Greg Booth protects and diversifies Zippo’s billion-dollar brand so it’s no match for the competitionWritten by Jayne Gest
After more than 10 years as president and CEO of Zippo Manufacturing Co., Greg Booth is still amazed by the product’s brand recognition.
In many places, there’s 90 percent brand awareness. When Japanese consumers were asked to name top American brands, their first responses were Coke, McDonald’s, Nike and Zippo.
“Prior to coming to work at Zippo, I worked for two large companies — a $2 billion and a $10 billion corporation — and on a regular and ongoing basis we worked hard to build our brand and increase brand awareness, and so forth,” Booth says. “And we were very successful in the category. But to get to the level of brand awareness that Zippo enjoys, that is Herculean at best.
“In the oil industry, if we had 25, 30, 35 percent brand awareness in a market, we were thrilled, and just wouldn’t think of spending the next umpteen-million to get to a level of 60 or 70 percent.”
Two of Zippo’s biggest challenges, however, stem from its name recognition — maintaining a strong presence in more than 160 countries while trying to diversify into new products.
Here’s how Booth and Zippo’s employees — 610 at Zippo and 300 at W.R. Case and Sons Cutlery Co. — are keeping the 82-year-old company growing today.
Protecting the brand
Hard work, determination and luck brought global success, and now Booth says the company’s No. 1 challenge is maintaining or protecting its brand.
“And I find it unfortunate, quite frankly, that we have to spend the time, the money and the energy we do just to protect something we already own,” Booth says.
“But trademark owners recognize that if you don’t aggressively protect your brand, you always stand a chance of losing it or having it diluted by others using all or a portion of your name.”
Booth, and owner George B. Duke, grandson of Zippo’s founder, fight an ongoing battle to protect Zippo’s name and shape. It’s something that comes across Booth’s desk weekly.
“Counterfeiters and knock-off artists build products that resemble ours and sell them either with our brand name on them, pure counterfeits, or sell them using as much of our trade dress as they possibly can to pass it off as a Zippo lighter,” Booth says.
The company employs people who spend nearly all of their time surfing the Web for trademark infringers. It also spends time lobbying in China and Washington, D.C.
Luckily, the fight has become easier, Booth says. China, now part of the World Trade Organization, is developing its own brands, thus getting a better feel for the plight of trademark owners.
Along with trademark registrations, Zippo has shape registration in about 60 countries. Booth says shape registration is difficult to obtain because other lighter manufacturers block them, saying that they make that shape, too.
“The brand is what’s worth all the money, not the metal we bend and the lighters we make. It’s Zippo — the trademark is worth who knows how much. We say the billion-dollar trademark. But that’s what you have to protect, and protect aggressively — and sometimes your hair gets grayer as a result of those kinds of battles,” he says.
Zippo’s business has grown nearly 60 percent in the past 10 years. More than 90 percent of its business is still lighters and fuel, even though tobacco-related products are declining.
Part of that is because of global sales — nearly 60 percent of Zippo’s sales are offshore. Zippo has only been in China since 1993, but that market is already about 40 percent the size of its U.S. market.
The other factor is becoming more of a lifestyle product.
When creating products in your brand family or category, or even when creating a new brand, Booth says you need to stay relevant with whoever your target audience may be.
When Booth first became CEO, the average age of a lighter buyer was 44 or 45 and rising, giving them an identity problem with younger generations.
“Most brands want to at least influence young people or people early in their lives so they continue to buy the brand later in life,” Booth says.
A 21-year-old who buys a pocket lighter now may purchase a candle lighter at 45.
But if you want to be relevant to a younger target audience, the execution is critical, he says. You want to talk to them how they want to be spoken to, socializing with them where they live, which today is via social media.
“We talk to them all the time,” Booth says. “We tell them what we’re doing, where we’re going, why we’re doing it.
“You want to be in their face electronically. You want to be involved with something that means something to them, something they enjoy.
“So, we’re involved in music — Live Nation for example,” he says. “We’ll sponsor 100 to 150 concerts around the country each year, and we have the Zippo booth and the Zippo people and everybody there, so the fans know who is sponsoring it.”
Another strategy is being conscious of what makes a lighter worth collecting. Several years ago, Zippo went to the Art Institute of Pittsburgh and asked students to create art to put on lighters. It was so successful Zippo now sponsors contests for student artists to create relevant art for products.
All that effort has paid-off. Today, the average age of a lighter buyer is in their mid-30s.
Launching new products
When Booth saw the buying trends in the tobacco category 10 years ago, the company started working on developing new products.
The strength of the brand name, however, has worked against the company. Booth says the more mature the market, the more challenging it is.
“So, in our oldest market, the good ol’ U.S., it’s harder to diversify because when you say to consumers, ‘What would you think about buying a hand warmer from Zippo?’ sometimes the reaction is: ‘You mean the guys that make lighters? Why would I buy a hand warmer from those guys?’
“If we do the same thing in a less mature market like Japan or China, consumers far more easily grasp the concept and accept the new products because they haven’t been tied to Zippo, the cigarette lighter, for 80 years,” Booth says.
It’s also a challenge coming into channels already crowded with competition. Booth says you have to get retailers on board with putting the product on shelf space that already has velocity and profit.
