Fostering Innovation, Incrementally and RadicallyFostering Innovation, Incrementally and Radically

Fostering Innovation, Incrementally and Radically Transcript:

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White.

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White. Joining me today is Carman Pirie. Carman, how are you doing, sir?

Carman Pirie: I’m doing great. I’m excited for today’s conversation. How are you doing?

Jeff White: I’m doing awesome. Yeah. Another beautiful day on the East Coast.

Carman Pirie: You know, they all are. They all are. It never rains or snows here out east. 

Jeff White: Certainly not the ten inches we got last night. 

Carman Pirie: No, no, that doesn’t happen at all.

Jeff White: we get the Canadian part out of the way.

Carman Pirie: Yeah, exactly. But, look, um, today’s topic is one man. You know, some of it’s talked a lot. An awful lot. Talked about an awful lot in business. Like, you don’t have to pry too hard to get a business executive of almost any stripe to want to talk about innovation.

Jeff White: No, it’s like one of the double spots on the bingo card, actually.

Carman Pirie: Exactly.

Jeff White: The word innovation. You’ve checked a few boxes.

Carman Pirie: Getting them to do something innovative isn’t always the easiest thing, but they all talk about it. And what I love about today’s guest is just the kind of the kind of lens he brings to this, um, frankly, the noble cause of trying to inject more innovation in, the corporate world writ large, but specifically obviously manufacturers is our primary interest. So I’m really excited to dive in.

Jeff White: Yeah, lots of experience in this regard too. So it’s going to be an excellent conversation. So joining us today is John Patrin. And John is a seasoned marketing leader in the chemical space, largely Fortune 100 kind of space, most recently with DuPont. But welcome to The Kula Ring John, glad to have you.

John Patrin: Thanks a lot. Thanks, Jeff. Thanks, Carman. Glad to be here. And I’m looking forward to talking about innovation and maybe double-clicking on that and sharing some of my experiences of how to drive growth in an enterprise.

Caram Pirie: Yeah, look at some. Well, let’s before we jump right into the meat of the conversation, maybe give our, uh, listeners a bit of a background about your, uh, you know, of your career and kind of what’s led you to your, uh, your current juncture.

John Patrin: Yeah, thanks so, Yeah. I’ve had an interesting background, kind of a technical background, so, you know, material science and physics background. So I went to school here in Minnesota, graduate school and undergraduate, and then I had various, you know, marketing roles at smaller companies as well as larger enterprises like DuPont. So I’ve been a product manager, and product marketer, and led global teams for a while. I also led an engineering group for about four years at a company. Um, you know, one role that we will probably talk quite a bit about, While I was at DuPont for almost five years, I was an innovation and growth leader. So that kind of bridged both kind of marketing and R&D. So it’s a very unique role within DuPont. But you know, that was a great role to have an experience for about five years.

Carman Pirie: And, you know, it’s an interesting title to have. Like we need to innovate and grow. Let’s put that one guy in charge of it, right? It’s only like a one. This is a $1.5 billion or so business unit.

John Patrin: Right?

Carman Pirie: But I guess that’s got to be a little daunting, John. I mean, as you get that initial assignment, how do you let’s kind of just step back and say, okay, um, now what? How do you approach that? How do you think about innovating in the various aspects of a business, an enterprise of that size? And how do you kind of begin to, um, I guess, eat that elephant one bite at a time?

John Patrin: Yeah. So it was definitely a journey over a couple of years to really put significant. But um, you know, initially when I got that role and this is like 2018, you know, I thought initially it was going to be, oh, I’m going to manage all the innovations in our portfolio and more or less manage a spreadsheet of projects. But actually, this was a role in DuPont and it was really, you know, not surprising with DuPont being a 200-year-old company, innovations in their DNA, which is just what they do, whatever windows at DuPont. So it really took on much more meaning than just managing innovation projects. It was really about enabling innovation in the organization, in our business, in the water business. And it comes in many facets. So it is thinking about how you drive growth in the organization through innovation. It turned out that, you know, one of the goals or objectives of innovation in the water business was a half of the year-over-year growth was going to come from innovation revenue from those projects that were or products launched in the last five years. So that some may sound relatively straightforward, but, you know, the innovation revenue may only be about 25% of the total revenue, so it has to deliver half the growth. The other thing is, is really thinking about how you approach that and deliver that kind of goal or objective if it comes from having innovations in your core. In addition, you want to have innovations outside of your core markets and explore new areas to ensure you have sustained growth, you have to build capabilities as well of the people. So it really is a very comprehensive program. It doesn’t happen overnight like, like you said Carman, it takes many years to kind of build that program out.

