys could do better, Mr. Hugan’s 

interest deepened. Software businesses were higher risk than services businesses, but 

also had much more explosive growth potential. Mr. Hugan persuaded Magnys CEO 

Rocco Pollifrone to take the risk. 

In the book Ten Rules for Strategic Innovators — from Idea to Execution, the authors 

identify three central challenges that every company faces when launching new 

businesses with unfamiliar business models. The new business (“NewCo”) must forget, 

borrow, and learn. 

NewCo must forget the existing business’s (CoreCo’s) business model. Simultaneously, 

it must borrow CoreCo’s assets. And, NewCo must learn how to succeed in the new 

and unfamiliar environment. The challenge of learning from experiments is by now a 

familiar theme, but forgetting and borrowing are new. These challenges are unique to 

high-degree-of-difficulty business experiments. 

In launching a software business, Magnys would have to recognize that nearly 

everything it had learned about how to manage a services firm was irrelevant. Although 

the same technical and engineering expertise underlay both the software product and 

the professional services that Magnys offered, that was where the commonalities 

stopped. Some of the crucial differences between software companies and professional 

services firms include: 
27

• Different People. Unlike services businesses, software businesses require 

commercial software development experts, customer service teams, and 

marketing teams with experience supporting product launches. 

• Different Organizational Structure, Different Power Base. Professional services 

firms align their organizations for delivering discrete projects that meet client 

needs. Software firms align their organizations for developing and selling 

software and supporting users. Power resides in different types of managers — in 

client relationship managers in most professional services firms versus product 

managers in software firms. 

• Different Roles, Responsibilities, and Processes. Job descriptions are different in 

software firms, as are expectations that core functions have of each other, and as 

are routines for coordinating actions across functions. The “biorhythms” of the 

businesses are also different. Service projects are planned week-to-week over a 

period of a few quarters. Software projects are planned month-to-month over a 

period of a few years. 

• Different Norms for Evaluating Performance. Professional services firms can 

evaluate performance, project by project and month by month, based on billings 

and utilization rates. Software firms must take a much longer term perspective, 

likely evaluating long-term returns-on-investment for new software products and 

new releases of existing products. 

• Different Culture. Service professionals take pride in satisfying clients. Software 

professionals delight in commercializing powerful products. 

It is easy to underestimate the magnitude of change that is required when an innovation 

takes the form of an entirely new business. Building NewCo is much closer to building a 

new business from scratch than expanding the existing business. Only when companies 

take such a ground-up approach to building NewCo do they succeed in forgetting. A 

less aggressive approach inevitably leads to recreating organizational processes and 

behaviors that make sense for CoreCo but are out-of-place for NewCo. 

An extreme approach to building NewCo is isolating it completely from CoreCo, but to 

do so is to go a step too far. NewCo must also borrow from CoreCo. In fact, if NewCo 

borrows nothing — if CoreCo has literally nothing to offer — reasonable investors could 

question whether that particular innovation is suitable for the company. 

V-Sim, Magnys’s new software operation, certainly had something to borrow from the 

core business — the deep expertise in simulation possessed by Magnys’s engineers. To 

take advantage of the expertise, there needed to be an organizational link between 

V-Sim’s product development teams and Magnys’s service providers. 

Such links are difficult to manage. Which takes priority? Magnys’s services or V-Sim’s 

development effort? In fact, Mr. Hugan and his colleagues constantly had to confront 

that very question, making a value judgment about which was more important — billable 

hours this year or the long-term potential for much bigger returns on investment for 

software. 
28

NewCo may be able to persuade CoreCo to offer some help on a volunteer basis in the 

short term, but fundamental tensions between NewCo and CoreCo will inevitably 

develop. For NewCo to have the best chance at success, senior management teams 

must anticipate and mitigate those tensions, bulk up resources that NewCo and CoreCo 

both draw upon, and set clear decision rules when conflicts arise. Ongoing attention to 

the organizational links between NewCo and CoreCo is generally the most important 

contribution that the senior management team can make on NewCo’s behalf. Because 

links are tricky to manage, NewCo is often well advised to borrow only those assets that 

confer a powerful competitive advantage, building everything else from scratch. 

