Sustaining Genuine Ingenuity - Building Innovation into Product and Strategy Development in a Mature Business

Summary from the Front End of Innovation Conference in Boston, May 2007.

Brunswick is the second oldest company listed on the NYSE. It employs 28,000 people 26 countries. It markets marine, fitness, bowling and billiards products under 64 brands manufactured on every continent in the world.

McCoy admitted that nobody needs Brunswick products. “If we can’t do something special, we’re not going to sell it. The business began with billiard balls. When you start off making stuff out of wood, it isn’t going to keep you in business for a long time.”

The company expanded into back bars (1890), rubber tires (1919), first rubber toilet seat (1921), phonographs and cabinets (1920), records (1922), a rubber bowling ball (1906), automatic bowling pin setter (1956), fiberglass boats (1963,) engines (1963), and air hockey tables 1964). We keep reinventing ourselves.

The 2001economic slowdown saw declining stock price and disastrous sales. Brunswick had lost contact with customers and dealers. Boats overloaded with features had pushed themselves out of the sweet spot of the market segments Brunswick had previously dominated.

A shift in focus was essential. The position they sought was to become more genuine and innovative. Senior management made a fresh commitment to developing and delivering meaningful and innovative products.

The new strategy: Coordinate and improve fragmented innovation initiatives to deliver the right products at the best prices, and to attract and retain talent.

Design thinking forced a reassessment of the marketplace needs. Innovation for innovation’s sake was a wasted and costly effort. A long list of patents didn’t earn a nickel. The focus was shifted to innovation and technology around consumer need, not filtered through execs or guesswork.

A common structure and language were needed to create a new process to innovate new products and match them to the appropriate technology. Leadership realized that inventive minds needed a structured environment with room to be creative. Cycle times would be less predictable. Flexibility was essential to explore promising ideas. Experimentation and iterative loops would be needed to match new technologies to each product. Innovation is not as easily defined as product development.

Senior management had to buy into new processes and be comfortable accepting short term risk to achieve long term market advantage. The change would require common product development processes, additional training, integrated thinking, questioning existing business processes, acquisition of or creation of new skills and acceptance of risk as an inherent element of the new culture. Integrated thinking is the hard part. Without common systems and common language there is not integrated thinking.

The Bayliner boat brand was one turnaround example. Listening to dealers and customers, the need was clearly defined: To create a boat that could pull 2 skiers, hold 4 passengers, hit a top speed of 40mph, retail for under $10k and provide an 18% margin for dealers. It had to reach the market within 12 months.

After assessing resources, obstacles, processes and options, they converted a cabinet plant in Mexico to build the new boat. Retraining was necessary to redirect local talent. The result successfully killed the competitor in that market segment.

The next goal was more ambitious – take the fear out of docking – a common obstacle for many boaters. Current, wind, boat size and dock space all make docking tricky and potentially dangerous. The goal was to change dynamic and make it simple. Design thinking was applied to engine technology, creating independent forward and rear thrust, integration of GPS and controls.

Create a system a 12-year old with 12 minutes of instruction could guide a 42’ boat into the dock.

Control was converted from a steering wheel to a joystick. Precision maneuvering with sports car performance and additional visibility during acceleration were all linked into a radically different solutions.

The next goal was to bring the same superior docking maneuverability to smaller, stern drive boats. Brunswick owned 72% of that market. A concept boat demonstrated capability at the 2007 Miami Boat Show. The revolution in maneuverability permitted 360 turns, 90 degree side thrust docking. This will be available to the public in December 2007.

The next goal was to move these innovations into the shaft drive models. These were days of discomfort for traditional engineers at Brunswick. Everyone was not on board with the direction, culture change that valued change over tradition, experimentation over best practices.

Management had to referee meetings. The results led to reassignment of some and elimination others. The results also produced exceptional comptetive advantage.

Once the culture recognized the potential and payoff of innovation, sites were turned to the e xercise machines division. These can be an incredibly boring activity. People use headphones, magazines and TV to occupy their time. Health club ownerships cited member retention as the greatest problem. Integration of exercise and entertainment was an intersection worth investigating.

The goal: Make the experience personally customizable, relevant and interesting. Add LCD screens, integrate a selection of images and environments from running tracks to mountain terrain with video and audio or iPod connectivity with customizable playlists. Permit insertion of custom workouts through USB flash memory with trainer-created routines and tracking ability for trainer review after the workout.

Conclusions: Design by executive will always lead to failure. Listen to customers (dealers and end users). Listen to young people. If they’ve done their work, they’ll find innovations. Innovation is the key to the CEO’s arsenal. Innovation requires nurturing and feeding. Failures must be acceptable. Processes are important. People have to understand how it works and steps to bring to market. Focus is a necessity. Think broadly – product innovation alone is not enough.

Questions:

How do you assess the value of proposed innovations? Look at the potential return. Move past concept and into commercialization. The process includes product managers, cross functional integrated thinking, marketing, technology and distribution. Phase 1 assesses the real market need and definition of market size. Phase 2 focuses on filling the pipeline so the only real restraint is capital. The right innovations are the ones with the longest term impact. (See Guido Petit presentation.)

Brunswick did not limit itself to technology or capabilities it already had. It outsourced as needed to acquire skills, technological expertise, integration, etc. If memory sticks can integrate training routines they may also transport maintenance or user activity data. Think in terms of systems and integration (See Bill Buxton presentation.)

Was there resistence to the Introduction of new processes? Yes - somewhere in the neighborhood of 99%. Communication of the commitment of senior leadership set the tone for how the company would transform was critical to conversion of the entire workforce. Leadership brought people in to question, understand and develop new processes. This was a signal to the entire organization of the seriousness of the situation. It was not superficial, but cultural. Brunswick sought internal thought leaders and communicators - all young. It was hell for the first few months. Leadership brought in teams to understand processes. They did not look for plug ins, but for genuine processes that fit the need and the organization. In the end, it didn’t really change all that much. The entire organization was part of the process of changing processes.

Leadership made it their mission to be the disciples. They attended all meetings and managed the bottlenecks.

How did you retain experienced people? It was not automatic. Some experienced people couldn’t adapt. Leadership was open and direct. If can’t change, you can’t stay. Some left. The transition was not perfect. The company took some hits in marketplace. In some cases, failure drove the process change deeper to survive.

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