8:05 am - 9:05 am: In a session dedicated to the topic of sustainable innovation, Charles Holliday, chairman and CEO of DuPont (pictured at left), and William McDonough of William McDonough + Partners discussed how to “rethink everything” when it comes to sustainable innovation. Dramatic innovation can happen if you can find a way to totally abandon existing norms and look to solve problems from an entirely fresh perspective. In the case of DuPont, it’s possible to do this while benefiting both shareholders and the planet.

Marc Gunther of FORTUNE started off the panel discussion by asking both Charles and Bill to characterize the economy on a scale of 1 to 10. 10 describes an economy that is perfectly sustainable, where we are not depleting resources; 1 means we are destroying the world at a rapid rate. On this scale (1-10), where are we?

Bill: Very low on this scale. In a perfect world, we would have a perfect flow of “nutrients” for continuous re-use. We would have fecundity on a “massive scale.” Everything should be in closed loop, where we are not losing energy from the system. Designers are inherently optimistic people, we wake up every morning hoping to make the world a better place.

Chad: One more step to the left (i.e. closer to 10 than to 1). Currently, Corporate America perceives short term as a few months and long term as 5-10 years. We need to change this perspective. Short term = 100 years. Long term = 1,000 years. We need to start some momentum on this topic.

What are the most pressing issues for companies to address?

Chad: Business & government need to set the rules of the road. Businesses wonder if they “get credit” for their environmental efforts. If they don’t credit, they don’t want to risk anything. Creativity of U.S. business can respond, if the rules and incentives are in place. The most common complaints/issues are around water. We will feel it over the next 25 years. We need to take steps around water depletion. Our country has been slow to appreciate greenhouse gases. On the positive side, there is currently less debate about the science involved, and more debate about the right steps to take.

Bill: To build on what Chad said… We need to start from the “perfect state,” and then work backwards. The presumption is that there will be legislation of some kind, such as carbon-trading. The only constant = high-speed change. We need to avoid high-speed retrenchment. The sustainability impetus can drive the leadership position. Business might as well be ready.

Where are the biggest opportunities in terms of sustainable energy?

Bill: Think of the sun as the energy source, and combine it with the organic chemistry of earth. We can combine these two with water to produce “biology.” This is the big-picture perspective. Look at what Dupont is doing, changing its focus to biology and biotech. We happen to be focusing on China now. The government there is trying to set up a level playing field. Competition from Latin = “strive together.” Business and government should “compete” (i.e. strive together). We need to think of using energy and biological materials in super-intelligent ways.

What are some of the interesting things happening at DuPont?

Charles: DuPont is known for making materials like nylon, lycra, etc. from traditional petrochemical sources. The company started down the biological path 15 years ago. We can get the cost down, and functionality up by taking this biological approach. We are working on the development of the first plant ever where you can make everything out of biological inputs like corn — in Tennessee. The same fundamental building blocks are being used to make bio-fuels. Same research time and, in same cases, the same research labs. It’s the right step.

The big question — how do we take more and more products made out of oil, and find ways to make them out of renewable, biological materials (e.g. corn)?

Chad: It’s a case of market opportunity lining up with technology. There is a special job in DuPont known as the “opportunity broker,” who is in charge of finding these opportunities — so that it’s not a lot of luck in lining up technology and opportunities.

What’s the catalyst for these new initiatives?

Chad: $70 oil is the driver and the attention-getter. If there’s a concern about availability of oil, the issue becomes even more important. Oil will retreat, but not back down to $18.

How do you market these bio-products? In terms of price, function, or “green consumption”?

Charles: The value to the customer. In the area of carpets, for example, we have partnered with Mohawk to help us with this value proposition.

Are people willing to pay more for “green”?

Charles: People say they’re willing, but only if it’s very close in price. If the prices are very different, we notice that they are not as willing.

In the “green building” area, the Rouge plant in Dearborn for Ford Motor Company is an interesting example. How do you persuade Ford or Toyota to do something radical? Explain the idea behind the Rouge plant.

Bill: Rouge is a 1,000,000-square foot auto assembly plant to make the Ford F-150. It’s the largest green roof in the country - 10.5 acres of green habitat. 17 species of bird nesting. When I brought up this idea to Bill Ford, he knew that people within the company wouldn’t be excited about it - “I’m sure they didn’t give you much time. Take twice the amount of time they told you to take.” I opened up the discussion by saying, “This product is for the birds.” Ford had $48 million for the project. I told him this could be done for $13 million. That’s all the proof he needed. “Next!” We sold it purely based on the numbers.

