Michael Fruhling's Blog

A bunch of stuff about innovation…

The Power of Prototypes: Making It Real

Posted by mdf4u on January 13, 2010

If “a picture is worth a 1,000 words”, then a functioning, physical product prototype can be worth a million of them.  In my experience, there are few things that can jumpstart a new product initiative within an organization better than a working prototype. 

If you’re seeking to cultivate advocates within your organization, or seeking to enlist external resources to further a new initiatives, then a physical representation of the end product can be an excellent way to go.

Rick Ruffolo (now Senior Vice President of Brand, Marketing and Innovation at Yankee Candle Company), one of my colleagues at Bath and Body Works, has always been very effective at successfully generating interest and building consensus around new opportunities by quickly reducing his business building ideas to physical prototypes and showcasing these with peers and management. 

My company (bfs innovations) is currently representing the developer of a patented wash cloth.  This special cloth has a usage indicator that works like this: it has colorful images printed on it that can be transformed to display another image after the cloth has been washed/scrubbed by its user.  This innovation will allow (for instance) a young user to understand the concept of washing themselves to go from dirty-to-clean in a fun and visually interesting way.  Interest in this innovation has increased dramatically now that we’ve been able to demonstrate technical feasibility and have a compelling, physical prototypes to share.  Welcome, but not surprisingly, companies that had previously rejected the concept in the absence of a prototype have returned to the table to discuss it with us, and with a markedly higher level of enthusiasm for it.
It can be magical when people within an organization can come together behind a shared vision for a new opportunity.   That said, just as a well-executed prototype can motivate a group to action, a lousy prototype execution can kill just as easily.   With this in mind, one should move swiftly to prototype, but with a certain amount of care to ensure that a poor representation doesn’t turn off potential proponents. 
To be clear, I wish to distinguish between prototypes that offer technical proof of concept and those that may serve as product representations.   This distinction is important.  The former may not need to be “pretty”.  It may just need to demonstrate feasbility.  The latter may need to do double duty. 
Physical product prototypes can make a new initiative seem real in the eyes of the viewing audience, and therefore make them more inclined to support it.   Are you making proper use of product prototypes in your innovation endeavors?   

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“Not Invented Here” Was Not Invented Here

Posted by mdf4u on January 10, 2010

 

Among companies contemplating an external innovation aided product development strategy, you should expect and address negativity from the people most directly affected by the implementation of the strategy. This resistance may be covert, but it will very likely exist. 

How to deal with it?  Carefully.

Employee negativity can represent a substantial threat to the successful implementation of an external innovation strategy.    Shrewd external partner selection can be as important to program success as the technology or capability that may have served as the initial basis for the relationship.  However, even if a company is very careful about partner selection, it will still likely have to address tensions that an inbound technology or product may induce among its employees.  

A few years ago, I participated in an inaugural external innovation project within a major consumer products company.  The mission was to customize the aesthetics of a product developed by a non-direct competitor to allow its sale in the company’s retail outlets.  While a technically straightforward exercise, this project prompted a fair amount of internal resistance from the product development team tasked with the customization effort. Why?     The technology customer’s product development team (TCPD) resented that the external innovation strategy and partner was being imposed upon them by top management.  Further, TCPD was concerned that the new product would be better accepted than products developed internally.  Also, unlike some of the close knit supplier relationships that TCPD had built over a period of years, they wouldn’t be able to control the relationship with this external partner.

Is this type of behavior unique and specific to TCPD teams?  Hardly. As evidence of this, separate from the above example, scientists from the Technology Supplier in the case I cited above were guilty of sitting for 6 months (!) on one of my technology submissions.  Why was this?  My contact admitted: “Some of the scientists were concerned about advancing a technology that they might have been expected to have devised themselves.”  And so it goes.

I’ve read a lot of literature that describe negative corporate entities as “antibodies”…almost as if they are an infection that somehow needs to be eradicated.  While antibodies need to be dealt with decisively, one must be careful to not “kill the patient”.  Top management needs to be sensitive to the fact that the attitudes revealed in the example above reflect simple human nature.  The rest of the organization will be watching closely to see how management deals with the issue as a bellwether. 

I don’t believe that it’s enough for management to offer verbal assurances to employees that external innovation won’t be a threat to their employment and to their position within the company.  In today’s corporate world, outsourcing and downsizing is becoming increasingly common. Who wouldn’t be suspicious of management’s intentions, given the type of business environment we all live in? 

