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Birth of a Product Company Pt. 4

Dear reader, this is the forth column of four. You may find the previous three in the Crazy Talk archives.


“After you have a solid business plan and actual market feedback on your product concepts, including revenue,” I continued, “you’ll want to think about raising capital.”


“You don’t want your company to wither on the vine before it ripens, so we’ll need to raise a round of Friends and Family money.”


“How do I do that? Just ask them for a hundred bucks each?” she asked.


“First, you need to figure out what you’re willing to give up in exchange. Are you willing to give up part of your company already? Are you willing to give up equity and report to a board yet? Or should you just consider a loan or structuring it as debt?”


“Equity. Debt. Board. Man, these are things I haven’t thought about at all,” she confessed.


“Have you heard of Old Wives’ Tales?” She nodded affirmatively. “This is one from the world of business ‘Most companies die of digestion rather than starvation,’ meaning they got a bunch of orders, hit a certain level of success, and then imploded –couldn’t produce and deliver quality at the rate the market desired. Think of all the struggle, the goodwill burned, the heartbreak of having to let people go, the taste of failure.”


She nodded, as this vision was one potentiality.


“The reasons they fail are two-fold, and unavoidable. First, they didn’t have a viable plan for scaling their growth. A plan cannot predict every possible pitfall, but it gives you a roadmap for finding your way and highlights key assets and resources you’ll need at certain levels of growth. You’ll be able to have a sense of what’s needed and can adapt more readily, more creatively with this plan. It pays to do your homework.”


I took a minute and made sure she was listening. She was, deeply.


So, I added, “the other reason is simple: money. Growth takes capital, investment; think of it as fertilizer. You have to spread it around pretty thick and generously, until it hurts, really. This is why you’ll need those Friends and Family dollars, to have something to put to work before you can either get a bank loan or raise what they call ‘more institutional money.’ Without ready capital, you can get trapped in a death spiral, a painful spot, which is why you want to plan for growth, account for it, and have money on hand when it is time to grow. I’ve had too many friends—all good people—who grew for a few years then got in over their heads, couldn’t handle their loan service or the price of production, then screech and grind until they finally close shop, still owing taxes, others. It’s a tragic end, but it is avoidable.”


Don’t focus on just the products. Write a business plan. Test market. Raise some money. Then, build with your plan as your guide. What a grand adventure.

Birth of a Product Company Pt. 3

Dear reader, this is the third column of four. You may find the previous two in the Crazy Talk archives.


At this point in the dialogue, I felt the need to break down the conversation into helpful actions in two main categories: test marketing and business planning.


“You asked what to do first. First: stop working on your products. You have beautiful prototypes built. Now, focus on the business,” I said. “In time you’ll need to think about capital, but first you have to prove yourself, so go and see how the market reacts and also draft a business plan—this way potential investors will know you are serious. Remember, they are betting on you, not on the products.”


“Whoa—how do I do all of that? Where do I start?”


“You already have begun test marketing by displaying your products on your shelf. Now, keep good records of what each one cost to make, which ones sell faster, and what the profit margins are.”


“Then, expand the test a little. Try to selling a few of the pieces you’ve created at your current asking price at the farmer’s market and a local gift shop or two for a set period of time, keeping good records on what sells, what doesn’t, and any feedback you get from people.”


“Most important, write a thorough business plan.”


“A business plan?” she sounded as crestfallen as someone just told they have been diagnosed with a terminal illness.


“I know this point sounds rough, but if you want to be successful, focus on the business. You have great product prototypes, but from this point forward it is not about the products—as long as quality is consistent—it is about growing a business.”


“A business plan …” she uttered this phrase with sour contempt, sounding defeated before a match.


Silence deafened us both. I couldn’t take it any longer, as she’s a friend, but she beat me to it.


“Can’t I hire someone else to write it?” she asked.


“That’s like asking who are you going to trust to raise your baby,” I responded, then switched metaphors: “do you know that old saying ‘you can’t hire anyone to do your push-ups for you?’ well, the same is true with business planning. You have to own it and do the hard work and homework to own it. That is, if you want to grow this effort into a business and you want to control it and be able to make the decisions.”


