INNOVATION FACTORIESMay 2013 | Feature
By James Hurley
“We haven’t got the ‘not invented here’ mindset,” says Richard North, founder of Midlands toy business Wow!Stuff. “Our attitude to innovation is ‘whoever, wherever’ – we don’t care who comes up with the idea, or where they are inthe world.”
Even on the side of a mountain in Vermont. This is no imaginary example – it’s the strange, isolated home of Jaimie Mantzel, an inventor that North is hoping will help him deliver a hit toy this Christmas.
Mantzel spent a decade flipping burgers, painstakingly saving up $22,000 to buy a remote piece of land that would be his escape from the rat race. Once he’d found a 20 acre plot on the side of a mountain, he designed and built an “off grid” three-storey dome structure from reclaimed materials to live in.
Deciding he wanted to build a workshop, he obtained a disused aircraft hanger and transported it up the mountain by foot, piece by piece and reassembled it. With a better way to carry materials to his new base clearly required, he started work on an off-road vehicle. Building a DIY 4x4 would be impressive enough, but Mantzel is a man who likes to put his imagination to work: he started creating a giant, 12 foot tall robotic spider from scrap aluminium that he could pilot.
Documenting his singular lifestyle and esoteric creations on a blog and, crucially, on YouTube brought Mantzel a global audience. The giant robot proved a particular source of fascination. One of those who followed Mantzel was a robot scientist working for Wow!Stuff and fascinated with the eccentric inventor, he told North.
As it turned out, Mantzel had already spotted the potential of toy versions of his giant arachnid – but had bad experiences with American toy giants. North and his team eventually convinced the reclusive creator that they could enjoy a fruitful relationship.
The result is Attacknid – a six-legged “battling machine” that North is convinced will be the number one boys’ toy this Christmas, with all of the UK’s major toy retailers having agreed to list it.
Wow!Stuff has a knack for coming up with toys that capture the imagination. Last Christmas, it sold 400,000 Air Swimmers, a giant inflatable radio controlled fish that ‘swims’ through the air. Another hit was My Keepon, an interactive robot that dances in time to music.
Its origin? YouTube again. Wow!Stuff workers spotted a video on the site starring a dancing robot designed by scientists to help therapists improve the social development of autistic children. When North watched the video, he saw the potential of the £20,000 device, which had been developed by US company BeatBots.
The lesson, North says, is that no amount of market research and analysis of trends can substitute simply recognising an inspired idea.
“You’ve got to back your hunches. Research won’t predict the next big thing. If you’re growing a business you can have a perception that all the ideas have to be generated internally. We’ve realised you have to look outside.”
The company – which has won a National Business Award for its approach to innovation – also uses the internet and social media to find new ideas and inventors, which North says can come from any industry and any location.
“You have to cast your net wide. The people we employ are people who share ideas freely and aren’t selfish – innovation has to be in everything we do, not just toys. There’s a world out there full of ideas, so it’s your job to capture that, not think, ‘we have all the ideas here’. It’s about being free and inclusive.”
If that makes the process of product development sound easy, North is at pains to point out that the pressure in his industry to innovate quickly and accurately can be “brutal”.
“When we started out I remember talking to people in the industry. Everyone had the same remark – it’s one of the hardest industries to do a start-up. Even the biggest toy companies, with millions to spend on development, research and focus groups say 50pc of their toys won’t work commercially. It’s like being a venture capitalist – you know a lot of what you do will fail. And the amount of start-up capital you have to invest upfront can kill you quickly if you get it wrong”.
With toys taking between two and three years to develop, the moment they’re presented to retailers is “nerve racking”, North says, with some understatement. He’s just back from toy fairs in the US and Hong Kong where he’s been doing just that. Unusually, all of the toys that Wow!Stuff presented received orders or interest.
“That never happens. It’s the best we’ve ever done. At the point of the first reveal, you’re hoping people get it. Sometimes you’ve just missed the trend, sometimes you’re too far ahead – predicting something that hasn’t arrived yet,” he says. “We saw a lot of companies doing toys that worked with mobile apps. They’re probably two years ahead of the consumer. Next year is when we think the timing will be right for that.”
When I tell North that the way he describes innovation makes his company sound like it is run by Tom Hanks’ character in the 1988 film Big, his response is telling: “I’ve never seen it but people keep saying that to me.”
In the film, a 12 year-old boy is granted his wish to be given an adult body. He gets a job in a toy firm and becomes an unwitting nemesis to an experienced product developer by rubbishing his ideas and coming up with much better ones of his own.
“The industry is like that – there are lots of clever people trying to justify their jobs by relying on research and numbers. The truth is, the answers are out there, not in you. The minute you start getting hierarchical is the time you lose your innovation. You need to think like a kid, be like a kid – before you were indoctrinated by life and educated in the supposed right and wrong ways of doing things.”
However there is no one single way to innovate; companies will invariably take different approaches to it as is evident within BGF’s own investment portfolio. The important common denominator is that innovation is high on the corporate agenda for them all.
At M Squared Lasers in Scotland, backed by BGF this year, thinking like a child is not on the agenda – they have to take a rather more structured approach to innovation. The company develops lasers for a huge array of industries, and for a wide range of applications – from advanced scientific research to sensing hydrocarbons in oil and gas production, sensing explosives and chemical warfare agents and computer chip manufacturing.
All of the industries that the company sells to demand both speed and accuracy – and constantly changing demands means M Squared needs to come up with new
products all the time.
“Our term is dependable innovation,” says the company’s chief executive, Dr Graeme Malcolm. “They’re novel processes but solving a real problem, so what we produce needs to be robust as well as quick. The customers don’t want flaky prototypes.”
