The Most Innovative Companies You’ve Never Heard Of

We all know the big names, we know how they made it and we know that they’re in it for the long haul. Companies such as Apple, Google and Nike reached the top through years of hard work and a relentless focus on innovation – and fair play to them for having the drive (and ideas) to stay ahead of the chasing pack. Constant reinvention is a tiring business, after all, and such companies are rightly feted for their ability to evolve with the times and respond to changing customer needs and wants – sometimes before the customer has even recognized that such a need existed.

But it’s not all about size; if anything, these companies are exceptions to the rule that says big companies don’t have the agility to remain at the cutting edge. In fact, just below the radar of public consciousness are a growing number of companies changing the face of industries as diverse as moviemaking, financial services and advertising. It’s not necessarily about technology, either: as some of these upstarts are proving, there’s plenty of room for revolutionary new business models, too.

There are many reasons why some companies fail and some survive. For some it is simply of matter of being in the right place at the right time: a winning concept or design, and suddenly they are catapulted into the limelight. For others it can be harder. At the heart of it must be a desire to succeed and the ability to roll with the punches; you need to work at what consumers want, foresee how they want it and look at what works best. In a nutshell, it’s about innovation. Successful companies are those who refuse to sit back, rest on their laurels and smile over their empire, but instead strive to improve and adapt to changing markets, advancing technologies and increased competition.

Carl Johnson, CEO and co-founder of Anomaly, has worked hard to make sure that his company is seen as unique. He claims, they’re a new kind of company, a creative think-tank focusing on branding, innovation and design. The company has gone from strength to strength over the past three years and is now set to hit the big time, and Johnson believes that the secret to the company’s success lies in its clarity of purpose. “We are absolutely clear on why we exist and that makes all our decisions, consequences and implications easy to work out because they flow from this purpose,” he says. “Many companies have no reason for being other than that they exist and should carry on existing. We’d rather shut than deviate from our purpose and default into an agency, but that’s what most people avoid because it is too difficult.”

Chris Larsen, the co-founder and CEO of online peer-to-peer lender Prosper, believes that focusing on the product will ultimately bring success and reward. “We are clearly seeing a second tech boom in Silicon Valley, but it’s different from the first, which ended so badly. There has been a refocus on the fundamental product and technology aspects, and in my opinion that came from the Google guys,” he says. “Google won because it kept focusing on the product, not the big marketing deal.” He’s been trying to instill this same sense of pride amongst Prosper’s employees. “If you can get each of your engineers to view what they are doing as their craft, then they will be incredibly proud of it – and that’s super-important.” So far, two-year-old Prosper has facilitated the transfer of more than $100 million in funds, and with borrowers and lenders featuring an unlikely mix of homeowners, college-goers, credit card junkies and entrepreneurs, his company is proving that average people – including Larsen himself – can be successful investors too.

When Beowolf hit movie theaters last November it was seen as the dawn of a new age in cinema. RealD 3D, the digital 3D projection technology company behind the film, now has a strong foothold in the 3D market and has had enormous success installing its technology in almost 2000 theatres in over 25 countries. Michael Lewis, co-founder and CEO, believes that RealD’s phenomenal growth over the past couple of years is down to its ability to make decisions quickly and fail fast. “If we don’t get the results that we set out for, we want to know it sooner rather than later so we can go on and try something else,” he says. “We are not afraid to make the wrong decisions, and if we do, we try to correct them as quickly as we can. And in an emerging market this is the key ingredient in keeping at the cutting-edge.”

Sandy Climan, CEO of 3ality Digital – producers of the first 3D live action movie launched in January 2008 – agrees. Just surviving in the film industry is “pretty darn hard”, so if you have got that far then you must be doing something right. Climan believes that innovation relies on creative vision. “Simply having the technology in place is not enough. It’s developed to support the creative vision,” he emphasizes, adding that it also helps to be insanely passionate about your work in order to have the vision and determination to make it successful.

For many businesses, the end of 2007 and the beginning of 2008 has brought a good deal of uncertainty. Will the value of the dollar continue to drop? Will the economy be affected long-term? And how do you stay at the top of your game and continue to bring in a profit? Innovation could be the key. Over the following pages, we celebrate the most innovative companies you’ve never heard of. Pay attention: you could be reading about tomorrow’s Google.

Secrets to success: how the big names have reached the top

Google continues to reign as king of the innovative enterprise. Why? Because the company continues to stick to its philosophy; never settle for the best. As Larry Page says on the subject: “The perfect search engine would understand exactly what you mean and give back exactly what you want.” Ok, so this is a pretty tough goal to aim for, but it requires a combination of research, development and innovation to realize. Google has all three in spades.