To keep from stretching its brand into something it shouldn’t, Booth says Zippo does a mountain of consumer research.
“Research is a monumental first step. You have to find what your brand will support by way of a product,” he says. “I’m sure there are 20 different things that we could go out and try to do that wouldn’t be very successful. But if we stay in the flame category, and categories or products that are normally lifestyle-related, the research we’ve done tells us we should do reasonably well.”
Stretching the brand led to a misstep a few years ago, when Zippo bought an Italian leather purse company called Zippo — for the trademark.
Zippo, unsuccessfully, tried to run the business for five or six years. There was a lack of good management, and Zippo just didn’t know enough about women’s leather purses. Booth says they ultimately discovered that Zippo purses weren’t fashion at all, but rather purses that women carried to work.
But research is just the first step. It also takes the right sales force, the right channel of distribution, the right public relations and media, and the correct level of dollar support, while not trying to launch too many new products at once.
“You have to be committed, and I think the other thing you have to be — other than well-organized and smart — you have to be incredibly patient,” Booth says.
Even with the challenges, Booth is excited about growing into more of a lifestyle brand, launching products in the outdoor recreational camper and patio categories. Zippo is looking to add grills and stoves to hand warmers, fire starters and lanterns in the coming months.
“We do these new product development sessions and come up with these potential products for market. We have a potential portfolio of products that could take us out five or six years, but you can’t do it all at once,” he says. “So, we do a couple here and a couple there, because it’s a handful getting them launched, and they are pricey when you build them from scratch.
“Yes, there’s lots of excitement and lots of opportunity as we’re going in a lifestyle direction,” Booth says. “But thank heavens Zippo lighters continue to sell in phenomenal volumes.” ●
- Aggressively protect your brand so others don’t dilute it.
- Stay relevant with your target audience by relating to them.
- Research thoroughly before launching new products.
The Booth File:
Name: Greg Booth
Title: President and CEO
Company: Zippo Manufacturing Co.
Born: Bradford, Pa.
Education: Bachelor’s degree in biology and chemistry from the Indiana University of Pennsylvania.
What was your first job and what did you learn from it? I was a paperboy for the Bradford Era, way back when. I was probably 13, 14 or something like that. I had to walk about a mile and a half to pick up the papers and start the route, and the route took another hour or hour and 15 minutes. I did that before I went to school.
You have to get up and go do the paper route no matter how bad you feel, or how good or bad the weather is. You have a responsibility to deliver these papers — I think at the time I had about 110 customers. You just had to get up.
What is the best business advice you ever received? One thing I was either told or learned over the years is that no matter who you work for or around — no matter what you think of the individual — if you listen and pay attention, you’re probably going to learn something from everybody. I remember in one case, I learned what not to do.
If you pay attention and are open-minded, you can learn something every day from your environment or the people you work around.
Do you have a favorite Zippo lighter? It’s a pink lighter that I carry in my pocket all the time. It’s one of our pink powder-coated lighters that has a beautiful picture of my daughter on it, who I tragically lost in a car accident five years ago.
- The original Zippo windproof lighters cost $1.95. A similar lighter today retails for $15 to $16. The design has remained virtually unchanged.
- The Bradford factory produces 50,000 lighters a day.
- In 2012, Zippo produced its 500 millionth lighter.
- The original 1947 Zippo Car, customized for $25,000, traveled to all 48 states in the 1950s. When Zippo looked to restore the car prior to its 50th anniversary, however, it had disappeared without a trace. Despite a PR campaign asking “Have you seen this car?” Zippo had to buy a second Chrysler, customizing it to look exactly like the original.
- During World War II, Zippo dedicated all manufacturing to the U.S. military; this was a significant catalyst to establishing Zippo as an American icon.
- There are approximately 4 million Zippo collectors in the U.S. and 11 collectors clubs worldwide. The highest amount paid for a Zippo lighter was $37,000 for an original 1933 model.
- There are more than 288,000 Zippo-related videos on YouTube, and 600,000 fans on Facebook. More than 22 million people have downloaded the Zippo smartphone app.
- The Zippo lighter has been featured in more than 1,500 movies, stage plays and television shows.
Learn more about the Zippo Manufacturing Co. at:
How to reach: Zippo Manufacturing Co., (814) 368-2700 or www.zippo.com
Rocketing to success: 4moms' Rob Daley and Henry Thorne manage rapid growth while keeping the culture that got them thereWritten by Jayne Gest
In 2004, two friends — Henry Thorne, a world-leading roboticist, and Rob Daley, a successful businessman — discovered over lunch they shared a vision for the type of company they each wanted to build that would foster creativity, collaboration and loyalty.
Rather than working alone, the two teamed up to take advantage of their complimentary skills and backgrounds, with Thorne as CTO and Daley as CEO.
“We also knew there were only two ways to make it as an entrepreneur: create a new market or change an existing one,” Daley says. “With its steadily decreasing price, electronics were both cheap and powerful for the first time ever (known as Moore’s Law) and could be used as a change agent to completely redefine an industry.
“We decided to focus our efforts on the plumbing industry, a field that had not significantly changed since the introduction of copper pipes after World War II,” he says.