In one sense, however, the approach M Squared takes to achieving that aim is strikingly similar to Richard North’s“whoever, wherever” philosophy. “We can sense chemical agents from hundreds of metres – that’s unique to us. What we’ve done to get that advantage is take a collaborative approach with supply chain partners and universities. Typically, our big publicly listed competitors take the ‘not invented here’ approach to life. We’re smaller and more agile, which gives us a bigger research and development group – because it’s not just us coming up with the ideas.”
Working with a multitude of partners is not a soft option, however. “You have to think harder about intellectual property this way,” Malcolm warns. Detailed agreements are made in advance so partners know where they stand on ownership if something commercially valuable is created. Working with academia as a small, fast growing company presents challenges of its own but Malcolm says it’s less of an issue than one might expect.
“We try to work with the most like-minded groups in universities – there are agile parts that are already working with industry. The rest, the more research-based academic parts, can be worked with for longer term projects,” he says. “We license a lot of technology from universities – that makes the relationship last longer because they’ll come back to you.”
For Malcolm, the hard part about innovation isn’t coming up with good ideas – it’s bringing them to market. “There’s often much more innovation involved in the process than in the original idea,” he says.
“Some of the things we’ve worked on have been groundbreaking. But 1,000 times more effort goes into rigorous engineering and developing a new market, and educating a new customer base. That’s the bit that’s underestimated – the light bulb moments can be obvious.”
To make sure innovative ideas quickly result in physical products, unlike many of its larger rivals, M Squared uses local manufacturing, via an advanced production facility in Glasgow. “The proximity between engineering and manufacturing is crucial when you’re doing it quickly. It’s an intimate process – and allows you to keep the skills you need to do the whole cycle from analysing a market to delivering a product. It’s difficult if you don’t have those close connections.”
Encouragingly, he thinks the principle could apply to less hi tech industries too – rising costs in emerging markets mean fashion companies increasingly see the speed and control benefits of coupling innovation with local manufacturing.
“I think that trend is something the UK is pulling through strongly on,” he says. “It makes the cycle of iteration much more rapid – so innovation can happen more rapidly. Many of the great innovations in recent years have had a number of iterations – the tighter the loop the better.”
But what about companies that aren’t involved in developing physical products? How do they approach innovation?
A care home isn’t something one immediately associates with innovation.
However, Graeme Lee, chairman of Springfield Healthcare Group, insists plenty of creativity has gone into turning a family business with sales of £400,000 into a £12m turnover company. He too is pioneering a new way of doing things in the domiciliary care market.
Unlike Wow!Stuff and M Squared Lasers, Lee’s innovation is focused on service and his business model rather than product design and production. Yet Lee’s emphasis of looking outside your own business for inspiration echoes the approaches of North and Malcolm.
In his role as chairman of a not for profit care association, he visited a multitude of care homes. A range of problems struck him – residents felt isolated in remote homes and frustrated by living on top of one another. “They wind each other up,” he says.
Worse, many have to cope with a change in circumstances – if a resident develops dementia, they’ll often have to move.
Lee’s solution is simple, but unconventional – a “care village” in the heart of a normal community just outside Leeds. Residents have separate units, and can move from complete independence to sophisticated care in one location. And they’re in the heart of real community life – the pub, the village shop, the post office.
“Say Mrs Smith comes in at 70 – we can deliver everything she needs for the next 25 years. Normally, if you’re in residential care and you get dementia you have to move. This is a home for life. And for us, we keep the patients longer so it’s a good business model, if we give people the right care at the right time.”
Echoing Malcolm’s point, for Lee, the hard part is in the delivery, not coming up with the original idea.
To bring the care village to life, Lee has had to convince both the NHS and local councils – hardly organisations known for embracing change – of the benefits of his approach. He’ll need their backing if he wants to expand the business, after all.
Just as North warns that bad timing can kill a good toy, Lee has picked a time of upheaval in the healthcare market to introduce a new model.
“GPs take control of healthcare budgets next year. They love what we are doing because they know that everything the patient needs is taken care of. For doctors, we’re ticking all the boxes.”
BGF liked the idea enough to invest and Lee is hoping to replicate it in other
When BGF backed North’s business, he says it focused the mind on what they were buying into – and ramped up the pressure to keep coming up with the bright ideas.
“As investors, their worry is, how do they know we’ve got the magic touch. You don’t know why it’s you that they’ve chosen; but then, why not us?”
The key to staying innovative for these growing companies is to keep looking outside their businesses for inspiration, hiring people who don’t care where the best ideas come from and remembering that being innovative doesn’t stop at simply coming up with neat product ideas. And of course, timing is everything.
WHAT IS INNOVATION?
If the Wall Street Journal is to be believed, innovation is the most overused word of 2012. It is often bandied about by consultants and PR executives, and companies can be just as guilty; heralding innovation when in truth what they have is simply a good product.
So what is real innovation? There are numerous definitions, and the experts can’t quite agree, but here are a few examples to consider:
- Inventing a product, technology or service that is genuinely new. Like the light bulb, wifi or Google.
- Revolutionising an existing product by changing the users' behaviour while at the same time revolutionising the market. Apple’s iPhone anybody?
- Inventing a new process, delivery method or business model. Turning mainframe computers into personal ones or shifting video rental from stores, to post and then online.
- Creating a new market for a leftover or overlooked commodity, or extending a market for an existing product. Best Buy, the US electronics retailer is creating revenues from recycling so-called ‘e-waste’.
- One could always just go with the summary offered by the late Steve Jobs who knew a little about the subject: innovation is what “distinguishes between a leader and a follower”.