Make or break

Innovation is supposed to be the lifeblood of industry but it doesn't stop me wanting to smash things every time someone says it. Politicians, in particular, are prone to uttering it as a panacea for virtually every ill, particularly if they are already on the back foot. But for every cat's eye and cloud chamber, there are plenty of Sinclair C5s and British Rail APTs on the scrap heap. If innovation was easy, on tap and guaranteed to be successful, every company would be throwing itself at the far horizon. Einstein was much more realistic when he said: "If we knew what it was we were doing, it wouldn't be called research, would it?" In fact, it's expensive, risky and potentially as much of a company-breaker as a company-maker. Which is why so many companies go for small, safe, incremental changes to their product ranges rather than investing their all in the dazzling unknown. And that's a problem, too. Nobody ever got rich by tinkering round the edges and too much caution gets you overtaken by braver or faster competitors. Dennis McCarthy of DAK Consulting draws an important distinction between two types of product development. "If you have got a product where the features and the price are well defined and accepted, then the development process should really be a 'step-out' in terms of trying to disrupt the market and the customers' agenda." He recalls a prime example from his days at General Motors. When Volkswagen brought out a twin airbag, GM was forced to spend the next few months playing catch up: "If you lead the market, you disrupt the competition." Where existing product features are not acceptable and there are opportunities to make it easier to use, enhancement is the way to go." He points out, however, that it's easy to miss some major opportunities when following the enhancement route. "Obviously, the key thing is understanding features customers would value that they are currently not getting. But if you ask them what they want, they may not be able to tell you. Or if you ask them why they bought that, they may say price when it's actually a combination of things. Why buy a Porsche instead of a Ford? It isn't price yet they both do the same job." There are no easy assumptions where customers are concerned. He suggests total cost of ownership (TCO) as a driver for enhancement - in essence, looking at what it costs customers to use your products and taking some of that out at no cost to yourself. Ready-to-shelf packaging is a good example - it saves the retailer work and the manufacturer would have to supply something like it anyway. To him, incremental and step-out changes are often separate assignments that need totally different types of people. For some time, McCarthy has been working with the Syngas division of Johnson Matthey Catalysts to help its team deliver a step-out product, the Apico catalyst, in record time. This programme was independently assessed as cutting more than 25% off the normal development cycle time. Underlying its success was technical director Peter Williams' belief in harnessing the abilities of a cross-functional team to work towards a common, clear goal. The first step brought technical, commercial and manufacturing people together in a three-day conference. The objective was to pool their knowledge in developing a viable strategy for a stream of new products to answer a specific customer's needs. Remarkably, they got 65% of the way towards their target in those three days. "This is a company with a lot of knowledge - if you can harness that knowledge, point it in the right direction and get people to talk to each other, the result is both drive and innovation," says McCarthy. It's a principle worth adoption on a wider scale. "Getting the kernel of an idea is one thing but turning it into product is quite another," says McCarthy. "You need to get the right operations and technical people together to find out how quickly you can convert it." He believes that innovations usually go wrong for two simple reasons: the company has not understood the customer or it has not got the right people involved at the right stage. A major problem for any development project is that the market doesn't stand still for you. A ground-breaking concept when you started may be redundant by the time you've printed the brochure. Sometimes an external perspective can be invaluable in matching the development strategy to a changing economic and technological climate. Cranfield School of Management is finding more interest in technology road mapping (TRM). TRM is a strategic technique for planning product development, aligning it to potential shifts in economic and market drivers, linking it back to current product ranges, and defining the technology and other resources needed to transform them. It provides a framework to forecast product appetite and to co-ordinate the short- and long-term response. According to Dr Marek Szwejczewski, it was very effective in helping the British arm of an international company unblock its pipeline of ideas and new product introductions. Incremental improvements were no longer enough; it wanted to know how to make its engineers show more initiative. "We told them we could teach TRM but we would prefer to handle it as part training and part workshop. That way we get people working as a group on TRMs for their own area. Hopefully that will help to form future products." Szwejczewski is also a firm advocate of involving marketing, sales and production from the outset as well as engineers. So how does all the theory play in practice? Let's go to Gripple, winner of both the Innovation Award and the Best Small Company at the 2009 Best Factory Awards. Originally designed to connect fences, Gripple devices are now found in agriculture and viticulture worldwide. In 1995 it moved into industrial