Innovation — Where to Look for It
By Denise A. Harrison
Many companies struggle when trying to develop new and creative ideas. Why? It is difficult to think "outside the box," especially in challenging times when it seems you are running as hard and fast as possible just to keep up. But finding successful innovation often is the key to getting off the treadmill. Here are some places to look:
- Assess your customers' unmet needs and preferences— is there anything new?
- Assess your strategic competencies—can you use the knowledge base that you have developed in one industry to please a different market segment or industry?
- Look at emerging trends— does a trend make sense, melded with your company's traditional strengths?
- Look at technology other industries are adopting—is there a smart way to capitalize on developments that you can tailor for your applications?
Assess Your Customers' Unmet Needs
Water Pik Technologies, Inc.
Personal Health Care Division
Many of Dr. Gerald Moyer's patients developed problems with their gums as they aged. Dr. Moyers, a dentist in Ft. Collins, CO, speculated that these problems could be alleviated if there was a way to clean the gum area of food particles and bacteria. And, the cleaning technology could use a jet of water not only to rid the area of food particles, but also to massage the gums. Dr. Moyer knew that a jet of water could provide all of the desired benefits—but where could he find a motor that would drive such an invention? He went to a number of sources looking for the proper motor to drive the water. He finally discovered John W. Mattingly, a hydraulic engineer and Colorado State University professor, who was interested in the project. They tried many different options and finally decided upon a piston, hollowed and flared. Their work was a success, but the motor did not produce a constant jet stream of water. Instead it delivered a pulsating stream.
In spite of the fact that the two set out to develop a product with a constant stream of water, the two inventors found the pulsating stream produced the desired effect. Even better—the accidental pulsating made the product potentially patentable. They decided to move forward with the pulsating water stream and developed Water Pik's foundation product: the oral irrigator.
Now the invention was ready for testing, Dr. Moyer distributed oral irrigators to several of his dental patients. Patients found the product effective, and one patient in particular, Gene Rouse, believed that the oral irrigator was a commercially viable product. So, Gene Rouse set out to find investors to fund the marketing and production necessary to launch this product. Who were the original investors? Dentists, of course! Once he raised the needed funds, Gene Rouse became the first president of Water Pik (at that time called Aqua Tec).
Now the founders were ready to launch the product to its target audience, the dental community. The team decided the fastest way to gain exposure would be to display the oral irrigator at the annual dental convention. The product generated a high level of interest and sales at the show. The company expanded its distribution channel to dental supply dealers. As the oral irrigator became a mainstream product, the company developed retail channels including drug, appliance, and hardware distributors. Soon the product was on retail shelves and consumers could purchase oral irrigators without a visit to the dentist.
The original investors saw the product's success and wanted to cash in their investment. They sold the company to Los Angeles based Teledyne, Inc. in 1976, the same year that Water Pik received the patent on the pulsating oral irrigator product.
With patent in hand, the Water Pik team developed new uses for the irrigator technology including a surgical jet lavage used in Vietnam to cleanse wounds.
Capitalize on Strategic Competencies:
The Original Shower MassageTM
The next real breakthrough came with the development of The Original Shower MassageTM.
Integrate the pulsating motion of multiple oral irrigators into a showerhead and what do you have? The Original Shower Massage TM! Use an existing Water Pik strategic competency (pulsating water) in a new application—will it work? Will the market accept this novel idea?
As is the case with new concepts, the developer had difficulty convincing the skeptics that The Original Shower MassageTM would sell. As part of the large conglomerate Teledyne, Water Pik needed corporate approval to invest funds in further developing production capabilities and in a promotional plan to bring this innovative product to market.
When Water Pik presented the new product concept to Corporate, it met a resounding "No!" The Teledyne corporate staff did not believe in the product concept. Showerheads were only installed when a house was built or during a bathroom renovation — consumers would not buy showerheads as a specialty item.
The Water Pik team thought that Corporate might throw cold water on this innovative idea, so they went to plan B: the team offered to buy the concept from Teledyne for the amount already invested in development—approximately $175,000. Corporate was faced with a dilemma. Should they let the team buy the concept or fund the production and promotion? Seeing that the team believed firmly in the concept, Teledyne decided to fund the shower massage product.
Smooth sailing from here?
