Category: Sustainable Management System

Innovation

In Favor of Incremental Innovation

It’s becoming more and more apparent in today’s marketplace – regardless of industry – that innovation is critical to long-term success and business sustainability. The question becomes, particularly for those companies in the commodity industry, where do we even start?

Longtime practitioners of innovation, of which there are many, know well that building a company that has a true portfolio of promising ideas to tap into is quite a challenging task. Such a portfolio needs to include initiatives that represent different levels of company risk and return, ranging from what Harvard Business School professor Clayton Christensen calls “incremental” innovations—tweaks to an existing product or service—to “disruptive” innovations—changes in strategy with the potential to transform markets or business models.

Might I suggest that your business begins with considering incremental innovation – doing so won’t cause you to take on overwhelming initiatives but will instead focus on improving what you already do best. In the world of utility poles, incremental innovation might focus on how to maximize the performance of a utility pole product line. For example, consider what modifications could be made in order to limit growth of vegetation around the pole, or how to make the poles better equipped to handle broadband and Wi-Fi connectivity in pockets that are underserved in this regard.

Leverage the product you have and find a way to make it even more useful.  Consider your products and/or services and ponder the following:

  • What is the main benefit of the product or service that I currently provide? What are the necessary benefits I must deliver on and what could provide even greater value?
  • What major customer problems or unmet needs exist that today remain unexplored?
  • What is my product’s life cycle? Within that lifecycle, where can things improve that may positively impact my business and perhaps my customer?
  • What trends seem to be of interest in my industry and complementary industries?
  • When is the last time I have implemented any kind of change or improvement to my business processes or product?

Innovation, and the integration of it in your business, doesn’t need to be a blackhole of uncertainty – it can start with what you are already doing, just finding a way to do it better.  Ask yourself these questions and consider how you can make incremental changes that can make a larger impact in the long-term.  Learn more about effectively implementing innovation within your organization here.

Appreciating How Innovators Think

Did you know it’s estimated that there are over 150 million utility poles in use in the United States today— nearly one utility pole for every two people? The bulk of them (at least 60 percent) have been standing where they are for over thirty years, having been installed during the massive build-out of suburbia that occurred in the decades following World War II.

Utility poles are everywhere – you pass them every day.  But most people, at least the ones I know, don’t think about things like: How long has that pole been there? How long will it stay there? Where did it come from, and where is it going?

So, though the common wood utility pole may not be a topic of interest for many and may be forgotten or simply taken for granted, the job of the innovator is to think about the questions that others don’t ask, and hopefully develop solutions that answer them. It’s easy to get complacent with products, services, and processes that have always just been the way they are.  However, those are the very concepts that need innovation and require those willing to consider, “what next?”

True Innovation Looks at The Entire Process

Thinking about any product—in this case, the utility pole—across its entire life cycle, from cradle to grave, opens up new opportunities for innovation at every point. Most industries refer to this as product life cycle thinking. In our instance, the “cradle” is the planting of the tree that ultimately grows into the pole. The “grave,” of course, is how the pole is disposed of once it has reached the end of its useful life span. It is here that we found the greatest potential for our innovation efforts, especially when it comes to disruptive innovations.

Like in lean principles, where one maps out a process in order to understand where to eliminate excess, companies that take a thorough look at their life cycle will inevitably find a multitude of opportunities for innovation – large and small. In our case, an incremental innovation might be something that impacts the performance of our existing pole product line—for instance, a new way to limit the growth of vegetation around poles or a pole design that better accommodates the growing need for mobile broadband and Wi-Fi connectivity in rural America. Both of these examples, incidentally, were real attempts to meet market needs that emerged from our innovation process.

In the end, innovative thinking is necessary for a company’s long-term health.  Appreciate the innovators in your organization and give them the resources needed to help create ideas and concepts that will not only benefit your organization, but your customers, their customers, and the community at large.  Learn more about fostering an environment of innovation by visiting my website.

Strategy

The “Four in Four” Strategy

As I’ve mentioned previously, the concept of really successfully integrating “innovation” into a business is easier said than done. Often innovation is merely used as a buzzword to drop when talking about high-level concepts and ideas. However, innovation is a very real strategy – one that takes deliberate planning, prioritization and resources.  More than just a talking point in leadership meetings, innovation must be a part of a structured approach to achieving company strategy.

