Welcome!  Our goal all along in planning this conference has been to practice what we preach. We want to delve into creativity, innovation and learning. We want this conference to be interactive and we will be working in smaller groups over the next three days to make sure we achieve this level of interaction. You will notice inside your package that there is a kaleidoscope, this is to remind us all why we are here, to think and see things a little differently. To kick things off, we will start with William Poole.



 

William Poole is president and chief executive officer of the Federal Reserve Bank of St. Louis, with headquarters in St. Louis and branches in Little Rock, Ark.; Louisville, Ky.; and Memphis, Tenn. In addition, he represents the Bank on the Federal Open Market Committee (FOMC), the Federal Reserve’s chief monetary policymaking body. The Bank is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., constitute the Federal Reserve System. Prior to joining the Federal Reserve Bank of St. Louis in 1998, Poole was the Herbert H. Goldberger Professor of Economics at Brown University in Providence, R.I. He joined the faculty at Brown in 1974. He was on the economics faculty at The Johns Hopkins University from 1963 to 1969. He is an author and has written numerous scholarly papers. Poole began his career in the Federal Reserve System at the Board of Governors in 1964 and worked as a senior economist there from 1969 to 1974.  website

I am delighted to welcome you to St. Louis and our conference. We have designed this conference in order to find innovative solutions for the communities that are feeling challenged or encounter barriers. We have a lot of people in the room today: bankers, investors, policy makers, foundations, government and private corporations. We will learn from the key leaders that have agreed to join us here and we will also learn from one another. You will have the time to focus on the underlying goal of your work and to share your best practices with one another.

It's important to learn what some communities are doing well in order for us to bring the knowledge back to our own districts. Our cities and urban areas include many blocks of distressed areas. What is truly important here is to bring innovation into community development. This will add value by providing new ideas and methods to something that is already well established. It's about growth. Twenty years ago, secrecy was the norm. Now transparency is the norm. Innovation changes things.

Subprime innovations opened up mortgages and financing to those that couldn't obtain access to it. With refinement, we will be able to serve a broader population. This innovation has not failed—it is evolving. Community development finance requires a comprehensive approach. It moves beyond rebuilding the bricks and mortar of the community into an investment in people. It requires significant investments of time and resources. Given the limited resources available, we need to determine the things that deserve attention and prioritize. This is not an easy task, but it is possible; and this is why we are here to explore innovation and come up with some of these answers together.

Andrew Hargadon is associate professor of technology management at the Graduate School of Management and director of the Center for Entrepreneurship and of the Energy Efficiency Center at the University of California, Davis. Prior to his academic appointment, he was a product designer at IDEO and Apple Computer and taught in the product design program at Stanford University. He is the author of How Breakthroughs Happen . Hargadon's research focuses on the effective management of innovation. He has published numerous articles in leading scholarly and applied publications. As principal of the Hargadon Group, he lectures and works with companies on the management of innovation and serves on the advisory boards of several start-ups. website

In 1876, Thomas Edison announced that he would open a research laboratory. He promised to give the world a minor invention every 10 days and a major invention every six months. No one had heard of him before he opened this laboratory. It became one of the most innovative research labs in the world and it helped to create many of the inventions we use today. I have studied Edison. He didn't like school. He liked to tinker and create. Many people look at him and think that he was a great inventor and innovator.

There is a theory historians call the "great man" theory of invention. For every invention, there is a moment where someone has an idea. It is easy to think about a moment where something is conceptualized, one idea at one point in time. The light bulb above his head. In truth, innovation is much more than one person with one idea.

Henry Ford is a good example of what innovation should be like. He didn't invent the automobile. It was 100 years old by the time he got to it. He brought about the production of the automobile. Ford had to come up with a way to create interchangeable parts, continuous flow production and use the electric motor. These things were not invented by his engineers, but they did have to go out and find the information and apply it to automobiles. They used meat packing production to determine how to run the assembly line. The key is that they simply re-assembled what they saw.What I want you to remember is that the genius behind Ford was not having a new idea but assembling many old ones in a new way.

In 100 years, who will be the greatest innovators of our time? Who will be our Edison? Our Ford? Many people believe it is Bill Gates inventing the PC. History is already being written. If you look at Microsoft, you will see that they actually invented nothing. They purchased MS-DOS, Word, Excel, Windows. Even today, the most successful companies are the ones that connect not "invent".

