It’s Never as Simple as It Looks

PATRICK DE KEYZER

Partner, DeKep

Wikipedia defines innovation simply as a “new idea, device or method”, but where the simplicity stops is when you try to manage innovation in your company or business.

Despite reading many books, attending courses at prestigious business schools and over 30 years of experience at a global company that touted global market and technological leadership I still cannot come up with a clear answer to the question: “How do you manage innovation successfully? “ However I can share with you what has worked the best for me: Innovation should be

1. Customer centered

2. Technology centered

3. People centered

1. The customer

Here I want to differentiate between internal (own company) and external customers (the market) that both need to be served through innovation efforts.

1.1. External customers

The first and only reason for a customer to innovate with you is to make him more profitable and/or competitive in the marketplace. This means that as a supplier you need to have a profound knowledge of his market(s) and the associated value proposition. It requires also a very good application knowledge: What is the function of your product, how is it applied, etc… When trying to enter new markets and create new applications for your products, the effort to acquire this application knowledge is almost always underestimated, since often it takes years of study and talking with customers!

While nowadays ‘open innovation’ is being broadly adopted by many companies, a customer will not haphazardly choose a supplier as a partner for their innovation efforts. In my experience it requires the following:

• Your current product supplies need to be QCD: top Quality at a competitive Cost with reliable Delivery. If you cannot meet this basic requirement, it is very unlikely that your customer will choose you as his or her partner.

• Proven technology market leadership. To reinforce your product leadership taking patents, participating in fairs and conventions, and publishing articles is very useful.

• Long term relationship. It is clear that the customer will only work with you if he can trust you to treat confidential information respectfully. While you might think that NDA offers the necessary protection there is always a strong one on one relationship needed of people that believe in innovation and cooperation. The NDA is then merely the formal expression of that relationship and trust.

Another challenge or issue is the time it can take to develop and commercialize the innovation. This is governed by the application itself and the customer’s testing and approval procedures. Unfortunately, the tire (reinforcement) industry has proven to be very slow in this regard. With customers that have a very strong brand reputation, it can be incredibly slow, and here we are easily talking about years! In this context and in order not to lose even more time, it is crucial that a rigorous stage-gate process is followed during the project. Taking shortcuts in this process will usually lead to failure and set you back for months if not years. The conclusion is that endurance, patience and systematic project management are your best chances.

Finally, very few customers will want to commit to a single supplier situation. This needs to be considered and discussed early on and can be solved through licenses or partnerships with other suppliers.

1.2. Internal customers

Internal innovation should be driven by the company’s own strategy to reduce the cost of quality (rejects, scrap, …), the cost of manufacturing (cash cost, productivity,…) and capital employed (investment and working capital).

As with working with external customers the first step is to do a thorough VOIC (Voice Of the Internal Customer) and not to rely on pure technology!

Internal innovation projects are many times very rewarding since they tend to be faster and yield visible and tangible results. A good balanced project portfolio contains a minimum of 50 percent internal innovation projects

2. Technology

In an industry that thrives on technologically advanced solutions (such as tire reinforcement) it is obvious that technology is key in bringing innovative solutions to the market.

Technology is the complex interaction between Product x Process x Equipment. If you have the scale to have the three in-house, this is definitely a strong (competitive) advantage. However, you have to be clear in what you consider as your core technology. This comes from answering the question “which (process) technology gives my company a competitive advantage in the marketplace?” While the easy and very often heard answer is “all of it”, this will result in a lack of focus and resources (people). So it is crucial to do an honest and in-depth exercise to determine your two or three core technologies and allocate the resources for it in the long term. Developments in non-core technologies need to be found with other parties.

Once a new technology (product, process, equipment) is developed, the next challenge is to get it introduced into the plant(s). A good practice is to do the first implementation in a ‘mother’ or ‘key learning plant’. This is a plant that has the necessary experience and (extra) resources to support this implementation together with the people from ‘central’ technology. It is very important that this plant has a KPI related to this development work so it gets recognised for this ‘extra’ work.

3. People

“It’s all about people” is one of my key beliefs and nothing can be truer when dealing with innovation, especially external innovation with customers. In working with customers you need the right blend of technical, commercial and interaction skills.

Since we are mostly talking about technical solutions, it is obvious that we require technical and application knowledge. But to get the most value for your innovation you need commercial skills and market knowledge. Interaction skills are needed to continuously check your value proposition with the voice of the customer. In my experience, the most successful people were ‘groomed’ in technology and acquired their commercial and interaction skills through training, exposure and mentoring by more senior people.

How do you recognise and reward people working in innovation projects? When the project is successful, there is not much discussion, but what if the project fails for (unforeseen) scientific or commercial reasons? The only way out is to consider not only the result but also the approach and way of working. A project that has been executed systematically with a good interaction with other people (external and internal) should be recognised as well! This approach will keep people challenged and above all not scared away from working on higher-risk projects.

4. Conclusion

It is extremely difficult to manage innovation from idea generation to successful market implementation. It is necessary to play very skilfully the dimensions of the customer, technology and people. The above suggestions and experiences in no way give the full answer to this complex question, but what remains unmistaken true is: “it is never as simple as it looks” and “it’s all about people.”

Patrick De Keyzer

Partner, DeKep