No such luck. The first batch of completed products did not make it to market. Gene Rouse stopped the product before it was shipped. Why? Surprisingly, the shower massage did not have a regular speed mode. Mr. Rouse felt strongly that the product needed a normal, along with fast and slow massage modes, to be attractive to consumers. The team quickly tooled up to make the product enhancements and this improved version of the product went to market. Did consumers embrace the new concept of a shower massage? Yes, the product was the first significant innovative product launch in the shower fixture category in years. The rest is history.
In addition to using its competency in pulsating water jets, Water Pik used its existing sales channels to distribute the product to consumers. Backed by an advertising campaign and point of sale demonstrations (consumers could actually put their hands in a glove and feel the pulsating shower massage), the product introduction was a rousing success.
After many years the shower fixture market is still expanding. Water Pik Technologies (now spun off from Allegheny, who purchased Teledyne in 1999) continues to introduce innovative enhancements to the shower market.
Keys to success: developing a competency that met an emerging need (the first oral irrigator) and then using that competency to develop a new product for a category not previously served by Water Pik, shower fixtures.
Manufacturing and Selling Plumbing Pipes—Look at Distribution, Evaluate the Buying Experience
Eric De Jeung sat with the HVAC fittings distributor and reflected on the proposal in front of him. If he could increase sales he would be rewarded handsomely for his efforts. If not, he would earn nothing. This was a commodity product in a crowded market. It would be difficult to increase sales, but times were tough and there was a significant upside to the proposal. Eric accepted the offer.
How can you differentiate your company in a commodity market?
Eric decided to visit various building and plumbing supply houses that sold the company's products to see if there were any unmet needs or ways that the company could differentiate itself.
He observed the contractors buying their supplies; he asked if there were any changes that could be made to improve the product. The contractors were satisfied with the basic product functionality, but they were very frustrated by the buying process. He saw that many contractors had to return to the supply house to exchange products from incorrectly filled orders. This caused down time on the job site. He also noticed that the building supply houses did not know how much inventory they had on hand, often causing builders to walk away empty-handed when items were out of stock.
Eric realized the supply houses were employing the cheapest labor possible to fill orders. The people in order fulfillment were not trained in construction and often had poor math and reading skills. It was this low skill level that caused both problems:
- Fulfilling orders with incorrect products
- Inadequate inventory
Eric knew that if he could solve these problems his firm's products would become the supplies of choice.
How do you solve problems at the distribution level? Order Fulfillment—Fill Orders Correctly—An Emerging Trend
Eric knew that, despite his encouragement, the building supply houses would not hire a more expensive, better-educated, workforce. He needed to develop an innovative approach. He needed to think outside the box—or at least think about the box. What did he do? He changed his product packaging. He placed a picture of every product on every package. Then Eric supplied the counter help with matching charts, and as contractors placed orders they would simply point to the products on the chart and the fulfillment clerk would fill the order by matching the picture on the chart to the picture on the box! The pictures and charts provided a win-win for everyone.
Inventory Control—Counting Made Easy
Now for the inventory problem—products came boxed in packages of 12. Eric knew that service counter clerks could count the number of packages in inventory, but lacked the skills to multiply the numbers by twelve. Why not packages of 10? With boxes of 10, even the simplest clerk could count the boxes, add a zero, and have a correct inventory count. Problem solved—the building supply house owners knew when they needed to order more of Eric's products. They could easily calculate the number of Eric's products on the shelf and make sure that they ordered more when stocks ran low.
By changing the packaging, using product pictures, and having 10 fixtures in each box, Eric resolved both problems and now:
- Building supply houses were able to keep track of inventory.
- Builders received the correct fixtures.
Within one year Eric's company became the market leader with 60% share of the market - not too shabby in a commodity business. The key to innovation is not always found in a new product, or a new product feature. It is often found in the buying or the distribution process. How can you make the sale easier for your customer, your distributor? If you can answer this question you may have the key to your future success.
Technology—how can it work for you?
The sharp sword of "bleeding edge" technology has cut many companies. But does this mean you should stay away from technology as a possible source of innovation? Why not adopt a technology currently in use in another industry? With the bugs already out of the new technology, you can focus on its application to your process, products and markets. Here are several examples of companies who have developed applications using technologies already debugged by someone else.