Magnys was able to navigate the tricky organizational balances that enable a NewCo to 

both forget and borrow. As a result, V-Sim is having a big impact and is growing. It now 

accounts for roughly 20 percent of the company’s revenue. 
29

Level 4B: Building New Businesses, New to the World 

The CAI Story — Reprise 

 

Kusum Kavia received the news from abroad in mid-2007. CAI’s new “Spirit One”

electrical power generator was operational, providing two megawatts of reliable, on-site 

power (enough to power about 2,000 homes) for a citrus producer in Belize. CAI’s 

customer ran 24/7, but before the Spirit One, its operations were frequently disrupted 

by an unreliable supply of electricity. Making matters worse, the company had to 

purchase the power at high prices from outside of Belize. 

Able to burn natural gas, liquid propane, diesel fuel, methane, or even bio-gas, the Spirit 

One was flexible, self-contained, and skid-mounted for easy transport. It was an ideal 

solution for small industrial operations in remote locations with unreliable power. It was 

an ideal solution for the citrus producer in Belize, who estimated that the Spirit One 

would generate enough savings in electricity bills to pay for itself in less than two years. 

CAI had begun investing in the development of the Spirit One seven years earlier. It 

was a mammoth project for a small company. With some funding from an R&D 

partnership, some help from suppliers and consultants, some help from the U.S. Small 

Business Administration and the Minority Business Development Agency, and years of 

dedicating every ounce of spare time and energy to the effort, CAI completed the 

design and pushed the product to market. Ms. Kavia described the effort: 

“We never quit. This was our dream. Whatever resources we could spare we spent on 

the Spirit One. We had other projects to keep us going — to pay the bills — but we 

always had this R&D project in our shop, and we kept adding to it bit by bit.” 

CAI had prospered through the 1990s but in 2000 became inspired to attempt to 

reinvent their business once again. California had experienced rolling blackouts that 

summer. Some industrial companies that relied on steady sources of electricity began 

investigating the feasibility of building generators on-site, fully dedicated to their power 

needs. One of CAI’s clients, Exxon-Mobil, asked them to help develop such a generator. 

What’s Different: Level 4B is different from level 4A only in that there is no

precedent for the new business that is being created. The risks are higher, 

the timeframes are longer, and there are more dimensions of uncertainly. 

Innovation Principles: Links between the newly launched business unit and 

the established one are likely to be hampered by severe tensions. Links 

should be minimized, perhaps to just the single most important opportunity 

for the new business to leverage an existing asset. Senior executives will 

need to be routinely involved in keeping the interactions healthy and 

productive. 

 
30

Excited by the challenge, CAI began researching “distributed generation” products. 

Some speculators in the electrical power industry believed that because small, portable 

generators were becoming more efficient, they would play a much larger role in the 

energy industry of the future. Anticipating growth in demand, CAI invested in 

developing the Spirit One. 

Seven years later, speculation about distributed energy persisted, but the developed 

world had changed little. CAI discovered interested customers in unexpected places — 

in the developing world, first from Belize and more recently from Benin, where a new 

natural gas pipeline is bringing a new source of power to remote areas. CAI is 

competing with several other companies but has benefited from the support from the 

U.S. Department of Commerce and the California Governor’s Office. 

The Spirit One falls into the highest degree of difficulty category. Beyond all of the 

technical challenges already surpassed and still to come, the organizational challenges of 

forgetting, borrowing, and learning will be taxing. They will be more taxing than what 

Magnys faced in launching vSim because the uncertainties are much greater. Not only 

is CAI building a new business quite dissimilar from their core business of consulting 

services and manufacturing services, they are targeting a new industry — distributed 

generation — which itself is nascent and uncertain. Not only is there no precedent for 

the new business within CAI, there is no precedent anywhere. CAI’s “theory of 

investment” must be full of uncertainties on most every dimension. 