Her head nods affirmatively.


“There is one alternative,” I add, “if you want to take on a business-minded partner whom you trust and with whom you can work closely, you can focus on products. Still, you’ll have to have a deep, visceral understanding of costs, materials, manufacturing, distribution, marketing, business development, sales, cultural trends, the competition, and adapt your strategy according to these dynamic forces once you have a grasp of them.”


The Gift of Writing a Book

Running any business day-in and day-out can bring active contemplation to a halt. The pace of work stays at such a staggering speed, leaving you inspired, exhausted, and bewildered.


With such demands on your time, it’s hard to make sense of life and work, and even harder to extract wisdom out of the many experiences that constitute a workday.


The gift of having a weekly column–and then further editing those columns into a book–is the gift of an examined work life. Work transforms into an articulated and contemplative experience, lessons learned in the trenches and crystallized through the alchemy of the writing process.


Distilling these insights into something worth sharing transmutes the dross doldrums of a common workday into valuable tales from the trenches.


So, I want to thank the Daily News for the weekly speed bump and for the gift of a reason to reflect.


It is my hope that you find these columns inspiring, provocative, and that they help you overcome blocks and hurdles that prevent you and your organization from reaching its potential.


The case studies, methods, and frameworks for exploring new ways of discovering new value can give you the tools for transforming your organization and placing it in a prime position to thrive.


More powerful, I hope, and more important, these tales and tips are intended to transmit courage and risk taking, the two scarcest soft skills in the professional world.


If anything triggers new actions, new thoughts, and new behaviors and shakes up anything out-of-date with the increasing rate of the dynamic marketplace, embrace it. If inspiration takes you to new places, go with an open mind. If any story sparks a sense of purpose, a renewed personal mission, or passion, honor it.


The gift here is seeing that the professional world can birth humanity’s next great phase, the human-to-human era. In this emerging age, you don’t need to create or sell things people don’t need. Rather, you can befriend people and help them solve problems with new products, services, and experiences.


There is a calling inherent in taking this challenge—and that is that you will take personal responsibility for making the world a better place through your work—and you won’t settle until you see evidence of this fact happening.


Here are the stepping stones, the path of the past eight-plus years, collected into a book. Hope you enjoy and end up amazing yourself:



Birth of a Product Company Pt. 2

In the last column I profiled a too common scenario. A person with passion, drive, and talent created a handful of products without considering the many factors of launching a new company in a complex, overcrowded market. (Read it here:


“Think of it this way,” I continued. “Look at these early product concepts as prototypes, a proof-of-concept,” I continued, “you can test pricing, sales, returns, which SKUs sell at the fastest clips, and general desirability for the whole line.”


She had a lost look on her face. Then, I unintentionally made the lost look sour by asking, “Where did you plan on test marketing these?”


“Brother,” she said in her bewildered-yet-trying-to-stay-cool tone, “I know not of what you speak, test marketing.” Silence engulfed us.


“Well, you have to see if anyone will buy it. Based on the local angle and high-end, hand-crafted sensibilities, maybe you should try a few boutiques, gift shops, and even a farmer’s market,” I said. “You’ll know in a few days if there is market for your products.”


“How do you do that?” she asked. “Who has time to do it?”


This question made it clear to me that she was thinking like a creator, a craftsperson, and not a like a business person.


“My dear friend, how long did it take you to gather all the materials, discover the right mix of ingredients, and price what you have?”


“My whole life.”


“And you can’t take a few mornings and do a little business development?”


“I thought I’d just set up a free web site and sell it through it.”


“How are people going to know you exist? Once you tap your social media connections and email list—your low-hanging fruit, you’ll have to set up SEO, pay-per-click advertising, produce and update a blog, and more, just for starters, but,” I added, “you’ll need to understand the market first. Where are the watering holes where your tribe hangs out—what web sites, what Pins on Pinterest—who are your competitors? What are their costs, who are the brands, what are their strategies? What are the trends in this segment of the market? And, what happens if you do only a handful of these tactics, according to written strategy, and your sales take off? Can you produce enough to meet demand?”


