Well, the latest issue of FORTUNE magazine finally hit newsstands yesterday, featuring Google as The Best Company in America to Work For. Maybe it’s my growing skepticism about GOOG at $500 a share and my unbridled jealousy about Google employees getting free meals, free spa treatments and free doctor visits on location at the Googleplex in Silicon Valley, but here’s a preposterously scary question to mull over during the weekend: Is Google the new Enron? Now, I’m not insinuating that there’s any kind of financial shenanigans going on at Google, only that the valuation numbers at Google just are not adding up the way they once did.

As much as I love Google and wish the company all the best as it attempts to march past $500 per share, does it strike anyone that Google bears a striking resemblance to Enron in several key areas: a stratospheric stock price that nobody really questions; constant adulation by the media, consulting firms and Wall Street analysts for “innovation”; and the all-important front cover of Fortune factor. (At one point, FORTUNE named Enron as the “most innovative company in America” for six straight years!)

Anyway, the cover of FORTUNE magazine features a group of thin, wealthy and casually-dressed Google employees whooping it up and having fun, together with the headline: Google is the New #1. Just like Enron, Google has been touted as America’s most innovative company year in and year out. Enron claimed to be an oil & gas company, but was really a big-time financial derivatives company. Google claims to be an Internet company, but is increasingly becoming a big-time advertising and media company.

OK, OK, maybe I’m overplaying this issue. (It’s tough to be a contrarian these days!) But, ask yourself, when was the last time you actually clicked on one of those annoying text ads or bought anything from Google?

Kevin Desouza, a faculty member at the University of Washington, recently visited HP Labs in Palo Alto, California in order to better understand the company’s innovation processes. As Desouza points out, “the single most important enabler of innovation at HP is their history and culture of innovation. From the days of Hewlett and Packard, HP is a company that recognized the value of innovation throughout the organization. HP focuses on all aspects of innovation: product and service innovation; innovation in business models; cultural and organizational innovation.”

In a wrap-up of his HP Labs tour on the Leveraging Ideas for Organizational Innovation blog, Desouza also provides an overview of the innovation portfolio approach, examines the role of collaboration within the innovation process, and explains the importance of having mature stage-gate processes to screen ideas and innovations.

[image: HP’s first product]

Let’s face it, Sony has really dropped the ball lately when it comes to innovation. Initial reports from the Consumer Electronics Show in Las Vegas have been promising, though, as Destructoid (live blogging the show) points out. Sony has been inundated with innovation awards for its consumer electronics gadgetry:

“Not only was the SIXAXIS awarded by the National Academy of Television Arts and Sciences, Sony itself received the “Technology and Engineering Emmy Award”… In addition to this, Sony has also picked up the “CES Best of Innovations Award” for 2007, a “Sound and Vision’s Editor’s Choice Award” and “Digital Innovation Award” from the Digital Entertainment Group and a “20 Most Innovative Products Award” from PC World.”

[image: Sir Howard Stringer delivering the keynote address at CES 2006]

Microsoft never seems to get any respect as an innovator within the technology sector. Things may be changing though, with the company redoubling efforts to bring innovations from the lab into the broader market. As Network World explains, Microsoft Research is fighting back against critics who claim that Microsoft consistently plays second fiddle to the likes of Apple and Google. Certainly, the massive brainpower assembled by Microsoft is impressive:

“Microsoft planted the seeds of innovation 15 years ago when it established what has become one of its most distinguishing features, Microsoft Research (MSR). The lab has spawned innovations seen today in products from Windows Vista to Exchange Server to Xbox 360.

MSR has grown from an idea to more than 700 researchers working out of five labs around the globe with a budget of more than $250 million. MSR incubates not only futuristic ideas but young minds, having hired 700 interns worldwide this year including 250 computer science PhD candidates in Redmond alone, which is roughly 21% of all the computer science PhD candidates in the United States. It’s a program Microsoft officials say is the world’s largest PhD. internship program for computer science.

The MSR staff, however, is not just computer scientists, it includes psychologists, sociologists, anthropologists and medical doctors who are tasked with pushing the envelope on state of the art technology as much or more than transferring their technology into new and existing Microsoft products.

If you’re interested to learn more about what’s next at Microsoft, you might want to check out another profile of Microsoft Research called Inside Microsoft’s Labs.

[image: Microsoft Research head Rick Rashid with Bill Gates]

MIT World has uploaded a one-hour video of General Motors CEO Rick Wagoner speaking about leadership in the automotive industry:

“Rick Wagoner’s outlook is optimistic, in spite of the bumpy road General Motors has traveled recently. With MIT Sloan Dean Emeritus Glen Urban, he discusses GM’s aggressive recovery plans in response to $10 billion in losses last year, and his determination to regain the public’s trust and confidence in GM cars. Wagoner sees new global competition creating both challenges and opportunities. India and China have opened up markets “that this industry hasn’t seen … since the 1930s, ‘40s and ‘50s.”

