by Adam Hartung | Aug 6, 2015 | In the Rapids, Innovation, Leadership, Web/Tech
Would you like to triple your revenue next year? And have plans to keep tripling it – or more – every year into the future?
Of course you would. But is your business positioned for such explosive growth? Are you in growth markets, creating new products with new technologies that meet unmet needs and have the potential to completely change your business? Or are you stuck doing the same thing you’ve always done, a litle better, faster and cheaper in hopes you can just maintain your position?
If you’re constantly looking at your “core” markets and solutions, and you know those aren’t going to grow fast, what keeps you from changing to make your company a high growth winner?
First, most people don’t try. Leaders say it all the time, “I’m so busy running a business I don’t have time to chase rainbows. Sure technology is changing, but I don’t understand it, nor know how to use it. I’m better off investing in what I know than trying to chase trends.” That’s often followed by dragging out the old saw, usually attributed to Warren Buffet, of “don’t invest in what you don’t know – and I don’t know anything about trends.” The comfort, and ease, of repeating what you’ve always done allows lethargy to set in – so you keep doing more and more of what you’ve always done, over and again, hoping for a different result. It’s been attributed to Albert Einstein that such behavior is the very definition of insanity.
Everyone is busy. We live in a “culture of busy.” Years of layoffs and cost reductions have left most leaders simply struggling to keep up with making and selling last year’s solution. Constant busy-ness becomes a convenient excuse to not take the time to look at trends, evaluate new opportunities or consider doing things entirely differently. Busy, busy, busy – until someone knocks your business off its blocks and then you have all kinds of time on your hands.
For those who overcome these 2 built-in biases, the opportunities today are extra-ordinary. It is possible to slingshot into leadership positions with new solutions, literally from out of nowhere. If you take the time and try. Listen, and just do it – to steal from a popular ad campaign.
ikeGPS was started in 2003 as a government/military funded products research company. Focusing on the technology of lasers and cameras, they won contracts to develop and prototype new solutions with technology mostly buried in universities and labs. It was a good business, made money for the founders, and was intellectually stimulating. If not growing very fast or showing much potential of growing.
Eventually ikeGPS started making products with lasers and cameras for finding physical assets. This turned out to be quite beneficial for electric utilities, which have to maintain some 200,000 power poles in the U.S alone. EPC (Engineering, Procurement and Construction) companies like Black & Veatch, Bechtel. Burns & McDonel , FMC and Foster Wheeler had a need to find big physical things, then measure their size and location between each other and major points. For utility company suppliers like GE laser cameras for asset location were a handy, if slow growing business. Good, solid, reliable revenues, but not something that was going to create a $100M company.
So the Managing Director, Glenn Milnes, and Chief Marketing Officer, Jeff Ross, set about to see what they could do to become a $100M business. Not because anything in their history said they could do so. Rather because they wanted to make their company a bigger, faster growing and lot more valuable entity.
The first thing they identified was the trend to mobile devices. They noticed darn near everyone has one, and they were using them for all kinds of interesting things. There were thousands and thousands of apps, but none that really took advantage of the cameras to do much measuring, or integrated lasers. While they didn’t know anything about mobile operating systems, or much about the kinds of cameras in mobile phones or the software used for popular mobile camera uses – they could see a trend.
What if they could take their knowledge about lasers and cameras and figure out how to make mobile phones a lot more powerful? Could they apply what they knew into markets where they had no experience, using technologies with which they had no experience? Would it work, or waste their time? If it worked, what would they make? If they made something, who would buy it?
Despite these great questions, they wanted ikeGPS to grow, and they decided to take the cash flow from their solid, but low growth historical business and plow it into development of a new product. So they took to internal company brainstorming to see what they might do. And they came up with the very clever idea of making an add-on device that construction workers, like concrete installers, pavers, carpenters, masons and such, could use with their mobile phones to replace tape measures. Something that would be simple, easy to use, work with the phones in their pockets and be a lot more accurate than decades-old technology.
So they went to the lab and built it. They started design in October, 2013, and a year later they had a product ready to launch. – Spike! They took it to social media, Google adwords, all the low-cost ad tools available to small business today. They also went to industry trade shows, bought some ads in industry trade magazines and ads on industry specific sites. Things were OK, but it was a slow slog.
