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May 16, 2013

Ready, Set, Innovate

As chief strategy officer at Farenheit 212, Peter Maulik '04 (EMBA) bets on — and delivers — innovation.

Interview by Jen Itzenson, Photography by Don Hamerman

Before joining Fahrenheit 212 in 2005, when it was an eight-person start-up, Peter Maulik ’04 (EMBA) says he knew nothing about innovation. In his previous work, he’d helped companies from Time Inc. to Saks Fifth Avenue develop strategies for growth, but always found himself thinking of new ways of driving business — and wanted to be involved beyond the planning stage. As Fahrenheit 212’s chief strategy officer, Maulik is responsible for leading the company’s innovation strategies, managing its performance-based compensation model, and developing talent — including making sure that new hires can deliver innovations that pay off for such clients as Samsung Electronics and Capital One. Maulik, a Minnesota native who played football in his undergraduate years and now devotes his excess energy to his daughters’ school, explains why he believes innovation is a skill that can be learned.

Columbia Business: Can you explain the business model behind Fahrenheit 212?
Peter Maulik: We’re a bit unique in that our business model is more akin to a private equity firm than to a traditional consultancy — we have skin in the game on all of the projects that we work on. The ideas we come up with can’t just be interesting; they actually have to work. Innovation is, by its nature, unpredictable. So what we strive for here is to bring a level of predictability to innovation — to deliver a transformational outcome without requiring a company to transform its business. If you can give amazing results in a manner that allows a company to assess more accurately what its return on investment will be, your chance of helping the company reach that goal is much higher. So we obsess a lot over working to deliver the type of innovations that don’t require you to take a leap of faith.

Innovation seems to mean different things to different people. How do you define it?
An innovation is something that creates meaningful value in the marketplace, that actually drives change. Having a good idea — even a really good idea — isn’t that hard. But coming up with a great innovation is incredibly difficult. To create meaningful value, you’ve got to do something that’s different from the norm.

And that scares the heck out of big companies, because their business in many ways is predicated on predictable performance. When you’re guided by quarterly reports, your earnings are supposed to be 1 percent greater than they were last quarter. It’s very difficult to say to analysts, “Well, actually my earnings were a lot lower, and that’s because I’m investing in this idea that’s going to be the greatest thing since sliced bread.” And because of that, it’s hard for big companies to create real innovation that drives change in the marketplace.

You’ve described innovation as a skill that can be taught. How can someone learn to be an innovator? Are there any elements that can’t be taught?
We’ve learned that it’s not just luck that leads to success. There are tenets of innovation that can be used in any situation, in any category — and we’ve worked in everything from fashion to food to financial services. By understanding these rules, we’ve been able to create a process and a training system for everyone who works here.

It’s like asking a group of athletes to play a sport they haven’t played before. The minute you get these athletes on the field and tell them what the rules are and give them the opportunity to showcase their natural gifts, they learn to perform at a very high level very quickly. That’s why we’ve been able to bring in people from industries like private equity and investment banking and have them sit next to people from architecture and toy design. Together they make up a team that delivers innovation for clients across all these different industries.

But what natural gifts do you look for in these “athletes”?
Because there isn’t an innovation consulting industry — because the sport we’re playing doesn’t exist—we have to find athletes who are playing a different sport and determine whether they have what it takes to play ours.

We’ve found that great innovation exists at the intersection of commercial strategy — or knowing where the money’s coming from — and having a really powerful creative insight. You can tell these folks very quickly; if they’re coming from investment banking, they’re the most creative bankers on the floor. On the flip side, it’s the person in a creative industry who, when presented with a great idea, is obsessing over how you can make money on it.

The second question we ask ourselves about a candidate: is this person decisive? In traditional consulting, you’re trained to ask questions because questions create projects. It sounds counterintuitive, but we want people who love answers — and who get an absolute thrill out of rapid problem solving. We’ve found that this characteristic is more prevalent in entrepreneurs than it is among traditional consultants. Entrepreneurs are very quick to say, “This is the answer, the world needs this!” And that passion and conviction often motivates speed and decisive action.

The third quality we look for is a commitment to something bigger than yourself. It could be anything — a sport, a religion, a cause. One, it means that you believe in the possible. But it also means you’re not doing it on your own. You’re someone who links arms with other believers and works toward a common goal. And that’s essential. As soon as someone allows cynicism to enter the relationship or breaks that link that’s holding us together — that’s the quickest recipe for failure in innovation.

What inspired you to enter this field?
I’d finished my MBA at Columbia, and I was thinking of what I wanted to do next. I had been in traditional strategy consulting when I started EMBA, and when I finished the program, I had an offer to go work in Singapore for another established consultancy. And I got a call from a headhunter saying a guy who’d started a firm on innovation consulting was moving here from Auckland and that his firm had a performance-based compensation model. I thought that was either the craziest thing in the world or it was brilliant.

Performance-based compensation sounds like a big risk if you’re working in innovation.
It was! But I knew that the world needed innovation consulting — even though I didn’t know it existed. And the performance-based compensation model forces you to attack problems with an entrepreneurial perspective and work as if your mortgage depends on it, because it does. I thought that if you could bottle that, you could revolutionize the industry.

How did your background prepare you for this uncharted territory?
A lot of what we do is based on the strategies and schools of thought that I learned at Columbia. Commercial strategy and creativity is really the intersection of two fundamental disciplines that I took away from my MBA. One was behavioral economics: understanding that people don’t make decisions based entirely on rational drivers. And the second is value investing, which is thinking of how you can drive growth but not just focusing on the top line — creating sustainable and profitable growth. Those two disciplines, which I learned from Bob Bontempo and Bruce Greenwald, are pillars of our process. And it’s paid off: we’ve gone from eight people to 50 and a client list that I couldn’t have imagined when we started.

Looking back, sometimes I wonder what the heck were we thinking. We started a company in a field in which none of us had experience — in a category that didn’t exist, working on projects we couldn’t talk about because of nondisclosure agreements, with a business model that could shut us down within a year. It was insane that we made that leap. But it was a chance to try something that hadn’t been tried before.

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