Wagoner also discusses GM’s massive “legacy” costs as well as the company’s bold new China strategy:

“After cutting thousands of jobs and negotiating with unions, GM will look “to grow in the right places.” For instance, the company has a unique partnership with a Shanghai auto corporation, and will soon be supplying 12% of China’s cars. In an aside, Wagoner mentions that the Chinese “insisted on the Buick brand” — the last emperor drove a Buick, so it’s got a “good image” over there. This is in sharp contrast to American consumers for whom the Buick name has “become polluted.”

As always, MIT World has provided extensive show notes for the video. Flip forward to the 15-minute mark, to hear Wagoner describe the competitive threat from Asia (both Japan and China), and to the 30-minute mark, to hear Wagoner analyze the upside and downside of new hybrid technologies within the automotive sector.

[image: Rick Wagoner]

For publicly-traded companies, the easiest way to establish a link between innovation and value added is by tracking the stock price of the company and simultaneously assessing the consensus Wall Street opinion about the growth perspectives for that stock. The faster the company is growing, the more likely that the company is coming up with innovative new products and services - and the more likely the stock price will be moving north.

Anyway, with that as backdrop, the current issue of Barron’s features an interesting profile of Medtronic, which has been one of the most innovative companies in the medical device space. The company has been a long-time Wall Street darling; however, lately, analysts have been getting a bit worried that the company will no longer be able to sustain its impressive pace of growth. The company is still the market leader in pacemakers and implantable cardioverter defibrillators (i.e. ICDs) but this market segment could be reaching a saturation point in the U.S. Recognizing this fact, the company has ramped up its innovation initiatives, hopeful of finding new products to bring to market. According to Barron’s, this strategy seems to be working:

“CEO Art Collins believes Medtronic can increase its sales and earnings at about a 15% yearly rate for the next five years. That would mean the Minneapolis-based company doubles revenues from the $11.3 billion shown in the fiscal year ended April 2006.

Medtronic has many shots at achieving those ambitions. Its sales of ICDs should thrive, thanks to innovations like wireless telemetry, which will let doctors monitor and treat patients wherever they might be - before patients land in the emergency room. As populations grow grayer, Medtronic should also see substantial growth in devices for managing other chronic diseases, of the spine, the pancreas and even the brain… “I think we are just scratching the surface now, says CEO Collins of the disease-management opportunities awaiting Medtronic.”

Barron’s is particularly enthusiastic about the next-generation wireless devices from Medtronic that will relay data through patients’ BlackBerry devices, allowing them to go almost anywhere and remain under their doctors’ care. (The title of the article is, appropriately enough, “Doctoring by BlackBerrry?”)

Anyway, if you have any kind of interest in the future of health care, it’s worth taking a look at some of the cool products on the way from Medtronic, as well as the company’s new partnerships with biotech companies like Amgen and Genzyme. For more on the company’s take on innovation, also be sure to check out the panel discussion featuring Stephen Oesterle of Medtronic at the recently-concluded FORTUNE Innovation Forum in New York City. What’s interesting is that Medtronic views doctors not as “customers” for its devices, but as “partners.”

[image: Art Collins of Medtronic]

MarketWatch has named Robert Iger of Disney as the CEO of the Year for 2006, thanks in part to his commitment to innovation within the entertainment industry:

“With a blend of bold strokes and olive branches, in contrast to his predecessor’s iron boot, Robert Iger has re-imagineered the Walt Disney Co.’s culture and reanimated its stock. Disney’s $7 billion buyout of Pixar was just one of many moves in the past year that won plaudits for Iger. The company, formerly bogged down by board and shareholder discord, has emerged as an example of good corporate governance.”

According to MarketWatch, the willingness to do the $7 billion Pixar deal was especially noteworthy and forward-looking:

“It may seem like an obvious, logical move now, but even those who work for Walt Disney Co. Chief Executive Robert Iger initially thought buying Pixar Animation Studios was a big gamble. When Iger pulled the trigger earlier this year on the $7.4 billion transaction, many in the entertainment industry questioned the wisdom of shelling out that much money for a company that puts out a single product once a year. Sure, Pixar had been wildly successful, scoring more than $3.6 billion in worldwide receipts, but it faces rising competition from other Hollywood studios.

Yet the move accomplished several tasks for Iger and Disney. It mended fences with Pixar chief Steve Jobs, who had grown weary of the mercurial Michael Eisner, Iger’s predecessor. It also put in Disney’s camp the animation specialist that had trumped its once-dominant position in the market. And it represented a symbolic but critical return to Disney’s roots, seeming to quickly heal the deep divisions that ailed the entertainment giant.”