Our Approach

Recognizing the need for a structured approach for innovation and understanding how to execute that are two very different things. We’ve created an innovation process which begins with what we call our  “Four in Four” strategy. We mapped out four major business initiatives or changes that we believed should take place over the course of the next four years to drive our business forward. We update this plan regularly, and it serves as a road map for where we need to be focusing our efforts. It is simply a way of narrowing down and fitting our innovation process within the broader strategic plan for the company.

Implementing the 4 in 4

Again, the concept of “Four in Four” sounds reasonable in theory but implementing this kind of dedicated approach requires the commitment and investment of various stakeholders.  It involves a process that includes a dedicated group of individuals who are identified as “forward-thinkers” –employees who are able to envision the future of the business over the next five to ten years.

Once this group is determined, they are presented with around thirty prompts regarding potential scenarios and problems over that time frame.  These prompts are designed to make the conversation more guided and constrained than a free-form brainstorming session. This also allows to streamline ideas to certain areas of focus for the group to consider.

Those prompts are then discussed, and ideas are created in the context of our Four in Four strategy. The team is tasked with exploring the trends and potential opportunities in our industry and market, and ultimately locate areas that are particularly ripe for innovation. The result yields various promising opportunities, each ranging in cost, purpose and result.  As a team we are then able to evaluate these against one another, build a business case for each, and present the cases to the senior leadership of the company for budget approval.

It’s this process that has helped us innovate and set ourselves apart in the pole disposal process.  When you create a dedicated process and you have the commitment of stakeholders to support the exploration and investment in these strategies, there isn’t an industry that won’t benefit from making innovation a priority.

Service

There are Other Ways to Get Ahead: Focusing on Service

The concept of innovation and setting yourself apart is much easier said than done in the commodity market. In an industry where what is produced is largely equivalent across all competitors, the key to getting ahead is the service you provide.

Consider your business from the perspective of your customer – with utilities, in particular, a new product is often not going to add value; however, improving upon the ancillary services based on your product and thereby expanding your business model to include a service component will.

Let me provide an example…No one else in our industry used radio-frequency identification (RFID) when we first started implementing this technology in our own plants in 2011 for internal inventory purposes while manufacturing utility poles. However, we soon realized that this same technology would also allow utilities to better track, inspect, and maintain poles once they were put up in their service areas.

Eventually, this led us to form a software company, Sustainable Management Systems (SMS), that today sells the capability for utilities to more quickly and accurately maintain their inventory of poles in use. Rather than reinventing the utility pole, SMS just attaches a service that provides added value for our utility customers by allowing them to move away from traditional paper-and-pencil inspection of poles.

Evaluate All Touch Points

In the previous example, we leveraged an internal best-practice to help customers externally.  Another area to uncover added value would be evaluating your delivery lifecycle – each touch point with your customer – and determine where in the process things could improve to create additional benefits for your customer.

One of the areas that have led to revolutionary innovation for our industry is the focus we’ve placed on pole disposal.  By focusing on a full life-cycle approach, we provide an unprecedented approach in our industry.  Our mission has been to make the removal and pickup of these poles as seamless as possible.  The goal is to create a process that requires customers to only work with us and not multiple vendors or contractors. We want anyone who contracted for our services to know that they will not have the hassle of a lot of the typical issues that go along with waste disposal, whether that is cutting up material to fit into a dumpster, contracting with a dumpster company to transport that material to a landfill on a regular basis, or paying the tipping fee to the landfill operator.

Standing out from competitors in the utility and commodity industry is difficult; however, it can be done. When you step back, look at the entire lifecycle of your product, improve upon it, and consider services that would create true customer value, you will inevitably be ahead of the pack.

Business Profitability

Choosing Both Environmental Sustainability and Business Profitability

Many don’t give a second thought to the life of a utility pole; however, it’s very much top of mind for utility executives.  It’s a critical part of a utility’s business profitability. And while most individuals won’t necessarily think about the utility pole or its destined end, many will care what you, as a company, so that will have an impact on the environment.  Utility poles – or the disposal of them –definitely has an impact.

Sustainability Without the Price Tag

Like many industries in today’s global marketplace, utilities continue to adopt corporate-wide sustainability goals as a key part of their operating strategy. The disposal of treated and untreated wood waste is often an area in which utilities see an opportunity to adopt a more “green” approach to their business practices.