The two built a showerhead demo that used behind-the-scenes electronics to control the exact temperature of the water. Daley says they took the prototype to the Pittsburgh Home Show, expecting a wave of excitement from tech-savvy men.
That wasn’t the case.
“Elderly women living alone loved the product because it was a tool that could help them maintain their independence, and mothers wanted something similar for the bathtub so their children would be safe and comfortable while bathing,” Daley says.
“After researching both elder care and juvenile products, we determined the juvenile product industry presented the most appealing opportunity, and the spout cover — 4moms’ first product — was born.”
Officially established in 2006 under the parent company Thorley Industries LLC, 4moms has experienced rapid growth in recent years. Sales were close to $30 million in 2013, and are projected to hit $60 million and $100 million in each of the next two years.
Here’s how Daley and Thorne got their company off the ground and are now focusing on identifying the right people, partners and systems to scale the business as it grows.
Entering the market with solutions
Usually, in a static market, like the juvenile products industry, incumbents win, Daley says. But by effecting change, companies can successfully enter the market.
4moms was built on the philosophy that the future of robotics lies in taking abstract or expensive technology and making it practical for ordinary use.
It also gives the company an impetus for creative growth because parenting can always be just a little easier, and technology consistently gets faster, lighter and less expensive.
In the company’s first focus group of mothers, the group explored juvenile product pain points, providing valuable insight that led to product creation.
“People don’t buy products. They buy solutions, and robotics helps us provide those solutions,” Daley says.
One way to become more innovative with product development, in any industry, Daley says, is to first minimize the scope. Then, work hard to get the job done right, while continuing to improve it.
Along those lines, 4moms is introducing new products similar to existing, successful products. For example, in January, 4moms launched rockaRoo®, a baby swing that rocks like a rocking horse. It’s a companion product to the existing mamaRoo®, an infant seat with five motions that mimic a parent comforting his or her baby.
Later this year, the company also will launch a lightweight version of its popular origami® stroller.
Managing growth through the right culture
With success has come rapid growth. The company secured more than $40 million in strategic funding. It also projects 300 percent revenue growth over the next three years, driven by increased demand for current and new products.
In addition, the team is adding U.S. retailers and is poised to secure several more international partners. Current retail channels include more than 500 U.S. stores and distributors in more than 40 countries.
Daley says it’s important to make sure you have good people to handle the rapid growth.
“Culture is everything,” Thorne adds.
A focus on innovation, passion and people should help ensure the company doesn’t lose its way while undergoing exponential growth, Daley says.
By fostering creativity, collaboration and loyalty, while offering opportunities for growth and encouraging employees to develop their own ideas, he says you can create a successful company culture.
Some values they want to keep in mind:
- Never let fear of failure limit your creativity, and be open to change whenever good ideas present themselves.
- If you’re passionate about what you do, that will inspire passion in others.
- Treat people like they are your most important assets, because that’s what they are.
In addition, some specific ways that directly contribute to employee happiness and retention include company lunches, new employee retrospectives, leadership development, team member reviews, monthly team “Lunch & Learns” and more.
The company also put together an e-book called “Vision and Values,” which serves as a reminder to the team about what makes 4moms a great place to work.
“We have resisted putting words to things like our mission and our values and our culture. We’re either innovative or we’re not. We’re either a great place to work or we’re not. Anyone can write platitudes but writing them doesn’t make them true,” the introduction states. “However as we grow, it’s important that we don’t lose our way.”
Then, in the 68-page e-book, some of the 113 employees contributed in their own words what 4moms means to them.
“As founders and active leaders at 4moms, we are focused on building a great company that cares about more than just financial success,” Daley says. ●
How to reach: 4moms, (888) 614-6667 or www.4moms.com
Improve performance, optimize efficiency and deliver value. That’s what employers are always under pressure to do. What many employers do not realize is that an integrated approach to safety and health can play a major role in creating healthier, high-performing workforces.
“Employers can have a major influence on the health and care behaviors of employees,” says Dr. Michael Parkinson, senior medical director for health and productivity at UPMC Health Plan. “Employers have a major role to play in both improving health and reducing health-related costs.”
Smart Business spoke with Parkinson about how to best improve employee health and productivity and reduce health costs.
What is the connection between employee health and company productivity?
Growing competitive and economic forces increasingly challenge employers and leaders of all organizations. A core asset of any organization is the health and productivity of its workforce, its ‘human capital.’ And as visible leaders, employers can influence their employees. It makes sense to provide an integrated, incentivized strategy to address the core drivers of poor health, excessive medical costs and lost productivity. Healthier employees are safer employees, and healthy, alert employees reinforce properly designed workplaces and safety policies.
By following an integrated and incentivized strategy that addresses the core drivers of poor health, excessive medical costs and lost productivity, employers not only improve the health and care behaviors of employees and their families but also add dollars to both their top and bottom line.
Total health management is increasingly being recognized as a business necessity, not a ‘nice to do.’
What’s the first step?
Building a culture of health, performance and productivity has been shown to be a critical determinant of the health and competitiveness of any business.
