Convergence: The Key to Successful Innovation

By Faisal Hoque  |  Posted 2008-04-21

Call them “McMansions” or “particle-board palaces,” the massive homes sprouting up across the suburban landscape presented a big problem for the carpenters who built them. The designs for these super-sized dwellings called for molding larger than the standard 10-inch miter saws could handle. Construction workers would have to cut through half the molding, pass the 16-foot piece out the window, turn it and pull it back in. It was a cumbersome and wasteful process, to say the least.

Engineers and marketing managers in Black & Decker’s DeWalt professional construction tools division observed this extra step and realized that a 12-inch blade would solve the problem. And so they designed, built and marketed a new saw.

Following DeWalt’s standard innovation procedures, the engineers dropped the new saws off at job sites and returned several weeks later to see how they had worked. As expected, they worked well, and DeWalt’s miter saw became the No. 1 seller. The results were no surprise, given DeWalt’s intense focus on the end-user experience.

DeWalt’s innovation engine uses stage gates for milestones and approvals, which act as safeguards against any impulse to act too quickly. Durability and reliability are more important than speed, because the end users will know if a product isn’t up to snuff. It’s a process followed by several companies that innovate successfully. The particulars of the process will vary, but several innovation principles are equally applicable to technology-dependent organizations. These principles are:

Convergence of disciplines and silos lets the enterprise act as one. This is especially true regarding the management of business and technology; business ideas cannot be separated from the engine of execution. As an example, DeWalt’s technology people and its business people visit construction sites together. Nothing beats field observation and research.

Collaboration, using business technology, is enabled by convergence and is a common characteristic across all innovative companies; this includes collaboration across internal and external boundaries.

Organizational design is critical to realizing convergence and collaboration. That most organizations aren’t designed to optimize collaboration is obvious, but change is difficult. Too many individuals and fiefdoms are threatened. Change must be accompanied by new incentives, job descriptions, reporting lines, information flows and training.

Partners and networks provide ideas and capabilities the organization lacks. Remember, most smart people work somewhere else. In addition to its in-house capability, Black & Decker has an open mind toward acquisitions that will bring new products and product categories, as well as human talent.

Customers have ideas, too. They are the ultimate reality check. No innovation strategy will work without a laser focus on customers, and this focus must adjust as existing customers need change, new customers appear and competitors seek to entice them all away. A deep understanding of the customer is necessary. DeWalt executives surely know the old construction saying, “People don’t buy a quarter-inch drill; they buy a quarter-inch hole.”

Customer-centric innovation begins with a “business architecture,” a map of all business processes and how they affect the customer. With this picture of the business, the company can then ask: What would work better? Is the enterprise genuinely serving the customer or does it just pay them lip service? Is the organization properly configured? Are there redundancies and inefficiencies that cause delays or raise costs? Does it need better information at any point? “Best state” models can be created and tested before any changes are made.

Research at 342 companies by Wharton School Prof. George Day revealed that success comes from three sources: giving customers priority and empowering employees to serve them; aligning the organization through incentives, accountabilities and structures; and generating relevant information. Of the three, Day found that orientation and configuration are more important than information. That’s why customer relationship management (CRM) software systems often fail: Companies are just sifting data without changing the way they work.

Management 101 strategies of this nature can directly affect the bottom line. DeWalt’s U.S. power tool revenues have grown from $150 million in 1991 to more than $2 billion today, and its share of the professional power tool market has grown from just over 10 percent to 50 percent. Such is the power of customer-centered innovation.

FAISAL HOQUE is the chairman and CEO of BTM Corporation. BTM innovates new business models and enhances financial performance by converging business and technology with its unique products and intellectual property (IP). © BTM Corporation

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