Can we innovate in office products?
by Hugh Darcy, VP Binding and Laminating, Fellowes inc.
Who killed the innovation?
Ten years ago a notable Harvard academic of my acquaintance once made the interesting prediction – "Supply chain optimisation will be the death of consumer choice". At the time I was not sure I really understood what he meant, but today in our industry it has become entirely clear.
Dramatic structural changes in the supply of office products has led to a limited number of large supply chains in which we are forced to ‘pick our partner’ then optimise.
Choice has become limited for the consumer as the price we pay for efficiency.
This in turn has thrown into sharp relief the ability of brand owners to create unique, innovative products, and justify their position in the chain. We have seen many companies in the last ten years either merge or cease trading, because despite often worthy products or services, they simply did not deliver something distinct enough to survive.
Thus the imperative to create innovation is not a ‘nice to have’ – it’s a fight for life or death.
The reality is, however, that innovation costs – and in today’s office product environment, manufacturers and brand owners are under enormous pressure, as are our customers, to create viable returns for their shareholders whilst satisfying the increasing demands of the consumer and buyer.
The funds available to manufacturers to research, develop and launch innovative new products shrink every year. So unsurprisingly we see stretched development programs peppered with ‘off-the-shelf direct from China’ range fillers that have little or no consumer-relevant innovation.
Constructive partnerships are the future
In many areas of our industry over the years we have seen a depressing trend towards ‘me-too’ products, a lack of consumer focus and a relentless drive to create a cheaper product at any cost.
Worse still, the ‘one-off’ benefit our industry, in common with many others, gained by moving production to Asia has bred an expectation in consumers that costs will continue to fall, when in fact we all face spiralling costs, as the impact of the recession has hit commodity prices, shipping and currency.
The only choice is to innovate and add value, but this requires a change in the expectation of both our distributors and consumers. It requires time, investment and a constructive partnership between brand owners and resellers – real, ground breaking innovation does not happen over night. But the benefits for all concerned are sustainable and tangible.
For too long we have been ruled by annual catalogues and two-year contract cycles which create real challenges in bringing innovative new products to market in a meaningful timescale that will excite consumers and drive sales. We need to see more innovation in the way we bring fresh ideas to market too.
Invent and defend
The great Michael Porter has been preaching the benefits of innovation-led competition for over a decade – where companies compete on the same basis with similar products delivering the same benefits, only one thing dominates – price, and a ‘zero sum’ game is the result.
Companies that succeed are those that create differentiation from their competitors, by delivering a unique set of consumer benefits, which allow many companies to prosper in the same sector, and the sector to gain in value and size. Look at the impact Southwest Airlines and Apple have had by playing the game a new way – in both cases they have expanded their markets and prospered – the ‘Positive Sum Game’.
As you might expect, Fellowes expends much effort and resource in developing unique Intellectual Property in designs and features, and utilises these to drive customer satisfaction, increase average dollar spends and ultimately make categories grow faster and deliver more top and bottom line for our distributors. The difficulty of this path is that it requires a rigorous defence via litigation against the copycats who appear frequently across the OEM, brand and reseller community.
Working harder to win
So despite the challenges, I am proud to say my small team focused on binding and laminating has utilised this approach over the last four years to create over 50 new models resulting in major growth and success, with innovation remaining at the core of all our developments – our competitors mustered less than half this number between them in the same period.
Speed to market, the incorporation of consumer-led innovation, and active reseller partnerships are all key to success in today’s OP market. Innovation is all around our industry, and companies have never worked harder, in my opinion, with limited resources and time to develop new ideas. The question is, are they finding fertile soil to grow in?
That is where partnerships will count in future.