Apple have undoubtedly flourished throughout their history. According to innovation consultant Larry Keeley, Apple used over seven types of innovation just to launch the iPod, including networking (a brand new agreement among music companies to sell their music online), business model (being able to sell a song for as little as one dollar) and branding (the earphones, the classic white color, the tiny nano – need I say more?).

Nike was in Fortune’s Most Admired Companies for Innovation 2008 for the third year running, and in 2007 the company donated $9 million to create the Nike School Innovation Fund (NSIF) in Oregon public schools. Nike’s dedication to seek new and innovative ways to develop superior athletic products has paid off big time, and now the company is regularly voted amongst the foremost pioneers in any industry, period.

Most innovative

A business anomaly

With a background in the advertising business, Carl Johnson was well aware of the pitfalls of the industry when he started up his brand new ‘branding experience’ company three-and-a-half years ago with a combination of people who had worked together at previous agencies. “The main thing was that all of us had some degree of frustration at how the industry at large was not evolving fast enough; we all felt constrained either by our roles or our organizations,” he explains.

Sharing the same vision for a new type of company and realizing that a revolution was a lot easier to pull off than an evolution, Anomaly was created in 2004. Since then Johnson has worked hard to make sure that Anomaly is not billed as anything other than just that – an anomaly. The co-founders of the company were clear that they did not want to be limited by the world of agencies, and wanted to be free to work with clients or partners in more entrepreneurial ventures. “We’ve gone about it by having an absolutely clear perspective on what business we’re in, and from the outset we didn’t want to be an agency. What we want to do is create a business model that is more about the value of the ideas you create,” stresses Johnson.

Anomaly tackles its projects in way that is different to anyone previously. Rather than working from timesheets, the company negotiates an upfront, predetermined fee or equity stake in the project. Johnson says that this means Anomaly is completely committed to a client or partner. “We are really driven to pressure-test our solutions, and ask ourselves whether we are doing the right things with the money. It also means that we see what else we can do to sell more. It’s absolute commitment because it is our money and that’s the difference. You have to deliver.”

For Johnson, the challenges have revolved around retaining this unique industry status and also the execution of projects. Each project is done on a case-by-case basis, which means that there is no set process to follow and no set team per case. “Unlike pumping out a load of ads, every challenge we face is different; there is no process that we can just take off the shelf from before.” This means that a certain number of senior people need to be involved in each project, and has led to the creation of the company’s second office, Another Anomaly, also based in New York.

“Because each project is so varied, there are too many times when you’re in a room with a business problem and you can’t just ask someone with only two or three years experience to solve it,” explains Johnson. Instead, Anomaly have expanded by going sideways and have asked people in as partners – people who have already been CEOs or who have experience of owning their businesses – to allow more senior talent in to the company.

To date, Anomaly has seen huge demand from the market, which is another reason behind the opening of the second office. “There were some opportunities that I did not want to pass up, but if we scaled in the normal sense I felt that we would either compromise ourselves or do a bad job. The other thing that was important was making sure we have enough time to think about the intellectual property side of things, not just the client side. So now we have two offices thinking about IP and two offices working with clients – we’ve scaled in an appropriate way for the business,” he explains.

Talking of expansion, Johnson also confirms that Anomaly are thinking about setting up an office across the Atlantic in London; however, he is keen to point out that he has no idea what they will actually do in the London market. “One of the things we’re doing is learning all the time about what works and what doesn’t. I’m also mindful of the fact that London is a different market and I’m not 100 percent certain that just trying to do the same as here would be the right thing,” he says.

For the future, Johnson wants to focus on putting real intellectual property into the market. “We’ve been working on this for a long time and it’s going to ultimately fulfilling to see it for real in the market.”

Anomaly’s success stories

Virgin America – “When they arrived they had no planes, no logo, no business plan, and we worked with them for two-and-a-half years on everything from design, advertising, websites, communications, PR, events. The totality of the way we saw everything they did as potential media was an outstanding blueprint for full communications.”

Converse – “We’re doing some interesting work for Converse at the moment. It understands that Converse has been pretty damn succesful without a lot of marketing and that our job is to ever so sensitively help the business grow in a way that understands wher that band is coming from.”

