In 2012, Chip Brewer stood in his brand new office at the Callaway Golf headquarters not knowing if the words he just told his team made an impact. The words were simple, "I just want you to make products you are proud of."
Fast forward to today. Callaway Golf Company has gone from being a struggling golf brand to the second largest golf equipment company in the world and one of the few growing in a shrinking golf market. To give you an idea of the difficulty in the industry, most reports have golf shrinking between 1-3 percent year over year. One of Callaway's competitors TaylorMade was sold by its parent company Adidas after going from $1.7 Billion in revenue in 2012 to around $900 Million in 2016.
Conversely, Callaway's trend is moving in the opposite direction, 2017 produced net sales over $1 Billion, a 20 percent increase over 2016. I talked with Brewer on an episode of the "Follow My Lead" podcast and you could summarize their turnaround into a lesson any business can learn from.
He said "Make products that are demonstrably superior and pleasingly different."
Want to achieve the same kind of turnaround as Callaway by building the best products in your industry? Take these three lessons from their playbook.
Create a culture that's focused on innovation, yet embraces failure.
The golf industry, in particular, is heavily focused on products. In order to get to and stay at the top, innovation on a yearly basis is paramount to success. Harry Arnett, Callaway's SVP of Marketing and Brand Management, believes they do this because "of a methodical and disciplined approach to innovation which is anchored with a deep collaboration between Sales, Marketing, and Research & Development." To give you an idea of how deep this collaboration is, marketing, R&D, and the sales team sit only a few feet away from each other. They almost don't have a choice but to collaborate.
This deep collaboration by itself is important but it goes beyond this. In order to innovate and bring the best products to market, no longer can the ideas only come from a few employees. Instead, ideas have to be flowing from every angle of the business because news doesn't happen in the newsroom. Innovation can come from anywhere.
A huge part of creating a successful culture of innovation is ensuring that the team embraces failure. Brewer says, "Every idea or new product isn't going to be a hit and the team has to know that. At the end of the day, you have to break a lot of eggs to make a great omelet and we know that."
Reconnect with customer needs through social media
Some of Callaway's best innovation and newest products come from being more consumer-centric by putting themselves in the shoes of their buyer. They spend a lot of time and energy thinking about human behavior. Specifically, what consumers want and how they learn about subjects they are passionate about, such as golf.
To do this, Arnett knew he couldn't rely on the old monogamous approach of how companies had previously interacted with customers. Instead of using a "pyramid of influence" they moved to a "sphere of influence" approach.
The transition started small but today Callaway is in lockstep with their consumer about what they want. They are participating in the "sphere of influence" with their customers to the point where you can barely move on social networks without seeing a Facebook Live interview with Callaway tour players, an Instagram post of five-year-old golf sensation or instant Twitter engagement with their customers.
Begin focusing on products on the fringes.
Innovation doesn't just come in the form of improving or creating new products in existing business units. While Callaway's core business is their main focus, it isn't their only focus for innovation and growth. They have begun focusing on products the fringes (pun intended.)
They invested in Topgolf, a fast-growing driving range- golf entertainment company that mimics more of a bowling alley than a traditional 18 hole golf course. This year they also made two big acquisitions: OGIO, an innovative designer of travel bags. and Travis Matthew, a men's apparel company for work and play.
Arnett summed it up well, "Our main focus is small, being the best in 6 categories: drivers, irons, fairway woods, wedges, golf balls, and putters. If we get those right every year it will lead to growth and benefit not just for our stockholders but for all. But we also see great growth in areas just outside our core space and these investments and acquisitions paint a bright future for us."
Whether you are a golf enthusiast or someone that hopes the game goes away forever, I think we all can agree Callaway provides an example about reconnecting with products and innovation that any company can learn from.