Why isn’t there more grass growing on roofs now?

Bill: There is. Designers are now embracing green roofs. We just need really cheap, really lightweight technology. We got it from the East Germans, based on a plan for a roof to camouflage airplanes from NATO. Rouge started from Herman Miller. Herman Miller adapted the “cradle” approach. The Herman Miller chairs you see on stage have no PVC in them; all of them are dis-assemble-able. Chair = “technological nutrition of American creation.” We started with Herman Miller, then went to Ford. The real value is that Herman Miller gets its customer back. Here’s an example of what I mean: Shaw Carpet (a Berkshire Hathaway company) has a 1-800 number. They will come and collect your carpet. There’s a value proposition here: you need a new carpet, and they know it. If they pick it up for you, they can sell you a new carpet.

Dell will pick up your old PC for you. Why? They want to sell you the next PC, not so much because they are “more green.” If know that you will be responsible for product throughout its life, you will approach the design and building of it differently.

Charles: We must re-engineer the entire system, not just the “end of the pipe.” Example with Tyvek. We are re-designing systems so that they are fundamentally different and better.

Is the green-grass roof important, or does it just lead to nice PR and a cool ad?

Bill: The idea is surprisingly big. We are creating habitats. We are using photosynthesis and “solar income,” not oil. The Ford roof is stable. A traditional roof has “thermal shock.” We made it so that an air-conditioned auto plant is 70% cheaper than a similar non-air-conditioned plant. That’s a powerful idea.

If it’s that easy and that obvious - why has it been so hard for Ford to say that it’s different in how we build cars?

Bill: Here’s some historical perspective. I grew up in Japan. In 1947, could anyone have ever imagined that a giant Japanese auto plant might be located in a place like Mississippi? Of course not, Japan was still recovering from the war and was an enemy of the U.S. It was arrogance on our part - “there’s no way.” We are suffering from residual arrogance even today. The same thing in architecture keeps us from moving forward - arrogance. Creative people have to solve problems, experiment and have failures. When you innovate, you don’t slide from success to success. You lurch. When I first talked to Ford about the green roof, there was a lot of arrogance. On Day 1, one Ford designer told me, “I’m not talking to an eco-architect about eco-initiatives. Here at Ford, we tar over skylights.”

Sustainability and innovation are linked. DuPont exists since 1802. The company has a huge # of patents. What are the components that go into innovation? Are the best ideas from 25-year-old scientists, or from scientists with 25 years of experience?

Charles: We need to focus on building a “living system.” There’s a whole business unit here that is focused on “building living systems.” We model things as a living system. What Wal-mart has done with their new (energy-efficient) demonstration stores is very important. We try out 1,000 new products each year. A third of sales derive from products less than 5 years old. Annual sales = $30 billion. Need more than just ideas to get to innovation. Have to be flexible to get to the “interesting things.” 50% intended, 50% found along the way. Diversity is also important. We combine biologists and chemists together, for example. We look for all kinds of diversity. The real clear goal is innovation through all this diversity.

How do you balance innovation with quarterly financial needs?

Charles: With a broad breadth of products, you can have a balance. Blend short-term developments with long-term innovations.

Are most product ideas internally generated?

Charles: We partner with NGOs. They bring us problems and possible solutions. We’re very comfortable with joint ventures - we’re working with Samsung now. We have over 50 joint ventures now.

(To Bill) You have worked with a lot of different companies. As you pointed out, arrogance is a barrier. What are takeaways of best practices to create innovation?

Bill: I’m not a scientist, I’m an artist. You need leadership from the top as well as grassroots support. We’re doing the Google HQ now. There are seven types of people and how they react to innovation: (1) vigor and passion (2) thrilled to be engaged (3) OK, but want to do well (4) could care less (5) finding it really annoying (6) “Sixes” are the passive aggressives. Too much to think about. Try to deep six it from rear. We line up and shoot them out back (7) Active aggressive - will tell to face. These are most valuable - they will bring real business discipline to business case. You need a blend of 1,2,3 and 7. All the monkeys are in the middle. You need real argument and real debate.

9:05 am - 10:00 am: In this panel discussion, a group of four high-profile innovation executives discussed the role of the Chief Innovation Officer. William T. Edwards (AMD), Jack Lord (Humana), Cheryl Perkins (Kimberly-Clark, pictured at left) and Amy Radin (Citigroup) discussed how the role of the CIO is making a real contribution at the intersection of marketing, R&D and general management. They discussed which skills and experiences are important for the CIO, as well as they pitfalls and challenges facing the CIO.