RFID, radio frequency identification, recognizes consumers by their unique identification tag and is able to automatically debit a specific consumer's account for a specific transaction.
An early application of RFID technology enhanced the NY/NJ toll collection system. E-ZPass automatically identifies cars passing through tollbooths and debits each car owner's account for the toll. Capitalizing on the NY/NJ RFID application, Mobil (now Exxon/Mobil) is using this technology in its SpeedpassTM program. This program allows SpeedpassTM customers to simply wave their "SpeedpassTM" at an electronic reader to have it debit the customer's account for gas or any convenience item. The transaction convenience increased sales significantly.
"An average SpeedpassTM transaction is more than double the cash amount." NYT, 7/7/02
What's next? SpeedpassTM at McDonald's! Fast food faster!
Spreading the use of RFID technology to new applications shows how technology developed for use in one industry is used to speed transactions in other industries.
The challenge for a company's strategic planning team is to search for technology applications in other industries and look for ways that technology can be applied to the business.
The first major application of bar code scanning occurred in the retail grocery industry, as scanners enabled clerks to check out each consumer more quickly and (ideally) more accurately. The rental car industry adopted scanning technology when it looked for ways to enhance customer service by speeding the return process. When the barcode on your rental car is scanned you immediately receive a printout of the bill. No more stopping at the counter; just hop the bus to the airport.
Sue Kinnick, a long time VA Hospital nurse, noticed the auto rental company employees using the scanning equipment to produce a bill instantly. Sue wondered if the same scanning technology could be used in the VA Hospital to match doctor's orders, patients, and drugs to prevent medication errors. When the wrong medication is given to a patient, he or she often requires extensive care to rectify the situation. Medication error can result in death. Once the VA hospital installed the scanning system, medication errors plummeted by 70%. (WSJ, 12/10/2001)
Technology in taxis? Taxi Stockholm
Taxi Stockholm struggled to differentiate itself in the extremely competitive Stockholm taxi market. After evaluating several possible solutions, Taxi Stockholm decided to take advantage of the emerging GPS technology to track the location of its cabs at any time. When customers call Taxi Stockholm, its system matches the telephone number of the caller to their address. As soon as the address is verified, the GPS system locates and dispatches the nearest available cab to that address. The system then updates the caller on the estimated arrival time.
Customers flocked to the service because they could count on Taxi Stockholm to arrive promptly at the estimated time. The technology gave them confidence that the estimate would be correct. The company increased the company market share to 60% when they introduced this benefit. Copycats have not been able to regain their previous market positions. By being the early innovator in the taxi market, Taxi Stockholm gained a competitive advantage.
Progressive, the country's third largest auto insurer, used two technology developments to set them apart from the competition.
- First Progressive began offering consumers 'comparison rates.' Available over the phone and on its Web site, Progressive offers their quote and, right alongside, competitors' rates for comparable coverage. The service is designed to help consumers understand that prices vary and to help them find the lowest cost alternative for them—even if it's not with Progressive. The innovative use of their Web site drove customers to try calling or going online to see where they could get the best price, giving Progressive "mindshare".
- Progressive claims representatives use wireless communications to handle the claims process. Claims reps prepare the repair estimate—either at the customers' home, office, or even at the accident site, and transmit it to the company's mainframe. When the information is verified, the claim rep is able to print out a check to settle the claim right there on site. No waiting. This way, the customer can get their vehicle in the repair shop faster and get back on the road faster.
Progressive's savvy use of technology sets them apart in the crowded world of auto insurance. They used available technology to solve the key consumer complaints:
- The difficulty of comparing rates from different insurance companies.
- The time it takes to get paid for a claim.
Now Your Company — The Next Great Innovator
When your team looks for innovation, seek new ways to use your competencies, ways to solve unmet or emerging needs and preferences, and ways to use technologies proven in other industries to gain advantage in your industry. A sharp lookout for shifts in productivity, customer service, and product/service enhancements can be a key factor in developing a "first mover" advantage for your company.
As you think about innovation for your company, look around and analyze how other industries are using technology and ask yourself the questions:
- How would this technology enhance my service or product?
- How would this technology enhance our processes?
- How would this technology enhance the overall customer experience?
Denise Harrison is Executive Vice President & COO with Center for Simplified Strategic Planning, Inc. She can be reached via e-mail at