Phil Hauck's TEC Blog

Sunday, March 11, 2012

Myth: A Better Mousetrap Does NOT Necessarily Attract A Crowd!

Last week, Craig Dickman, CEO and founder of Breakthrough Fuel, Green Bay, spoke to a St. Norbert College audience about Innovation and its challenges.

Important Quotes:
• “Different isn’t always Better, but Better is ALWAYS Different.”
• Myth: “Build a better mousetrap, and the world will beat a path to your door.”
• “We want to innovate. We just don’t want to be the first one.”

Craig told the story of how he and his team worked through the challenge of introducing something new to the marketplace. Innovating the idea was the easy part.

The Easy Part
Oil prices have periodically doubled or tripled since the early 1970s as producer countries become in turmoil. When Craig was CEO of Paper Transport, a trucker, he encountered a customer who didn’t want to talk to him about trucking. He had just been chewed out by his boss because fuel prices had increased, and he had no control to change or offset that. The adage: You can’t control energy cost increases; you live with them, and pass them on as a surcharge.
One form of Innovation involves breaking the mold: Doing what was assumed can’t be done!
He went back and with others, began brainstorming how the fuel price-setting mechanism could be short-circuited for shippers’ benefit if you knew the anamolies within the price-setting mechanism. It’s similar to arbitrage ... taking advantage of market anamolies that others don’t see, haven’t seen yet, or don’t take the time to deal with.
They developed algorithms to take advantage of price cost disparities, creating a way to save fuel costs for long-range shippers by creating deals with fuel companies that yielded these savings. The savings per shipper could range into the millions of dollars.

The Hard Part
That was the easy part. Now, they began contacting shippers and truckers who had complained about the rising costs in the past. “Great idea,” they said. “Who’s doing it and how does it work for them?” “No one is.” “Oh. (pause) We want to innovate. We just don’t want to be the first one.” As it turned out, making the dollar savings wasn’t that important ... because it might involve risk.
Instead of complainers, they began looking for prospects who embraced change, who had already demonstrated innovation tendencies.
They found P&G, one of the world’s largest companies, and of necessity a serial innovator because it has great competition and is publicly-llisted. “You know that we move markets. Why didn’t you come to us first?”, they asked. Sales cycle length: four months!
But with mammoth customers comes notoriety ... and opposition from those who profit from the current ways of operating. Soon, his customers and prospects were getting phone calls from current suppliers indicating that if they actually retained Breakthrough Fuels, they would pull their support. They had been pressured by the current state profiters. Craig spent much time visiting customers and prospects to counter the calling campaign. Some customers dropped them, but some didn’t, saying “No one tells us who we can buy from.” Relationships matter.

Stay Radical
One of the Breakthrough Fuel teams’ discussions: Should we react positively and be less radical in what they were offering ... to move to the center. They sought advice. The result: No! Doing that might keep some customers, but it would demoralize the company and defuse the brand message. “It was important strategically to stay on message, because it’s what drove our passion and that’s what our customers want. We will attract customers who appreciate our passion and commitment, hopefully enough of them.” So, they kept telling their story, and telling it louder and more frequently to gain awareness of prospects who would be open to change.
And it’s worked. Today’s lineup includes many well known brand names.
Their next, and ongoing challenge: “These customers appreciate our inventiveness, but as market leaders in their own right, they want more and more innovative ideas from us.”
Summarizing his messages:
• Seek Out and Work with Leaders ...
• Believe and Have Passion.
• Market will be your Scorecard.
• When successful, begin innovating even faster.

2 comments:

  1. Phil, This is a story about innovation, commitment and sticking to your message! There is always resistance to change...and those that will do anything to stop from losing business. I once had a vendor who emailed our stores, telling them that my department didn't know what we were doing and that our new vendor would weaken our overall program. He lost in the end... Take Care, Dave

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  2. A great article about being innovative for the right reasons not just to be innovative. Great notes summarizing his message, awesome tips to remember.

    Thanks,
    Adam Lofquist

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