Andrea Kates  (akates@BusinessGenome.com)  is the founder of the Business Genome® project and author of the visionary bestselling business innovation book, Find Your Next (McGraw-Hill, November 2011). As a business strategist, facilitator, and speaker, Andrea has led more than 250 business innovation initiatives for global corporations, entrepreneurs, and organizations including Royal Dutch Shell (Asia-Pacific), Audi, Allstate, Continental Airlines, GM/OnStar, Hewlett-Packard, JP Morgan Chase, KPMG, the Houston Texans (NFL), and P.F. Chang’s.   Find Your Next was based on her original research with top leaders of rapidly growing companies including GE ecomagination, IndieGoGo, LunaTik, Autodesk, Cisco, and Sharp Healthcare. Find Your Next reveals the keys to a revolutionary model of business innovation that has the capacity to change business as we know it.

Known to many as the next generation’s “brand whisperer,” Andrea created the Business Genome project to help companies adapt to a rapidly-changing global business environment and to gain a competitive advantage by discovering cross-industry opportunities for innovation. Her hallmark CoLabs immerses organizations in the hands-on application of cross-industry insights.

Andrea is a member of the TED (Technology, Entertainment, Design) community and featured 2012 TED speaker (short talk).

The is the first part of a two-part interview of her. To read the second part, please click here.

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Morris: Before discussing Find Your Next, a few general questions. First, which person has had the greatest influence on your personal growth? How so?

Kates: No one has ever asked me that question before–it’s not something I generally share with clients. But now that you’ve asked, I’d have to say Twyla Tharp, a choreographer I studied with when I was a teenager. She was trained in both classical ballet and contemporary dance and was one of the first crossover choreographers—she incorporated nontraditional music like Billy Joel’s and David Byrne’s into her works and blended ballet moves with modern and even pop culture dance moves. That’s right, dancing. I may be a business analyst now, but I’ve lived a lot of lives, and one was as a dancer. What does dancing have to do with business? What could a dancer teach a business strategist? She taught me to have tenacity and fierceness, and her influence didn’t stop there.  She actually taught me—through dance—three skills that would impact my career and success in amazing ways:

1. BUILD ON A CLASSICAL, TRADITIONAL DISCIPLINE (ballet) to CREATE A NEW GENRE (modern choreography). Twyla Tharp was never afraid to challenge conventional thinking about classical disciplines (in her case, ballet). That’s what she was known for. That’s what made her something singular. She built on what she knew about classical ballet—which was a lot—and transformed it through works like Movin’ Out—a piece set to Billy Joel music—and Deuce Coupe—a dance set to Beach Boys songs—into something that had popular appeal. She pioneered an entirely new form of creative expression that was much more dynamic and innovative. Her dance transformed the discipline of classical ballet into something that modern audiences could relate to—it fit modern times and modern themes.

2. BRING A TIRELESS WORK ETHIC TO THE JOB, EVERY DAY. Her dedication to her work combined with that radical vision inspired me to look at business—and, really, everything—with the same spirit. She worked hard, and set the bar high. You knew better than to ever come to rehearsal unprepared. Ever. You’d never whine. You’d be thrown out. There were hundreds of people who wanted your spot, so the competition was fierce. And she knew it.

3. WORK WITH ONLY “A” TEAM PLAYERS. Twyla worked only with the best—“A” Team players—dancing greats like Mikhail Baryshnikov, who was a super star in the world of ballet. Twyla was an “A” team player, so that meant I needed to do more than just work with them, with great people. I had to be great. I didn’t make the cut the first time I auditioned for her. I didn’t give up, either.  I looked around, I analyzed what the dancers who’d gotten in had that I didn’t, and I trained myself for months to have it by the next round. That process of goal-oriented self-examination forced me to get where I needed to go. It made me disciplined. It taught me, again and again, how to take principles and ideas applied to one pursuit and reconfigure them on to another.  It was about talent and dedication and people and creativity.

Wouldn’t you know it, Twyla Tharp went on to write books on creativity for business leaders (The Creative Habit, The Collaborative Habit).

Morris: The greatest impact on your professional development?

Kates: My dad, Phil. He was a psychiatrist who became a stand-up comic when he retired. Of course, as you can guess, that combination made him a great role model because he taught me the power of translating insights into universal stories. It’s what all comics do, really, the really good ones. If you can take an insight and distill it down to something that gets a response from a large audience, you’re onto something powerful.