Beverage Partners Worldwide – “We do great work with the joint venture between Coca-Cola and Nestle, Beverage Partners Worldwide, and it’s the totality of what we do that I’m pleased with. We will start with white space and a potential market opportunity and work closely with the client on quantifying that opportunity. And that might take two years, so we’re working globally on new market and new brand creation.”

Most innovative

The REAL Deal for 3D films

When Michael Lewis first produced a couple of large format 3D movies, he was fascinated and amazed by the experience a 3D image could produce. Four-and-a-half years ago he co-founded RealD 3D, a company dedicated to delivering digital 3D to the highest standard and combining 3D science with digital projection systems. “Our vision was to see if we could transform the cinema business by coming up with technology that would allow people access to this really amazing experience,” says Lewis.

Around two years ago, RealD launched its first film in co-operation with Walt Disney, Chicken Little. From that point on, as Lewis himself admits, the business has been on a “rocket ship ride”. The company have now been involved in six film releases and have almost 2000 screens rolled out in over 25 countries. “Every major filmmaker and every major studio is now making movies this way. In 2009, we’re probably going to have more than 10 major movies produced in this fashion. It will be the biggest thing since color and sound, and has changed the economics of the exhibition business tremendously,” enthuses Lewis.

There is no doubt that digital technology has and continues to change our lives in many different ways – RealD have been able to do the same thing in the cinema business. What Lewis has seen through the six films that have been released so far is how the experience is differentiated from other entertainment opportunities. “What we’ve found is that films shown through RealD have done three times the box office consistently over all films, versus the same movie shown in 2D. That’s a pretty significant change in the industry,” says Lewis. The other big factor driving uptake is that filmmakers are really excited about participating in this format, citing it as a new way to tell their stories. “It’s more real and more lifelike,” claims Lewis. “All the top filmmakers in the world – Jim Cameron, Steven Spielberg, Peter Jackson and many others – are all wanting to move forward in 3D. It’s the perfect storm. We have all the ingredients to really transform the industry over the next few years.”

Although movie theaters are the primary place to find 3D technology Lewis believes that there is potential for 3D technology to be used on other types of visual displays in the home and even on mobile phones. He sees RealD as trying to replicate the way we see, making as real and lifelike an image as possible. ‘We think all visual display devices, whether it’s your mobile phone or your television, will go this way. It’s just a much better experience. Once you’ve seen color it’s very hard to go back to black and white.”

Indeed, Lewis is confident that 3D technologies will not only affect motion pictures but that there is a great opportunity for live events in RealD theaters. “Imagine concerts and sports being delivered live to the theater in 3D. We did a test with the MBA live 3D for the all-star game in Las Vegas – and it was very promising. If we were to get involved in the content side that is what we would focus on,” he explains.

The primary focus for Lewis is to continue the rollout of the platform. 2009 is the watershed for RealD and Lewis wants to make sure that the technology is in as many movie theaters as possible by then. “Our job is clearly focused on making sure that we get the screen count up to a point where all these content producers that have made movies have as wide a platform as possible to show them on, so that we can get into some of these markets that aren’t currently being served by us,” explains Lewis.

Q&A: High-tech moviemaking

BM. You’ve been associated with some exciting and revolutionary projects recently, including Beowulf and U2 3D. Was there much collaboration between you on the technology side and the production crews actually making the films?

ML. Yes, there was. First of all, RealD is the platform that it plays on, but we have a full group. We provide much of the visualization technology necessary to see what you’re actually shooting. We worked a lot on the post-production side of these films. We have some of the world’s leading 3D experts, and collaborate and assist the production personnel and the post-production personnel. That’s not our business, but we do whatever we can to support and to share our knowledge of how you make a great 3D film so that it’s the best-looking piece of art that you can have on our platform. It’s self-interest, and we’re very collaborative with the companies that produce this stuff.

Most innovative

The future of film

“3D is a new tool for filmmakers that changes the way you plan a film, and provides an exhilarating opportunity both creatively and economically,” says Sandy Climan, CEO of 3ality Digital, an integrated entertainment company dedicated to high-quality live-action 3D. 3ality Digital has built the world’s first all-digital, online 3D production and post-production facility, creating a unique environment supporting the creative process from script through to exhibition in theaters. The next evolution of cinema has arrived.