“Then, when it is time to scale growth, you’ll have to have a distribution plan. What are the channels? What are your wholesale margins? What is your plan for manufacturing at scale? Have you modeled out your costs? Do you have a formal pricing strategy? Marketing plan? What about capital? You’ll need money to make all of these moves and hit growth milestones. Also, you should benchmark companies you like.”


“Wow, wow, wow—that’s a whole lot. How would you suggest I even start?” she asked.


Birth of a Product Company Pt. 1

This is the first installment of a four-part series.


A friend of mine is a stylist to the stars. If there is a movie or TV show shooting in the region, she’s on the set, making hair magic. She gets flown around the world at times. She’s in demand. She also runs a boutique high-end salon in Memphis. People await her return and pay 2x-5x normal rates for a new hair-do because going to her is an experience.


She not only knows her craft well, but is also a genuine inspiration and joy. Passion exudes from her like a form of electricity. In an odd way, she is the premium product, offering a service but wrapping it into a unique, touching experience.


When I entered her enchanted lair—dance music at an inviting level, lights just right, art deco appointments—last week the experience was further enhanced with strong, attractive smells of well-mixed essential oils, new products.


Touching the tester items felt so good, silky, not sticky, and not greasy. I felt drunk in the best way, not woozy, but uninhibited. The sensory overload was heady and bewildering.


I came to my senses holding some hand-crafted objects, lovely designs, beautiful packaging with hand-tooled wood filled with small batches of shaving solids, solid shampoos, and a small selection of other wonders. Perhaps it was the environment, perhaps it was the novelty, but I knew I must take some home.


Until I saw the price, handwritten on a sticker on each object. As I imagined my bank balance draining instantly with each possible purchase, my friend walked into the room.


“Congratulations on creating these products!” I proclaimed, “smells, looks, and feels sublime. Did you make them with nectar of the Gods?”


“What do you think?” she asked, knowing I have helped hundreds of companies conceive, create, and launched new products into the marketplace. Her question was loaded; she was looking for real advice from experience.


“It’s too late. You’ve made several critical errors,” I said, sensing the need to be helpful and honest, as she is clearly devoting time and energy to this project. “You’ve fallen in love with your products, are unmindful of what the market will pay and how much they will cost to manufacture them at scale, and I assume you created all of these stunning works of art without writing a business plan.”


“A business plan? I don’t know how to do that,” she responded.


“My advice would be to back up, stall your product development and prototype creation—you have enough as a proof-of-concept. You’ve put enough attention and care on the products; however, you have fallen in love with the products and are smitten with your creation. This love will endure only if you fall in love with the business-side of the equation. May I ask you a few questions?”


“Of course,” she said, “you are the one who helps people go to market,”


“That’s only partly true. I also help product developers find new areas of opportunity around which they can create new solutions. You didn’t start with people, or a plan, you started with the products. Now, you’ve fallen in love with your creation. Hemingway said ‘kill your darlings’ and the same advice holds true for the product development cycle.”



Why Relationships Are Essential to Research

Beth Werner, Head of Retail Research and Vision at Bose


“So, why are relationships essential for research? Let me begin by telling you a little about myself, and then tell you about why relationships are scary for BOSE.


At a young age, I felt odd about life, so then I started being curious about human behavior. Then, I went to SCAD and learned that men designed women’s products.


I began a Design by Gender study. Then helped design a Ryobi drill for women that didn’t alienate men.”


Then, Beth went to work at Herman Miller to understand the hospital room experience. “I spent days upon days with patients, nurses, doctors, and caregivers. We bought back our learning and created a foamcore hospital room—and we each played the various roles.”


“Then, we built a modular system as a prototype that became a best-selling line for Herman Miller. The sad fact was that we didn’t go back to consumers as part of the process.


“Then, I joined Bose, which just celebrated its 50-year anniversary. Dr. Bose left the company to MIT when he died in 2014. Dr. Bose wanted all of his employees to grow, collaborate, be self-sustaining, and innovative. By staying privately funding, they keep R&D ‘cool, weird, and amazing.’”


But, there’s baggage about being privately held. “We are not connecting the brand to consumers.”


“When I joined three years ago, there were fears. At that time, we had not done any customer research.”


