A great discovery solves a great problem but there is a grain of discovery in the solution of very problem – George Polya, 1944
I have been part of many innovation stories and the attached blog is a great story of innovation that happened at Castrol, a great company when it comes to innovation and one that is built on multiple innovations.
The key lessons I learned there are :
Here is an innovation story that I was part of
In the 90s I was amongst the first set of employees in Ford in India. I was involved in supplier development and Ford’s approach was quite a whiff of freshness in the automotive industry in India.
One of the problem Ford had solved innovatively was the operation of painting cars. In painting a car, a number of elements are involved, the body, paint shop, painting system, and the paint sub system. The paint subsystem is not one element, it has sealants, it has degreasing solutions, primer, sealants, electro deposition layer, base coat, top coat and clear coats. The car may have components manufactured by different companies and Ford was no exception.
The cost of painting a car is then having many variables, consumption of individual components, paint thickness, paint quality (a function of the ingredients as well as the hardware such as paint guns), etc. Ford was already piloting a process for getting control of this element, pay for painting per car.
The lead supplier would have control over the paint shop and all painting process, though the material to be used would be as specified / approved by Ford. The supplier would get paid for managing the process as well as material, but on a per car basis. They had performance targets specified, paint thickness, quality standards etc. If they managed it very efficiently, they will make more money than they would supplying materials. On top of it, operating the entire system gave them opportunities to develop insights that would help them develop other components of the paint system. For Ford, it represented a multiple set of benefits, control on costs, get experts to do the painting and focus their efforts on designing cars, overcome the challenge of attracting paint experts, etc.
Of course there were other challenges in India, the input accounting and taxation process added complexities. On top of it none of the suppliers had approval for more than 2 components making for a complex supply chain challenge.
Consequently, the suppliers were unwilling to operate the system and later I realized that even after a decade, the paint manufacturers
hadn’t cracked the problem.
Of course, there were more nimble players elsewhere. At Castrol, we were exploring innovative solutions and this model came to attention. A set of guys engaged with me to understand how the system was designed at Ford. They then discovered that a similar but lesser complexity opportunity existed in the industrial lubricants business.
Castrol launched the CMS business in early 2000 to become a very successful business unit. The company would take over the entire chemical management of large manufacturing companies, which had to manage a large number of consumables of low procurement costs, greases, cutting oils, machine lubricating oils, cooling solutions, etc. Castrol would manage inventories, procurement and bring their expertise to optimise consumption of these chemicals. They will charge a management fee and a fixed fee based on production. They could increase sales of many products which were losing to inferior competitor products on pricing. For the customers, this represented a reduction in total costs of managing chemicals, while they were observing significant performance improvement.
Castrol was the first player to come up with this solution and had many years of advantage over competitors.
I found one major difference in the approach of Castrol and the paint companies. At Castrol, they quickly organized a team to explore the new business opportunity once the challenge was identified. This was not the same sales team, they were to create a new business model and operate it independently. This resulted in completely fresh ideas, new business model that was very different from existing and new ways of working.
Whereas at the paint companies, I found the same sales and technical teams that were handling the traditional sales model, were handling this opportunity as well. They were constrained in their thinking by the existing business model and somewhere there appeared a concern to protect internal interests.
What innovation lessons can you learn from this story?
Finding a customer need that requires innovation is not straightforward.
Once a customer need is discovered, there are many unknowns and constraints. Innovators have a challenge to find these problems first
Once the customer problem is found, there is a challenge of finding a solution, these I call, the problems to prove. It requires hard work and perseverance.
You need multiple experiments to prove problems and in the process, will generate knowledge.
The final solution may look very different from the one you started with, keep learning and refining your solutions
Your existing business model will probably work against new innovations, be ready to change and manage the change well
Innovation is a problem solving opportunity and has two parts, problem to find and problem to prove. It doesn’t work on “Eureka Moment”; it never arrives for most.
What you can and should do is plan to start a journey, a journey of new possibilities rather than wait for the alien to upend your world.
Do reach out to me if you need support for your innovation efforts.