Sometimes innovation doesn’t look like a new social media channel, iPhone, app, or nifty widget. In fact, Joel Peterson believes that innovation is hiding in plain sight. Peterson tells Fast Company, "It’s any time you are doing something in a better way." The way he sees it, innovation can be simply, "tweaks around the edges [of existing products and services], and a lot of people don’t get credit."
Peterson sees it happen all the time. Most people don’t know he’s chairman of JetBlue Airways—and the discount airline’s first investor—or that he founded Peterson Partners, a Salt Lake City-based private equity group with some half a billion dollars under management, as well as Peterson Ventures which funds startups.
Peterson’s been flying (pardon the pun) under the innovation radar for over 35 years even though he’s been the financial brawn behind a slew of such forward-thinking ventures as Bonobos, Asurion, and Mangia.
Peterson concedes that his investments over the years appear somewhat schizophrenic. But really they all have something in common, he says. "Every experience I’ve had in business is about adding value. How do you provide something to customers that’s worth more to them than it is costing them? It’s the internal or external focus of every new company I’ve ever been involved in."
That said, Peterson admits the other tie that binds his investments is an intuitive sense. "With great talent, you tend to fall in love without the analysis being as profound as it should be. That’s great thing about having partners," he says.
But partners aren't always right, either. And Peterson has been talked out of a few investments that would have yielded a fortune—one such missed opportunity would have earned him 22 times the amount he invested, he recalls. "You can’t always prevail," says Peterson ruefully, "but it probably kept me from just as many dumb deals. You empower your partners so you win and lose together."
On a more serious note, Peterson says there is no such thing as a dumb deal, rather, they become dumb because of market shifts. Likewise, he says, "An idea, product, or service is not a business. You can build around it that is rarely enough."
Instead, he underscores, it’s all about the entrepreneur. "That’s why I’ve gone so far afield [in my investments] to find world class entrepreneurs with high energy, intelligence, and flexibility. These entrepreneurs figure things out over time, they take counsel, they listen, and they are humble. I am willing to follow them into various kinds of industries."
And they are more than willing to learn from him. Andy Dunn, founder and CEO of men's online clothing retailer Bonobos, says Peterson "is the leader at building and scaling a terrific customer experience." Dunn asserts that Peterson’s hand in building the world's favorite airline has translated well to Bonobos’ e-commerce business "that wants to build the world's most personal retail customer experience."
Founded in 2009, Bonobos touts itself as the Internet's fastest-growing men's clothing retailer, and it recently secured $18.5 million in a round of Series C financing to further drive the growth.
Dunn continues to call on Peterson for leadership advice as the company grows. "From Joel I've learned to discover an authentic style built around specific positive feedback, to transition leaders from the company with dignity and celebration, and to build alignment across the leadership team to keep the company at prime, as Joel calls it, for as long as the gods of capitalism will have us."
From where he sits, Peterson says funding often steals the spotlight from the real challenge innovators face. "I have always felt great ideas and great business plans attract money. The major difficulty is getting paying customers who are delighted then building management to consistently deliver that."
It’s a challenge that plenty of large corporations face daily as well, he says. "I’m not dismissive of big companies. They have incredibly capable professionals who often get in a bind solving day-to-day issues which are legion, so it’s hard to set up pilot programs outside of the main business," says Peterson. But those pilot programs often provide the innovative edge that can keep a large organization from getting stuck in a rut. Peterson suggests letting divisions operate like startups to disrupt their own business and see if that spurs growth.
But above all he advises taking a page from his own playbook and "invest in great human beings."
[Image: Flickr user MHJohnston]