John Schaeffer, head of Real Goods Trading Corp., a $7-million catalog company in Ukiah, Calif., has taken the idea of drawing insight from customers even further. To begin with, he's turned the catalog of energy-saving products into an ongoing conversation between him and his customers. Laid out like a community magazine, with political articles and commentary, the Real Goods catalog elicits pages of passionate letters about the energy movement, previous letters, and Real Goods products. "The letters spur new ideas all the time," says Schaeffer. "When I started the company, I was taking orders, talking to vendors. Now I do more marketing and merchandising, so letters keep me in touch with the market."
Schaeffer credits letters with prompting the idea to produce a more simple black-and-white version of the catalog for steady customers who disdained the company's mainstream color version. Customers also provide tangible suggestions for products they want Real Goods to carry: Schaeffer estimates 10% of the catalog selections are customer inspired. Last spring the company put out the call for products that Real Goods ought to manufacture, and it already has received 300 responses.
But the biggest idea Schaeffer got from customers didn't have to do with products -- it had to do with cash. Several years ago customers sent Schaeffer two or three letters a week asking if there was a way to invest in the company. "I navely came up with this idea that sure, there's a way to invest -- send money." Why not, he mused, offer people 10% interest to lend money to Real Goods, which was better than the 8% they could get from certificates of deposit and was less expensive to the company than the 12% banks were charging at the time? He put a notice in the catalog, and customers promptly sent in $250,000. Spurred by the response, he took the original customer idea to its logical extreme and did a formal public offering under the nascent Small Corporate Offering Registration program, enabling Real Goods to raise $1 million with minimal paperwork. Once again, almost every investor came from the company's zealous customer base.
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Take Advantage of Internal Technologies
Talking with people in a growing organization becomes more difficult as the number of players expands and the interaction with each shrinks. "Usually, managers get information from other managers, but I knew there would be bottlenecks or control freaks who'd clog the process," says Mac Lewis, CEO of Computer Network Technology Corp., a $22-million Maple Grove, Minn., company with 200 employees. One modern prescription for spreading ideas and comments more widely is electronic mail. In addition to giving greater access to information to greater numbers of people, electronically connecting a workplace means that ideas can more easily flow to the CEO. In companies connected by E-mail, anyone can "carbon" (that archaic term) a message to company managers. And at companies with electronically connected computers, a CEO can tap into common files and get updates on issues that might otherwise not pass his or her way.
For example, Timeslips Corp., a 70-person software publisher in Essex, Mass., has developed a suggestion database. CEO Mitchell Russo says it "probably has more than a thousand suggestions in it, from customers, from letters, from me, from developers -- every possible source." The database centralizes all those comments, whims, and fleeting thoughts, with entries including a synopsis of the idea, who originated it, and the date of the suggestion.
Russo peruses the collection every week or so to keep up with what's coming in and to provoke his own imagination. "Fifteen to 20 of the items are what I consider great ideas," he says, "and they end up on a short list in my personal database." Some are simple, such as suggestions for added product features; others are more sweeping, such as new product concepts or major (and expensive) product enhancements. All, he says, help him set his agenda for how the company should be steered.
More than a hundred of the electronic suggestion box's entries were incorporated in the last Timeslips release, Russo says, and he is now overseeing the development of a new product that bubbled up through the idea-exchange system.
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The choices people make about where they look for ideas are often not as deliberate as they might seem -- there is a strong dose of serendipity in finding methods that work. John Schaeffer received letters and thought it only natural to print them in the company catalog. Vadim Yasinovsky was invited by an acquaintance to a peer-group meeting just to see how he liked it. Probably only because she was being turned down for a loan did Mary Baechler take her banker's suggestion and ask a local businessman to teach her about financial statements.
What's more, the nature of how ideas themselves pop up is often equally serendipitous. Timothy DeMello, founder of Replica Corp. -- a Dedham, Mass., company that puts on national competitions for people growing fictitious stock-market portfolios -- is a firm believer in the power of randomness: the best ideas, he says, come from sources that appear totally irrelevant.
"I want to talk to a few people who have nothing to do with what I do rather than a million who might," says DeMello. When he was running Replica, he spoke regularly to a friend who runs a travel company. "We'd spend days going over his phone system, the way customers are kept in the computer, how to customize operations to deal with some customers quickly and others more leisurely. I'd read offerings for companies such as the Franklin Mint -- I study all prospectuses -- and you think, What does a company that sells Rhett Butler dolls have to do with me? But it's a direct marketer of products and might have ideas about listening to customers or software-support systems."
Pierluigi Zappacosta, president of $200-million-plus Logitech Inc., based in Fremont, Calif., likes to tell the story of people who were studying the effect of light on workers. The workers became more productive when the lighting was increased from 100 watts to 125. Then the lighting was decreased from 125 to 75. "And once more," he says, "they noticed a new increase in productivity. What they realized is that people were reacting positively not so much to the light but to the fact that someone was trying to find the ideal environment for them. Every attempt they were making was taken as a good thing." The point, he says, is that the specific methods people use to look for ideas are less important than the fact that they "invite themselves to allow things to happen in a more chancy way" -- to be a conduit for ideas.
Which means, for company builders, finding the time -- and establishing the habits -- that will give ideas a chance.
