Innovation Agents: Diane Hessan, CEO of Communispace

When you’re at the helm of a ten-year old, $50 million social network that’s growing at a rapid clip, you might take innovation for granted. Not so with Diane Hessan, CEO of Communispace.


Sure her company has enjoyed a compound annual growth averaging 39 % in the last five years. And yes, Communispace sailed out of the dot-com bust and the recession on double-digit margins and a client retention rate of 90 percent. But rather than rest easy, Hessan’s still hungry: for smart growth, scaling Communispace’s corporate culture, and ways to make a transformational difference for her clients.

“We ended up in a space that’s recession-proof,” Hessan tells Fast Company. But that’s partly because she understood the depths of the economic slump were a time of opportunity–a lesson learned as a girl working alongside her father in his sewing machine repair shop. “I’ve said every day it’s a terrible time to lose touch with your customers.”

Communispace’s staff, therefore, is constantly tasked with looking for better ways to build and manage about 400 private online customer communities they’ve created. “We do an enormous amount of innovation within the communities,” she explains, “Not from big, scientific, quantitative research. It can be one consumer saying something that changes everything.”

From lone voice to new product

That’s exactly the kind of innovation that gave birth to Godiva Gems. Contrary to what you might think, says Hessan, those tasty individually-wrapped candies were not the product of tons of market analysis. Instead, while talking to consumers about the way chocolate is used to entertain, one woman confessed she didn’t share the contents of her gold Godiva boxes. Hessan says the wheels started turning immediately. “It spurred a completely different conversation,” one that pushed Godiva’s product developers to figure out what a package of share-able chocolates would look like.

For Hessan, the most important thing Communispace does to innovate is to get immersed in the life of their customers. “New ideas are a dime a dozen. The key is to find the right idea that’s really going to add value and transform the way you do something to make it so much better.”

Smart failure and intelligent growth

It’s also the way Communispace evolved from its focus on employees within organizations to consumer groups. Hessan likes to say that the company has made more mistakes than anyone else. A critical one at the beginning was building software so large companies with staff in far-flung locations would have a way to share best practices.

Chase Manhattan Bank (in its pre-J.P. Morgan days) eagerly signed up. The result? A flop. “Out of 200 people, only seven users,” Hessan admits. “It was a just a complete ‘nice to have.'”

Yet from failure came a new idea via a conversation with then-potential client Hallmark. Once the switch was made to creating consumer communities, growth was fast. “I’m a huge believer in serendipity,” says Hessan.

But Hessan is also quick to point out that growth can be destructive without well-managed capacity. Communispace does execute annual planning, but more important, Hessan believes, are the two-hour management meetings that take place every Monday. Studying weekly metrics allows the company to finesse an emergent strategy instead of simply reacting to changes.

“Our priority is always to take care of existing clients,” she says. “It is so sexy to have a brand-new account, but building value for customers you already have is a kind of growth that’s a much more gratifying and sane way to grow.”

Growing forward

Hessan says her biggest challenge now is maintaining the Communispace culture as they continue to grow. From the logistical difficulties of packing more than 300 people into the company cafeteria for a staff meeting to the daunting prospect of remembering more names, it’s enough to keep any CEO up at night.

Yet here’s another instance where Hessan presses innovative thinking into action. “Usually when you hear scale you think about finances and margins. I think the key is to figure out how to scale leadership,” she muses. “My job now is mostly about developing strong leaders in the organization.”

Hessan maintains her strength is hearing the one person who is saying something profound, giving them the tools and getting out of the way. “At this stage of my career it’s not my job to invent the idea, but to be discerning.”

This interview is part of a series about the paths that innovators took to get where they are today. See more Innovation Agents.