A comprehensive assessment of environmental drivers of health and productivity is an essential first step to determine an organization’s strengths and needs. The work environment is not just the traditional physical workplace, but also attitudes, behavior policies, compensation schedules and promotion opportunities.
Creating simple, reinforcing messages in corporate vision, compensation, and promotion and benefit alignment sends the message that employee and family health is core to the organization’s success.
How can healthy behaviors be improved?
Assisting employers to create the infrastructure to sustain health, wellness and productivity is a key responsibility of a health plan. A health plan can help sustain health and productivity through consultation, educational support, benefit alignment, and the creation of a wellness committee to initiate and sustain wellness efforts.
The recognition and rewarding of healthy employee champions is a key leadership message, along with making it known that the employer wants to assist employees and their families in achieving health goals.
By offering employees a health plan with appropriately designed and communicated incentives, employers have an evidence-based method to improve behavior change and increase employee engagement. Account-based, consumer-directed plans with additional targeted incentives for health improvement and care management decisions increase employee engagement and produce health care costs savings.
What results can an employer expect from an integrated and incentivized strategy?
The majority of the known causes of excessive health care and productivity costs — stress and mental health, absenteeism, short- and long-term disability, workers’ compensation, occupationally-related illness and injuries — can be addressed by an employer using a comprehensive and integrated strategy supported by targeted tactics, programs and practices.
By improving the health status of employees (and their families), by assisting them to get involved in their medical care decisions with their doctors and by directly targeting specific ineffective and inefficient medical practices and delivery modalities, both the employer and the employee can improve health and produce savings. ●
Insights Health Care is brought to you by UPMC Health Plan
A commercial interior design firm works to help companies find a space that’s an effective setting for their operational and aesthetic needs, and tailors its services to best suit specific client goals. For example, one client may be relocating because of growth, another wants to reflect its rebranding throughout a new office, and another is downsizing operations and needs a cost-effective relocation solution. Design firms help clients such as these achieve their goals while saving them money, time and hassle along the way.
Smart Business spoke with Sam McWilliams, managing partner at SMC Consulting, LLC, to learn more about effective office relocation and design.
What are some ways to ensure a space suits a company’s needs?
A designer uses programming to learn about a company and its needs. He or she will spend a day at your office talking with management and employees to understand what is and isn’t working, then develop a space plan that will maximize efficiencies and increase productivity.
Another aspect of programming is learning about the company’s desired image and work to reflect that in its office look and design. Companies can effectively market themselves by injecting their brand image into their physical space. This can be achieved by using logo colors within the space or by finding ways to highlight the company’s products and services through imagery and design. If your space welcomes the public, then it should remain consistent with your brand promise and image.
How can a design firm help during relocation or construction?
A professional designer can help you get the most out of your rentable square footage by doing ‘test-fits’ in several buildings. This will help determine which building gives you the most usable square footage while comparing rentable cost per square foot rates.
Once a site is chosen, third-party oversight becomes an extremely valuable service to clients. Having a project manager represent you on a construction or relocation project ensures quality, cost control and that schedules are kept.
Weekly project update meetings will keep you informed and assured that the project is running smoothly. Project managers will keep control of the schedule, providing sufficient time for long-lead items and ensuring all the elements are in place and tasks are completed when they should be.
What needs to be done with the former location upon leaving?
First, know when your current lease termination date is and plan accordingly to avoid penalties. The more lead-time you have, the better project costs and schedules are controlled.
Next, avoid unexpected costs by reading and understanding the termination requirements in the lease. Some leases require that the building be restored to its original condition, which may require demolition, construction, data cable removal, etc. Some leases only require a cleaning after all assets have been removed. A relocation manager can provide assistance in the building closeout process.
What are ways a company can minimize the impact of a move on employees?
Companies should provide perks when relocating farther from ‘home’ because the risk of losing good talent is possible. Offset additional travel costs by offering free or reduced parking fees, public transportation discounts, or institute a flextime or a compressed workweek schedule. You can also identify area day care facilities and other personal services that are important to your employees before you announce the new location.
How can companies minimize operational interruptions when relocating?
Relocation managers take the hassle out of a physical move, whether it’s a multi-phase move, consolidating multiple offices into one or a single-phase move over a weekend. Let them get you from point A to point B with little or no downtime.
Choose a design firm that can build an in-house team of designers, furniture planners, project managers and relocation experts. Firms that provide one point of contact, with all the resources at hand, makes the entire process seamless, which enables clients to focus on their core business. ●
Insights Facilities is brought to you by SMC Consulting, LLC
Whether you love it, hate it or are still “on the fence,” the implementation of health care reform is in full swing.
“While escalating health care costs have long been a concern of employers who desire to offer a quality, competitive employee benefits package to their workforce, health care reform has presented even more challenges in terms of changing legislation, compliance issues and requirements,” says Ron Smuch, insurance and benefits analyst at JRG Advisors. “The business decisions that employers face today are more complex and require educated consideration and guidance.”
Consumerism, however, is a strategy often overlooked by employers in their efforts to keep health care costs down.
Smart Business spoke with Smuch about how to better manage health plan costs by promoting consumerism strategies.
How does consumerism help with costs?