The directors of 3ality Digital’s first 3D live action movie were Catherine Owens, who had never directed a film before, and Mark Pellington, a director with a distinguished reputation. There was no distributor and a wealth of unproven technology – the potential for disaster was high. However, through enormous creative talent and technical resources, and two long years later, U2 3D was ready for the big screen. U2 3D was filmed in South America during the band’s Vertigo tour and was the first live action movie ever shot, produced and exhibited in digital 3D. “People comment that they’ve never seen a concert the way that this concert is brought to them,” remarks Climan. “They actually feel as if they are in the brotherhood of the band, that they have the best seat, the best perspective of the music emotionally, in every shot.” He claims the 3D feel of the concert brings you into the music in a way that you couldn’t experience live. “This film used 3D to put you in the emotion, not to startle you with special effects.” While no film could ever replace the excitement of being at a live concert, this is not like concert films of days gone by with flat images and mono speakers.

Climan explains that 3ality is currently focusing on three important initiatives. The first is on producing the highest quality 3D filmmaking, and this initiative is reinforced by the work done on the U2 3D project. Second, Climan has been concentrating on the technology itself, working with consumer electronics companies to embed the new generation of consumer electronics products with the highest quality technology for 3D. There are currently a range of Samsung and Mitsubishi 3D-ready rear projection televisions on the market and there are a number of flat screen plasma televisions that will be 3D-ready due for release soon. The primary use for these will be for game-play, although Climan believes it won’t be too long before they will be used for watching television and movies. “We want to be able to perfect this technology for home exhibition. You still have to wear glasses at this point, but we will also see the day when you won’t,” he predicts.

Initiative number three for Climan is looking at 3D live broadcast, in order to allow the 3D broadcast of sports, live events and concerts – first into specially equipped venues, and then later into the home. When will we start to see this? “There is a danger ever predicting anything with technology, but what I do know is that it is a lot closer than people think,” he says with a wink.

Most innovative

Prospering despite the credit crunch

Chris Larsen has been focused on making consumer lending more efficient, fair, honest, open and trustworthy for the past decade. But rather than do this through a bank or a credit card company, he loans money via the internet; not only that, he uses the average Joe to do the lending.

Larsen is CEO and co-founder of Prosper, America’s first people-to-people lending place, created to make consumer lending more financially and socially rewarding for those who participate. Prosper is much like eBay in that it is essentially an online auction platform on which people list and bid on loans. “It’s an infrastructure that allows any person to make their pitch, tell their story and then have any other person with $50 or more judge whether that person is worthy of their money, either because of good return or because of some kind of social satisfaction that they can get out of it,” he explains.

Prior to Prosper, Larsen co-founded and served as Chairman and CEO of E-LOAN. Under Larsen’s leadership, E-LOAN closed over $27 billion in consumer loans and earned customers’ trust by taking radically pro-consumer actions such as being the first company to provide its clients with their credit scores, and played a critical role in the passage of the strongest consumer financial privacy protection law in the nation. The company was acquired by Popular in 2005. “In many ways, Prosper is a 2.0 version of E-LOAN,” explains Larsen. “The technology wasn’t there before, so we were unable to get money directly from people to other people. Over the last couple of years the technology has developed, and Prosper is the second wave of that.”

Larsen is incredibly excited about the future of Prosper and believes that the company has accomplished its initial phase of providing the tools, safety and a system that works. He and his team are now concentrating on scaling the site to become the dominant player in the peer-to-peer lending arena. Larsen sees a fundamental shift going on that started with social networking and has now spread beyond entertainment and into things like finance and retail. “Prosper is a benefactor of the trend we are seeing. Broadly, the capital markets are changing in fundamental ways – you no longer need a small protected group of elites to make the market, every person can make the market – anybody who owns money and anybody who needs money,” says Larsen excitedly.

Peer-to-peer lending is on the up, particularly since the credit crunch hit. “It’s impacted us in a fairly dramatic way,” says Larsen, “Prosper is being used as a replacement for credit markets that have been shut down.” He goes on to explain that even the best credit quality people now have trouble getting loans that they easily would have secured a year ago. “The banks are really retrenching, even for their best customers.”

Larsen believes that the lack of transparency in the marketplace has contributed to the credit crunch, and believes that is why Prosper really is prospering. He is adamant that Prosper will continue to retain its philosophy of offering absolute transparency, and hopes to employ and build more tools in order to become even more transparent in the future. One development is the ability to give more liquidity to the market, such as the ability to resale loans, for example, as well as continue to build social capital. “We want to be able to monetize a close friendship relationship, where a friend believes in you, and puts a bet on you through a bid that is going to be worth something to the people that don’t know you in the wider marketplace,” suggests Larsen. “It’s at a level where a friend is putting their money where their mouth is. There are tons of opportunities to monetize that in a way that traditional markets could never really do, and that’s exciting for us.”