But as the difficulties rise, so do the rewards. The Spirit One has the potential to 

multiply CAI’s business by orders of magnitude. As it does so, CAI will make an 

important contribution to economic development in the poorest regions of our planet. 

Onward, CAI. 

 
31

Conclusion 

Innovation is about inspired ideas and hard work. But innovation is also a managerial 

discipline. The research-based body of knowledge regarding the specific practices and 

techniques that make up this discipline is advancing quickly. 

Through a mix of sharing innovation stories in minority business enterprises and 

introducing frameworks and ideas from the latest research in the field of innovation, this 

paper has, perhaps, both stimulated you and raised your level of confidence that it is 

time to move forward with a clever idea that you have been sitting on for some time. 

For your reference, Table 1 summarizes recommendations. 

The rewards to innovators are rich and play out on so many levels — personal 

satisfaction, financial gain, business growth, new employment, industry revitalization, 

economic strength, national pride. 

Innovators experience the excitement that accompanies the conception of new ideas. 

More importantly, they experience the satisfaction borne of the sweat that turns ideas 

to life. 
32

Table 1: Innovation Principles, One Degree-of-Difficulty at a Time 

Level Characteristics Principles 

1A • There is a single innovation idea. 

• The innovation is an 

improvement to the existing 

business or minor variation of it. 

Can be a process improvement 

or a geographic expansion to an 

area with uncertain 

characteristics. 

• The innovation does not change 

what you measure to evaluate 

the business. 

• You cannot fully predict the 

impact of the innovation on 

these measures or the impact on 

overall financial performance. 

• The experiment can be 

implemented quickly and results 

measured quickly (within a few 

months at most). 

• The innovation does not require 

building a new organizational 

sub-unit that needs people with 

different backgrounds, different 

processes, and different job 

descriptions. 

• Measure and analyze results as quickly 

as possible. 

• If results are disappointing, alter the 

experiment if possible or discontinue it. 

1B • Similar, but experiments are 

much longer. 

• Attempt to assess in advance whether 

the innovation is on a trajectory to 

success. 

• For every business measure, plot results 

as trends over time. 

2A • Similar to Level 1A, but instead 

of one experiment, there are 

many smaller experiments, 

possibly implemented by frontline employees. 

• Rather than focus on learning at the 

top, focus on establishing an 

environment in which employees are 

likely to learn quickly on their own. 

• Empower employees but give them a 

clear innovation charter, one that is 

within their capabilities and within the 

bounds of their free time, accounting 

for the demands of business-as-usual. 
33

Level Recognizing the Challenge Advice 

2B • Similar to Level 1B but now a 

sequence of similar, long-term 

innovation experiments. 

• Over the long-term, focus on making 

the innovation process routine and 

efficient, just as you would any business 

process. 

• Build measures that resolve unknowns 

into management templates for the 

innovation process. 

• Be wary of what the innovation process 

you build is not capable of. 

3 • Similar to Level 2B, but 

successive innovations are 

heterogeneous. 

• Innovations strengthen the 

existing business rather than 

build new ones. 

• Each experiment requires a unique 

theory of success. 

• Crucial to clearly articulate, record and 

later review the specific uncertainties in 

that theory of success. 

• Do not attempt to build a repeatable 

innovation process. Treat each 

experiment as unique. 

4A • An innovative offering for an 

adjacent market that is wellestablished but in which you 

have never participated. 

• The new market has a distinct 

business model and different 

success drivers. 

• In moving into the new market, 

you leverage one or more 

existing assets in your firm. 

• Demands forgetting the existing model 

for success. This usually requires 

building a distinct organizational subunit, which may have different reporting 

structures, may be filled with people 

with unfamiliar backgrounds and areas, 

may need new processes, and new job 

descriptions. 

• Borrow existing assets to succeed — 

those existing assets are your 

competitive advantage, but devote 

substantial senior management time 

and attention interfaces between the 

new unit and the established one. They 

are often problematic. 

4B • Same as Level 4A, except no 

firm has ever proven that the 

new market can be profitable. 