Employees who make smarter, more cost-effective health care decisions have a positive impact on health care costs for themselves and for their company. Many employees simply underestimate the value of asking questions, researching health care options and taking a more active role in their health care purchasing.
What does it mean to engage employees to be wiser health care consumers?
Most people already practice ‘consumerism’ with purchases they make. Individuals will dissect a newspaper or magazine in search of coupons that will save them 50 cents. Yet when it comes to health care, which is a more complex and costly service, rarely do they ask questions or even consider other options that could save money.
How can you get started?
Making more conscientious health care decisions starts with educating employees on how their health insurance plan works. They need to know what is covered and what is not, and which providers or facilities to use to receive the most cost-effective, quality outcomes-based care.
Employees should be educated to ask their doctor questions such as: ‘How much does the treatment cost? Is there another option that is equally effective but less costly? What are the risks or side effects?’
Another area to educate employees is about prescription drugs. Surprisingly, many people mistakenly think that there is a difference between generic and brand name prescription drugs. They are unaware that the difference lies in the drug name and, yes, you guessed it, the cost.
How can making wise choices extend to emergency room use?
A trip to the emergency room is one of the most expensive types of outpatient care. Emergency rooms should only be used for true emergencies, as they are staffed, equipped and best suited for medical emergencies. Going to an emergency room for non-emergency care is a poor use of health benefits and is very costly.
Consumers should consider using an urgent care facility to assist with non-emergent care needs. For example, if you have a cold or unidentifiable rash that needs attention sooner than waiting through the weekend to see your general practitioner, consider going to an urgent care facility.
What’s the best way to create and implement a strategy that engages employees?
While these are just a few examples of wise health care purchasing, companies need to choose an advisor who can properly review its workforce demographics, utilization, trends, risks and rewards to create the consumerism strategy that is engaging, measureable to objectives and effective in achieving established goals.
Today’s health care landscape requires a consultative approach and commitment to strategic planning, expertise, innovation and technology. Companies should partner with an advisor who takes a proactive approach to educating employees about consumerism strategies. Through the use of employee communications, fliers, posters and payroll stuffers, employees can be educated to make wiser health care decisions and in turn become smarter health care consumers.
At the end of the day, quantifying the overall plan cost savings and improving employee health is the best and most rewarding engagement tool for employers and their employees. ●
Insights Employee Benefits is brought to you by JRG Advisors
After careful planning to refresh company strategy, a major financial services company set aggressive objectives for the coming year. The executive team aimed to create a consistently outstanding customer experience across every access point.
Leaders resolved to hire a new chief service officer, broaden the roles of field personnel to “quarterback” the service experience across product lines, shift to a customer-centric culture and provide technology that integrated customer support across all portals.
In addition to setting clear annual targets for revenue lift, share-by-region and so on, leaders developed a tactical action plan with aggressive, but reasonable, quarterly milestones to monitor progress.
By the end of the third quarter, the picture was already clear. They were achieving the action plan milestones, but not the results targets.
Why? The answer is that the company had not implemented changes in actual, daily behavior to underpin its tactical moves.
Field personnel were still operating within their specific areas of product expertise despite new job descriptions, training and processes. Service centers and branch offices were still providing conflicting advice to customers despite new technology to provide common information.
There was little evidence that the culture was changing, despite a well-intended corporate communications campaign.
Beyond checklist management
Most organizations start their fiscal year with annual goals and execution plans. But only the best apply consistent practices that maximize their ability to deliver year after year.
Highly effective leaders venture beyond “checklist management” (completing one-and-done project milestones) and focus instead on essential, week-to-week practices that foster high-impact behaviors — behaviors that ultimately drive new and better results.
As you think about your own readiness to achieve your annual plan this year, ask yourself:
- When your employees walked into work today, could a majority tell you the specific, new behaviors that will achieve the new results targets you are accountable for this year?
- Are they performing these behaviors consistently and consistently well?
- Are they performing the new behaviors because they want to, or because they feel they have to?
It’s not enough to have clear annual targets or even aligned organizational changes.
Your annual planning must specifically examine the following: Which of our annual objectives are especially challenging and, of these, which require significant behavior change that is not likely to happen without special focus?
With the financial services company, executives could have devoted time to ask whose behavior — and what behavior — most directly impacts the daily customer experience. Further, what specific and direct behavior change plans would immediately accelerate this essential component of its success?
Companies who emphasize executive and employee behavior in their annual planning are surprised at the results. They routinely meet and exceed their most audacious goals, achieving historic revenue growth, unprecedented levels of cost reduction, record reliability and quality measures, industry-best safety records and industry awards for customer excellence.
It all starts with understanding that the right tactics get you started, but breakthrough results require new and different practices underneath it all — a behavior breakthrough, if you will.
As you commence your 2014 plan deployment, be sure to consider: Are you ready to fully execute the plan, including encouraging and sustaining the new behavior that you need to achieve new results? Are you sure? ●
Steve Jacobs is a chairman and senior partner at CLG Inc., a business management consultancy that advises executives on how to achieve new performance, culture change and lasting competitive advantage through the principles of applied behavioral science. He is also the lead author of “The Behavior Breakthrough — Leading Your Organization to a New Competitive Advantage” and can be reached at firstname.lastname@example.org. For more information, visit www.behaviorbreakthrough.com or www.clg.com.