The question is, how do you come up with a new invention every 10 days and a major one every six months? How do you become as creative and inventive as Edison? I have spent 10 years on looking for the answers to this question. I have looked at large and small companies to find the answers. I think the answer is technology brokering, moving existing ideas from where they are known to where they are not, often in new combinations. You need to find ideas and connections that haven't been found yet. You need to be able to move between a lot of worlds and talk a lot of languages. Once you can see the combination, you need to be utterly faithful to the idea you think is the best.

Social network theory divides the world into nodes and ties. You are a node with ties to other people you know. The people you know have ties to each other. If you are told a joke and re-tell it, whether you are perceived as funny or not depends on who knows the joke already. If you can talk to a wide range of people, you are broadening your entire world, the more people you know, the more likely you are to be successful and happy. This has been proven. If you were to look at your calendar last week, looking just at your lunches, how many of those lunches were taken with people you already know, or alone? The more you share and talk to new people about your ideas, the more likely you are to be innovative.

The mimeograph pen is a great example of innovation. It evolved from belonging to a machine, then becoming a standalone pen then an evolution from Edison's original invention into a tattoo pen. It was about re-framing how to look at something. Contrary to popular belief, Edison did not invent the light bulb. He invented a combination of generators and wiring in order to make it possible to put the bulb into mass production. When you look at clip art under ideas, you see a light bulb. The genius is really how he took the idea and made it a reality. The genius is in connecting dissonant worlds.

The scope of your imagination depends on your network. It's not about thinking out of the box. It's about thinking about all the boxes you have at your disposal. The raw materials for innovation are bringing different worlds together and building new ones. What is it about an idea that works? Look at the Victor mousetrap. The company started out building fruit crates. They were perfectly positioned to take all their networks and manufacturing to develop the idea. That is why they became successful. The Segway is an interesting product story proving that the "if you build a better mousetrap" theory is incorrect. When the Segway was launched, they had no idea how to sell it, but they promised the world it was going to revolutionize personal transportation. Inventing the better mousetrap is only the beginning. If people can't access the idea, you haven't moved at all. Success depends on your ability to mobilize your network around an idea.

Paul Revere rode north. William Dawes rode south. We don't know William Dawes. William Dawes did not know a lot of people. He knocked on strangers doors and warned people, but they were not as receptive as the people that Paul Revere talked to. Revere knocked on the doors of people he knew. He was a politician, an insurance salesman, and someone with a strong social network. Your network is not something you will put together after you have an idea; it is something you need to develop first.

I worked at Apple for years. When the iPod was introduced, it was the 12th or 13th MP3 player on the market. They did not reinvent the MP3 player, they just got the network together to produce it well and in a very short amount of time. When they linked the iPod to iTunes, they really developed their network linking the music industry with legal MP3 sharing. Apple designed a system that allowed the music industry to sell and protect their music. They are now moving into TV, movies, podcasts. They designed a network. Network innovation connects to create value.

The way to be innovative is not to look farther down the road than anyone else. It is about looking for other roads and talking to the others that are standing on the sidelines looking for those new roads. William Gibson, a science fiction writer, said "the future is already here, it's just unevenly distributed." Your task is to develop your social network, find an idea that would succeed and link up with others in your network.

Discussion

• You need capital of all kinds to succeed, including financial, physical, intellectual and social. When we make connections, we need to ensure we have all these ingredients.

• Genius and innovation are learned not born. They are learned through our connections.

• Community development is about human beings, not product development. One size does not fit all with human lives. How do we link the two? Innovation is acting locally to make connections. It's about individuals that move each other forward.

• It's about what you can create in the networks around you, not just the network itself.

• How do we re-frame people around networks? The social communities are very important, the churches, the schools, and so can be leveraged.

• The future is wireless, everything in mass media will be wireless including TV.

• How we capitalize risk is changing as well.

• Energy and water will be consumed completely differently.

