success Archives - Barry Breede

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.

Understanding Innovation in Commodity Markets

When it comes to the commodity market, customers aren’t typically looking for new innovative products. They want the tried-and-true product, which is essentially the same from seller to seller, at the lowest price. “Cheaper” is better than “new and improved.” How, then, are you supposed to get ahead and innovate as a company?

I’ve seen this struggle firsthand in our industry. In fact, currently, we’re the only company in the wood treating industry dedicating staff to innovation. This is not to say that there hasn’t been skepticism from some of these parties.

Consider the opening statement in a fairly recent article entitled, How to Convince Your Company’s CEO to Invest in Innovation when it says, “CEOs who truly invest in innovation aren’t just rare; they’re often self-sacrificing. How did investors reward General Electric’s former CEO, Jeff Immelt, for placing a $4 billion bet on the industrial Internet of Things, remaking GE into a model for lean, entrepreneurial management? By firing him, of course. Immelt surely knew that his shareholders wanted to see innovation; they just didn’t want to invest in it.”

It goes on to cite a concept that far too many executives settle for, “innovation theater,” or this idea of merely appearing to treat “innovation” seriously but with no significant investments or decisions to develop it. The article adds, “At many companies, then, the innovation “department” is but a shell with a figurehead. And most CEOs, boards, and investors are content for it to stay that way.”

This is a hurdle for any company looking to enact change—some parties will inevitably see the effort as an unnecessary risk with an unlikely return on investment. This is the understandably cautious, conservative impulse of the mid-sized, family-owned company. This is especially true in the case of truly disruptive innovations; the impetus toward changing the business or moving into a whole new market can easily be met with an attitude that says, “We don’t do that here.”

The key is to show the skeptics that the ability of the company to remain profitable while also growing and remaining dynamic in the market—controlling its future rather than having the future control it—is going to rest on how it utilizes the innovation process.

Innovation is more than just an obligatory hypothetical notion – it requires a real, dedicated process. This however, is difficult particularly for smaller and mid-sized companies, were corralling the resources to build a lasting innovation effort is not always an easy task, and stumbling blocks will undoubtedly pop up along the way. Nevertheless, the potential upside for such a company, especially one operating in a commodity market or a consolidating industry, is that a structured innovation effort can truly become the impetus for transforming how the business operates, fueling sustainable business and disrupting commodity markets—and bringing value not only to customers, but to the general public as well.

Learn more about how to integrate real innovation into your business strategy by contacting me.

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.

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.

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!

How to Create and Manage Disruptive Change

Implementing innovation is easier said than done; my previous posts on obstacles and requirements give an idea of why this is the case. Longtime practitioners of innovation know well that building a company that has a true portfolio of promising innovative 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 change/innovations—changes in strategy with the potential to transform markets or business models.

At Cox, we had a history of innovation, but the success of those initiatives were fortuitous and the scale, and long-term outcomes weren’t necessarily a part of a deliberate plan. While it’s nice to benefit from luck, in order to build up the portfolio I previously mentioned, it takes a well-defined process.

Be Deliberate

Over the years, Cox’s approach to innovation became much more targeted, and we focused on developing a more formal innovation process for the purpose of developing a portfolio of ideas that are integrated with our business strategy and that are possible to implement systematically.

The process we developed started with identifying areas that are ripe for innovation, then carrying ideas through a strategic business analysis, and ending up with executable steps to take. This serves as a vetting process for ideas for how viable they really will be.

Go Beyond the Status Quo

Such a process was/is especially necessary because disruptive change doesn’t come easily at a company like ours, which faces challenges with regard to innovation simply due to our industry and our business profile. Cox is a mid-sized, family-owned, third generation manufacturing company, and it competes primarily in a consolidating commodity market—although stable, this market offers competitors only minimal growth opportunities year over year. Changes in market share within our industry typically arise from either acquisitions or the willingness of one competitor to underprice another to get more business.

Companies like this tend to be fairly risk averse; available resources to invest in innovation are usually limited and are instead directed toward acquiring competitors or some other form of near-term financial win. In this environment, it is sometimes difficult to see how stretching the business beyond the status quo will be beneficial—which can be an obstacle to innovation.

The thing is, all companies need to disrupt the status quo—at some point what you have historically produced/manufactured/sold/etc. will need to change because what’s needed or demanded will shift. The sooner a company faces up to the simple fact that innovation is a requirement for future organic growth, the better off it will be.

Learn more about how to jump-start innovation within your company by visiting my website.

4 Requirements for Success in Innovation

In my previous post, I discussed five common obstacles that get in the way of innovation. A company that wants to be consistently innovative, needs to make the decision that it’s important, necessary, and a part of the strategic plan over the long term. For such a strategy to get off the ground and find success, certain factors need to be in place.

While there were five common ways that get in the way of innovation, there are just four requirements needed to be successful:

Alignment among all stakeholders. As mentioned previously, lack of leadership and workforce support is a huge hurdle to overcome when it comes to innovation—but it absolutely necessary. Successful innovation requires support from all key stakeholders: the CEO, board of directors, leadership, staff, and family shareholders, etc. These parties need to be aligned on the value and priority placed on the innovation function within the company, including expectations regarding factors like budget and time horizon.

Integration of innovation into overall business strategy. One way to foster buy-in from your stakeholders is to thoughtfully integrate innovative initiatives into a broader, well-formed business strategy based on an examination of the likely impact of longer-term cultural, demographic, and market trends. Remaining competitive requires having some sense of where the market is headed and trying to get out ahead of those developments. When innovation is a part of a structured approach to achieving company strategy, it becomes more than just an “interesting idea.” To truly achieve success, innovation can’t be a standalone function that generates ideas in a vacuum, nor can it be focused on merely solving local problems.

A structured innovation process. Along with integrating initiatives into the overall business strategy, having a true innovation process is critical. Doing so will make sure the company doesn’t revert to a transactional, opportunistic, one-off approach. It’s a careful balance, however, as you don’t want a process so rigid or rigorous that it inhibits quick decision making and execution.

An internal culture of innovation that celebrates small wins. An organization aiming to innovate needs to focus internally on small steps and small wins prior to engaging in any really disruptive or transformative changes. Generating examples of measurable success and advances on a small scale can visibly demonstrate and validate the importance and value of innovation, for leadership and employees alike. This both helps grow senior level support for the innovation process and sows the seeds of cultural change among the employees.

There are a lot of potential obstacles that get in the way of successful innovation; however, if a company commits to following these four requirements, innovation will be an effective part of a profitable business strategy. Learn more by visiting, barrybreede.com

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