The lifeblood of business growth is innovation — but knowing this is the easy part. It’s a whole other ballgame to actually drive innovation within your organization on a consistent basis.
Your company could suffer if you’re the only one who comes up with the next big idea. Smart leaders build organizations that think for themselves with the right people and channels to spark ideas.
In order to move your organization to the next level, here’s some tips from Pittsburgh business leaders who drew on their teams’ full potential to find new ways to enhance processes, procedures and products.
1. Use internal and external channels
Nicholas DeIuliis, president of Consol Energy Inc., looks inside and outside his industry to bring the best innovation to the forefront of the company’s operations.
Consol Energy Inc. is a more than $6 billion, publicly-owned producer of coal and natural gas and one of the leading diversified energy companies in the U.S. DeIuliis and Consol have been focused on new technologies, new energies and, above all else, staying one of the leading producers in its region.
“There are two broad groups I look to over time for help and insight,” DeIuliis says. “One is the management team that we work with and around. They’re the best and brightest in the industry. Getting that comfort level and that trust level with the exchange of ideas and thoughts as time goes on is the lifeblood of any successful organization.”
The other group DeIuliis looks at is almost the mirror image of his leadership team. He looks toward entities and individuals with insights and experiences outside the industries Consol works within.
“It’s amazing how many already established processes, technologies and concepts are out there in entirely different industries that are being viewed as innovations and ground-breakers with the coal, natural gas and fossil fuel industry that we operate in,” he says.
“Every time we tend to look outside our box and outside our industries, we always come away with an injection of innovation that keeps us going.”
2. Focus your R&D
Bill Byham, chairman and CEO of Development Dimensions International Inc., places so much energy into the company’s research and development the problem isn’t a lack of good ideas, but more ideas than he knows what to do with.
So, the DDI management team works to narrow the options for the company, which is a leader in talent management, leadership development, hiring and talent acquisition.
“We have a series of meetings to cut them out and usually it’s not hard to get it down to eight,” Byham says. “But then to get it down to two or three new projects is tougher. R&D to us is brand new, game-changing products or a big change in what we’re doing.”
He looks at R&D as a 50/50 balance between customer suggestions and being able to develop products out in front of clients before they know they want it.
“We do a lot of customer surveys. We’re out with our customers a lot and they’ll say, ‘We want a training program on this.’” Byham says. “However, I think it was Steve Jobs who said, ‘If you only give your customers what they ask for, you’ll always be behind.’
“What I’ve always noticed is you have to be out in front of the customer because sometimes it takes us several years to develop these things.”
In addition, the R&D process isn’t just about finding the next new product, but also devoting effort to keeping well-performing, existing products up-to-date.
“The more products you have, the more it costs you to keep the old products good,” Byham says. “The ratio for us is around 60 to 70 percent old products and 30 to 40 percent new. You have to look at the sales of the old product. If you’re still going up with the old product, you will want to keep investing in it.”
3. Place a well-informed bet
Early in BodyMedia Inc.’s growth, the company struggled with a lack of focus, waiting for the market to tell it where the best place was. CEO Christine Robins, however, says that with an early-to-market technology, you have to create the need — and place a bet.
“If you’re running a company, you’re making decisions every day that have risk,” Robins says. “But if you’re running a smaller company, you’ve got to place a bet and it’s got to be a focused and well-informed bet. Then you have to go with it and be willing to listen to the reactions of people and figure out how to be a continual learner.
“You have to get a product or service built that satisfies your hypothesis of the market and who you’re going after, build your messaging and get it to market to get real feedback. You can iterate in an office and give your opinions until you’re blue in the face, but if you don’t put it out in the real world and it doesn’t sell, it doesn’t matter what you think.”
But it wasn’t just a clear focus for the product that launched BodyMedia into growth mode. Once the company turned to the consumer market, it had to turn its attention toward making the product more functional and attractive in terms of design. This ultimately increased sales volumes and led to San Francisco-based Jawbone acquiring the company in 2013.
4. Watch marketplace trends
Flemming Bjøernslev, president and CEO of Lanxess Corp., has found that the company’s production and product base is extremely quick with regard to innovation, technology and the right ideas to make new products that will propel the company.
He couldn’t decide where to focus the company moving forward, however, without listening to what was happening globally.
“First, you have to listen to your customers,” he says. “Secondly, make sure that you assess the entire value chain. You want to make sure that you reach out and listen to the customers of your customers. You want to make sure that you’re integrated in the right manner in order to cost-effectively and profit-effectively cater your products to the market.
“You have to make sure that you read the signs of your time, meaning the trends in the marketplace. You have to live in a global world. Today, it would be very risky to only focus on the U.S. or North American markets.”
5. Get the right talent
Fred Potthoff, co-founder and co-owner of Kroff Inc. attributes the company’s success — more than 80 employees in eight different businesses under the Kroff name with annual revenue of more than $50 million — to finding the right talent.
In fact, each of the leading water and wastewater treatment and recycling services company’s businesses started with ideas from sales associates.