Dad had an incredible track record for understanding what makes relationships work and what makes people happy. My world is the world of commerce, but I ascribe to the same mindset in what I do—I understand what makes businesses thrive and the people within those businesses successful. I try to help people in a similar way by attempting to translate what makes businesses work into elements that can work for every kind of business person or organization, from entrepreneurs, to large companies, to nonprofit organizations, to government groups, or even think tanks. Anything that works should work for everyone, no matter how large or small they are. How famous or how underrated. If I can take a complicated set of decisions and boil them down into simple questions like “Do you want to buy low and sell high or buy high and sell low?”, then I—with them—can cut to the heart of the issue and formulate a game plan for their “next”—that non-obvious opportunity for growth.

In essence, something I’ve only just realized, I’m doing just what Dad did when he refined a joke until it hit just the right note. You can do the exact same thing with business strategy. With everything.

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please elaborate.

Kates: Yes, there was. Isn’t there always? To explain, let me first talk about how I got to where I am in my business thinking. I’ve been doing market research a long time, and when I first started, I focused on how to get businesses somewhere new and different, how to uncover untapped opportunities.  I didn’t want to be one of those tired consultants that told their clients what was obvious to anyone who was paying any attention. I worked with so many different kinds of companies—in industries as diverse as telecom, energy, consumer goods, manufacturing, financial services, healthcare, technology, and even nonprofit. No matter what the assignment was, I always had a knack for asking a slightly different set of questions than I was assigned to ask, because I always believed that the really powerful answers couldn’t result from asking obvious, either/or types of questions. Perhaps that came from my dad, too.

As an example, when I first got involved in focus groups years ago, I didn’t like the kinds of questions we were asking. The questions were simple multiple choice questions like, “Which do you prefer, Cheer or Tide?”, instead of what I ended up asking and I thought would tell us a lot more, “What do you wish you could change about how you do laundry today?” What if they didn’t want Cheer or Tide at all?

Back then, we were somewhat limited to that kind of yes/no, binary thinking. We were driving our questions towards our solutions. It makes sense to do that, and it’s way easier. Analysis is always easier when you can fit answers into neat categories. Life is easier that way, but it doesn’t reflect the real world. Easier wasn’t better, or more insightful. All Cheer and Tide tells you is that the big nut to crack has to do with things like chemical formulations, fragrance, and price. It’s based on an assumption that customers worry about the same things that companies do: the product’s formula.

It wasn’t until later, when we learned how to evaluate “fuzzy data” and answers to open-ended questions came along, that we could finally start to do something with answers that were less black and white. And more informative.

It turns out that my early intuition was spot on, but it took almost ten years for everything else to catch up. So, the turning point was all about asking the right questions—the ones that told you what you actually wanted to know, not just the ones that were problems you could solve right then with whatever you had. Plus, for someone like me—and I suspect for my clients, too—it’s a lot more fun, and a more interesting way of looking at business.

The most significant business growth doesn’t come from incremental thinking. The most significant business growth comes from reading between the lines. That’s what I learned. If customers are honest and say that they don’t want either Cheer OR Tide, but instead don’t want to deal with laundry at all and would rather hire someone to do it for them, we need to be able to listen, understand, and act on that actual preference. P&G did just that recently when it launched Tide’s Pop-Up laundry services—companies are finally finding out what people want and crafting their product and service lines to give it to them. I love it when that happens. When companies listen with new perceptions to what will appeal to customers or when they uncover an unmet need and figure out a way to meet the need. That’s what I mean by reading between the lines.

Morris: To what extent has your formal education proven invaluable to what you have accomplished in your career thus far?

Kates: I live in a world where business leaders are trying to minimize risk. Businesses are not comfortable creating corporate strategy based on intuition alone. No one is comfortable making decisions that way, really, or they shouldn’t be. At the same time, when companies as diverse as GE ecomagination and P.F. Chang’s and IndieGoGo promise double digit growth to shareholders, employees, or stakeholders, and incremental growth doesn’t happen for whatever reason, companies have to try to do something else than simply “jumping higher and running faster.” And they still have to grow.

What I’ve accomplished, I think, is helping my clients increase their revenues with a more insightful approach. Which includes research and pattern matching. So, my MBA training in analytics, finance, consumer trend analysis, and aggregate research (where you look at patterns and groupings of information—like why certain people buy the same car, for example) has been invaluable. It taught me that other part of the equation that’s more teachable—the analysis part.  The metrics part.  A required part in working with business people.

Analytics are the acid test in business—results come down to a metric, something much more than just a cool idea. For that reason, you can’t enter the world of business without a solid foundation in analytics. You can’t come up with solutions that will scale to multiple locations and require investment dollars without a background in operations management and finance. You can’t drill down into details of innovative recommendations without a solid mastery of accounting and legal policy.

The problem is that analytics alone are not enough. You can’t grow a company by looking at last year and multiplying it by 1.10 and expecting to magically grow in the double digits. No matter how many companies are still intent on doing just that.

