South-Western - Management  
The Innovation Factor: Inside the Idea Mill
Topic Managing Innovation and Change
Key Words Innovation
News Story

Scott Augustine began Augustine Medical in 1987 with the help of his father in the garage. It is now a $64 million maker of medical devices. Augustine Medical accomplished this by becoming a continuously experimenting organization, capable of churning out profitable products one after another. Research has shown that innovative products have a much higher return than average, and that money spent on R&D results in significant increases in a company's market-to-book-value ratio.

One thing that sets Augustine Medical apart is that the R&D group is made up of not only engineers, but also a number of prop builders from regional theatre and opera companies. The company encourages building lots of prototypes quickly and cheaply. The skills these people have brought to the job allow them to see a problem and begin tinkering until they find a solution. Computer modeling is used at later stages.

Developing new products is the founder's priority, and the corporate mindset. Augustine expects every department to be experimental, not just R&D. Conference rooms and cubicles are designed to foster creative interaction. Employees have flexible work hours to give them opportunities to be where they think best, which is not necessarily at the office.

Patents are one of the more challenging parts of the business. The director of intellectual property is self-taught and driven. As the company gets closer to going public, it is searching for ways to succeed Scott Augustine as the primary idea-man.

Questions
1.

Define innovation, and name five things this company is doing to promote product innovation. Why are these things important?

2.

What leadership qualities does Scott Augustine demonstrate that indicate his ability to unleash creativity in his employees?

Source Leigh Buchanan, "The Innovation Factor: Inside the Idea Mill," Inc. Magazine August 1, 2002.
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