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How To Innovate

How to Kick Off an Innovation Project

"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 , 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 , 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 might be an opportunity to differentiate itself. Ultimately the new strategy, and the innovations that followed, influenced everything from and marketing to store design and hiring. Watch and See How They ShopIn 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 PersonalityThe researchers also studied , 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? This analogous research, along with the deeper understanding of their customer that Gravity Tank presented to a cross-section of executives during a two-day off-site, gave Office Max the confidence that a female-focused strategy would succeed. Last year, the company introduced a line of products based on one of the first insights to come from the research: Women wanted products with more personality. This April, the company launched the InPlace System by Peter Walsh, a new line of organizational products that includes a super sticky Post-It, developed for OfficeMax by 3M (MMM), as well as plastic file folders more durable than paper ones. It's early to judge how successful the campaign has been. But Vero is upbeat. "We have so much good research," he says. "And when you have good research, it's hard to go too wrong." What can executives learn from OfficeMax's research-based approach to innovation? • Focus on Unspoken Needs Needs represent market opportunities, but consumers are unlikely to come out and say, for instance, "I want a better way to label file folders." Researchers read between the lines to uncover real needs. • Study customers in their environment You'll learn far more observing people's everyday behaviors than you ever would by asking them questions in a focus group. • Watch for Contradictions When someone says one thing and does another, that's often the sign of an opportunity. • Identify Your Target Customer In-depth ethnographic studies usually involve no more than a dozen subjects, so make sure they are the right ones. Depending on the project, it might be important to include subjects from different regions or countries, or to get a mix of urban and rural participants. A food company, for instance, needs to understand regional differences in eating habits, while a pet food maker might want to study the differing needs of city dwellers and out-of-towners. • Use Multiple Tools to Record Material In addition to written notes, the researchers used video, which allowed them to capture rich detail. Audio is useful when researchers want to be less obtrusive. An advantage of still photographs is that they are easy to sort later as researchers review materials looking for common problems and other valuable insights.
Scanlon is a Bloomberg Businessweek contributor.

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