As they were preparing to launch Spike they thought, “why don’t we reach for outsiders to gain some input on this product. Let’s hear what others might have to say.” So they launched a Kickstarter campaign, offering investors the product to try. Via this route they gained the eyes and ears of early adopters.
This was when the surprise happened. The earliest adopters, and biggest fans of laser measuring via mobile devices weren’t in the construction business. They were signage companies. ikeGPS listened to their feedback, and realized they could tweek Spike to be very relevant for folks in signage. The made themselves accessible to these early adopters, and turned a few into fanatical loyalists.
With this early success, they began to downplay construction and seek signage companies. Across 2 months they placed about $20k (not millions, thousands) in ads in the 4 largest publishers to the signage industry. This led to on-line product sales, and smashing reviews.
So then they made overtures to the large franchisors of signage related shops – with retail names like Fast Sign, Sign-o-Rama, Alphagraphics, Speedy Sign, Sign World, etc — in companies like Franchise Services and Alliance Franchise. Within 6 months of launch they had stopped chasing construction customers and were full-tilt developing signage companies, to great success. Even sign supply companies llke Reece Sign saw the benefit of promoting (and even reselling) these new laser camera add-ons for mobile devices to stimulate sales and move sign design and creation into the 21st century.
After making this switch, they initial launch sold 1,200 units at $500/unit retail . But better yet, contracts for promotion and reselling has the company convinced they will blow far beyond their projection of 4,000 units in the first year.But they did not simply forget about construction. The idea was still sound, but clearly the market had not developed. So they asked themselves, “if we listened to sign guys and they told us what to do, could we listen to construction guys for advice?”
They pursued finding out more about construction, and learned the market was dominated by brand names. Few products were bought without a strong brand name – and most products are purchased through the very large home improvement chains such as Home Depot, Lowe’s, Menard’s and others. But that would be a nearly impossible task, at extremely high cost, for little ikeGPS. So they pursued finding a partner which knew the industry.
In early 2015 ideGPS announced that Stanley Black&Decker would brand and sell Spike via traditional retail. The product should be on shelves before the end of year, and substantial additional sales volumes are expected.
In 2013 100% of ikeGPS revenues were in their traditional government/military and utility markets with their bespoke device. In just one year they developed a mobile device, and launched it. In 2015 1/3 or more of their $10.5 estimated revenue will be from Spike, and they expect to at a minimum triple revenues in 2016. And they think that rate of growth is sustainable into future years.
ikeGPS shows that it IS possible to move beyond historical markets and create new products for break-out growth. You aren’t stuck in old businesses with no hope of growth. if you want to grow, and reap the rewards of growth, you can. You have to
- Want to do it
- Take time to do it
- Pay attention to trends, and support obvious trend growth
- Learn about new technologies and how you can apply them. Start with the trend technologies first, then see how to apply something new. Don’t start by trying to push what you know onto another platform. Be ethnocentric in product development, not egocentric.
- Brainstorm how to meet unmet needs
- Listen to early sales results, and go where the need is highest/selling is easiest
- Don’t forget to learn from what did not work, and see if you can overcome early weaknesses.
by Adam Hartung | Nov 28, 2014 | Current Affairs, Innovation, Leadership, Web/Tech
Last week I gave 1,000 VHS video tapes to Goodwill Industries. These had been accumulated through 30 years of home movie watching, including tapes purchased for entertaining my 3 children.
It was startling to realize how many of these I had bought, and also surprising to learn they were basically valueless. Not because the content was outdated, because many are still popular titles. But rather because today the content someone wants can be obtained from a streaming download off Amazon or Netflix more conveniently than dealing with these tapes and a mechanical media player.
It isn’t just a shift in technology that made those tapes obsolete. Rather, a major trend has shifted. We don’t really seek to “own” things any more. We’ve become a world of “renters.”
The choice between owning and renting has long been an option. We could rent video tapes, and DVDs. But even though we often did this, most Boomers also ended up buying lots of them. Boomers wanted to own things. Owning was almost always considered better than renting.
Boomers wanted to own their cars, and often more than one. Auto renting was only for business trips. Boomers wanted to own their houses, and often more than one. Why rent a summer home, when, if you could afford it, you could own one. Rent a boat? Wouldn’t it be better to own your own boat (even if you only use it 10 times/year?)