Werner created a 400-person consumer panel who were into consumer electronics. They talk to this community almost daily. The panel does two-four activities a week. They do in-home visits, shop-alongs, and surveys.


Beth then highlighted three consumer journeys in some depth. A jogger. A participant who lost her job. The mobile speakers they were testing made Summer with the kids much more enriching. One community member creates ethnographic work for us in retail settings, with friends and family, and even building prototypes.


The tangible impact of deep relationships


“We found that the brand could play in many more areas than it was currently playing. Also, they helped us understand how to prioritize features in marketing and messaging. Lastly, they evaluated in online and in store experience. They even co-created a forthcoming product. Most important, the panel helped us to move into a test/learn methodology that is essential to thrive in the market.”


Consumer works enabled three key benefits: speed, confidence, alignment.


Expanding role of research


“We are engaging with people over a long period of time in meaningful ways to create value, deep learning, and even humanizing a formally engineering business,” said Beth.



Accelerate Growth Through Strategic Integration of Research During the Innovation Process

Stephanie Cunningham, Associate Director, Global Insights Business Lead—Specialty Division, The Clorox Company

Jody McInerney, Senior Vice President, Burke, Inc.


Stephanie began with crisis, a story about the kitty litter business. Competitive pressures were high. Market share was being lost. They needed a new product, in a hurry. From concept to packaging, they needed it all: RTB, packaging design, product name, name and product fit with top benefits, and fully baked complete concepts to test against legacy products and competitive products.


Clorox had five weeks to cram in eight months of work before the end of the fiscal year and their plan to retailers.


They had limited time and were forced to explore non-traditional methods.


They called Burke, Inc. for help, and began the Accelerated Learning Labs®, a methodology designed to shorten the learning curve and allow teams to get more done in less time.


Accelerated Learning Labs® focus efforts into a single-day or real-time learning.


Steps of framing an Accelerated Learning Lab®

  1. Gather Participants
  2. Evaluate
  3. Choose subgroup
  4. Explore
  5. Refine Ideas as a Team


This methodology provided a way for the Fresh Start team to get the results they needed in their timeframe.


The Fresh Step team pushed back at first at this method. There was fear of the unknown, no proof that it would work, and questions about the output. This process requires a high-performing team to execute, so it was critical to get all of the internal stakeholders to suspend disbelief and deeply participate in the process.


For each of these client fears, there was a solution. There was the trust of working with a supplier with whom they’ve had a decade-long relationship. They set expectations about the level of involvement. They also engaged creative teams and agency partners from the outset.


In the end, the whole Fresh Step group (Innovation manager, brand manager, designers, consultant team, and marketing manager) all dove in as a unified cross-functional team.


Once aligned, the team moved forward with

  • Three-in-person sessions in one market
  • Total of 102 participants (34 per session)
  • 1.5 hours of quantitative evaluations
  • 1.5 hours of qualitative probing with small groups of six-eight.


Understanding the most compelling message—the RTB—was the prime mover in this scenario. Then, we moved into package design that needed to stand out at the shelf. We tested a total of 18 names, then took the names and packaging and tested fit with the benefit (RTB).


Consumers provided ways to improve the benefit, the look-and-feel, the imagery, and the name. They were invaluable in driving iteration after iteration that made the product more desirable in the market.


They planned the five-week sprint in weekly segments with things that had to be completed each week.


So, was it a success? Yes. They met the impossible timeline. Since launch, Clorox has done more rigorous testing and the product that was launched has tested very well each time. Plus, the market accepted and embraced the product.


The ability to learn in the moment, given the tight timelines, was instrumental to hitting the condensed timeline.



Contagious: How to make products, ideas, and behaviors catch on

Notes from a keynote speech from The Market Research Event

By Jonah Berger, Professor of Marketing, The Wharton School at the University of Pennsylvania


Berger starts the keynote session by playing a game, Which is Tastier? Where two images are shown: broccoli and a cheeseburger.


The vote is cast: the majority vote, you guessed it, for the cheeseburger. The point is simple. We all know we should eat more broccoli but the cheeseburger beckons us.


