Mark Reynoso could hear the rumble approaching on the horizon, and he knew it spelled trouble for Belkin International Inc. Competition was growing fierce in the consumer electronics industry and if he didn’t act fast, he and his business were going to get run over.
Belkin launched as a seller of computer cables and surge protectors. But the business evolved into products that make electronic devices such as laptop computers, iPods and eReaders easier for consumers to use and easier to integrate with other devices.
As the calendar turned from the 1990s to 2000, the company of more than 1,000 employees found it wasn’t alone anymore in this realm. Belkin was facing more and more competition and Reynoso needed to respond to help his company stay ahead of the pack.
“We saw that the retail market, the shelf space that our products lived on, was becoming more competitive,” says Reynoso, the company’s president and CEO. “Not only were we competing against other brands like Belkin, but retailers began to develop their own private brands to compete with people like Belkin.”
Companies such as Best Buy and Circuit City were now in the market offering their own specialized electronic connectivity solutions. Reynoso feared that without quick action, his products were at risk of being moved to the back of the shelf or even getting bumped off completely.
“It became really clear that we needed to push our organization upstream in terms of our innovation capabilities to really continue to put ourselves in a space that was ahead of the commoditization curve so that we’re bringing new products to market and creating new categories that would allow our brand to maintain its relevance and strength,” Reynoso says.
“Our goal was not just to sustain our business; it was to grow and expand our business. The only way we would be able to do that was if we were bringing differentiated solutions to the market that people really cared about and that consumers loved.”
Make a commitment
Reynoso reached out to his people and explained the dire circumstances. He told them that they all needed to work harder to come up with new and innovative products that would excite consumers and help Belkin stand out from the competition.
The plea did not go over well with his employees.
“Initially what we discovered when we tried to inject this way of thinking into our business was that it was really hard to get it to take hold,” Reynoso says. “People were running their day-to-day businesses. It was hard to get them to change gears and change focus and begin to develop some of these new strategies.”
The response underscored the fact that the increased competition wasn’t due to a lack of effort from his employees. They were working hard and didn’t have much capacity to take on additional tasks.
“So then to say to somebody, ‘Hey, I want you to go kick off this new initiative because we’ve discovered a customer need,’ it would be really difficult to make that successful,” Reynoso says.
He had shown them that he understood the environment in which they were working and was willing to adapt that environment to make this new initiative possible.
“You have to have the conviction to stop doing certain things if you want to do new things,” Reynoso says. “One of the CEO’s primary responsibilities is to set priorities for an organization. Something is going to have to fall off the list. The biggest thing you can do is remove barriers.”
Innovation was desperately needed at Belkin. Reynoso knew he had the talent on hand to be innovative and develop new products that would excite consumers. It was time for him to give that talent a chance to blossom.
His idea was to create an entrepreneurial program in which selected leaders in the company would be given a chance to take an idea conceived by the consumer insights team and develop it into a great product for Belkin.
“Every company has their bureaucracies that are designed to make them more process-driven, efficient and effective,” Reynoso says. “Start-ups succeed in part because they don’t have any process. Everything is done pretty much in an ad hoc, entrepreneurial fashion. The best thing you can do for somebody in that situation is to put them in an environment that liberates them from a lot of the structures in your organization and truly gives them the freedom to be completely entrepreneurial.”
This program would solve a big problem for Reynoso. Employees chosen to take part in it would be freed from other responsibilities and given a chance to dedicate all their time to the new project. The excuse of not having enough time or resources would no longer be valid.
“We’re going to allow entrepreneurs within Belkin along the lines of this vision and future that we’ve talked about really push the needle of our innovation profile,” Reynoso says. “We’re going to fund those ideas, we’re going to fund those entrepreneurs and we’re going to allow them to work within our corporate development group. We’re going to cocoon or isolate them so that they can really focus in exclusively on nurturing their specific idea.”
Connect with your customer
With the framework of his entrepreneurial program in place, Reynoso needed a great idea to hand off to one of his fresh-faced entrepreneurs. A scan of the marketplace revealed that laptop computers might be a good place to start as they were becoming really popular, particularly for home users.
“We recognized that we were going to need to understand consumers’ needs and preferences in order to create new solutions or categories that would allow us to drive growth,” Reynoso says. “A real direct result of that discussion was our commitment to begin to disproportionately invest in and become experts in our consumer research and consumer insights.”
Reynoso made it clear to his employees that ideas would be given the opportunity to breathe and grow at Belkin. In order to do that and begin the entrepreneurial process, he and his consumer insights team had to identify an idea with great potential. He had to reach out to consumers and figure out what would get them excited.
If he was lucky, the team would stumble upon an idea that consumers didn’t even know they needed.
“That’s really the gold mine for us,” Reynoso says. “It’s a need that a consumer can’t articulate because we’re solving a problem that they didn’t know they had. When we’re mining for unarticulated needs, you can’t ask them direct questions. You need to spend time understanding broadly how they live and how they use the product and the pain points they have with it.”
Whether you’re reaching out to people through a database of customers who have bought products from you or you’re flipping through the Rolodex on your desk, you need to get inside the heads of the people who use your products.