[image: Disney CEO Robert Iger]

Without a doubt, magic is cool these days. In just the past six months, we’ve been treated to Hollywood films like The Illusionist, The Prestige and Woody Allen’s Scoop, all of them with magic as a central part of the plot line. (The films also feature big-name actors and actresses like Scarlett Johansson, Edward Norton, Hugh Jackman, Christian Bale and Paul Giamatti.)

With that in mind, perhaps, the New York Times has called Andy Cohen’s new book Follow the Other Hand - which combines a behind-the-scenes look at the world of magic along with insights about innovation and business strategy - a potential bestselling business book for 2007. The Business Innovation Insider reviewed the book back in September, intrigued by the premise that corporations can become more innovative by learning to think like magicians. Paul S. Brown of the New York Times agrees, suggesting that the book will teach you how to “create ideas out of nothing, solve impossible problems, and make it all seem effortless.”

In search of the best books about innovation and entrepreneurship, The Economist reviews four important new books that might make some good holiday reading for that innovator on your shopping list:

(1) Joe Ellis and the Creation of Xerox - “Chester Carlson’s invention of xerography would never have become the hugely profitable Xerox photocopying business were it not for what Charles Ellis calls the “extreme entrepreneurship” of Joe Wilson.”

(2) Mavericks at Work: Why the Most Original Minds in Business Win - “A pivotal work in the tradition of In Search of Excellence and Good to Great and featuring many of today’s most interesting corporate rising stars. These are companies that blend the revolutionary zeal of the late 1990s dot-com era with an emphasis on values in a way that has set them apart from the ethical crisis gripping American business in the first years of this century.”

(3) Outside Innovation - “Patricia Seybold focuses on the potential for using customers more in the innovation process… She does a decent job of justifying her Martin Lukes-esque subtitle, “How Your Customers Will Co-Design Your Company’s Future”. Her case studies cover a number of web-based companies and are written up with even more breathless enthusiasm than those of Mr. Taylor and Ms. LaBarre (authors of Mavericks at Work).”

(4) The Entrepreneurial Imperative: How America’s Economic Miracle Will Reshape the World (and Change Your Life) - “Mr Schramm, who, as head of the Ewing Marion Kauffman Foundation in Kansas City pays for a lot of research into the subject, argues that America needs to do more to maintain its entrepreneurial edge. At the same time, it must promote the American model abroad as the centerpiece of its foreign policy—the global spread of wealth being the best recipe for national security.”

ASIDE: In case you’re wondering just exactly who Martin Lukes is, it’s an inside joke about a character that appears in the Financial Times on a regular basis. Patty Seybold, author of Outside Innovation, explains the Martin Lukes reference on her Outside Innovation blog:

“For those who aren’t loyal readers of the Financial Times, Martin Lukes is the main character of a hilarious email soap opera that runs every Thursday in the FT. I admit to being an addict–so much so that on a recent Thursday on which the column was inexplicably missing from my edition of the paper, I was miffed all day. Martin Lukes is delightfully depicted (by his creator, Lucy Kellaway) as a complete fool and idiot. He is particularly prone to coining over-the-top terms like “creovation” and to sexist and boorish, insensitive behavior. His escapades never cease to delight and amaze!”

Mr. McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.

In the current issue of Barron’s (link via Reuters), there’s a great story about the transformation of DuPont from a traditional chemicals and plastics company into a rip-roaring biotech giant. (If Dustin Hoffman were to reprise his part in The Graduate, he would be given advice about “biotech,” not “plastics”). Anyway, as Thomas G. Donlan of Barron’s explains, a major impetus behind the innovation transformation at DuPont has been the active role played by Charles (”Chad”) Holliday, the chairman and CEO of the company:

“Charles O. Holliday, CEO of DuPont, has been giving the same speech since becoming president in 1997 and CEO in 1998. His message: DuPont’s cash cows - commodity chemicals and petroleum - are no longer giving enough milk. DuPont, he has said, would have to return to its roots as a science company and blaze new trails into the frontiers of biotechnology. […]

The company, with a market value of $44 billion, is launching one new product after another and making a real mark in the realm of genetically modified seeds… All told, DuPont’s shares probably have room to rise 15% to 20% over the next year. Longer term, each of DuPont’s five major businesses has significant growth potential.”

So how much is this new focus on innovation worth to the company? Well, the company’s stock price was about $47.5 headed into the publication of the Barron’s article. On Monday (the first day traders could digest the news and act on it), shares of the company skyrocketed to $48.25 before cooling back down to about $48 by the end of trading. Even the most bearish analysts on the Street think the company is worth $50 a share, and some of the more optimistic analysts think the company is worth $55 a share. Thus, the answer to the question: between five to ten points on the stock price, if not more.

ASIDE: DuPont CEO Charles Holliday will be among the speakers at the upcoming FORTUNE Innovation Forum.

[image: Charles Holliday]