“Aside from the original company, my partner and I didn’t come up with any of the other ideas,” Potthoff says. “It was people in our organization coming to us, and us listening to them and running with that idea.”
When Potthoff interviews candidates, he is interested in trying to spark that kind of enthusiasm and interest in the company.
“It doesn’t mean that everybody who comes here is going to run their own company, but it’s part of our culture,” he says. “People who fit in well here think that way and look for opportunities.”
And one way to encourage those true difference makers is to do a good job of listening to ideas.
“It’s one thing to give lip service to somebody, but if somebody comes to you with a good, creative idea, you can’t summarily dismiss it because maybe you tried it before or it seems a little harebrained,” Potthoff says. “You have to be willing to listen and trust the people, and if you think it’s a great idea, be willing to move and invest in it. When you do that, the culture responds to it.”
6. Leverage the region’s strengths
Charles Bunch, chairman and CEO of PPG Industries Inc., says the founders of Pittsburgh Plate Glass were attracted to the Pittsburgh region because of the coal supply needed as an energy source, the sand and mineral resources, and the river transportation system that were critical for the manufacturing and sales of those first plate glass products.
Today, the region has different strengths to offer.
The Pittsburgh region has some of the best educational institutions and hospital systems in the country, and as a result, research and development is more than $3 billion of the local economy, Bunch says.
“This is clearly a home for innovation here in the Pittsburgh region,” he says. “Big business provides technology, innovation and support to many of these smaller businesses, leading to a healthier overall ecology for growth. And now we’re creating that environment here in our region.”
Organizations like the Allegheny Conference, which are dedicated to improving economic growth, are in a unique position to build on these strengths for the betterment of the region.
Bunch says they can help employers by marketing the region globally and supporting existing business with venture capital funds to support the success of entrepreneurs and startup companies.
7. Break assumptions
MARC USA, a full-service advertising firm, has a history of doing things differently and bringing innovation to the industry. Behind Michele Fabrizi, president and CEO, the company even created an off-the-wall word to describe its unique capabilities.
“We’re using breakthrough research techniques and new technologies to drive innovation every day,” Fabrizi says.
“At MARC we say what we do is a word we made up because there is no word for what we do. It’s called ‘wezog’ and it’s how we think. It’s what we expect from our people. It’s a critical component of our long-term client relationships. It means doing things the way they haven’t been done before — thinking outside the box.”
The firm builds successful brands and drives sales through its creativity, insights and technology.
“It’s really about not doing things the way they’ve been done before, being highly collaborative with clients and finding ideas to break assumptions and challenge conventions,” Fabrizi says. “This is the kind of thinking that really helps brands strive in good times and in bad times.” ●
A mathematical approach: RMU professors built predictive modeling tools to help place natural gas stationsWritten by SBN Staff
It’s a moment of panic for drivers: You suddenly notice the warning light on your fuel gauge, but you don’t know when it came on or how close you are to the nearest gas station.
Now, imagine you drive a compressed or liquefied natural gas-powered vehicle. The Pittsburgh region, for example, has only five natural gas fueling stations. That scarcity is a barrier to more people adopting cleaner, more fuel-efficient natural gas vehicles that could also reduce dependence on foreign oil.
Three professors at Robert Morris University have developed a mathematical model that determines the optimal locations for natural gas fueling stations in Pittsburgh, based on existing traffic flow and traffic density. The paper, authored by Tony Kerzmann, assistant professor of mechanical engineering; Gavin Buxton, associate professor of physics; and Jonathan Preisser, assistant professor of mathematics, predicts the optimal locations for up to 128 fueling stations in Pittsburgh. The paper is being published in the journal Sustainable Energy Technology and Assessments.
A step toward energy independence
According to the U.S. Department of Energy’s Alternative Fuels Data Center, 14.8 million natural gas vehicles operate worldwide but only 112,000, including buses and trucks, operate in the United States.
Yet as the RMU professors note in their paper, while the U.S. imports 45 percent of its total petroleum consumption, the nation produces nearly 90 percent of the natural gas it consumes.
“A transportation sector dominated by natural gas vehicles would provide a huge step toward energy independence, but this is not the only advantage of natural gas vehicles,” the authors write. “Natural gas vehicles significantly lower carbon monoxide, nitrogen oxide, non-methane hydrocarbon, particulate matter and greenhouse gas emissions.”
Taking a look at the model
As a first pass, the authors considered the total vehicle miles traveled through each location as the numerical variable with which to optimize the distribution of natural gas fueling stations. The fueling stations are treated in the model as wandering around, trying to find the regions with the higher numerical variable.
The computer model finds the optimum locations for a large number of natural gas fueling stations simultaneously, while penalizing the overlapping of natural fueling station locations — fueling stations that are close enough to one another that potential customers will be divided, and use both.
However, the numerical variable used to optimize the distribution of natural gas fueling stations is at present too crude. The authors, therefore, are looking at the socioeconomic factors that might make a given location a sound investment for placing a natural gas fueling station.
“Say you are BP and you wanted to change some of your existing gas stations to supply natural gas. Our computer program could tell you where to distribute the natural gas stations that would make the most sense, that would increase the likelihood of customers switching over to natural gas vehicles,” Buxton says.