• Innovation may be new to the 

world. 

• Highest risk, highest return 

category. 

• All advice from preceding two 

categories applies, but be very 

conservative about borrowing. 

• Minimize interfaces between the new 

unit and the existing business — perhaps 

just create one interface to leverage the 

single most valuable asset. Conflicts 

between new and existing operations 

will be severe and demanding for senior 

management. 
34

Appendix: Ideas about Ideas 

There are many avenues for developing ideas. Some ideas are borne of breakthrough 

creative thinking. In the book Why Not?: How to Use Everyday Ingenuity to Solve 

Problems Big And Small (Harvard Business School Press, 2006), authors Barry Nalebuff 

and Ian Ayres offer numerous specific thought processes for finding new solutions to 

well-known problems. 

Another source of innovative ideas is insight derived from market analysis. Past papers 

written at the Tuck School for the Minority Business Development Agency have pointed 

business leaders in two specific directions, finding opportunities to build businesses in 

emerging economies where large multinationals have yet to build a presence,4

 and 

locating opportunities to redesign supply chains and take advantage of the most 

profitable links within them.5

 

Finally, other ideas are nursed through lengthy and expensive research and development 

efforts. Because these endeavors are often beyond the means of small businesses, the 

federal government supports such endeavors in small business through mechanisms 

such as the Small Business Innovation Research (SBIR) and Small Business Technology 

Transfer programs. In the remainder of this Appendix is one last example of a minority 

business enterprise, Shadowband Systems, Incorporated that tackled a complex 

innovation through these programs. 

 

4

See Minority Business Enterprises in the Global Economy: The Business Case by John Owens and Robert Pazornik, 

2003. Prepared for the 2003 National Minority Enterprise Development (MED) Week Conference. 5

 See Minority Business Enterprises Mastering the Supply Chain: A Perspective by Quintus R. Jett, David F. Pyke, and 

M. Eric Johnson, 2006. Prepared for the 2006 National Minority Enterprise Development (MED) Week Conference. 

The Shadowband Systems Story 

The United States Air Force faced a challenge. Advanced internetworking 

technologies were enormously valuable in modern defense operations, but 

communications over computer networks had to be entirely secure. 

Communications technologies were advancing at warp speed, and the Air Force 

needed its security protocols to keep up. 

The Air Force Research Lab in Rome, NY turned to the private sector for help with 

one particularly thorny information security problem. Through the Small Business 

Administration’s (SBA) Small Business Innovation Research (SBIR) program, it 

solicited proposals from leaders of small companies who believed that their 

organizations had the capabilities to tackle the issue. 

In 2002, Dr. Raymond Garcia, CEO of a information technology consulting firm, 

spotted the Air Force’s request. He had previously hired a small team of engineers 

and computer programming professionals who were conducting research in a 

related area and felt confident he could address the Air Force’s need. 
35

Shadowband continued... 

Dr. Garcia also identified a related SBIR problem statement from the National Science 

Foundation and chose to make a proposal to both agencies. 

The SBIR program is highly competitive, but Dr. Garcia won both. He used $200,000 of 

Phase I funding, for feasibility studies, to start a second company, Shadowband Systems, 

Inc., based in Norcross, Georgia. Ultimately, Dr. Garcia won an additional $750,000 in 

funding to produce a prototype information security tool dubbed ShadowDC. 

SBIR proposals are intended to do more than solve the issue that the involved 

government agency, in this case the Air Force, needs solved. They are also intended to 

stimulate the economy by accelerating the development of innovations that have 

commercial value. Shadowband has extended the functionality of ShadowDC to meet 

the needs of a variety of customers, from research institutions to large corporations. 

Dr. Garcia offered three suggestions for companies aspiring to win an SBIR award. First, 

anticipate that experts in the field will review the proposal. Second, ensure that the team 

of scientists and engineers looks credible and capable of solving the problem of interest. 

