In a world so inhabited by digital technology, it’s easy for investors to become distracted away from physical product innovation. It’s manufacturers’ job to make sure they don’t.
The team at MAGNET, the non-profit organization I lead in Northeast Ohio, has helped thousands of manufacturers bring their innovations to life. It’s work that can be as frustrating as it is rewarding. Those who come up with an idea often find themselves attached and struggle to see the forest for the trees.
But successful innovation takes much more than a great idea. Every innovator struggles to clearly describe the value they’re creating at the earliest stages of their journey. And yet once they can describe that value proposition, they often don’t know how to prioritize their next steps. How to assess whether the juice is worth the—often pricey—squeeze? It all starts with answering four (deceptively simple) questions: Are you solving a burning problem? Is your unique solution solving the problem? Can you deliver the solution? Will anyone buy it?
Answering these questions honestly, with clear eyes, is key. Then comes the real work. It isn’t easy, but when it all comes together, it is certainly worth it. Here are three stories of manufacturers who got it right and what we can learn from their triumphs. (You can read even more in The Value Proposition Matrix, a new book by MAGNET Vice President for Strategy and Innovation Brandon Cornuke that details MAGNET’s framework for companies to map out their innovation.)
1. Intrapreneurships and spin-offs can drive growth
When Vedang Kothari came to lighting manufacturer Lumitex as an intern, company leadership did something very smart: They gave him time and space to work. Kothari, at the time a master’s student in engineering and management at Case Western Reserve University, ultimately presented 25 ways light could help treat medical conditions. One of them wouldbecome Lumitex’s next marketable invention.
“One board member was so excited he practically jumped on the table,” said Peter Broer, CEO of Lumitex, which provides lighting solutions for the medical products industry.
Many cancer patients who go through chemotherapy or radiation develop ulcers or inflammation of the soft tissue within the oral cavity, particularly head and neck cancer patients. Kothari’s idea was to use light to prevent that debilitating side effect. It was no surprise that Lumitex immediately hired him to incubate the idea and develop the technology as an “intrapreneur” inside Lumitex. “I had Lumitex’s whole staff of engineers to support me in any area I needed,” Kothari says. “And I knew that no matter what happened, we had a great senior staff and team that wouldn’t let me fail. That really gave me the confidence I needed to be successful.”
Six years after starting as an intern, Kothari has indeed found success. Having raised $4 million, he’s now CEO for a spin-off company called MuReva Phototherapy. This is Lumitex’s third spin-off, with more of this kind of innovation in the works. And the projects bring more than just revenue in the door. “People see the innovation happening and they want to be a part of it,” Broer says. “And that draws talent.”
2. Let the customer guide the journey
An inventor named Russell Horner came to MAGNET a few years ago with a prototype that was perhaps less technically advanced than Kothari’s, although no less real. He’d created an outdoor lawn game called Battle Toss that was something of a mix between Connect Four and a sober version of beer pong, where opponents threw different colored ping-pong balls into a basket from a few yards away. The balls fed into one of seven wooden columns. First to stack four horizontally, vertically or at an angle wins.
Horner assumed his target customer (college students) would buy the product, and that scaling the product would mean switching to plastic construction. Our team encouraged him to go through a listening cycle, where he set about taking his product to tailgates, bars and barbecues and talking to folks who used his product. That led to a couple revelations. Not only was it people age 30 and over, often with young families, who that most gravitated to the game, but most preferred the wood to the myriad plastic products that already littered their garages and basements.
MAGNET helped Horner cut a wood prototype—a minimum viable product—and begin selling. He hosted Battle Toss tournaments at local bars and got even more feedback, not to mention video and other content for his website. That led to another iteration. As Horner took his game to Amazon, MAGNET engineers helped him continue to round out and simplify manufacturing processes, creating a two-piece unit that customers assemble themselves.
Had he gone full steam ahead into his assumptions about his customers, Horner could’ve been out hundreds of thousands of dollars in production costs. Instead, with a measured approach that has put customer feedback at the forefront at every step, Horner’s innovation has garnered a devoted following. He now has options: grow by investing in manufacturing capability, license Battle Toss or sell the company to a strategic buyer.
3. Innovation can be a new approach to doing business
Sometimes innovation isn’t just about products—it’s about rethinking the fabric of your company. That’s what David Vance, president and owner of QualTech, did after years of operating on razor-thin margins and unpredictable demand as a contract printed circuit board manufacturer.
Rather than simply take orders, Vance’s team began making suggestions to their clients, like a massive global appliance retailer, about how they could improve their products. “We would say, ‘You have this big transformer in spot A, but if you move it to spot B, the machine will solder and build the part better,’” Vance says. “Trust was the main driver on the project.” QualTech eventually became so ingrained with the appliance retailer that they were a fundamental cog in developing several of their products.
Empowered by their new approach, QualTech overhauled its technology systems to integrate deeper into the business cycle of their customers, as well as help smaller companies that didn’t have in-house capabilities. “We made it so that when a company receives orders, they come directly to our system to be fulfilled,” Vance says. “Our end customer never actually touches the product. They are copied on a purchase order, and we do the rest.”
All told, Vance has innovated a new business model for contract manufacturing—one that has meant more profit and more predictability. It all started with conversations about what customers actually need. “What we actually build isn’t unique—anyone can solder stuff—but our approach to helping clients is,” he says. “There's a great book, Stop Selling and Start Helping, and that would be our mantra if we had one around here.”
Manufacturing innovation may not naturally grab investor attention the way technology innovation does. But done well, it can change the fortunes of your business and the future of the industry.
Ethan Karp is president and CEO of the Manufacturing Advocacy and Growth Network (MAGNET).