Now we think very, very differently. I haven’t watched a movie on any hard media in several years. When I find time for video entertainment, I simply download what I want, enjoy it and never think about it again. A movie library seems – well – unnecessary.
As a Boomer, there’s all those CDs, cassette tapes (yes, I have them) and even hundreds of vinyl records I own. Yet, I haven’t listened to any of them in years. It’s far easier to simply turn on Pandora or Spotify – or listen to a channel I’ve constructed on YouTube. I really don’t know why I continue to own those old media players, or the media.
Since the big real estate meltdown many people are finding home ownership to be not as good as renting. Why take such a huge risk, paying that mortgage, if you don’t have to?
That this is a trend is even clearer generationally. Younger people really don’t see the benefit of home ownership, not when it means taking on so much additional debt. Home ownership costs are so high that it means giving up a lot of other things. And what’s the benefit? Just to say you own your home?
Where Boomers couldn’t wait to own a car, young people are far less likely. Especially in, or near, urban areas. The cost of auto ownership, including maintenance, insurance and parking, becomes really expensive. Compared with renting a ZipCar for a few hours when you really need a car, ownership seems not only expensive, but a downright hassle.
And technology has followed this trend. Once we wanted to own a PC, and on that PC we wanted to own lots of data – including movies, pictures, books – anything that could be digitized. And we wanted to own software applications to capture, view, alter and display that data. The PC was something that fit the Boomer mindset of owning your technology.
But that is rapidly becoming superfluous. With a mobile device you can keep all your data in a cloud. Data you want to access regularly, or data you want to rent. There’s no reason to keep the data on your own hard drive when you can access it 24×7 everywhere with a mobile device.
And the same is true for acting on the data. Software as a service (SaaS) apps allow you to obtain a user license for $10-$20/user, or $.99, or sometimes free. Why spend $200 (or a lot more) for an application when you can accomplish your task by simply downloading a mobile app?
So I no longer want to own a VCR player (or DVD player for that matter) to clutter up my family room. And I no longer want to fill a closet with tapes or cased DVDs. Likewise, I no longer want to carry around a PC with all my data and applications. Instead, a small, easy to use mobile device will allow me to do almost everything I want.
It is this mega trend away from owning, and toward a simpler lifestyle, that will end the once enormous PC industry. When I can do all I really want to do on my connected device – and in fact often do more things because of those hundreds of thousands of apps – why would I accept the size, weight, complexity, failure problems and costs of the PC?
And, why would I want to own something like Microsoft Office? It is a huge set of applications which contain dozens (hundreds?) of functions I never use. Wouldn’t life be much simpler, easier and cheaper if I acquire the rights to use the functionality I need, when I need it?
There was a time I couldn’t imagine living without my media players, and those DVDs, CDs, tapes and records. But today, I’m giving lots of them away – basically for recycling. While we still use PCs for many things today, it is now easy to visualize a future where I use a PC about as often as I now use my DVD player.
In that world, what happens to Microsoft? Dell? Lenovo?
The implications of this are far-reaching for not only our personal lives, and personal technology suppliers, but for corporate IT. Once IT managed mainframes. Then server farms, networks and thousands of PCs. What will a company need an IT department to do if employees use their own mobile devices, across common networks, using apps that cost a few bucks and store files on secure clouds?
If corporate technology is reduced to just operating some “core” large functions like accounting, how big – or strategic – is IT? The “T” (technology) becomes irrelevant as people focus on gathering and analyzing information. But that’s not been the historical training for IT employees.
Further, if Salesforce.com showed us that even big corporations can manage something as critical as their customer information in a SaaS environment on mobile devices, is it not possible to imagine accounting and supply chain being handled the same way? If so, what role will IT have at all?
The trend toward renting rather than owning is monumental. It affects every business. But in an ironic twist of fate, it may dramatically reduce the focus on IT that has been so critical for the Boomer generation.
by Adam Hartung | Sep 25, 2012 | Disruptions, In the Rapids, Innovation, Leadership, Transparency, Web/Tech
I like writing about tech companies, such as Apple and Facebook, because they show how fast you can apply innovation and grow – whether it is technology, business process or new best practices. But many people aren't in the tech industry, and think innovation applies a lot less to them.
Whoa there cowboy, innovation is important to you too!