Third, write a strong commercialization plan for the innovation. That requires a discipline 

of staying knowledgeable about the industry in which your innovation can have an 

impact. Dr. Garcia elaborated: 

“You need to be part of the inner circle of what other companies in the industry are 

doing. There are many ways. You must strive to be an industry authority, to contribute 

to the subject, follow industry trends, and read industry literature. You have to ensure 

that you do not become obsolete. You have to constantly know where your relevance 

is.” 

The SBA’s Small Business Technology Transfer program is similar. Rather than supporting 

small businesses that work alone, however, it supports small businesses that work in 

partnership with non-profit or government research institutions, many of which are 

established to pursue theoretical, rather than practical ends. 

Small businesses with grand visions but limited resources would do well to review current 

solicitations for proposals from any of the eleven agencies involved in these programs: 

the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and 

Human Services, Homeland Security, and Transportation, plus the Environmental 

Protection Agency, the National Aeronautics and Space Administration, and the National 

Science Foundation. Another intriguing program is the Cooperative Research and 

Development Agreement (CRADA), which supports collaborations between small 

enterprise and federally funded research institutions. Small enterprises are not funded 

directly, but can gain access to personnel, services, facilities, equipment, intellectual 

property, and other resources. 
36

Acknowledgments 

This paper combines insights from a compelling series of interviews with leaders of 

minority business enterprises with seven prior years of innovation research. In writing 

the paper, I was supported by a team that spanned both the Tuck School of Business at 

Dartmouth and the Minority Business Development Agency. We solicited examples of 

innovation from the minority business community and interviewed business leaders to 

understand what they did and how they did it. 

I must start by thanking the dozens of innovative small business leaders who wrote to us 

and volunteered to speak with us. All offered compelling stories, and time permitting I 

certainly could have enjoyed conversations with each and every one. We conducted 

detailed interviews with the following eleven: Abe Abraham and George Downer, CMI 

Management; Mark and Charlene Chesnes, Interchez Logistics; Dr. Raymond Garcia, 

Shadowband Systems; Joe Hugan, Magnys; Kusum Kavia, Combustion Associates; 

Sanjay Kumar, vCustomer; Brenda Moore, Perk & Brew; Stacey Scott, It’s Media; Hector 

Solis, Sol Telecommunications; Frank Venegas, The Ideal Group; and Mark Wilson, Ryla 

Teleservices. Constraints in space prevented us from including all of their stories here, 

but all provided inspiration. 

I also express my gratitude to the MBDA for an enriching collaboration. Mr. Ronald 

Langston, National Director of the MBDA, provided high-value, targeted feedback. 

Ivonne Cunarro was a crucial day-to-day collaborator. In addition to dedicating hours to 

several close reads, offering countless improvements page-by-page, Ms. Cunarro was the 

engine and the energy that made this project happen, happily and smoothly. 

I was supported by a terrific network of colleagues here at the Tuck School of Business 

at Dartmouth. Dean Bob Hansen, Professor Len Greenhalgh and Carolyn Clinton have 

led the Tuck-MBDA partnership for several years and made my work on this project easy 

and fun. Bill Little, a research assistant, participated in all of the interviews and 

contributed cogent insight. Beth Perkins, my administrative assistant, admirably took on 

the challenge of maintaining my sanity, as she does routinely and without complaint. 

Finally, I’d like to acknowledge Professor Vijay Govindarajan — not just for his interest in 

and feedback on this paper, but for his boundless contributions to my work and my 

professional development over the past seven years. 
37

Notes on Sources and Further Reading 

This paper relied most heavily on interviews with the minority business leaders profiled 

in the paper. Each of the companies profiled has informative websites for further study. 

See in particular www.cai3.com (Combustion Associates), www.rylateleservices.com

(Ryla), www.vcustomer.com (vCustomer), www.interchez.com (Interchez), 

www.shadowband.com (Shadowband), and www.magnys.com (Magnys). 

This paper also relied heavily on research in the field of innovation conducted by 

Professors Vijay Govindarajan and Chris Trimble: 

Vijay Govindarajan and Chris Trimble, Ten Rules for Strategic Innovators: From Idea 

to Execution, Boston: Harvard Business School Press, 2005. 