Langdon Morris is a partner of Innovation Labs and an affiliate of WDHB Consulting Group. His work focuses on innovation, strategy and collaboration methodologies to solve complex problems with very high levels of creativity and innovation. He is also senior practice scholar of the Ackoff Center at the University of Pennsylvania where he is researching complex social and business systems; a senior fellow of the Economic Opportunities Program of the Aspen Institute; and a member of the Scientific Committee of Business Digest, Paris. He has taught MBA courses in strategy at the Ecole Nationale des Ponts et Chaussées in Paris and Universidad de Belgrano in Buenos Aires. He is the author or co-author of numerous white papers and six books, with editions in Japanese, Chinese, Korean, and French. website

Why are we here today? We are here to share and learn from each other. Much like a real cafe, we will be talking to each other and building communities and networks. If the value of what you create is based on the networks you have, you have a tremendous opportunity to innovate here today and explore the questions that matter.

Many of us have children, and we all know that children have a lot of questions. I learned at an early stage in parenting that when I answered the question right away, my kids would nod their heads and walk away. When I re-phrased the question or brought up new questions, even just asked them what they thought about the potential answers, I got a lot of insight into how their minds worked. Questions open doors, if you do not just try to answer them but discuss them and contemplate them, you will get a far richer result.

You may have noticed some concept cards around the room. Please take a look at the information as it is meant to seed the group's ideas and thoughts. We are capturing the information and we would like you to do the same. Just like any cafe, there is a specific etiquette involved, you need to focus on what matters, contribute your thinking, speak your mind and heart, listen to understand, link and connect ideas, develop insights and find some deeper questions, play doodle draw, have fun!

Write down one thought that jumped out at you from Andrew's presentation, I encourage you to do this throughout and stick them up on the sticky wall we have placed at the rear of the room. The World cafe is the basis for this type of work. Get yourselves into small groups of four or five people. Each round you will shift to another table. To help you, there are some cards on the table with questions to answer and the rules of the cafe.
click here to view a PDF guide to create your own cafe experience or click here to view World Cafe website

Keith Sawyer is a professor of psychology and education at Washington University in St. Louis. A leading scientific expert on creativity, he began his career in 1982, designing videogames for Atari. From 1984 to 1990, he was a principal at Kenan Systems Corp. where he was a management consultant on innovative technologies. In 1990, Sawyer began his doctoral studies in psychology. Since receiving his doctorate in 1994, he has dedicated his career to research on collaboration and group creativity. He is a jazz pianist and author of several books and more than 50 scientific articles. He has a new book coming out in June 2007, titled Group Genius. website

I am happy to be here to discuss creativity. It is my passion. Sometimes people characterize creative people as crazy or wacky like Albert Einstein or Jackson Pollock. The psychology of creativity tells us otherwise. Creative people are often more balanced and happier. There is really no correlation between creativity and mental illness. Creativity is based in everyday processes where you need to improvise to make do with what you have. Basic cognitive building blocks are the foundation for all mental processes including creativity.

I have been studying creativity for years, I have dedicated my life to pursuing and understanding it. Today, creativity is the foundation for economics. We have moved from the knowledge age into something deeper. We have to have more than ideas. We have to be able to use them to be innovative. It has been called the innovation economy, but it is not just a passing fad like some business concepts. It is the new reality of the world we live in today.

I used to work in the video game industry. In the 1980s, I designed a video game called "Food Fight". The game was about a boy that had to move across a cafeteria past four evil chefs to get to an ice cream cone. This game obviously wasn't a huge commercial success. Twenty years later, video games are flashy, immersive virtual realities. It's amazing how things have changed and evolved. Back when I designed "Food Fight," it took one person nine months to create a game. Now it takes over 50 people managing and hundreds more. The lesson here is that innovation emerges from collaboration. It takes more people today to produce something than at any other time in history. I am mistaken about thinking I created "Food Fight" alone. It was never one person making a game, even in the 80s. People would collaborate to make things better. Spontaneous interactions were always welcomed to come up with new and interesting ideas. We used to brainstorm to come up with ideas. The collaborative networks we create are always the basis for our creative processes.

The creative process follows the same routine every time: You work, then have a flash of thought, then work some more. There is something in this flash of insight that tells us it is the important nugget we need to be creative. Creative people absorb more information thereby increasing the likelihood that they will have a creative association.

You are more likely to be creative if the associations you make are farther apart. Taking two concepts that seem unrelated and do not have an association and linking them is key. The remote associates test (RAT) links three words that are not related, then you are asked to come up with a fourth word. For example, if you see the words: cream, skate and water, you might determine that the fourth word is ice. When this happens in your mind, you experience a small hint of the flash of insight that is the basis of creativity. Your brain is working on these associations without you even knowing it. People are fooled by what your conscious mind is telling you, that the sudden flash of insight is creativity. It is a piece of it. I call them "small sparks." It is when the small sparks come together that you get true innovation. This can only happen through collaboration.