So, what should be done about this?  Upper management needs to be very transparent and specific with employees about the new strategy, why it’s being implemented, how it’s going to contribute (and be additive) to existing business results to allow the company to meet shareholder expectations.  Employees also need to be told how their roles will be altered to accomodate the new strategy and why this will be critical to its success.  Those employees who choose to “get with the program” will do so, while those who don’t will exit the business, sooner or later.    Importantly, employees will need to experience a reality that is consistent with what management has promised.  If management walks the talk, and if business operations unfold as promised, then the naysayers should recede into the background.   Companies should anticipate and actively manage these types of issues before they open their doors for external innovation business.  I feel it’s naive to assume that your company is somehow different and that these issues won’t exist for you.  The ones that address them head-on should increase their odds of long term external innovation success.

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Escape From The Island of Unmet Expectations

Posted by mdf4u on January 8, 2010

This post is universally relevant, but is primarily directed to my friends in the retail business, as the concept discussed will likely resonate most strongly with them.

An interesting phenomena can occur in the retail world…based on judgment, market benchmarking and possibly some testing, management has high hopes for a new product line.  It sets high expectations, prioritizes company resources accordingly, sets budget numbers high, and orders big…and the product line underperforms.

This doesn’t necessarily mean that the line sucks wind.  Under some objective measures, it might even be considered successful.  Just that it doesn’t perform as planned.  For example, a $75MM line for a company that was expecting $150MM is a dismal failure.  On the other hand, $75MM can be pretty darn impressive if you’re used to staring at $30MM lines! 

Lines that underperform are usually sent to the retail gulag.  That is, it drops in sales priority, items start getting discounted, and a self-fulfilling prophecy of failure results as sales continue to decline and retail space dwindles.  

So, what’s my point?  First, there are a lot of  fully developed product lines that have underperformed and which were sent to the retail gulag.  I’m betting that a good number of these could potentially be resurfaced, repositioned and/or repackaged and/or “sold” to another party in a different trade channel, or geography…especially if there was nothing intrinsically wrong with the offering.  

Is anyone brave enough to consider this option?

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In Search of the Corporate Sugar Daddy

Posted by mdf4u on January 8, 2010

There is a pervasive disconnect between the public’s perception of external innovation and its reality as practiced within major corporations.   By “public”, I mean inventors and small business persons.   With my business, I see this every day.  It is remarkable how consistent the message is (such as the following):

“I have a great idea for an invention that will make millions.  All I need is for a big company to fund the completion of the development, and they can then put millions of dollars behind marketing it and distributing it to Walmart, Target, Kroger and Walgreens.  We’ll all be rich. 

By the way, Michael, since I don’t have any money myself and I want to compensate you fairly, how about you work on contingency, and I’ll pay you a hefty portion of our earnings when our ship comes in!”   

In effect, most of these folks are looking for a corporate Sugar Daddy…an entity that knows what it takes to create and implement a business plan and has the resources to successfully pull it off.   The entire premise of the television show American Inventor (the inventor version of American Idol) which aired several years ago was based on the inventor’s pursuit of the Sugar Daddy.

The reality is, that corporations aren’t routinely seeking “ideas”.  What they really want are commercially viable, manufacturing and cost feasible, protected/protectable technologies and products.  Some companies, like Kraft and P&G go to great pains to explain on their portals what types of innovations they’re seeking, and even list examples of them.  They may even go on to say that they strongly prefer ideas that are near or are market-ready.   From Kraft’s “Innovate with Kraft” portal:

“Kraft is accepting ideas ….for new products, packaging, and business processes/systems only. We are most interested in ideas that are more than a concept, in particular new products & packages that are ready to be brought to market (or can be brought to market quickly).”

If one studies the P&G Connect and Develop website, one will notice that the “success stories” posted substantially describe collaborations with established businesses.  

Despite this, individuals cling to their belief (rewritten as “dream”) that they will succeed once a major corporation embraces their vision and will fund their idea.   This is not at all to say that an individual with a substantial innovation can’t appeal to a major corporation and do business with them.   I’m guessing that this does occur, on occasion.  However, I suggest that if one wants to play with the big boys, one should at least know how the game is played in order to maximize their success odds.

