Although Sweat could clearly envision his product, he lacked the scientific background and the resources to make it. That didn't stop him. As Tom Kelley reminds us, even famously solo inventors like Thomas Edison are often teams in disguise. (Edison came up with 400 patented ideas in six years, thanks in part to the 14 colleagues working with him.) So it was with Sweat. He tapped two customers to help him build a prototype out of materials that had not traditionally been used to make similar products in the past. He contacted his local manufacturing extension partnership, a federally funded program that provides consulting services to small companies, to help him set up a lean manufacturing system. Later he forged a marketing partnership with a larger company, which helped refine and sell his product to hospitals. Result: hospitals can E-mail SRP specifications for a patient, and the company can custom-manufacture the product and ship it within 15 hours.
As an innovative business matures, it falls to the CEO to find ways of institutionalizing the creativity he or she once brought to the table -- in effect, building development into the very fabric of the business. Here, too, there's no need for advanced degrees or high-tech products. Jim Nichols innovated with septic tanks.
Nichols is president of Infiltrator Systems, a $100-million manufacturer of septic and storm-water systems in Old Saybrook, Conn. Back in the mid 1980s, Nichols's own failing septic system inspired him to design a plastic septic chamber that would outperform the standard stone-and-pipe design. The concept gave birth to Infiltrator, and Nichols has worked diligently ever since to build a company that's bigger than his own good ideas. "Other people can leapfrog over you and take the market away from you," he says. "So we need to be in a process of continued development. If someone is going to put us out of business, it had better be us."
Nichols has put in place a series of practices that he says enable Infiltrator to "know the market so well that we can anticipate what customers need before they need it." First and foremost among those practices is gathering information -- from customers, industry reports, and the contractors who install Infiltrator's systems. Vice-president of engineering Bryan Coppes says that Infiltrator's marketing team recently made a product presentation to contractors, and their feedback resulted in significant design changes. "We get in front of the customer and throw out an idea before we actually tool things up," he says. Nichols adds that industry research once inspired him to design a leach field with a more robust sidewall, well before states began to recognize that research. When states started changing their specifications, Infiltrator had a clear market advantage. To systematize that kind of information gathering, the company now pays $4,500 a year for a subscription to Nerac, a database service that enables Infiltrator's department managers to plug in keywords and get back a constant flow of E-mail with the latest industry trends, patents, and trade-magazine articles.
Ideas are just the beginning, of course, and the way Infiltrator assesses them has changed radically over the past three years. It was, in fact, a colossal product failure that made Nichols realize that Infiltrator had a problem with the way new products were being developed. Four years ago the company's new storm-water-management system failed repeatedly, triggering multiple lawsuits from customers and leading Infiltrator to file for Chapter 11 protection to manage the claims. The company's core business not only survived but grew, and creditors and claimants were paid in full when the company emerged from bankruptcy, in September 2000. But the product failure was a wake-up call.
"I say to people, 'If you're not making any mistakes, you're flat out not trying hard enough.' "
Enter Stage Gate, a new product-evaluation tool that involves employees throughout the company. Ideas come from Infiltrator's salespeople, the engineering department, and even inventors outside the company who know its reputation for bringing new products to market. Every idea is guided through a series of "gates" by a champion -- either the person who first conceived of the idea or someone in the company who is impassioned enough to develop and refine it. A project team performs R&D, market research, pilot studies, and financial analyses, then makes a recommendation to an evaluation team consisting of Nichols and other top executives. The first product to come out of Stage Gate was a new storm-water-management system, which replaced the product that so vexed the company four years ago. Introduced in January, after three years and $7 million in R&D, it is being "enthusiastically received in the marketplace," says Nichols.
In the past three years, two new products and three innovations to existing products have come out of the Stage Gate process; another seven ideas are now in the system. About half the product ideas that go through Stage Gate come to fruition; the rest die in the process. But failure, says Nichols, is part of the game. "You have to set up a culture where people are allowed to try things and to make mistakes. I say to people, 'If you're not making any mistakes, you're flat out not trying hard enough." Case in point: Bryan Coppes was the project leader for the storm-water system that failed. It was Coppes who championed the new system through Stage Gate.
The moral of such stories? Innovation, so it is said, is the stuff of progress, the engine of the U.S. economy, the generator of profits for business and wealth for society. Here at Inc we take no issue with any such pronouncements; indeed, we believe them wholeheartedly. But don't be misled by what you might call the glitz surrounding innovative people and companies. There is a world of Ph.D.'s and patents, of scientific luminaries, of dazzling and complex new technologies and the well-funded businesses that bring them to market. But that's only one realm in the world of innovation. The rest of that planet is made up of companies that are probably much like yours, run by people whose claim to fame isn't scientific genius, only the ability to see things that others overlook and to bring those new ideas to the marketplace.
Donna Fenn is a contributing editor at Inc. John Case is a contributor to the magazine.
The Innovation Factor: Part III
Innovation, We Trust
Creation Nation
A Brief History of Innovation
Ordinary People, Extraordinary Creativity
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