Improvisational music or theatre is based on not knowing. The actors don't know where it is going before it starts. They depend on the wisdom of the group and the interaction between them that creates collaborative creativity. I want to do an exercise based on this. I want everyone in the room to clap. Once you all start, try to clap in unison with everyone beside you. I will time this and determine how long it takes to synchronize. It took you only three seconds to synchronize. The longest it has ever taken was 12 seconds. This is called interactional synchronicity. It is a natural capability of humans. We can do this with rhythm, harmony, melody and even thinking.

Gore, most famous for Gore-tex fabric, gives every employee an allocated 10 percent of their time to look at information to stimulate ideas and thinking, Google gives one day per week. It is creativity from the bottom up. Gore also invented Elixir guitar strings because an engineer invented a coating that would prevent a buildup of particles that dull sound. Employees within the company took up the invention during their 10 percent time and management wasn't even aware of this going on. Employees were released to show their natural creativity, which produced the most famous guitar strings in the world.

Mountain biking is another interesting example. In the 70s, people realized their speed bikes couldn't off road very well. A small group of enthusiasts got together and started buying things up at garage sales. They played around with their ideas and resulted in a Schwinn Excelsior, which became one of the first mountain bikes. These were just hobbyists, openly sharing ideas and trying stuff out, an invisible collaborative web. The innovations we see today are never a result of one individual. The key is the right kind of organization and group to link them together.

Discussion

• Being sensitive to the others around you helps collaboration.

• Brainstorming groups are often not very effective, sometimes less effective than people just working on their own. The raw number of ideas generated is one way to measure this.

• Most of the time brainstorming groups do not have a moderator. Inevitably groups with no moderation will not be as creative as they could be. It takes the right kind of facilitation to make collaboration work.

• Organizational change is really the only way to make collaboration a way of life for a company.

Doris Koo is president and chief executive officer of Enterprise Community Partners, a national nonprofit provider of development capital and expertise for creating decent, affordable homes and rebuilding communities. Koo joined Enterprise in 2001 as vice president and was promoted to senior vice president in 2002, executive vice president in 2006 and president and chief executive officer in 2007. From 1979 to 1992, Koo led Asian Americans for Equality in New York City. She is credited with transforming the community-based civil rights organization into the largest owner and developer of low-income housing in New York City’s Chinatown and Lower Eastside. After moving to Seattle in 1992, Koo worked as senior housing developer at the Fremont Public Association. In 1994, she joined the Seattle Housing Authority as director of development and was named deputy executive director in 1999.  website

Enterprise is honored to be here. We are a national nonprofit organization, based on helping distressed neighborhoods. The founders of Enterprise, Jim and Patty Rouse, meant to help people get up and out of poverty and to help provide affordable housing. Jim was retired at the time and devoted his retirement career to this end. He wanted to end poverty in his lifetime. Low-income housing tax credits came about in 1986, allowing corporations to purchase dollar for dollar tax credits in low-income housing projects. Innovation is the norm for many community organizers as they don't have many resources or assets.

The tax credit was an invention based on necessity, not driven by profit but by a calling and a vision. We had no choice but to innovate and we need to continue doing so. We have brought in an extraordinary amount of resources. We have helped to build thousands of homes, invested over a billion dollars in 23 cities. We work on some of the toughest community challenges in the country. We like to call our approach "the Enterprise way." The Enterprise way means that we have to leave with ideas. There is no business as usual. We demonstrate these ideas on the ground, through real work. We sustain these things through policy changes and partnerships. We learn from our mistakes.

We have helped build hundreds of thousands of affordable homes since 1992. Hurricane Katrina destroyed over 265,000 homes, half of which were lower-income housing. The question was how we could bring 25 years of experience to rebuilding the homes that were lost. We have begun this work and tens of thousands of homes are being rebuilt. We will raise $120M in tax credit equity. We are working on this. It takes a long time, but so does community development. Once we start to see the bricks and mortar going up, we can see the platform for the human spirit to return and overcome. We want to create communities of choice. We want to re-knit the social fabric of New Orleans. We have offered ourselves as pro-bono advisors. We are open for business to let nonprofit groups have access to capital to get some housing put in place. We are also helping to add in community services to support the bricks and mortar.