The analogy of tasty then gets turned to ideas. Which ideas are Tastier?


Some of the ideas are like broccoli—they are good for us, but not desired, not catching on.


The curse of knowledge plagues the researcher.  We have to overcome what we know and communicate in a way people will try and spread it.


As an overview, we will explore these three, key points:

  1. How we make ideas tastier
  2. How we craft our insights that make people more likely to listen
  3. How we can use word-of-mouth to spread the idea


He asks the audience: What is the science of why people share? Let’s tour the main points. Let’s learn about the science of social transmission through storytelling.


Berger showed a slide proving that word-of-mouth is at least twice as effective as advertising, according to a McKinsey study.


The first hack he shared was based on his experience in academia. Two copies of the same book were sent to him; the second had a note encouraging him to pass along to a colleague who may enjoy it. Berger’s point: find the influencers and give them something to spread, and it comes across as a recommendation.


So, why do people share? Here are the top six driving factors:

  1. Social currency
  2. Triggers
  3. Emotion
  4. Public
  5. Practical Value
  6. Stories


One way to get others to share our ideas is to make them look good, look smarter—this is the basis of social currency.


We share things that send desired signals of who we are, our ideal self. So do brands. How can you make your brand tribe feel smart and in-the-know, on the inside track? If people feel special sharing our stuff, they will.


One facet of social currency is finding the Inner Remarkability—something surprising, novel, or interesting. Berger used Blendtec’s blending of an iPhone in their Will it Blend campaign as an example. Blender sales went up 700% as a result.


The more you can show rather than tell, the more powerful.


So, what is a Trigger: something that is top-of-mind because it is tip-of-tongue.


Consideration is 80% of purchase, and getting in the consideration sphere is the most important part of the strategy.


Here are the four questions for getting value from triggers:

  1. Who do we want to trigger?
  2. When do they want to be triggered?
  3. What is in the environment at that time?
  4. How can we connect to the environment?


The last tactic discussed is Stories. Facts and data bore everyone. Stories are vessels of information, a Trojan Horse, a carrier of information. Stories imbue the emotional shorthand of a brand. Stories are the currency of conversation.


Berger’s advice: first, find your kernel. What do you want to pass on, to share? Then, how can you make others feel special about it, in-the-know, and share.


Overlooking the Obvious: Why Innovation Fails

This column was based on a presentation by Scott Jenkins, SVP of Innovation and Product Development of Deckers. 


Scott began this talk insisting on blending work and play.  His journey into “the sin of corporate innovation” happened eight years ago.


At an early age Scott became fascinated with running shoes.  He met an inventor in 1978, when he was 18.  For eight years, he tried to sell an innovation.  He was rejected 94 times by every leading athletic CEO.


He asks, “how do corporations judge good ideas?  How do ideas get killed?”


Finally, they licensed the technology to Reebok® and it was a mega-seller.  Persistence was key.


His journey took him to the Pentagon, selling a safety innovation, and then he joined Deckers.


He bases his philosophy off of his mother’s wisdom: “Look for the good.”


He foreshadows, “it’s people and culture that make change.”


Then, he jokes, showing several hundred innovation funnels that are meaningless, saying “process is necessary but not sufficient to drive innovation.”


But it is not the process that drives innovation.  What gets in the way are people who make decisions—and the courage lacking to make such decisions.  The over-reliance of process, proof, and security stymie the process.


Corporate executives want to create a “bloodless surgery,” and that is now how innovation works.


He quoted Wilber Wright: “no bird ever soared at a calm.  Likewise, no innovation soars in a calm.”


Scott switched to a few success stories.  The first was UGG® boots, which Deckers bought for $10MM.  As the UGG® brand grew, they were using all of the available sheepskin they could get their hands on.  Prices were rising.  But, there was an orthodoxy that UGG® boots had to be made of sheepskin.


They created a product called UGGpure™, with wool inside, but a different material on the outside.  Then, they tested it with 100 of their customers.  They could not tell a difference in the product.  Therefore, costs went down, for the company and the customer, while creating a lighter footprint on planet Earth.  They saved the company $70MM a year.


By debunking the orthodoxy, it was a win for the company, the customer, and the planet.


