Innovation and Culture Clash: Koch Industries and Georgia Pacific

In a recent “interview” with Georgia Pacific’s new CEO Joe Moeller, (AJC February 23, 2006) he stated that a key transition challenge he is facing is the development of a culture of “principled entrepreneurship” at G-P. Having worked with both Koch Industries http://www.kochind.com/default.asp (recent acquirer of G-P) and Georgia Pacific on technology projects and having spent the past 15 years focused on corporate entrepreneurship and organic business growth, I can see tremendous opportunities and significant challenges for Mr. Moeller.

Mr. Moeller states he will instill “principled entrepreneurship” at G-P by leveraging these capabilities currently found within the Koch companies. As has been the experience of many M&A programs, the integration of core capabilities, particularly capabilities related to corporate entrepreneurship and innovation, are difficult at best and down right destructive at their worst. Remember the “Carly” adventures and the failed integration of the HP and Compac business operations and cultures.

Certainly Koch, being a privately held enterprise, has advantages. Decisiveness can be (and is at Koch) swift and focused. The “open collar” Koch culture Mr. Moeller mentions is not representative of a “laid back” West Coast culture. Quite the contrary, Koch is an “open your collar, roll up your sleeves and get to work” culture. Project teams I was associated with at Koch were akin to a Kansas posse with each “cowboy” clear on the objective, tuned into the directing leader and giving 100% of the energy and skills they possessed. Somehow the term “Git-er-done” (with principled entrepreneurial tactics) comes to mind.

Koch to me is the epitome of a company that values the ability of individuals within the company to be the source of significant business growth, what is sometimes called “organic” business growth. In fact, Koch rewards corporate entrepreneurs by paying them a portion of the long term value they create. You can get rich (and some have) by having valuable ideas as a Koch employee.

Georgia Pacific, on the other hand, suffers the malaise of many publicly traded companies; the demon of corporate inertia. While Koch leadership makes hard decisions with focus and speed, G-P’s culture is studied and slow, and this is counter to a culture that understands the need to deconstruct non-performing businesses to provide resources for new businesses. The debate at G-P related to its less-than-stellar Consumer Products business is a case in point and I assume quick action on this and other G-P assets will free resources to be applied to the development and commercialization of new business offerings.

It is in this ability to identify and create new business offerings where the cultural differences between Koch and GP will be most evident. Whereas Koch’s approach to innovation is guided by its Market Based Management and autonomy of leadership, GP’s more institutional approach (for instance, GP’s “Innovation Institute”) smacks of control and risk aversion while at the same time providing a channel for the company’s capabilities and knowledge to be brought to light and exploited.

And here lies the organic growth nugget available to Koch; G-P is a treasure chest of technical capabilities and market insight that, when combined with Koch’s capabilities and insight, will unveil significant growth opportunities. The key will be to combine the best G-P talent in the culture of Market Based Management and principled entrepreneurship by quickly engaging together to create the future; not by endlessly analyzing potential and giving in to the corporate inertia this engenders.

For Koch to be successful I suggest the following:

The mantra of the new G-P must be “Move quickly, show results”. By applying MBM and principled entrepreneurship, decisions will be made, leadership will emerge and the strong will survive.
Mine and converge the technical skills and capabilities of G-P with those of Koch where the best business opportunities lay. Koch’s approach to knowledge management and leverage will overcome the “siloed” knowledge of G-P where I have often heard the statement “if only G-P knew what G-P knows.”
Find synergies in the technology and product portfolios of the two companies AND identify market white space where new value can be created through focused innovation work.
Impugn the current G-P culture by ensuring accountability and rewards for ideas that source significant value for customers and Koch.

I for one am excited about the “new” G-P and look forward to its future growth.

Large Group Innovation Summits

At Fortune Magazine's recent Brainstorm conference Launch Institute tools were used to ensure the ideas of the large group of attendees (a group with VERY large egos!) were heard, considered and built upon ( brainstorm.fortune/index.htm ) to see attendees click here (fortune_archive/2006/08/07/8382578/index.htm). I have a strong bias for group based idea generation; with a high level of diversity in the group, sources of alternate points of view and challenging mindsets that are not satisfied with the status quo better ideas will develop. But if you are to ask such diverse individuals to gather, it is critical that technique and tools are available to stimulate idea development, work the ideas to create even more powerful ideas, and finally to select the top ideas for further work after the gathering.


Launch Institute works with companies to conduct multi-day Innovation Summits where a group of individuals representing diverse insights (including external experts) come together with the specific purpose of developing new business ideas related to products, services or business models focused on a specific business opportunity or need. These sessions generally are attended by a group of from 35 to 70 individuals (although members of Launch Institute coordinated a two day brainstorm with 5400 Pepsi Managers at the Dallas Convention Center; 2.4 acres of breakout tables!).

See how Eaton Corporation uses Innovation Summits by clicking here to view the video overview of their Innovation Process by clicking http://www.arclightning.com/eatonvideo/

Here are some general principles Launch Institute uses when conducting one of our Innovation Summits:
1. Define the objective and scope of the Innovation Summit.
Sessions where there are no boundaries or starting expectations have their place (we call them White Space Summits), but most of your innovation work is guided by business goals and objectives you are looking to achieve. Linking the work of your innovation team to the needs of the business and the business strategy is essential to business focused innovation.

2. Ensure senior executive commitment.
We often encounter situations where executives state they will review the ideas developed in some meeting after the Innovation Summit or gathering. To us at Launch, senior executive commitment is being involved as the Summit is being planned to ensure the objectives of the Summit are aligned with business strategic needs, the senior executive committing resources for the further development of the ideas selected at the Summit, the senior executive showing up at the start of the Summit to give the group gathered its marching orders and set expectations and then attending the final presentations of the top ideas to allocate the committed resources. There is nothing worse in my opinion than asking individuals to share their thoughts and ideas and then do nothing with those ideas.

3. Establish your current understanding of the Innovation Summit topic area
It is important to acknowledge that there is current information and points of view related to the topic of your Innovation Summit. This information can be gathered from previous projects or efforts, market information and research, customer interactions, etc. At Launch Institute we select a small team, the “Insight Team”, to spend some of their time collecting this information and, at times, adding to this information. Prior to the Innovation Summit this team generally collects this information in a form they can share before and/or at the Innovation Summit.

4. Prepare participants for the Innovation Summit
It is important that people know why they are attending a Summit, have some background on the topic of the summit, and see how their point of view will be important at the Summit. Generally the goals and objectives are forwarded several weeks ahead of the Summit along with readings, websites to visit and other pertinent information.

5. Hold the Summit at an inspiring location
There is nothing worse than asking a group to give you their best creative thoughts and then conduct your event in a stale corporate conference room. Location is important to giving individuals a sense of importance and engaging their various senses needed for the act of creativity. There are many great locations available for such sessions, including museums, monasteries, brand centers, and institutes.

6. Conduct the Summit with discipline but remain flexible
It is important to understand when individuals begin to work in the area of “what they don’t know they don’t know” whole new lines of thinking emerge. As these lines of thinking surface they must be acknowledged and nurtured for it is from these new lines of thinking breakthrough ideas emerge. In fact, the event agenda might change. The facilitators must be able to spot these changes and then have the tools to redirect the work of the group as needed.

7. Ensure follow-through and communicate
After the Summit make sure the “next steps” identified for each idea at the Summit are adhered to and communicate progress to the entire organization. Again, it is important that people know their ideas will be taken care of

For more on Innovation Summits please feel free to contact us at Launch Institute.