Traditionally, utility companies have been limited in their disposal options, with most having to resort to “landfilling,” which can present both environmental and logistical problems. The current dilemma for utilities—most of which strive to be environmentally responsible—is that sometimes the “greenest” approaches can also be the costliest to implement.

This doesn’t necessarily need to be the case.  As with most sound, strategic decisions, striking the right balance of options provided will allow you to achieve corporate sustainability goals, all while managing the budget.

Understanding Your Options

Traditional landfill-based disposal programs often appear cheapest due to the lower initial disposal fees, however, when internal labor costs are included for cutting, sorting, or moving material to the landfill, the actual per-ton disposal costs increase significantly.   Many are surprised to learn that the following options are not only better for the environment, but they can also actually be done in a cost-effective manner:

1) Waste-to-Energy (WTE) Incineration

This is an environmentally friendly method of generating energy using Penta and/or Creosote treated wooden poles (or untreated wood) as a biomass fuel source. The high-temperature incineration process converts the old wood waste into a new energy source which can be repurposed as electricity. Currently, roughly 2% of the electric energy used in the US is derived from wood waste disposed of in this manner.

2) Wood Waste Recycling

Depending on the type of wood waste being disposed of—and the toxicity of the waste stream—this is perhaps the most environmentally responsible wood disposal method. Typically used poles are repurposed for agricultural purposes, landscaping, pole barns, and the like.

3) Landfill Gas (LFG) Recovery

This method relies on capturing methane gas from existing landfills to help generate electricity and simultaneously reduce GHG emissions. The methane gas serves as an energy source to power turbines and, in turn, the turbines generate electricity for the grid.  As biodegradable waste, wood poles and other untreated wood material produce methane during the degradation process.

Depending on the utility and the corporate level of commitment to environmental responsibility, any one of these methods may be the best overall solution—for both the environment and the bottom line.

Innovation

Don’t Reinvent the Utility Pole: Sustainable Management System

We’ve all heard before—don’t reinvent the wheel. The phrase speaks to the waste of time and resources it would take to reinvent something that’s already been discovered. Instead, those resources could be used to transform the use of the wheel to create new ideas, processes, products and/or services.

The same could be said for the utility pole industry in which Cox Industries operates. Cox is a family-owned business, founded in the 1950s by brothers W.B. and E.J. Cox, that manufactures and distributes treated wood products ranging from lumber for residential buildings to poles for purchase and use by utilities. W.B. Cox—Bill Sr., grandfather of current Cox CEO Mikee Johnson—was driven from the beginning to keep coming up with new ways of making his company more efficient and profitable.

Cox wouldn’t find innovation in trying to create a different/new utility pole, instead it found innovation in the processes surrounding that utility pole.

Finding Innovation Elsewhere

At first blush you’d probably assume there wouldn’t be a whole lot of innovation happening in the utility pole industry—Cox changed that. In the commodity market we operate in, looking at things from the perspective of the customer—utilities in particular—made it clear that product-based innovations (i.e., making a new and better utility pole) were not going to add value for us; in cases like that, innovators have to turn to ancillary services based on their product, expanding their business model to include a service component.

In our case, this meant creating new businesses under the Cox umbrella. Our first development actually grew out of our exploration of the value of using radio-frequency identification (RFID) technology—a method for tracking items, similar to bar codes—to tag and track the poles we manufactured.

No one else in our industry was using RFID at the time. We started by implementing RFID in our own plants for internal inventory purposes, but we soon realized that this same technology would also allow utilities to better track, inspect, and maintain the poles once they were put up in their service areas. This led us to form a software company, Sustainable Management Systems (SMS), that essentially sells the capability for utilities to more quickly and accurately maintain their inventory of poles in use. Rather than reinventing the utility pole, SMS just attaches a service that provides added value for our utility customers by allowing them to move away from traditional paper-and-pencil inspection of poles.

It wasn’t the utility pole—our main product—that required the innovation; instead it was the experience and processes that surrounded our product where we found ways to innovate that transformed the industry. The same approach could be the key to innovation for your company; look beyond the obvious and see what can be improved.

Learn how to successfully integrate innovation into your company and industry by contacting me!