State can make it safer, easier for firms to take risks

Saul Kaplan isn’t about to get “Netflixed.”
That’s the term he uses to describe a business’ inability to anticipate change and, worse, failure to reinvent itself for future success, referencing what happened to the Blockbuster franchise when Netflix came along with a new business model for the same product.
In case you missed it, Blockbuster all but went under.
Embracing innovation – or thinking in terms of market-making instead of market-share taking – has been at the core of Kaplan’s career from his days in sales within the pharmaceutical industry, where he had a front-row seat to the introduction of Prozac, to his tenure as head of the R.I. Economic Development Corporation.
In 2005, he founded the Business Innovation Factory as part of his focus at EDC in pushing innovation and entrepreneurship in order to help stimulate the state’s economy.
He’s continued to run BIF since he resigned from the EDC in 2008. and has published “The Business Model Innovation Factory: How to Stay Relevant When the World is Changing” that he hopes will inspire other business leaders to avoid getting Netflixed.

PBN: Why was now the right time to write this book?
KAPLAN: I really think that leaders are looking for ways to be bolder. They want to be more innovative, but they don’t have the tools to do it. They don’t have the tools to separate incremental change from bolder. They tend to put the two together and then you only get incremental [that way]. They don’t carve out enough space for experimenting – not just with technology but with new business models and social systems. How are we ever going to fix health care and education if we aren’t willing to experiment with new approaches that are designed around the consumer?

PBN: You got a science degree and then went into sales and marketing. Did you originally intend to work on the science side of the pharmaceutical industry? Or was sales your goal? KAPLAN: I love both. I still to this day [feel] that combining and crossing disciplines is really interesting and a lot of what enables innovation. I’ve always been that way. I’ve always believed that the way you learn and come up with new ideas and approaches is by thinking and acting horizontally and getting out of a silo. I think it was very important to have both the scientific foundation and the business experience. That’s always served me very well.

PBN: How did your career in the pharmaceutical industry most prepare you for later endeavors?
KAPLAN: I’m still learning all the things I learned during those years. Most of the people in the world focus on existing markets and how [to] capture more market shares. We need more market-makers – people [who] can create entirely new markets. I’ve been very interested [in that and] what it means to be a market-maker. How do you help organizations and communities to make bolder, transformational moves?

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PBN: How do you help leaders, in business and communities, get over their fear of failing while trying something new?
KAPLAN: I wrote [the book] for leaders who recognize in the 21st century that we have to learn to reinvent ourselves, our organizations and our communities. I think it’s [become] more of an economic reality that the way things work today doesn’t last as long as it used to. Netflix didn’t reinvent anything. They just changed [the market]. The cycle is becoming shorter [too]. It’s imperative for all leaders to continue to strengthen the way things work while simultaneously [thinking] of ways to create, deliver and capture value.

PBN: What makes BIF unique to other innovation incubators?
KAPLAN: BIF is very focused on a specific part of the innovation conversation. It is focused on business model and systems-level transformation. It answers the question, how do you [develop] new business models while we continue to pedal the bicycle of the ones that we currently [have]? At BIF we believe the path to transformational change is through real-world experimentation of new business models and systems of high social importance. That’s our mission here.

PBN: What does Providence have going for it in terms of innovation?
KAPLAN: There’s a lot of great activity. There’s a designer-type that we have thanks to RISD and when you look at the technology vibe you see a lot of energy and good things happening. It’s really important that we shine a big spotlight on that and continue to reinforce and support that because it’s the nucleus of what we need to do to transform the economy. I’ve always said that Rhode Island’s ruby slipper is its size. If we play the game the same way every other state is playing it, we lose. We’re too small. If we change the game to leverage our size, no only would we help organizations here, we would attract capital. That’s innovation at scale. It’s turning state size into a strategic weapon.

PBN: So, what could the state do to make that happen?
KAPLAN: We have to play that [size] card more aggressively. We’d be in a much stronger position to go after federal dollars to help companies locally. We could turn the economy if we made innovation and entrepreneurship more central. That’s not just about technology and universities and startups, though [they’re] important. I use the technical term “We need to try more stuff.’ We made it too risky to try. We’ve said, ‘Your career is limited if you fail.”
How do you innovate if you don’t fail? You have to make it safer and more manageable, cheaper and quicker, to fail. •INTERVIEW
Saul Kaplan
POSITION: Founder, Business Innovation Factory (BIF)
BACKGROUND: Kaplan worked in sales and marketing within the pharmaceutical industry for over 20 years, first in the corporate world, relocating from Providence to Albany, N.Y., and then Indianapolis, Ind., before joining a consultancy firm in Boston in the late 1980s. After that company went public and Kaplan made a brief attempt at early retirement, he returned to work, in 2002, to join the R.I. Economic Development Corporation. He served as executive director for three years until he resigned in December 2008. In 2005 he founded BIF, an incubator for innovative growth in steadfast sectors, including health care, education and energy, as well as to foster entrepreneurship.
EDUCATION: B.S. in pharmacy from University of Rhode Island, 1979; MBA from Rensselaer Polytechnic Institute, 1984
FIRST JOB: Paperboy
RESIDENCE: Providence
AGE: 55

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