The Drama of Business
By Lenora Chu

Dubbed the “serial innovator” by the Economist, John Kao is a trailblazer in business creativity who is breathing new life into companies with his motto that “in this new economy, improvisation is the name of the game.”

A former Harvard Business School professor, film producer and author of several best-selling business books, Kao has garnered praise for his philosophy on corporate innovation and strategy.

His latest venture is the Idea Factory, a consulting shop operating out of San Francisco’s South of Market district. The 3-year-old company has helped large organizations like PriceWaterhouse Coopers and select e-commerce startups dissolve traditional business frameworks and bring in a new creative energy.

The concept for the Idea Factory began in 1994, while Kao, now 48 was teaching at Harvard Business School. “I had become aware of the fact that every company thought innovation was important, but they had no idea how to do it,” Kao said.

Kao studied the impact of environment on creativity and spent time observing that dynamic in recording studios and theaters, and he developed an understanding of how lessons learned from the performing arts world can be parlayed into business. By 1997, Kao said, “the idea was burning a hole in my pocket,” and the Idea Factory opened its doors.

“We are unique in that we are the only pure play on innovation products and services,” Kao said.

That innovation has attracted companies to the Idea Factory in place of traditional management consultants. Kao’s avant-garde methods address challenges like new product development and strategic investment with a fusion of elements such as studio design, production and theater. In theater, Kao said, “there is a suspension of disbelief where you go from being aware of body to being inside the dramatic structure of the play.”

It is this kind of emotional engagement that is necessary to commit to and execute a new idea, he said, pointing out that “having a good business idea is not enough.”

Kao and his team have developed a “toolbox” of methods tying innovation to both strategy and the customer.

One tool under development is a set of experiential war games, which allows clients to experiment with a set of scenarios. Kao also likes to use improvisational actors as a means of simulating business scenarios for clients.

Physical space is a critical part of the creative process; most of the furnishings in the Idea Factory office are prototypes, designed with function and creativity in mind. The “knowledge ring,” a semi-circular ceiling suspension, offers a workspace for brainstorming ideas and pinning up notes. A sound isolation dome hovers overhead, which helps stimulate innovative thought by concentrating sound waves in one place.

The veritable pioneer of business creativity, Kao introduced a business school course on the subject in 1983 to much skepticism from his colleagues. Almost two decades later, the course has attracted over 2,000 MBA students, as people increasingly realized the need for flexibility and creativity in a competitive marketplace.

In 1996, Kao wrote Jamming: The Art and Discipline of Business Creativity. Named after an improvisation technique used by jazz musicians, Jamming is a BusinessWeek bestseller that has been published in twenty languages. Other books include Managing Creativity and The Entrepreneurial Organization.

Kao is also an accomplished artist. In the late ‘60s, he played jazz piano with Frank Zappa. More recently, he has produced Broadway plays, including the Tony-nominated Golden Child, which tells the story of a Chinese businessman struggling to embrace Western ways within China of the early 1900s. In film, Kao has helped produce hits like Sex, Lies and Videotape and Mr. Baseball. And he recently directed and produced a feature-length documentary based on Jamming.

Prior to founding the Idea Factory, Kao started Genzyme Tissue Repair and K.O. Technologies, which specialize in tissue engineering and new cancer diagnostic therapies, respectively. He has trained in psychiatry at Yale College and Harvard Medical School.

Kao believes his cultural experiences in early childhood were responsible for developing his skill in merging different knowledge bases. As a first-generation Chinese American, he speaks very poignantly of his struggles to “reconcile two very different social systems.”

Kao acknowledged the emphasis on humility in Asian culture. But, he said, in the United States, “if you don’t speak up, no one knows what you’re doing.” He said that since childhood he has been searching for a balance between two disciplines.

Kao’s ties to Asia are strong. He has acted as the former advisor to the government of Singapore, and at the end of this year, he will deliver a speech to a group of 50 to 60 Japanese CEOs on business-to-business market space in Central Asia. Eventually, Kao plans to introduce the Idea Factory to Asia with a new satellite office.

“There will be an explosion of interests in Asia,” says Kao, “because there are so many amazingly talented people. The issue with Asia is that historically, people have not been willing to pay for [creative services] -- it’s not like buying land. There’s that whole psychology to overcome. But now, more and more people are realizing that all companies and countries are engaged in a race and innovation is the key.”

Outside of the Idea Factory, Kao keeps busy working on his next book and playing with his 15-month-old son. He also plans to produce a new film, set in the New York City art world.