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Plan for Success in External Innovation

Posted by mdf4u on January 6, 2010

Among companies contemplating external innovation, I would offer the following unsolicited but simple advice:

If your company struggles with decision making involving products and technologies that are grown organically within its own four walls, it should expect to have even greater difficulty in successfully implementing an external innovation strategy.

A number of the companies I’ve worked with have shared with me their frustrations with corporate decision making.  Whether this involves R&D waiting for direction from marketing on what it wants to put on the product launch calendar so that it can interpret these needs into technical development criteria, deciding what and how much information is necessary to advance an initiative to the next stage in a stage gate process, or gaining internal alignment on the consumer test action standards necessary to pull the trigger on a product launch, companies can be flush with opportunities for internal gridlock. 

In the context of an external innovation collaboration add the further complexity of seeking to coordinate the activities of two companies (a technology provider and a technology seeker) that don’t necessarily know each other well, or trust each other, or have similar product development approaches and/or philosophies, and things can get even dicier.

The smart companies understand this implicitly.  One of my colleagues at a larger consumer products companies shared with me an insightful observation.  We were discussing success factors for external innovation within companies.  Paraphrasing, she said, “It’s important to remember that there are always 3 conversations going on:  the one between the people at your company, the one between the people at your partner’s company, and the one between you and your partner”.  

I’m not suggesting that companies seeking to pursue external innovation initiatives should have low success expectations.  However, success probability will be significantly enhanced by careful preparation.   Said differently, successful companies prepare for success.  With this in mind, companies should objectively acknowledge their process and cultural strengths and actively address existing weaknesses before they open the door for business in external innovations.

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Creating Bigger Business “Pies”

Posted by mdf4u on January 2, 2010

Each year, companies invest millions of dollars to develop and introduce new products to market.    What if these companies could generate an even larger return on their product development investments through strategic relationship creation…without jeopardizing their existing businesses?  

Some new product launches are very successful.   Some of these can be even more successful if they were able to access geographies and/or trade channels that their existing distribution reach cannot currently allow.  Repositioned and/or repackaged versions of these products could be very attractive to prospective partners with strong positions in non-competing, alternate trade channels and/or geographies.   A strategic relationship between these companies could create a significantly larger pie for both to share.  

Let’s consider a couple of realistic scenarios (one of which involves a current client):

Company A is a European skincare company whose new product successfully launched earlier this year.   The Company has determined that it could be even more successful if it could build greater consumer awareness and generate higher trial rates.  However, it is currently constrained by non-optimal retail shelf position and its inability to invest sufficient funds at the shelf and in media in order to enhance consumer awareness.  Company B is an international direct marketing company with a lucrative U.S. business.  They are expert at creating long-form informercials and have a history of success with a combination of direct marketing and mall-based retail kiosks.  Could a match between these two companies make good business sense?   Very possibly… 

Company C  is a small U.S. business that makes and sells innovative and clinically proven oral care products directly to dental professionals for use in their practices and for resale to consumers.    Company D is an established retail oral care brand that sells consumer products.   Company D wishes to expand its new product portfolio and bolster its innovation capability.  Could Company C  license to Company D some of its proprietary technologies and capitalize on the latter’s strong consumer brand recognition and distribution strengths?   This could enable Company C to realize a greater return on its IP investment, and accelerate Company D’s new product development efforts.    

An innovation catalyst (like bfs innovations) can help companies to vision attractive, highly incremental, and possibly unobvious opportunities like these, and others.   They can also facilitate the connections necessary to advance these opportunities.  Something to consider…

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External Innovation “Dating Etiquette”: Who Pays?

Posted by mdf4u on December 27, 2009

It is common for a would-be technology provider to find that a corporate technology seeker wishes for them to invest in conducting supplemental work to validate their technology.  While a certain amount of this is to be expected and is appropriate, how much is reasonable?  At what point should the technology seeker also be expected to contribute?
 
A technology seeker typically has access to and knowledge of available, alternative solutions in the space that a technology provider may be seeking to fill.  The potential value of the provider’s innovation to the seeker must be weighed against these.  Investment decisions must be similarly considered.  

As one might expect, a technology seeker’s strong preference is to push costs and resource investments onto the technology provider. Realistically speaking, large companies can’t afford to invest in the validation of every potentially attractive opportunity. That said, a technology provider should seek to have good knowledge of how well positioned his technology is relative to the current art.  With this knowledge, he can decide at what point he feel he can request that the seeker share in this investment.  If the seeker is unwilling to make this investment, then their interest likely isn’t that pressing.  It further signals their apparent willingness risk losing the opportunity.