The moderator for the event, Jane Stevenson of Heidrick & Struggles, led off with a broad perspective on the new CIO position. The CIO is the newest office in the C-suite. There is, as yet, no normative data on the position. The CIO is at the intersection of R&D, marketing, and product development. CIOs come from very different functional areas. Quote: “Insanity is defined as doing same thing over and over again, without new results.” Is the CIO position an antidote to this concept?

Please give a quick biographical sketch, explain your overall organizational structure, and explain how CIO fits into this mix. I’d like to get a sense of your passion for the role.

William Edwards: My career has been a random walk. The only common thread has been variety: a variety of company types, a variety of company sizes within the tech sector. I’ve had every title from Chief Strategy Officer to Chief Innovation Officer. The CIO is not just about technology, not just about marketing, not just about M&A. The key: how do you change the organization? I started off in engineering, went to BCG as a strategy consultant. Usually, the CIO is a “pseudo-Renaissance” person. The role usually evolves organically, it’s just now that we can describe it. We can describe it, but how do you do it? It changes. A lot of ambiguity, judgment, timing are all part of the job.

Amy Radin: My focus at Citi is innovation within the global consumer segment. I came to the role 12 months ago. My functional background is in marketing, especially credit cards and retail banking products. I am leading the integration of the Internet to impact the business model. I started off by building a small team within the cards unit. Then we moved it to a new product silo. The key challenge now is organic growth, not M&A-fueled growth. The real focus is on disruptive innovation - the types of things that are “new to market” and “new to Citi” in focus.

Cheryl Perkins: Kimberly-Clark has changed over time, from a paper goods company to a consumer products company, and now to a healthcare company. We need to innovate differently. Look at the brand equity, look at where we can extend it, look at current product & technology capabilities. Incremental innovation = line extensions. Advanced innovation has a strategy component to it. The only thing constant is change. Design is a big thing. There needs to be a constant ebb and flow of capabilities.

Jack Lord: I’m a forensic pathologist by training. Humana has morphed over the past 45 years, from a financial services company to a company that embraces both financial services + healthcare. I’ve had the title since 2001. I was originally hired as the chief medical officer. Humana is becoming a consumer company, we needed to adapt. so we eventually came up with the CIO title. Every year is different. It’s the Chinese New Year’s calendar (the year of the dog, rabbit, monkey). What year is it this year? There is a fundamental belief that healthcare has to change, due to the current disequilibrium between users and experts. How do we empower consumers? Our work had involved R&D. M&A. and ICE (integrated consumer experiences)

To achieve real innovation, does it happen by degree, or is it a complete breakthrough?

Humana: “Improvise” is a fancy word for “steal” and “copy.” The basic concept is to bring new ideas into healthcare. People are great shoppers, and so the question is: how do we bring this skill to healthcare? It’s very important to find talent: people who can handle ambiguity and are passionate for change.

Citi: Innovation can be small and sustaining and it can be breakthrough. Ask people about breakthroughs - they were not necessarily started or planned that way. Talent acquisition is key for us. Diversity is key. Trying things is key. If looking into the Great Beyond, there is no substitute for experimentation. Borrowing from other industries and sectors is a help - if it works here, it might work in financial services.

Do you need the support of the CEO?

Humana: I like to think of it as a “mind-meld” with the person responsible for the organization.

Cheryl: Not just the support of the CEO, but the support of top leadership. We need to make innovation a key concern at the top.

AMD: The support of the CEO is necessary, but not sufficient. You need to work 1-2 layers down. You need to include “outcasts” in any team. What is the interface between the core and the fringe? You need to make sure that the “antibodies” don’t kill the innovation. How do you know when the right time is? If you wait too long or go too early, there’s risk. This requires judgment and timing. Who should be the recipient and owner of the innovation? I sometimes play a “mother hen” role. I like to empower people to become heroes.

Citi: I spend a lot of time working on the proper engagement model. We need to think about how to integrate innovation projects back into the business. Most people really hate change. Need to engage constituencies internally.

Cheryl: The engagement model needs to be modeled for the maturity of the business.

Is there a specific methodology when it comes to innovation?

Cheryl: There’s an overall framework that’s tailored. One area within the company might use a different methodology than another area within the company. A good example: emerging markets vs. North America.

Humana: Having executed one thing well gives you a “passport” to do more. Gaining credibility allows you to build more structure into the process. There must be an “aspirational” part of the enterprise that is leading and driving change. It builds on aspirations, as well as relationships with leadership. What comes out of the innovation pipeline needs to become newsworthy to customers or business.

