Inventor Versus Innovator
Co-founder and CEO of HighTower Advisors
Ralph S. O’Connor Associate Professor of Entrepreneurship
What’s the difference between an inventor and an innovator?
That was the theme of the lively discussion Thursday, Nov. 6, between Elliot Weissbluth, co-founder and CEO of HighTower Advisors and Rice alumnus, and Yael Hochberg, Ralph S. O’Connor Associate Professor of Entrepreneurship. Titled “The Innovator Has No Clothes,” the discussion in Shell Auditorium was the second in this fall’s Jones Partners Thought Leadership series.
Hochberg, also the academic director of the Rice Alliance and managing director of the annual Seed Accelerator Rankings Project, moderated the casual conversation with Weissbluth about his career influences and inspirations. The former English major made it clear he is an innovator. “Tinkering with things is in my DNA,” he said. His grandfather was a nuclear physicist at Stanford and his father, a professor of clinical pediatrics at Northwestern University School of Medicine, worked to understand the problem of why babies cry, focusing on his “eldest son, who cried a lot.”
Weissbluth “outgrew crying,” he said, and founded HighTower in Chicago in 2007 in response to what he saw as a lack of transparency and an inherent conflict of interest in the practice of investment advisors. A former litigator who became disenchanted with the law, Weissbluth changed the relationship between the investor, the investment firm and the marketplace, bringing in greater transparency and removing the conflict of interest.
His wealth management firm has since been ranked one of the fastest growing private companies in America three times by Inc.
“We didn’t invent anything new,” said Weissbluth. “We re-examined the relationship between clients and the marketplace.” His innovation was that his company “embraced fiduciary duty.”
“It’s the difference between service and sales.” He compared it to the difference between going to the butcher or a dietician for advice on what to eat.
Tweaking and Shifting
An invention, pointed out Weissbluth, is the “creation of something out of nothing.” Like penicillin or the automobile. An innovation, he said, is tweaking something that already exists and causing a shift.
His favorite innovator, he said, was Susan Butcher, the highly successful Iditarod dog sled racer. By allowing her dogs to rest more often, Butcher “tweaked” the relationship between her, the dogs, and the race, Weissbluth said. And she started winning.
Another example of a “profound tweak and shift,” said Weissbluth, is the cab company Uber. Uber “reexamined the relationship between the person and the cab company,” shifting the focus from the company to the client.
But Innovation is Hard, Inefficient and a Little Bit Crazy
“Being innovative has now become cool,” said Weissbluth. “In SEC filings the word ‘innovative’ has appeared 33,000 times this year.”
But “the reality is that most companies are not particularly innovative,” he said.
“Innovation is a real thing. It’s hard work.”
It’s also inefficient, he pointed out. As companies stabilize, they tend to squeeze out innovation in order to continue to be profitable.
An innovator is someone “who doesn’t know that their thinking is impossible.” Weissbluth counseled that to be an innovator “you have to have the confidence that you are right” and be able to withstand the naysayers all around.
“Being an innovator is to be a little crazy. … You see things differently.”
Only ten to fifteen percent of entrepreneurs are truly innovative, pointed out Hochberg. “What’s your advice to a future innovator?”
An innovator is “going to fail a lot,” Weissbluth cautioned. “It’s part of the process.”
But “it’s a most satisfying existence.” And “if you have it in you—solving problems, taking a different path—grab that flame of passion and make it central to your being.”