Few industries are as mired in outdated practices and slow to adopt technology than construction. Whether times are good, or not, contractors and tradespeople generally do things the way they've been done for decades. Even customers like to see bids where the practices are traditional and time-worn, often eschewing innovations simply because they like the status quo.
Skanska, a $19B construction firm headquarted in Stockholm, Sweden with $6B of U.S. revenue managed from the New York regional HQ refused to accept this. When Bill Flemming, President of the Building Group recognized that construction industry productivity had not improved for 40 years, he reckoned that perhaps the weak market wasn't going to get better if he just waited for the economy to improve. He was sure that field-based ideas could allow Skanska to be better than competitors, and open new revenue sources.
Skanska USA CEO Mike McNally agreed instantly. In 2009 he brought together his management team to see if they would buy into investing in innovation. He met the usual objections
- We're too busy
- I have too much on my plate
- Business is already too difficult, I don't need something new
- Customers aren't asking for it, they want lower prices
- Who's going to pay for it? My budget is already too thin!
But, he also recognized that nobody said "this is crazy." Everyone knew there were good things happening in the organization, but the learning wasn't being replicated across projects to create any leverage. Ideas were too often tried once, then dropped, or not really tried in earnest. Mike and Bill intuitively believed innovation would be a game changer. As he discussed implementing innovation with his team he came to saying "If Apple can do this, we can too!"
Even though this wasn't a Sweden (or headquarters) based project, Mike decided to create a dedicated innovation group, with its own leader and an initial budget of $500K – about .5% of the Building Group total overhead.
The team started with a Director of innovation, plus a staff of 2. They were given the white space to find field based ideas that would work, and push them. Then build a process for identifying field innovations, testing them, investing and implementing. From the outset they envisaged a "grant" program where HQ would provide field-based teams with money to test, develop and create roll-out processes for innovations.
Key to success was finding the right first project. And quickly the team knew they had one in one of their initial field projects called Digital Resource Center, which could be used at all construction sites. This low-cost, rugged PC-based product allowed sub-contractors around the site to view plans and all documentation relevant for their part of the project without having to make frequent trips back to the central construction trailer.
This saved a lot of time for them, and for Skanska, helping keep the project moving quickly with less time wasted talking. And at a few thousand dollars per station, the payback was literally measured in days. Other projects were quick to adopt this "no-brainer." And soon Skanska was not only seeing faster project completion, but subcontractors willing to bake in better performance on their bids knowing they would be able to track work and identify key information on these field-based rugged PCs.
As Skanska's Innovation Group started making grants for additional projects they set up a process for receiving, reviewing and making grants. They decided to have a Skansa project leader on each grant, with local Skansa support. But also each grant would team with a local university which would use student and faculty to help with planning, development, implementation and generate return-on-investment analysis to demonstrate the innovation's efficacy. This allowed Skansa to bring in outside expertise for better project development and implementation, while also managing cost effectively.
With less than 2 years of Innovation Group effort, Skanska has now invested $1.5M in field-based projects. The focus has been on low-cost productivity improvements, rather than high-cost, big bets. Changing the game in construction is a process of winning through lots of innovations that prove themselves to customers and suppliers rather than trying to change a skeptical group overnight. Payback has been almost immediate for each grant, with ROI literally in the hundreds of percent.
You likely never heard of Skanska, despite its size. And that's because its in the business of building bridges, subway stations and other massive projects that we see, but know little about. They are in an industry known for its lack of innovation, and brute-force approach to getting things done.
But the leadership team at Skanska is proving that anyone can apply innovation for high rates of return. They
- understood that industry trends were soft, and they needed to change if they wanted to thrive.
- recognized that the best ideas for innovation would not come from customers, but rather from scanning the horizon for new ideas and then figuring out how to implement themselves
- weren't afraid to try doing something new. Even if the customer wasn't asking for it
- created a dedicated team (and it didn't have to be large) operating in white space, focused on identifying innovations, reviewing them, funding them and bringing in outside resources to help the projects succeed
In addition to growing its traditional business, Skanska is now something of a tech company. It sells its Digital Resource stations, making money directly off its innovation. And its iSite Monitor for monitoring environmental conditions on sensitive products, and pushing results to Skanska project leaders as well as clients in real time with an app on their iPhones, is also now a commercial product.
So, what are you waiting on? You'll never grow, or make returns, like Apple if you don't start innovating. Take some lessons from Skanska and you just might be a lot more successful.