Is innovation a social art — or is it a science?

Cheryl: There are right/left brain relationships and interconnections. It’s not an either/or proposition, but an “AND” proposition. Innovation needs to be the glue within the organization.

Citi: Great innovation comes from understanding customer needs (real or anticipated) and then acting on them in a really amazing way. But it’s also about execution. It’s tough - there’s no norms around process, measurement when it comes to innovation.

Humana: The people part is very important. We need to create an environment where people have comfort. Must align beliefs. Must believe you can fly. Co-creation is a big part, both when it comes to people within the enterprise and customers outside the enterprise. Again, co-creation is key. We think in terms of a genie bottle: Allow the “best you” possible to come out of the bottle.

AMD: There are three parts to consider: (1) How do you install passion? (2) How do you put together teams that are not homogeneous (”I love it when people ask me: You’re putting those people together?”). If you can work it, this is very powerful (3) How do you impact organizational behavior and group dynamics. This is a huge component: people, how they interact, and the dynamics. I realize this is now very important - the organizational behavior aspect to it.

There are some consistent themes that I’m hearing. What are the highest-impact ingredients?

Amy: Having a vision and being willing to stick with it, but walking a fine line between being stubborn. You need to walk a tightrope of listening to internal constituents, but not letting antibodies get you away from your vision.

Cheryl: When it comes to innovation, think in terms of “glue” and influence & collaboration. Real value creation comes from the intersection of different areas. Real success comes when people take ownership of it. The inspiration piece is important. Talent is important. We look for people like OBGYNs, anthropologists and psychologists to give us new perspectives.

It sounds like a chess game. Which piece do you move - and when?

Humana: People leading the innovation effort need to be experts, they need to understand every aspect of the business. This gives them credibility. It’s all about situational management. Think of the example in football of the linebacker coming up to line, reading the eyes of the quarterback, and knowing how to react to the play. Approaches may be fundamentally different across various groups.

How do you spend the majority of your time?

Cheryl: There’s no recipe. Corporate budgeting is a big focus now. But after January 1, I will be looking back outside and looking at possible partnerships.

AMD: I would like to spend 80% of my time “outside.” Actually, I have two offices - one on “corporate row,” and one deep down in the trenches, almost like a cubicle. In the last month, I have been spending time on corporate row for budgeting. There’s no template, a lot of ad hoc.

Humana: Executing on your vision. Having something big “work” gives you instant credibility within the organization. As tempo picks up, you can go “outside.”

Citi: The focus has been internal, building processes and governance. External focus = benchmarking. How do you go about doing it? There’s no rulebook, no job description. As the role matures, a lot more emphasis will be placed on external relationships. You need to monitor what’s inside, before you can look outside.

How do you balance the need for having accountability for quarterly results vs. needing to get trials out into the marketplace?

Humana: Building a lot of external relationships, getting different types of talents onto the same team. There is an abundance of resources - “I will fire anyone who talks about resource constraints.” There needs to be respect for the parsimony of resources used that are needed to drive innovation.

Cheryl: You need a balanced portfolio, and you need a commitment for a certain amount of funds. Then you can think about how to deploy these funds. You manage the portfolio to get the right balance.

Citi: Money is not the issue. If you have less, you will make smarter decisions. Build small-scale, get in & out fast, and learn. Separate the winners and losers.

AMD: People like to blame quarterly earnings. Money is not the problem. Everyone wants more. People want more resources, more time, more money, more people. To reduce failure percentage. have to be upfront with your employees: it’s OK to fail. Then, you need to act on it. Failure has to be a learning experience, not something that puts you into purgatory. Otherwise, there will be risk aversion. You need a balanced portfolio - big/small, short-term/long-term, etc. Think about proving things with a minimum of resources. Risks taking should be acceptable - it will not kill a career.

Humana: In the past six years, we have increased our market capitalization by a factor of 10. Organic growth accounts for 50%. This is the cumulative effect of aspirations and beliefs. It’s almost like being a spiritual leader within the enterprise.

Cheryl: You need to think beyond products or services. You need business model innovation. Need to learn quick. Need new businesses for a boost in growth.

AMD: Having done it in several companies, I’ve learned that “facts are our friends” (not anecdotal evidence or assumptions). Language can kill you. For example, the term “learnings” means different things to different people. English language can be a hindrance. Need new terms to get all people on the same page. Multiple times, I’ve actually created glossaries. You have to use the right words. Sounds simple, but it is crucial.

Cheryl: Each company must define “innovation” for itself. You can use frameworks, glossaries, etc. You must be willing to evolve.