WoodDigest.com |

I don’t get to spend much time at home these days, but in early June I attended a three-day national brand development workshop in Madison, Wis.. On the final day of the event, one attendee told the group that her company’s board had undertaken serious cost cutting measures in response to the continuing decline in revenue. Deep personnel and spending cuts included her department — research and development. The cuts took their toll. “We put the ‘no’ in innovation,” she declared with passion. For the past three weeks, the words have replayed in my head.

For those of you who are reading me for the first time, I am not simply a passive, impartial commentator. A longtime working member of the wood industry, I am currently the CEO of PremierGarage, a national garage enhancement franchisor and manufacturer of cabinetry and flooring systems. As a business leader, I frequently wrestle with how to differentiate and grow. Certainly, innovation is essential to either.

PRODUCT INNOVATION?

Merriam-Webster’s Dictionary defines innovation as “the introduction of something new, or a new idea or device,” while Wikipedia refers to it as “a new way of doing something.” For the wood products manufacturers, it would seem our work on innovation has focused mainly incremental product enhancements. Compared to other industries, the wood industry, particularly the residential furniture and cabinetry sectors, is lacking the real product innovation seen in other segments, such as consumer electronics. While arguably the opportunity for breakthrough innovations of wood product may be limited, a walk through any local residential furniture store will testify to what little progress has been made in the area of design.

Similarly, while companies have made continuous investments in manufacturing technologies, these investments, for the most part, have not produced substantial improvements in the performance of the products, markets or the financial performance of industry companies. With most manufacturers using the same machines, materials and software producing undifferentiated products, we have maintained industry parity within our own borders; achieving a sort of industrial “keeping-up-with-the-Jones.” Clearly the industry has not innovated to the extent necessary to maintain its competitive fitness.

The loss of industry companies to offshore producers, the lowest revenue productivity within the manufacturing sector, and declining shipment revenue per dollar of payroll demonstrate the industry’s lack of meaningful innovation. (See “When Ignorance Isn’t Bliss,” Wood Digest, October 2008.) Without innovation, what will become of the industry?

So what’s the problem? The answer is always the same … leadership. Wood industry owners, executives and managers have failed to move beyond making and selling “stuff,” building buildings, buying the latest technology, and pushing their own biases onto staff, marketers and customers alike. Why? Because leaders don’t know the people who are buying (and especially not buying) the things they buy! Indeed, it is industry leadership that is putting the no in innovation.

Innovation has moved well beyond the realm of product into the nonproduct experience. Here I am referring to not just service, but to the realm of personal experience and deeper emotional connections buyers make with the brands they consume. Harley-Davidson owners don’t buy Harleys because they are the most reliable motorcycle, but because they associate themselves with the rebel image of the Harley brand. Harley has captured two generations of owners not because it innovated on the product side, but primarily because it recognized the nonproduct attachment that owners had to the brand. Harley Davidson innovated in marketing the brand.

Even the really great product innovators like Apple recognize the importance of making an emotional connection to customers. It is true that the iPhone and iPod are exceptionally innovative products, yet their success is closely tied to Apple’s ability to create a close emotional bond to its customers.

Nike, whose brand promises not to make better athletic shoes, but to make their customers better athletes, has collaborated with Apple to integrate a micro chip embedded in the Nike+ running shoe with the Apple’s iPod Nano Sport Kit. The runner’s performance data collected in the chip is transmitted to the Nano, and eventually uploaded to a user’s website hosted by Nike (www.insidenikerunning.nike.com). Nike’s user community has become so strongly engaged that on Aug. 31, 2008, the Nike+ Human Race posted global participation of nearly 800,000 runners from 142 countries. As of this writing Nike+ members have logged over 137 million running miles!

Nike, Apple and Harley-Davidson have created products that their customers aspire to own, not just because they are a pleasure to use, but more importantly because of how the owners feel when they use them. In all cases, these companies and their products are improving the emotional as well as physical quality of their customers. The customers’ loyalty to these brands is undeniable.

So, how will the wood industry innovate? While superior products and services are a given, real innovation will not occur when driven by ideas created within our four walls without deep understanding of what is really important to our customers. Moving our industry from survival to growth and prosperity will depend on our ability to create new perspectives on innovation.