Homelessness to home ownership is another one of our goals. The lack of affordable housing for working people is a severe crisis. Wages do not match housing; 36 percent of children live at or below the poverty line in St. Louis. We need to build communities that have the same access to the things the middle class takes for granted in order to give them a fighting chance. We want to build a coalition to reduce silos. We are proud to be in partnership with the city and its agencies to help end long-term homelessness in this city. Homelessness is like a pool of water: You don't just mop up a pool, you find out where it is coming from and fix the leaks. There are steps that need to be taken to move people from low-income housing to rental housing to home ownership. The recent wave of foreclosures is providing us with a challenge in this industry. Ten years ago, we saw a small wave of foreclosures. We started to map the path of these houses and what we saw was staggering. Within six years, one house would rotate two or three times due to foreclosures. We purchased homes in LA at a reduced price; we fixed them to meet proper standards of living. The homes have not turned over once since we have done this. This is the kind of innovation Enterprise spends its energy on.

The final thing I would like to talk about is the green communities initiative. Buildings contribute to about 45percent of greenhouse gas emissions. Off-gassing often comes from the cheapest materials being used and contributes to high energy bills. We made some incredibly interesting partnerships with some unlikely groups. We built along transit routes to reduce sprawl and to allow cities that have already got some properties that could be renovated and fixed to be not only up to snuff but to be green as well. We want to study and track the differences on the operations side. We built 8,500 units and the responsiveness of nonprofit groups and the government has been incredible. LEED standards have been adapted to affordable housing.

The most important things we have learned in 25 years is that we don't need to be geniuses to be innovators. We need to ask "why not?" and "what if?" to change things. There was no room for us to do anything differently. We can re-invent and borrow ideas to continue to evolve and change and grow. We are adapting to global challenges. We are a generous country when it comes to the human spirit. We need to continue the evolution that is driven by commitment and adaptability. We can do much more, through innovation. Innovation isn't just on a grand scale like Google. It is also from humble roots of community. Jim used to say "What ought to be, can be" but will alone will not do it. It requires boldness. We need to keep shaping our future by looking squarely at our mistakes to try to fulfill Jim's mission to end poverty. He could not do it in his lifetime. Can we commit to do it in ours?

There were a few people placed in the group today to take some notes. Each of them was asked to prepare 2-3 minutes worth of notes both on the process of the Innovation Cafe and some things that jumped out from the discussions they participated in.

We could have used more time as our discussions were very interesting and could have gone on for hours. The first thing I noticed was some good buzz in the room. This has been highly energizing. I think this is a great way to get ideas and share. Content wise, there were some pieces of wisdom. There was an Aha moment in seeing innovation as connection. Connections make things possible between people, assets, organizations, and resources. We can create a network of innovation, but the network needs to be used and mobilized. Regardless of where we are sitting, it seemed as though a paradigm shift is required to develop a sustainable base. There needs to be some sweet spots identified as a group.

We wait for people to give us answers instead of moving on our own. Networks need to grow and we need to keep growing them. Community development is misunderstood and foreign to many. Innovation is about networking. In community development, we must already be innovators. We need to become innovators in building scale to really make a difference.

Practitioners have a good understanding of how to get things done, we are practical people and we need practical applications on how to innovate. There is a strong belief in the value and perspective of community. It's not just housing but community initiatives around that housing. We need to build income and assets as well as houses. There is a sheer value in "can-do" and there is a distrust in institutional mechanisms, but we still need to get things done. We can indeed make a difference. That is the seed that germinates innovation.

It seems as though people are looking for a broader way to expand housing projects in order to ensure they are appropriate and coupled with economic development to make it sustainable. We are looking for a way to broaden the impact of our projects. We put so much effort into them, we want to make sure that effort is sustained. The principles we learned today include the fact that the more robust and active your network is, the stronger your change will be and the more innovative your approach will be.

The concept here is great as we are used to sitting and just listening to presentations. Community development people are specifically suited to this type of conversation stream. The networking aspect was phenomenal. Every table seemed to be connected to others I know from different areas. That's what networking is all about. We have a lot of people from the capital side that are bringing in the Wall Street perspective to the grassroots. You can't just have the capital perspective. You need the people in community development that know the people to bridge the gap. This seems to need to be strengthened even further. If we do this, we can truly make a difference.