Out-of-the-box, out of style

Fat chance, however, these breakthroughs would get funded right now. The "out-of-the-box" thinking that was so popular in the go-go 1990s has been replaced in boardrooms and research and development divisions by layoffs, cutbacks, and shelved expansion plans. Many executives call the prevailing winds in their company cultures "austerity." But that's often longhand for fear.

"The `wildflowers' in many companies have gone underground," said Lawrence Halpern, a professor of strategic positioning and competitive strategy at Boston College's Carroll School of Management. He refers to nontraditional thinkers as wildflowers and yearns for them to start sprouting again amid the current economic recovery. "But it's hard to get the innovators to surface again when capital is tight and a risky idea can get you branded as reckless."

Although most companies still say they want to develop products and larger markets, many quietly -- often subconsciously -- have ratcheted down risk-taking. "People have become more cautious, more inward-thinking -- less dramatic in their approach," said Agit Kampbil, the global director of Deloitte Research in New York.

Funding by US businesses for research and development has slowed to a growth rate of 2.4 percent in 2002 from 4 percent the previous year, according to the Office of Management and Budget. That's a far cry from the heady years of 1994 to 2000, when the nation's research and development spending grew at a rate of 5.8 percent annually.

Venture capital spending has also plummeted. The number of venture capital deals in the United States in 2002 fell 35 percent from 2001, which was already down 43 percent from the previous year. The average size of venture capital investments last year was just $7 million, compared to $8.8 million the year before and $13 million in 2000. In the first half of this year, such investing fell again: The number of deals dropped 18 percent and the sum invested dropped 17 percent.

Less investment means fewer jobs. "One reason for the so-called `jobless recovery' we're seeing right now is that so much corporate talent has been aimed at cost-cutting, rather than creating new lines of business," Halpern said. "The result may be short-term profits, but you don't build long-term growth that way."

Across the spectrum, from space to sports, out-of-the-box thinkers are hobbled and humbled. The National Aeronautics and Space Administration, once the icon for staking out research frontiers, is stuck in neutral with the space shuttle, essentially a bus that replaces worn-out satellites.

Even at Walt Disney World's Epcot theme park in Orlando, Fla., where innovation is celebrated, the latest attraction is a $100 million ride that simulates a space launch -- of the Apollo program, from four decades ago. In Hollywood, sequels such as "Terminator 3" reign on many weekends as the most popular films.

Certainly, out-of-the-box types have often been their own worst enemies. They were a big deal when the economy was hot, the stock market soaring, and pockets deep. Their strategies symbolized and underscored entire industries, especially the dotcoms and telecommunications frontiers that turned out to be more forbidding than fertile.

"Everybody in business is looking for a brilliant idea, but in a lot of strategy sessions it's easier for people to sound smart when they're shooting something down than adding ideas on how to make it work," said Linda Kaplan Thaler, co-owner of a New York advertising agency and author of the best-selling book "Bang: Getting Your Message Heard in a Noisy World."

Even early in the slowdown, creative ideas were viewed suspiciously. Kaplan Thaler recalled her partner's reaction when she revealed her plan to recommend that Georgia-based insurance giant AFLAC Inc. depart from its industry's typically somber advertising to have a live duck quacking the company's name. "She said, `You aren't really going to say that? You'll make a fool of yourself.' " At first AFLAC executives balked at the duck until Kaplan Thaler spent her own money on focus groups to research reaction. The response was good and executives gave the duck a try. It garnered everything from critical acclaim to good-natured mocking on "Saturday Night Live." It also generated sales.

"Since the duck, starting in 2000, our US sales have averaged growth of 24.5 percent a year," said Ken Janke, AFLEC's senior vice president of investor relations. In the five years before the duck, AFLAC's annual sales growth averaged 15 percent.

Such boldness has become rare. Often, innovative thinking is redirected into cost-cutting -- or even bill collecting. Halpern cited one strategy pursued by some companies in recent years: Changing their accounts receivable terms to give customers less time to pay. "Sounds great to Wall Street analysts, but it's not a way to get more business," he said. Consider what passes for major out-of-the-box thinking by academia and major media. Clayton Christensen is being hailed by Newsweek magazine as the "Master of Innovation." But his ideas are of the relatively modest "Build a Better Mousetrap" variety, such as fostering an improved refrigerator storage bag, rather than anything that would create a whole new aisle of products at the supermarket.

"We're trying to derisk the innovation process," said Michael Raynor, Christensen's coauthor of a new book, "The Innovator's Solution." So instead of beefing up research and development budgets or betting even part of the ranch on a hunch, Raynor suggested "trying to identify small unattractive businesses that can serve as an up-market trajectory for large growth."

The Christensen-Raynor innovation theory has this provision on new ideas: "They need to be profitable from the start. If you're losing money, the market is telling you something."

"We're seeing a lot of ideas, but they aren't the dramatic ones that go out and change the way people behave," said Deloitte's Kampbil.

Kaplan Thaler said true out-of-the-box thinking can't exist without the risk of failure. "The idea is that making a `big bang' means big bucks, but that means going for broke. And corporate executives should be encouraging a culture where even bad ideas can be voiced openly."

To encourage that at her agency's strategy meetings, Kaplan Thaler said, "No one is allowed to say `no' to a new idea. You can oppose it by saying, `Yes, but . . .' That's because a lot of bad ideas become good ones if you work on them."