That’s where a background in innovation and improvisation comes in—I have studied the discipline of improvisation, something I rarely talk about with clients. But something I think really works. I can look at what ifs, and turn them into something that works. By feel. By intuition. By inspiration. And then by the rigor of testing.

Morris: When and why did you become keenly interested in genomics?

Kates: My husband started his career as a medical scientist, and exposed me to the discipline of scientific inquiry. I found myself learning about the Human Genome Project without really meaning to. And I was fascinated by the incredible vision of mapping information about human genomics on such a large scale. And genomics can apply to nearly everything. Again, it was about the power of patterns of data, except in this example it was in human biochemistry. But it doesn’t have to stop with science.

There were parallels between that project and the patterns I was seeing in business. Business strategy, market research, and large data sets were beginning to come together from all of the business analytics over the last decade. The time had come for a pattern to emerge. Years ago would have been too early.

From the beginning, I had a hunch that there was something in seeing information about customers in a new light—not looking at people in terms of demographics—like how many guests ate at a certain restaurant in a particular week—but instead looking at people in terms of preferences—“where else have people been eating their meals other than that restaurant and what do those places have in common?”

So much can be learned by spotting patterns—like what does eating fast food or grabbing a granola bar have in common? Say you categorize them as “food on the go” or “hand-held” food. With that you can steer restaurants, grocery stores, entrepreneurs, and even food manufacturers like Sysco Foods in a new direction—all because of the emergence of a single new category. The food itself hasn’t changed, but the way we look at it has. It’s what led Whole Foods and Central Market and Eatzi’s and now dozens of other companies like theirs to start selling carry out food you could eat at home. Years ago, their leadership discovered a hybrid between chef-prepared food and home eating and found success. And people were happier. It was a trend that’s not only popular, but here to stay.

Look at Pandora. They do the same thing with music, by being creative with genres and forgetting about the categories we’re used to seeing in a music store. That way they can recommend a song that they know you’ll like, because it perfectly fits your profile of your favorite songs. It works for me. I don’t actually love “Classic Rock” (the category) but I love “fast-driving songs by women with a lot of percussion.” World Beat, Latin, even Bluegrass fits the bill. Pandora calls it the Music Genome Project—it, and science, inspired me to do the same for business.

Morris: By what process did you devise the Genome Business approach?

Kates: I’d been working on a theory that the world of business discovery was different than the world of business management—I realized that what I was taught in MBA school was geared toward management and analysis. But when I got into business, we were all expected to go beyond incremental growth, and sell more hotel rooms in year two than year one, etc. Or for whatever industry you happened to be in. Sell more today than you sold yesterday. Business leaders were expected to come up with solutions that would yield double digit growth as if on automatic pilot. It was time for new tools for business discovery—a system for uncovering untapped opportunities. What every business needs to do. A process for getting comfortable with what’s actually a paradigm shift, moving from that traditional corporate mindset to a vision of what your organization can be—like the transformation GE went through to create GE Ecomagination or how Zappos came up with the best model for selling shoes online.  The old tools were rear-view mirrors that traced the past—they weren’t designed to help us discover anything, but it was all we had to go on.

You could only hope that tomorrow’s business opportunities would come from doing last year’s ideas better, on the other hand, with tools designed for discovery, you can look at how to offer the “next” product – like Tata’s development of Nano cars for people in India who had been riding bicycles.

It got interesting when I was listening to Pandora one day, and I realized it was doing just what I wanted to do with business, business discovery, more specifically. Pandora had mastered the art and science of getting my playlist to expand beyond the same old genres and move into new territory—moving me into new territory at the same time—simply by analyzing the “genome” of my musical taste—that unique combination of attributes that reflected my taste. It had genomized my taste in music. I thought “categories”—like Classic Rock. They thought in patterns—like “Andrea likes songs with great percussion and women singers.” Suddenly the Pandora genome introduced me to new categories that I didn’t realize I’d like so much until they showed me other songs that fit my genomic sweet spot.

Before I met with Tim, I’d been experimenting with similar ideas for business. How could companies see the patterns in what their customers wanted?

If people at Starbucks were coming in for coffee before work to hang out and socialize, where were they going at 5 PM? The “pattern” of hanging out and unwinding between home and work would lead a company like Starbucks to want to discover what would come next—what they could offer past coffee. That might lead them to selling beer after work, for example.

As an interesting side note, they just announced that they’ll be selling alcohol at some of their locations. I can’t take credit for that, but it’s a great illustration of what I’ve been talking about.

Morris: So, did you do anything that required special “courage”—a bit of moxie that would move your vision to the next level?

The movie We Bought a Zoo has a great quote. “It only takes 20 seconds of courage” to do that game-changing thing that will change your life. My 20 seconds of courage came when I booked a flight to San Francisco to meet with Tim Westergren, the founder of Pandora.