Vijay Govindarajan and Chris Trimble, “Building Breakthrough Businesses Within 

Established Organizations,” Harvard Business Review, May 2005, pp. 58-68. 

Vijay Govindarajan and Chris Trimble, “Strategic Innovation and the Science of 

Learning,” MIT Sloan Management Review, Winter 2004, pp. 68-75. 

Vijay Govindarajan and Chris Trimble, “Organizational DNA for Strategic 

Innovation,” California Management Review, Spring 2005, pp. 47-76. 

All of these books and articles are based on a series of in-depth innovation case studies 

about the following companies: Analog Devices, The New York Times Company, 

Corning, Hasbro, Cisco, Stora-Enso, Unilever, Deere & Company, Infosys, Thomson 

Corporation, Dow Jones, IBM, Nucor, Southwest Airlines, Dell, and Wal-Mart. Most 

case studies are available on the Tuck School website today. The URL is 

www.tuck.dartmouth.edu/cgl. 

The brief observations about Toyota included in this article are drawn from: 

Stephen Spear and H. Kent Bowen, “Decoding the DNA of the Toyota Production 

System,” Harvard Business Review, September 1999, pp. 56-67. 

The following list of sources is for further exploration. It includes references specific to 

minority business enterprises plus books and articles that have been most influential in 

developing the point-of-view on innovation outlined in this paper. 

M. J. Benner and M. L. Tushman, “Exploitation, Exploration, and Process Management: 

The Productivity Dilemma Revisited,” Academy of Management Review, 28 (2003), 238-

256 

Andrew B. Bernard and Matthew J. Slaughter, The Life Cycle of a Minority-Owned 

Business: Implications for the American Economy, prepared for the 2004 National 

Minority Enterprise Development (MED) Week Conference. 
38

C. M. Christensen, The Innovator’s Dilemma, Boston: Harvard Business School Press, 

1997 

C. Christensen and J. Bower, “Customer Power, Strategic Investment, and the Failure of 

Leading Firms,” Strategic Management Journal, 17 (1996), 197-218 

American Competitive Initiative, Domestic Policy Council and Office of Science and 

Technology, February 2006. 

Richard D’Aveni, Hypercompetition, New York: The Free Press, 1995 

Peter Drucker, “The Discipline of Innovation,” Harvard Business Review, 1985. 

J.R. Galbraith, “Designing the Innovative Organization,” Organizational Dynamics, 

Winter 1982, 5-25. 

J.R. Galbraith, Designing Organizations, San Francisco: Jossey-Bass, 2002 

Quintus R. Jett, David F. Pyke, and M. Eric Johnson, Minority Business Enterprises 

Mastering the Supply Chain: A Perspective, Prepared for the 2006 National Minority 

Enterprise Development (MED) Week Conference. 

C. Kim and R. Mauborgne, “Knowing a Winning Business Idea When You See One,” 

Harvard Business Review, September 2000. 

Barbara Levitt and James G. March, “Organizational Learning,” Annual Review of 

Sociology 14, (1988): 319-340 

J. March, “Exploration and Exploitation in Organizational Learning,” Organization 

Science, 2/1 (Feb 1991): 71 

John Owens and Robert Pazornik, Minority Business Enterprises in the Global Economy: 

The Business Case, Prepared for the 2003 National Minority Enterprise Development 

(MED) Week Conference. 

C. K. Prahalad and Gary Hamel, Competing for the Future, Harvard Business School 

Press, 1994 

M. L. Tushman and P. Anderson, “Technological Discontinuities and Organizational 

Environments,” Administrative Science Quarterly, 31 (1986), 439-465 

Andrew H. Van de Ven and Douglas Polley, “Learning While Innovating,” Organization 

Science 3, no. 1, (February, 1992): 92–116 
39

Author 

Chris Trimble broke into the forefront of executive consciousness with the blockbuster 

article that led the May 2005 Harvard Business Review, “Building Breakthrough 

Businesses within Established Organizations.” The article is adapted from Vijay 

Govindarajan and Chris’s December 2005 book Ten Rules for Strategic Innovators – 

from Idea to Execution . In June 2006, the Wall Street Journal published a Top Ten 

Recommended Reading list that included Ten Rules alongside Freakonomics, The Tipping 

Point, and Blink. Later that year, Strategy & Business magazine recognized Ten Rules as 

the best strategy book of the year. 

