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issue: August 2009 APPLIANCE Magazine

Appliance Engineer - The Open Door
Innovate…or Die by Not Trying


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Jeff Varick, founder and president, Brandmotion

It’s critical to guard innovation as the engine of recovery once the recession ends.

About the Author: Jeff Varick is the founder and president of Brandmotion (www.brandmotion.com), a Grand Rapids, MI, U.S.–based manufacturer of solutions for consumer electrics inside automotive vehicles and household appliances. He was formerly the director of New Product Strategy for Johnson Controls, and the new business development manager for General Motors International Operations in Zurich.

 

“The test of a first-rate intelligence,” F. Scott Fitzgerald once wrote, “is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”

For designers, engineers, and CEOs, that means we must balance the dual challenges of investing in growth through innovation while managing the current business bottom line. Too often, innovation efforts are one of the first things to get cut in a recession. However, companies that don’t innovate in this recession may not be around for the next one.

The current trend is disconcerting. Many CEOs seem to be viewing innovation as something you do when times are good. The engineers and designers who remain during lean times live in fear of losing their jobs, stifled from coming up with the next “Big Idea.”

Prior to starting my own engineering and design firm, I worked for auto supplier Johnson Controls and before that, General Motors, where I got an up-close-and-personal look at GM’s retreat from being a leading automotive innovator. Instead of coming up with the latest and greatest breakthrough designs, GM opted to rebadge its lineup, putting a different grille on a Chevy and calling it a Buick, not realizing how badly their brand was deteriorating.

Instead of leading, GM was caught for years in reactive mode, trying to catch up to the competition. The new electric Chevy Volt is cool, but it’s late. GM now has a great product lineup, but it’s one that it should have had five years ago, maybe 10. This manufacturer may be the current poster company for paralyzing its business by not looking ahead with product innovation and taking the risks that go with that.

Some Innovative Approaches

To recapture America’s innovative leadership that dates back to Alexander Graham Bell, the Wright Brothers, and Henry Ford, companies have to first commit to innovation as an essential, ongoing core business practice. The key to better results from those efforts is to test the innovative idea or product in the marketplace earlier and faster than most companies would be comfortable doing.

Most companies hang on to ideas way too long rather than getting them into test markets where they can learn and adapt. According to innovation expert Clay Christensen of the Harvard Business School, 93% of commercially successful innovations start out trying to solve a different problem than the one that eventually succeeded.

If that’s the reality of innovation, it makes the most sense to speed up the process of cycling through value propositions to get to the one that works. And since longer cycles of pursuing a wrong-headed track just cost companies more money—and tie up precious innovation resources—there couldn’t be a better approach to innovation for the times in which we now live.

Companies need to take their ideas, prototype them quickly, and try to sell them in market niches as a salable product with real consumers. They need to learn what works and what doesn’t, and continue tweaking until the market agrees on what it really wants—and then scale up in core markets.

E-commerce technology today makes this process fast and inexpensive. A new wave of open-source e-commerce platforms like Magento allow you to have a unique e-commerce site up and running in days. Couple that with a targeted Google AdWords campaign to drive traffic, and you’re now learning with real transactions and real customers. Another technique to lower costs is to find a partner company to cosponsor the product and share the developmental risks and costs.

When I oversaw marketing strategy and innovation within the automotive interiors group at Johnson Controls, we wanted to move faster and test our ideas more quickly, but we were faced with the “clock speed” problem: the development cycle of vehicles is very slow.

Our answer was to try to decouple the development of new features from the development of the vehicle. With a standard interface system, we felt we would be able to speed up the development of new consumer content.

The result was an overhead rail system for connecting consumer devices such as DVD players, iPod holders, and hands-free phone systems. We saw ourselves as “real estate” developers, facilitating opportunities for seamless customization inside the car.

To develop a lot of content in a short amount of time, we licensed the overhead real estate to consumer brand companies such as Black & Decker, Swiss Army, and Leatherman—companies with faster product development cycles—and provided them with the opportunity to reach their customers in a new environment. The system was a success, and at one point was being built into 1 million new vehicles each year.

My company was formed out of Johnson Controls to take this concept further and develop additional new modules, and market them on the Internet, direct to consumers.

Taking It to the Kitchen

And, yes, this applies to the appliance industry. One day, I received a call from the director of advanced concepts and technology at Whirlpool. He was intrigued with the rail-system concept, and wanted something similar to develop the vast real estate on the refrigerator door.

We ran a quick consumer survey that asked, “What’s the number one thing that you want in your kitchen?” Some of us were surprised when the answer came back as “more counter space,” but we shouldn’t have been. We looked at what consumers had on their existing counters and saw not only toasters, coffee makers, and dish racks, but also FM radios, charging stations, iPod docking systems, CD players, satellite radio systems, home computers, and TVs: All the artifacts of the modern connected lifestyle.

The refrigerator real estate idea evolved into a system to mount and dock iPods, digital picture frames, and even flat-screen TVs on refrigerator doors. We used the same licensing concept, partnering with consumer brand companies to develop the modules and share the risk. The system, coined “Central Park,” debuted on a line of Whirlpool refrigerators in 2007, and became one of the biggest media events in Whirlpool history.

Sure, America’s back is against the wall in the current economy, and many of the nation’s biggest companies are struggling to adapt their business models and are cutting back on innovation. But it’s also a great time to create new businesses and product lines that anticipate a new order of things in the next economy. Much will have been destroyed in the process, but as the great economist Joseph Schumpeter taught us, this process of “creative destructionism” is precisely what makes America unique, creating the new from the remnants of the old.

Now more than ever, it’s time to innovate…or die by not trying.


 

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