Importantly, a technology provider should seek where possible, to define a validation roadmap with the technology seeker before incurring costs.  In effect, they should seek to identify what information is necessary, what results will qualify their technology, and what specific actions will be taken by the seeker if these conditions are met.  With this roadmap defined, a provider can decide what investment they are willing to sign on for.  Technology seekers will not usually raise this issue as they do not want to be committed to anything prematurely, and because in some instances they don’t have authority to commit to anything beyond qualifying the technology as an input to another business decision in a staging process. 
 
Many technology providers are reluctant to broach this topic at the risk of offending the technology seeker.  However, without some  clarity, the provider has no sense of what obstacles must be cleared in order to achieve success, nor will they have a clear definition of what constitutes success. 
 
I recall several years ago, one of my clients having spent about 6 months seeking to validate a technology with a consumer products company, only to find that there was no internal business customer ready to adopt it once it had cleared this review.  After this experience, I have learned to seek clarity much sooner in the vetting process. Sometimes the answer simply isn’t available to be given.  And that can be useful information in and of itself. 
 
In conclusion, technology providers should approach interactions with technology seekers with clear eyes and a measure of sophistication.  Associated investment decisions should be viewed similarly. 

 

 

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End to End External Innovation

Posted by mdf4u on December 22, 2009

Many companies are eager to engage in external innovation.  They can mistakenly begin by opening the door for external submissions without first having a defined end-to-end process to manage the inbound flow.   While many companies already have in place a stage gate process to manage new product opportunities grown organically within a company, fewer have defined processes for accomodating candidates that may already be in a more advanced state of development without the customary standards and approvals that organizations apply.  Without having protocols for managing these “exceptions”, there’s bound to be confusion.

Another common challenge exists for companies knowing how to address unplanned opportunities, when these arise.  For instance, when Marketing and R&D are aligned on technical needs to support an approved product and marketing strategy, work flow is pretty predictable.  However, when an intriguing new opportunity arises for which no business case had been devised, many companies are ill equipped to accomodate this newness.  Besides the process gaps, some NIH mentality can creep in.   An internal advocate may not emerge, for instance.

Net, companies that plan to be open for business in the field of external innovation need to thoughtfully formulate processes and plans to accomodate the different scenarios that they are likely to face when they go “lights on”…before they actually do.

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Finding a Home for Misfit Innovations

Posted by mdf4u on December 19, 2009

 Once upon a time, a global consumer packaged goods consumables giant received an unsolicited external innovation submission from the CEO of a medical device company who was seeking a buyer for his FDA-approved, clinically proven and commercially available product.   The CPG giant examined the submission and decided that while it was somewhat related to one of their branded businesses, the fit was not sufficiently close to merit their consideration.  So, they declined the submission.  And the medical device company’s CEO was sad.   

However, all was not lost. The CPG giant suggested to the CEO that someone they knew and respected might be able to help him to achieve his dream of finding a home for his technology. The CPG giant was progressive to recognize that even if it wouldn’t adopt the innovation, that it could add value by helping to steer him to someone qualified to help him find others who might be willing to do so.   

So, one day in 2007 my phone rang…it was the CEO!  I listened carefully to his story and in partnership with a colleague, arranged to introduce the CEO to senior executives at a consumer durable products company that we felt was a better fit for the innovation.  Unlike the CPG, the company was pursuing a strategic initiative in which this medical device would be an excellent candidate.   Well…I suppose you can guess at the rest of the story. 

 The consumer durables company acquired the medical device company earlier this year.  And they all lived happily ever after.   The lessons from this story should be pretty obvious:  

  • an unsolicited innovation submission that isn’t right for your firm may be very valuable to another.  It need not represent a competitive threat to your business.
  • referring declined innovation submissions to a 3rd party who can facilitate new introductions is a great way to build your reputation as a partner-of-choice.   
  • the more companies that put dismissed opportunities back in play, the better the odds that these will find their way to your company. 

  Obviously, I’m not talking about companies seeking to create compelling business opportunities for their direct competitors.  I don’t think I’d want to be the one to have to explain to P&G CEO Bob McDonald why the diaper concept my company declined somehow ended up as a Huggies product. There are simple guardrails that can be built into these types of referrals to prevent such occurences and to prescribe which types of companies are in or out-of-bounds.  

 

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