Hoka One One® running shoes was Scott’s other example.  The insight was that “people choose comfort over discomfort.”  The idea was revolutionary, given the barefoot running craze happening at the time.  They had to bet that running trends would change away from the minimal style and bet on their consumer three-to-five years from now.


The CEO said to Scott, “No one at this organization can stop you by saying no.”  This golden ticket empowered Scott to build the fastest growing running shoe in North America.


So, what truly empowers innovation?  (Not process)  People.  Heart.  Character.  The courage to lead as innovation officers.  Courage is key.


To reward this trait, Deckers gives out an Innovation Courage Award to key innovators in its organization.  On the back of the coin it reads:

  • Positive Change
  • Into the New
  • Passion
  • Humble
  • Open
  • Persistence
  • Find the Pain
  • Look for the Good


These eight mantras guide the innovation process at Deckers.  These awards are given to people in every department who live out and practice these values.


The core value is courage, “it takes courage to persist, speak up, follow your passion, be a game changer.”  What the award does is show that the company appreciates risk taking and bold action, both of which are core elements for meaningful innovation.


To reward this trait, Deckers gives out an Innovation Courage Award to key innovators in its organization.  On the back of the coin it reads:

  • Positive Change
  • Into the New
  • Passion
  • Humble
  • Open
  • Persistence
  • Find the Pain
  • Look for the Good


These eight mantras guide the innovation process at Deckers.  These awards are given to people in every department who live out and practice these values.


The core value is courage, “it takes courage to persist, speak up, follow your passion, be a game changer.”  What the award does is show that the company appreciates risk taking and bold action, both of which are core elements for meaningful innovation.



Creating a Commercialization Culture: How to Create a Culture Where You Can Capitalize on Innovation

A presentation by Jay Morgan, VP Global Innovation Bayer Consumer Care given at the Back end of Innovation Conference, October, 2015.


Jay Morgan shared his story of how Merck Consumer Care (now Bayer Consumer Care) began its innovation journey.


The story takes place in Memphis, TN. It begins in 2011. It began with struggle and a question: What are the barriers to innovation in your business that are keeping you from producing the desired results?


In 2011, things were “pretty good, but not seeing great growth.” We got a new CEO who had a very big vision. She wanted the double the size of the business in five years.


Because we were not going to get double the people or double the budget, we had to think in new ways. Value engineering and being more efficient wouldn’t double growth.


First, we studied the situation. In Pharma style, we visited other more innovative companies and made a journey of discovery.


The patterns of behavior and culture at these companies ran counter to our pattern. We lacked both ideas and execution—it was a cultural problem. We weren’t getting the results we wanted.


We broke the study into two camps: Incremental Cultures and Innovation Cultures. After a look into the mirror: we confessed we were an incremental culture and needed to change.


The innovation companies had a bias for action, shared work-in-progress, deep collaboration, and shared workspace.


Even the way Insights are gathered and shared are different at Incremental and Innovative companies. At Innovation companies, we go out into the context of the market itself, having in depth and meaningful conversation with consumers.


The frame of the opportunity expands beyond new product development into every touch point in the brand experience: digital, communication, claims, packaging, shopping experience, or a business model innovation.


We developed a five-point plan for changing the culture:

  • Learn by doing (three projects in one year, as a prototype)
  • Start small ($50k budget)
  • Work on tools and culture (Design Thinking; One table, no offices)
  • Work in more cycles (Memphis Innovation Bootcamp)
  • Get help (bring in the Southern Growth Studio to do the projects with us instead of for us)


We also co-founded the Memphis Innovation Bootcamp with Merck, Michael Graber of the Southern Growth Studio, Dr. Brian Janz, and a few others to share this toolkit and creative a broader culture of the Memphis community. In Memphis, we took innovators and applied to social challenges that benefited the Memphis community. We mastered the material by teaching in in several cycles of the Bootcamp.


Key learning for success: Engage the whole company. Form a Realization team—of key players that will help you realize the concept in the market. Debrief everything. Create revenue-based metrics.


The key take-away was don’t wait for leadership to fix the culture. Start. Just start. Start small. Share the results, then scale with each success.