Chris is on the faculty at the Tuck School of Business at Dartmouth and a Senior Fellow 

at Katzenbach Partners LLC, a management consulting firm. He has published in the MIT 

Sloan Management Review, California Management Review, and Across the Board, and 

has written for Fast Company and The Financial Times. Chris is a frequent speaker on the 

topic of innovation, and has spoken all over the world. 

Tuck School of Business at Dartmouth 

Founded in 1900, the Tuck School is the first graduate school of business and 

consistently ranked one of the top management schools in the world. Tuck's faculty 

members are outstanding scholars with a passion for teaching and research. At the 

cutting edge of their disciplines, they are highly regarded for their expertise in key areas 

of business practice. 

Tuck combines the intellectual and competitive strength of a large university with the 

soul of a tightly knit community. Tuck offers only one degree program — the full-time 

MBA — and a select array of executive education and other non-degree programs. This 

focus allows Tuck to consistently offer outstanding educational experiences to its 

students. 

Key among these offerings are Tuck’s minority business executive programs which were 

the first of their kind when they debuted in 1980. The mission was to help minorityowned companies grow by offering their senior executives the same high-caliber 

educational experience available to Fortune 500 corporations. There are now over 

4,000 alumni who have used the tools and strategies they learned at Tuck to develop 

and strengthen their businesses, and to create jobs and wealth in their communities. 
40

Minority Business Development Agency 

The U.S. Department of Commerce’s Minority Business Development Agency (MBDA) 

is the only Federal agency established to foster the establishment and growth of 

minority-owned businesses in America. Created in 1971, MBDA provides services to 

African American, Asian American and Pacific Islander, Hasidic Jew, Hispanic, and 

Native American and Alaska Native entrepreneurs. 

The vision of MBDA is to serve as an entrepreneurial organization serving entrepreneurs. 

MBDA’s mission is to achieve entrepreneurial parity for minority business enterprises 

(MBEs) by enhancing their growth and expansion. 

Since its inception, MBDA has provided business development services to minority 

entrepreneurs and developed research and information about the minority business 

community. The agency coordinates and leverages public and private-sector resources 

in support of its mission. 

Over the past several years, MBDA has focused on fostering business-to-business forums 

and services for minority entrepreneurs who are pursuing strategic accelerated growth. 

These entrepreneurs are well-positioned to impact the local economies by creating jobs 

and generating significant revenues, and expanding into national and global markets. 

In fiscal year 2006, MBDA provided services to over 20,000 clients. The agency 

facilitated nearly $1.6 billion in contracts and financings for MBDA clients, which 

resulted in the creation of over 4,200 new jobs in that fiscal year.

Tuck School and MBDA Partnership 

Through a grant from the U.S. Small Business Administration, the Tuck School of 

Business and the Minority Business Development Agency (MBDA) have been working in 

partnership on a number of programs designed to enhance the effectiveness, efficiency, 

and growth of minority-owned businesses. Among these, Tuck faculty members 

conduct research studies that explore issues related to the emergence, survival and 

prosperity of minority-owned businesses and their future impact on local and global 

economies. The current study entitled, “The Sophisticated Innovator, Practical Insights 

from Provocative Stories of Innovation in Minority Business Enterprises,” is the fourth 

paper written in collaboration with MBDA. 

In partnership with MBDA, Tuck also provides executive training for minority business 

enterprises (MBEs) as well as training for business development consultants in its 

network of funded agencies. Through the executive training program, MBDA’s MBE 

clients learn from some of the best faculty in the world and network with successful 

minority-owned businesses, potential suppliers, customers, and partners.