We sat down to breakfast and I outlined the ideas I had on genomics and business, then said, “Tim, when we finish breakfast today, you’ll either love me or sue me.” He laughed, promised not to sue me, and I got the trademark for the Business Genome project. In other words, he believed in my vision.

Morris: You have been referred to as the next generation’s “brand whisperer.” What’s that all about?

Kates: Lane Cardwell, President of P.F. Chang’s China Bistro, coined that term. I had worked with him and his team to help get them to their “next.” I did it by looking for the non-obvious answers. Which meant asking the non-obvious questions. He watched me decipher what was between the lines, and uncover what wasn’t being said. I put into play something I call the “waterbed effect,” where you can track what happened to your lost customers by figuring out where they went. It’s almost like seeing “white space” in a painting—interpreting what’s not there and making sense of it. That negative space. It relates to branding—so much of business success and struggles do.

It sounds cosmic, maybe, but all it requires is training and experience. I’ve solved more than 250 problems over the years for large and small companies, nonprofit organizations and large global companies. Those experiences pushed me to take an outside perspective to data so that I could see what was coming. It means paying special attention, and listening. Reading between the lines to discover something new.

It’s actually the cross-industry insights that make this happen. Deregulation in energy wasn’t too different from deregulation in telecom. Jones Lang LaSalle can gain insights for recruiting talent from the Brazilian Football League, not simply look at attracting employees from a competitor like CB Richard Ellis. And it works.

Genomics are so logical that once you see how to read data “genomically,” the patterns jump out at you. You see the forest, not the trees. And you see similarities that the companies themselves can’t because they’re too close to their own issues. We’ve all been there. And it’s easy to transform your approach into something that works, something innovative, when you can see the patterns

Insurance companies wouldn’t naturally look to Zappos, CB2, Etsy, or Amazon for a better ecommerce approach. But they should. That’s where the real wins begin.

Morris: What do you know about the business world now that you wish you had know when you began your career?

Kates: That’s a wonderful question. I didn’t know how success happens.  That it isn’t like the people at the top have some kind of playbook that guarantees results. I didn’t realize that “truth” and “brilliant insights” don’t mean anything if people aren’t engaged in actually doing something about it. Heart matters.

I once thought business was about statistics and having the right answer, as if companies were academic case studies with a solution set for every problem. I didn’t realize that business is really about people, passion, and belief. But it didn’t take long to learn that.

I should have paid more attention to Dad.

Morris: In your opinion, what will be the single greatest challenge that business leaders will face during (let’s say) the next 3-5 years? Any advice for them?

Kates: Business leaders will be tempted to cling too long to what worked too long ago in what was a different world, when you could use Napoleonic military models even if they only worked on a single enemy, or assembly lines because you had lead time to plan next year’s car models, or even certain kinds of advertising in the days of “Mad Men,” when you could telegraph slogans to customers and that was the end of the conversation. I say, admit that times have changed, I say, “Don’t be afraid to abandon SWOT analysis and embrace adaptation.”

Morris: In recent years, there has been lively (sometimes severe) criticism of M.B.A. programs, even offered by the most prestigious business schools. IN your opinion, what is the single area in which there is the most urgent need for immediate improvement? Please explain.

Kates: I think the appeal of the technical capabilities and analytics that MBA schools teach has led a lot of us to forget to ask the right questions up front. Not all projections come true, even when they’re based on so-called robust data sources. The world is fast, we have to be ready.

GE studied West Point and Google to accelerate cultural change. Sharp Healthcare learned from Disney and the Ritz Carlton.

Not every answer to what’s “next” can come from studying the past and equations and models. It’s a real world out there, with real people, which means nothing’s predictable. Analytics is important, but only when it’s combined with intuition. And an understanding of people.
The best approach is forward-thinking that incorporates metrics and trading in a strict benchmarking approach that looks only at your own industry for a cross-industry approach. That is bound to be the future of the MBA—case studies that tell us what happens when Nikon looks at iPhones (not only Canon or Olympus) as the model product to watch. Starbucks just announced that they’re introducing alcohol into their product mix and Whole Foods has craft beer. Everyone in business today has to be on the lookout for their “nexts.”

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To read Part Two of my interview of Andrea, please click here.

Andrea cordially invites you to check out the resources at these websites:

http://www.businessgenome.com/

http://www.youtube.com/businessgenome

http://www.facebook.com/BusinessGenome

http://twitter.com/#!/businessgenome

http://www.amazon.com/Find-Your-Next-Company%252019s-Competitive/dp/0071778527/ref=sr_1_1?ie=UTF8&qid=1326037059&sr=8-1