markets with a series of load-rated kits designed for hanging services like ventilation, pipework and lighting. Over the past five years, sales have grown by 90% to 2,000 customers in 80 countries. It employs 240 in sites in Sheffield, France and Chicago. Gripple continues to trail blaze: around 18% of its turnover comes from products less than three years old. Product development is remarkable for its speed and lack of constraints. Ideas come from all quarters and, in the early stages, are kicked around with a vigour that borders on the brutal. Andy Davies, Gripple's business development director candidly admits they make mistakes but they are always recoverable: "We work on the basic principle that if you wait to answer every single question, you'll never reach your goal. However long you spend, inevitably the market will throw something new at you." He recalls a new product that he thought had been tested on every fence possible during development - until he came across one with a very large crimp. "I just looked at it - and then at the product I had in my hand - and thought there's no way this will go round it." He stopped the project and the whole interior was redesigned. "It added six months and the IP had to be reregistered, costing us another £40k. A mistake was made but we didn't waste much time on why we had made it. We found it and put it right quickly. And it [the Gripple Plus] turned into one of the best and most profitable products we have ever made." In that instance, Gripple chose to invest more because the market argument was clear from the beginning. "We had decided why we were doing it, who for and what it would generate in customer loyalty - and we were right." Gripple is confident in its market assessments because it goes to extraordinary lengths to understand what customers want. "Who is the customer? The one using it - not the distributor," exclaims Davies. "Listening to the middle guy doesn't give you what you need. You have to go and see the coalface every time." A few years ago, an Irish customer complained that a field fence wasn't tensioning properly. Gripple was on a plane the same week. "We found out it wasn't even our fence! But it was still the right response. You must go and look at every complaint. If we hadn't seen it for ourselves, we might well have started replacing something that worked perfectly." Gripple believes customer contact is the rainbow leading to the pot of gold. "The name of the game is to keep your ears open. Take the strands of knowledge from your customers' comments - 'that's useful' or 'nothing does this' - bring them back, assess them in terms of commercial opportunity, understand the application and design something with the plus factor." He believes most complaints aren't actually that - they are a source of information that can be fed straight back into product development without third party distortion. It's not all plain sailing - and Gripple's move into a new market illustrates a dilemma faced by many businesses. During the BFA audit, it openly acknowledged reservations about the future of a new range of trellis products, despite rave reviews from gardeners. Today, the situation is different, thanks to the triumph of realism over optimism. Davies says it was never a product problem. It was simply the difficulty of finding a profitable route for a consumer product by a company used to industrial markets. "The natural outlet was garden centres and B&Q-type operations - but they don't want to deal with a one-product supplier. So it has to go through a middle man. By the time you cost that and add B&Q's horrendous discount structure, there's no money in it for us." Unwilling to spend millions to promote the product through conventional advertising, Gripple started establishing it by visiting county shows. Staff had great fun and people loved the product but, finally, it was also obvious that this route was absorbing more effort than it warranted. "We have to balance how we spend our time and we make more revenue by spending it on our core products." Today the range is sold over a separate website, through specialist gardening catalogues, and at shows via a small external team that displays it alongside its own products. Davies is happy with it. "It's trickling along and the returns justify continuing to make it - but we will save major investment for plans generating us a great deal more. It showed us once and for all the difference between industrial and consumer markets." Future path Gripple's development focus is clear: it will never compete in a commodity market. "It just drags the price down for everyone." The company stakes its future firmly on innovative products and protects them rigorously through patents. And it safeguards profit stability through a mix of rapid-fire and longer-term developments. Davies says it can normally bring new wire jointers to market within six months of the first idea. "The other kind - areas that will give a big jump in new applications or markets - require a lot more effort because they may well take us beyond our current understanding. But that has never stopped us." Davies says that Gripple initially knew nothing about industrial hangers. Today they account for 70% of its production. Suppliers are a critical part of this fleet-footedness: "We look for those who can move the goal posts. When we first looked at hardening the rollers in the Gripples, we were told we'd never get over HRC 35. We are now operating at levels of twice that and it's all because our suppliers got involved in the process." Gripple set the objectives; the supplier came up with a way of meeting it. "As we have progressed, so have they." He makes one more valuable point. Pride in innovation goes well beyond the development group: "'Me-too' is boring. 'Unique' keeps people truly fired up."