How To Innovate June 24, 2009, 12:33PM EST

How to Kick Off an Innovation Project

To build consumer loyalty, Office Max launched a study of what women look for when they buy office supplies

OfficeMax first introduced its TUL private label brand of pens, markers and desktop items in 2006. The idea was to emphasize style and design in the workplace

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The patterns on OfficeMax's Private Label brand DIVOGA of desk top accessories are inspired by global fashion trends

"Life is beautiful. Work can be, too." So ends a fantastical commercial for the office supplies company, OfficeMax (OMX), which aired in cinemas earlier this year.

More than just a new marketing campaign, the ad reflects a new direction for a company that had previously based its competitive strategy on price and location. The problem: OfficeMax wasn't gaining any ground against Staples (SPLS), the leading office supply company. In a bland, undifferentiated market, consumers tended to buy paper and ink at one store or the other based on convenience, rather than any sense of brand loyalty.

OfficeMax needed to innovate, but how? The first step was to understand the problem and the opportunities. A standard customer survey commissioned by the company in 2006 provided a starting point, revealing a split in how men and women thought about office supplies. Knowing too that women had spent $44.5 billion on office supplies the previous year, OfficeMax wondered if a focus on female shoppers might be an opportunity to differentiate itself. Ultimately the new strategy, and the innovations that followed, influenced everything from product development and marketing to store design and hiring.

Watch and See How They Shop

In order to get beyond the survey data, OfficeMax asked GravityTank, a Chicago innovation consultancy, to study women who buy office supplies. "If you wanted to understand the behaviors of a long lost tribe in the Amazon, you wouldn't send them a census survey. You'd observe them," says Ryan Vero, OfficeMax executive vice-president and chief merchandising officer, who initiated the research. Ditto, he says, with consumers. "Ethnographies are a critical component of our innovation process."

Vero wanted to know more about the potential customers' underlying needs and values. How could OfficeMax offer something more valuable than an eco-friendly paper line or longer-lasting pens? What products would address their problems? What messaging would resonate? Did OfficeMax need to change the design or staffing of its stores to better address female customers? Gravity Tank's task was to paint a more complete portrait of women's lives and understand how office supplies fit into them.

The research team recruited a group of 10 women, all from the Midwest, who together represented a cross-segment of OfficeMax's customer base, which includes both small offices and big companies.

Over the course of two weeks, the Gravity Tank field teams, including a researcher and videographer/photographer, spent one or two days with each subject, arriving at the woman's home in the morning and shadowing her as she traveled to work and back. "We try to watch for workarounds. Things people don't necessarily perceive as a problem, because they've developed a way around it," says Shailesh Patel, a Gravity Tank partner who led the OfficeMax project.

For instance, the research teams repeatedly saw women trying to reuse file folders, often writing a new project name on a Post-It and sticking that on the tab. But because the adhesive was relatively weak, the Post-Its would often fall off.

Products with Personality

The researchers also studied customer experience, looking to retailers in other markets. Questions included: Why has Best Buy (BBY) thrived even as Circuit City foundered? How has Best Buy tailored its products and services to its customers' needs? What did customers value in the Best Buy shopping experience?