The typical customer of a natural gas-powered vehicle might prefer to see natural gas fueling stations near his or her neighborhood, where he or she is likely to be refueling his or her vehicle, than in areas of high vehicle traffic. Therefore, while vehicle miles traveled through a given location may be an important variable, it is not the only variable to consider.
The number of residents in a given neighborhood might influence the decision of where to place a natural gas fueling station, along with the average household income — with customers from more affluent neighborhoods being more likely to purchase a new vehicle.
Furthermore, the typical political persuasion within a neighborhood might also influence the customers’ likelihood to purchase a natural gas-powered vehicle. For example, might it be possible to consider the type of customers that are more likely to buy a more environmentally-friendly vehicle, or a vehicle that reduces our dependence on foreign fuel?
The presence of existing gasoline fueling stations that could be converted to also provide natural gas refueling capabilities would be another influencing factor. For example, currently no gas stations are located in downtown Pittsburgh, making the Golden Triangle an unlikely destination for natural gas fueling stations.
However, it’s important to remember that ultimately a robust network of natural gas fueling stations could ease the transition to even cleaner hydrogen fuels. The infrastructure that we invest in now to transition to natural gas-powered vehicles is the same infrastructure required to store and transport hydrogen for hydrogen-fueled vehicles. ●
Natural gas basics
Natural gas is an odorless, nontoxic, gaseous mixture of hydrocarbons — predominantly methane. Because of the gaseous nature of this fuel, when stored onboard a vehicle, it must be in either a compressed gaseous (CNG) or liquefied (LNG) state. Both CNG and LNG are clean burning, domestically produced, relatively low priced and widely available for fuel vehicles.
› There are three types of natural gas vehicles:
- Dedicated vehicles are designed to run only on natural gas.
- Bi-fuel vehicles have two separate fueling systems that enable them to run on either natural gas or gasoline.
- Dual-fuel vehicles, traditionally limited to heavy-duty applications, have fuel systems that run on natural gas and use diesel fuel for ignition assistance
› Natural gas accounts for about a quarter of the energy used in the United States.
› About one-third goes to residential and commercial uses, such as heating and cooking; one-third to industrial uses; and one-third to electric power production.
› Only about one-tenth of 1 percent is used for transportation fuel.
Source: Alternative Fuels Data Center, part of the U.S. Department of Energy’s Clean Cities program
As a CEO, I met with many strategic suppliers during performance review meetings, contract negotiation meetings and social events. During negotiation meetings, I had one simple question: What makes you unique and why should we buy from you — and not your competitors?
That was a destabilizing question for many salespeople. They were caught unprepared and could not articulate their true differentiation in a clear fashion.
I got some of the usual answers: “We have been around for 50 years.” “We have had a good relationship with your buyers for more than 10 years.” “Because we provide good value to your business.”
The reality is that many firms do not clearly know their true differentiation. Most of the times, they confuse “true” differentiators to win business, with “must-have” elements to stay in business or “nice-to-have” components to be in business.
Taking a tried and true idea
The concept of differentiation is not new. Edward Chamberlin originally proposed it in his 1933 Theory of Monopolistic Competition.
His definition is: “In economics and marketing, product differentiation (or simply differentiation) is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This involves differentiating it from competitors’ products as well as a firm’s own products.”
Understanding your differentiation
So, differentiation is often the name of the game to win in business, but it is fairly difficult to create, extract, measure and communicate it. In engagements with clients, I coach them through the following process:
- Understand your true differentiation internally. Hold brainstorming sessions with key employee groups within your organization to identify “nice-to-haves,” “must-haves” and “true” differentiators of your business model. Most often, you will identify only two to three true differentiators.
- Align all internal stakeholders around this understanding. Identify internal gaps in intended versus perceived differentiation among various employee groups. Create one understanding across the entire organization.
- Validate true differentiation with customers and prospects. Conduct an internal assessment on how customers perceive you as well as informal customer interviews about the elements of differentiation. You also can do a formal win/loss deal analysis with your prospects and existing accounts for the past year.
- Modulate internal perceptions of differentiation and adjust value communication. Peter Drucker said, “The customer rarely buys what the business thinks it is selling him.” Aligning internally intended differentiation with externally perceived differentiation is a must. What really matters is what customers perceive you do well for them, so your value communication plan has to reflect that.
- Train all commercial staff on the perceived dimensions of value and differentiation. Conduct specific training on your true differentiation so employees can believe in it fully. Have them memorize a value elevator speech that clearly states the most important dimensions of your differentiation. This will boost their value selling capabilities.
- Start over and never accept the status quo. Value and differentiation perceptions evolve with time. Conduct this process every year. Never get complacent about what you do well. Competitors are watching you.
If you claim to be differentiated versus your competitors, it is essential to understand the nature and degree of your differentiation. It is equally important that you communicate your differentiated customer value proposition to your salespeople. Then they will have a clear answer, the next time a CEO asks, “What makes you special?” ●
Stephan Liozu is the founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation, pricing and value management. He earned his doctorate in management from Case Western Reserve University and can be reached at email@example.com. For more information, visit www.stephanliozu.com.