How business leaders use innovative approaches to shape their strategies. Tyco International’s view on the Innovation Imperative: An interview with Ms. Marilee Harris, Director of Marketing, Digital Security Controls Ltd. (Tyco International). Ms. Harris argues that innovation leadership is about knowing your customer base, what their needs and wants are, and being prepared to engage them with new products and technologies.
What does it take to innovate? The majority of executives say it involves achieving technological leadership, global presence and a comprehensive portfolio of patents that will enable the company to help define the major trends regarding products, systems and services, and to offer its customers important added value. They say it helps to cut costs, increase sales and achieve higher earnings. But how does one come up with new solutions, and can innovations really be part of a strategy plan? Arcus’ multi-industry survey of senior executives found that of all the challenges companies face in this area, the biggest challenge is finding ways to create a “climate for innovation”.
As Arcus research indicates that to do so, you need to be surrounded by highly talented people, and you need to find a way to transmit your passion to them, so they will buy into your vision of the future, perform at the highest possible levels, and come up with innovative solutions to the challenges of achieving the vision. No surprise, then, that the topic of innovation has been gaining ground as CEOs seek to incorporate concepts like “a culture of innovation” into their assessments of a company’s long-term value.
What is the biggest challenge with innovation?
Ms. Harris: My feeling about innovation is that it is all about the culture of a company. You can’t keep the lights on in a business that is technology-based unless you innovate. You can’t survive because technology enables rapid development and immediate change and early obsolescence. Unless you have the business process to continually upgrade, modify, release and change your product offering, the lights will go out because somebody else will beat you to it. I think it’s a basic commercial critical success factor. Coming from a technology-manufacturing environment, one of the largest challenges is lead-time.
The lead-time in developing technology-based products can be multiple, multiple months, because of regulations. There are approval bodies that can force the need for change to product design. They actually force some innovation because one must respond to regulatory and policy requirements such as the ROHS in Europe. There is also “green” pressure on energy requirements – requirements that began in California but pushed to the rest of the U.S.—and standards of Best Practices if you’re doing projection, as we do, in China. There are a lot of variables that force you to innovate in order to continue to provide a product to meet your market needs. You have to have the capability to be able to respond to those changes very quickly.
As an example of how green requirements drive innovation, consider a change that started in California and eventually became a U.S. wide mandated change. There was a compliancy change in the actual transformer—the plug that you use for small appliances. We use that plug for small appliances to charge some of our keypads in the intrusion-free business. We had to make a very quick change to respond to that, otherwise our business would have been shut down; we would not have been able to ship the transformer that we were using into the U.S. That threw the industry for a loop, but we were one of the first to be ready with a new transformer to meet the new specs.
“Marketplaces dictate the need to be innovative; it’s not an intellectual exercise. It’s a financial exercise.”
What are your thoughts on innovation in Canadian companies today?
Ms. Harris: I don’t think any country has “enough” innovation. I think it would be naive to say that there’s ever enough. However, I think that in all likelihood, as in any other topic to do with Canada, we are probably much better than we give ourselves credit for. We have a very conservative mindset culturally and commercially, so even though there’s room for more, we probably do not appreciate how much innovation we already do have.
How have you seen innovation translated into tangible results?
Ms. Harris: The big data point that we really measure is directly related to innovation. It used to take, in a productive mode, thirty-six months from design to launch of a new product in the intrusion business here. It’s a long wait time. Innovative products take a long time to specify, a long time to design, and a long time obtaining the regulatory approvals out of all the government bodies in all of the countries you want to do business in. It can take up to six months to get approval in one country; thirty-six months was a pretty good standard to get new product out the door with our global launch in 2005. In 2008, we were able to go from concept to market in eighteen months. We are launching fourteen products in April 2009 that we’re going to get out the door in less than twelve months. We’ve taken it from thirty-six months to twelve months.
How do you relate innovation to consumer expectations?
Ms. Harris: Because we are a technology-based business, the markets demand continually improves, changes and enhances products. Marketplaces dictate the need to be innovative; it’s not an intellectual exercise. It’s a financial exercise. It comes down to knowing your customer base. Because our organization serves multiple cultures, multiple countries, multiple regulations, multiple technologies, multiple products, we have the unique benefit of understanding different market demands and different customer demands at a level that most companies and most employers just never get a chance to see.
Keep in mind that innovation is not just what the competition is doing, because that’s kind of old news. You have to be looking forward, and you do that not knowing what your competition is going to be doing; the only direction you can take is what the market tells you they need. You don’t dictate to the market; the market dictates to you. I’ll tell you how we measure customer satisfaction: it’s about the units we ship out the door and the orders we take coming in—because if customers don’t like what we’re doing they’ll just buy from somebody else. In the end, a company can have the best qualitative report in the world but it’s ultimately about the orders going out.
How has the recent economic environment changed your company’s attitude to innovation?
Ms. Harris: You cannot survive in a technology-based manufacturing business unless you do two things: first you innovate. Parallel to that, you take the cost out of what you innovated yesterday. As far as how the current economic climate is impacting us from an innovation point of view, we always manage cost; we have to manage cost and we, like any business in this environment, don’t know for certain what tomorrow is going to hold. So, we are managing cost and we are managing cost in parallel aggression to what the financial markets are dictating. There is one area where we are not cutting back any investment, and that is in R&D. We will cut everything before we will take any reduction in our engineering and product development. It is absolutely priority number one and it is receiving no cuts. We, like any business, need to manage our cost relative to our top line revenue, to deliver our bottom line commitments. We have targets that we have to hit for cost reduction; it’s a principle and a practice of our business.
Do you see a difference worldwide in terms of the pace of innovation and the expectation around customer benefits and product performance? Or do you think one size fits all?
Ms. Harris: One size definitely does not fit all, and the only size that matters is the one the customer wants to buy! The fact of the matter is that we work with our customers to identify feature benefits and requirements and do competitive surveys, like any business would do. However, we have to do it for stakeholders in over a hundred countries. We offer three brands. Two of those brands have very different technology platforms and customers that are comfortable with one but not the other platform. The feature requirements are similar in some situations and very unique in others. The true innovation skill is in developing a common platform on which you can add features cost-effectively. I wouldn’t say that this involves trying to understand what the lowest common denominator is — but that’s part of being cost effective, to be able to fund innovation. And it works for us. We measure everything in this business—we have data for everything and we’re breaking all standards of achievement on quality and reliability and performance. We are almost at a Six Sigma Standard.
What would your advice be to CEOs on the topic of innovation?
Ms. Harris: Do what your market wants you to do, and do it as quickly and cost-effectively as possible. Make what your customer wants; don’t just sell what you have.
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