“If we’re learning about laptops, what do you love about your laptop?” Reynoso says. “How do you use your laptop? Where do you use your laptop? What is it you don’t like about how you use your laptop? The more data you gather in that respect, certain trends and themes will begin to emerge that will give you a hypothesis to begin to innovate around. That’s how you tackle unarticulated needs.
“It doesn’t need to be complicated. The key is less about the sophistication of the system versus the sincerity of the conviction to make it a priority for your business. What you need to figure out is the best way for you and your company to engage your customers.”
You’ve got to show customers that you’re genuinely interested in their feedback and that their responses will play a key role in the product decisions you make.
“Be really clear in communicating your sincerity of your objective of what you want to achieve,” Reynoso says. “Then make sure you listen and deliver. There’s nothing worse than taking up somebody’s time and then effectively ignoring their recommendations.”
It’s the kind of thing that will drive your customer to a competitor.
Through its commitment to intensive research, Belkin came up with an idea that Reynoso and the consumer research team believed laptop users would love.
Find the right person
It was now time to find someone to lead the initiative to develop a product related to laptop computers that would excite Belkin consumers and serve as a springboard to even more innovation.
“You have to identify a vision and you need to go make some quick wins so people can see that direction is a good direction,” Reynoso says. “When people see it, they’ll follow suit. It’s like Roger Bannister and the four-minute mile. Until somebody does it, it seems impossible. Then as soon as somebody does it, people can see that it’s real, it’s achievable and it’s possible. You have to go from something that appears to be not possible to something that was done so they can see that it can be repeated.”
In order to make the initiative a success, you need to think beyond just the technical expertise in whatever realm you’re asking this person to work in. You need to look at their ability to work in an entrepreneurial fashion.
“Somebody who is very structured, process and rules-driven is not somebody who you want in start-up environment,” Reynoso says. “There are people who thrive on innovation, thrive on the ups and downs and don’t require a tremendous amount of management to work through the hiccups that you’re inevitably going to have. They recognize it’s part and parcel of the path that needs to be taken.”
Use your HR team to identify people who have the personality and temperament to take on leadership roles.
“If your HR organization is focused on developing your people and caring about your people, usually that tends to be a correct recipe,” Reynoso says.
Once you put the person in place, you have to live up to your promise and your intent to let the person be a leader in developing the initiative.
“You can tell somebody, ‘Hey, we’re going to be supportive of you when you make mistakes or when there are failures,’” Reynoso says. “OK, great. But they are going to test it when it happens. They are going to want to see that when a failure occurs and there is a setback, you truly are willing to support them. We have a good track record of being able to say, ‘OK, you fell down. Pick yourself up, dust yourself off and move forward.’ Don’t nickel and dime them.”
You should also understand that any plan is likely to go through changes and perhaps even complete transformations over the course of development.
“I don’t recall what the initial assumptions and expectations were for the laptop at home business when we initially put together the business plan,” Reynoso says. “But I can promise you what ended up being successful was only half of what we originally wrote down. We just had to give our leader the freedom and the empowerment to go to make mistakes.”
What Belkin came up with was the Cush Top, a product that would help laptop computers keep their legs cool while using their computers.
“It’s an ergonomic, comfortable laptop stand that you put on your lap whether you are in your bedroom or your living room or wherever you are,” Reynoso says. “That was one example of innovation driven through consumer insights that was a huge home run for us.”
The work also produced a product called Home Base that would connect computers, printers and any other USB device in your home. Consumer research discovered that connectivity was a big issue for many people.
“Collectively, those insights drove our laptop at home initiative that basically allowed us to create a new business that is now in excess of $100 million,” Reynoso says. “Had we tried to drive that through our existing businesses, it probably would have failed because everybody was so busy with everything else they were doing. That dynamic is more true now than it was seven or eight years ago.”
How to reach: Belkin International Inc., (310) 751-5100 or www.belkin.com
The Reynoso File
Born: Addis Ababa, Ethiopia
Education: Bachelor of arts degree, law and society, University of California, Santa Barbara
Who has been the biggest influence on your life?
My parents. They just really taught their kids to understand what right and wrong was and tried to make sure they behaved accordingly. Just a real ethic, a moral grounding was what they brought to us.
Reynoso on making the right personnel choice: You don’t want to pick somebody who is doing really well and put them in a job where they struggle because now you’ve made two big mistakes. You’ve taken somebody who was successful and made whatever they were doing less successful because you pulled them out of that.
Then the initiative you wanted to do is now not going to be successful because you put somebody in there who isn’t going to be successful. And now you’ve got an employee who was feeling really good about themselves being successful who is now struggling. It’s a real disaster in that respect. You just want to be really careful you don’t misalign opportunities with roles.
What one person would like to have a conversation with?
Nelson Mandela. For somebody to go through the life that he did, to be imprisoned by his own country because of the color of his own skin, to be willing to struggle for freedom and to then embrace the society that imprisoned you and lead that country as he did out of apartheid, it requires a depth of a person that is really hard to understand. He would be an incredible individual to be able to spend some time with.