Carman Pirie: Let’s dive further into that kind of very careful distinction you just made between innovation in the core business versus more kind of an experimental market or experimental plays. How did you, did it have a fundamentally different approach in one area versus the other or a different appetite for risk in one versus the other?

John Patrin: So it’s a great question. You know, the answer is yes to too many other questions. You know, you think about innovating in the core and many enterprises or companies, they’re very good at that. I mean, you have already products in those markets. You’re doing incremental changes to them. I mean, think about iPhone 12 to 13 to 14. I mean, Apple does that they have to do that to stay relevant in the market. But each year it’s not significant changes. But they’re you know, through the course of many years, it’s actually quite significant. But so those are generally, you know, those markets, you typically know the changes you have to do because you’re getting feedback from customers. So, you know, the process that you may use in there is more a planning process or stage process, generally lower risk. You may have some elements of it that are new or higher risk that you need to deal with. That’s actually quite different than in those new market spaces, Carman. So you might not know the market, you may not even know the problem. And you have to understand, you know, is there a problem that we can solve, that we can address? So inherently, there’s just a lot of risk. And the way you approach that is you find an opportunity, an idea, and then you start derisking that in kind of a metered funding approach. So you don’t throw a lot of people at it and that, you know, you prioritize your risk areas and de-risk them over time and then have further investments. So it’s much like the kind of the VC model, if you think about VCs out there, you know, they have seed stage funding, you know, seed 1 to 3 and then series ABC and they’re just investing more money with time as the opportunity unfolds and they derisk it. And it looks like a good path, for revenue generation and profitability. So the approaches are very different. That actually is what makes it kind of difficult. Know it takes kind of an ambidextrous thinker of, Hey, I’ve got a portfolio of kind of things I know that will generate revenue. They may cannibalize my current products, but I have them. But now I have to think very differently about this portfolio that has a lot of risk and, you know, opportunities may die very quickly, but it’s a very different approach.

Jeff White: I wanted to ask and maybe this is specific to DuPont or maybe this is sort of a thing that you think of more broadly, but where are the ideas coming from? Is it open to absolutely everyone to come forward with a concept or an idea? Is there an innovation lab where people are experimenting with new things? How is how is that structured? Or is it just like if you have an idea, come to us and we’ll put you through this innovation process? I guess.

John Patrin: Yeah. So like in the core markets, I mean, we have market segment teams, they’re kind of, you know, managing their portfolio of innovations and those are a little bit more incremental in nature. They’re always talking to customers and exploring new pathways. So those teams as well as people outside of those teams would manage their ideas and bring them forward. In the new spaces, it is much more open, but we did put kind of a structure in place, as opposed to just having all ideas coming from all over the place. We kind of had what we called more strategic themes like focus, you know, big areas and example, you know, in the water business, whenever there’s energy being generated or created, there’s always water needed know the water-energy nexus. So in a power plant, whether it’s coal, gas, or nuclear, there’s water presence. So but there’s a big movement to green energy. So there was kind of thinking of that maybe as a potential strategic theme is green energy. There are lots of ways of creating energy, green hydrogen, you know, there’s new nuclear power plants being created. They’re a little bit smaller, so there’s a lot of opportunities. But we kind of had these themes that we would explore those areas as opposed to just totally wide open space. Having said that, you know, we have a lot of people in the market talking to customers and they may have ideas and they can certainly share those and bring those forward. And we would them.

Carman Pirie: John, you’ve mentioned a few times this notion of innovation in the core seems to almost by definition be more incremental in nature. So how do you nurture more leapfrog innovations in the core business because of or do you this seems to me that just settling on that being incremental innovation could be limiting, but maybe not.

John Patrin: Right. And you know, and that’s a that’s a great question and comment. And that’s what you commonly see in larger companies is you think about just going back in time when the companies started, you know, maybe as a start-up and then it grew to 100 million and they’re in their market space and they keep evolving and maybe expanding in near adjacencies but at some point that market may plateau. And so you know you’re you’re you’re kind of leveling off so there’s kind of diminishing returns of your investment there. So you need to explore new pathways and, you know, put resources into new into new spaces. So from like a resource to allocate some perspective, I mean, you may depending on really what the strategic growth profile of your business is, is you may invest a certain amount of resources in the core for doing innovation and then you may invest another percentage in this new space. So just exploring new areas, you know, an example might be for that for the people, marketers, R&D people, engineers that are spending time in innovation, it might be 70% in the core, 30% in new or whatever. What you want to grow in terms of, you know, in those new spaces, if you want to grow more there because the core is very stable, you may be 50/50. So, you know, that’s really up to the business to decide how do I want to invest my resources and other money.

Jeff White: And I’m sure that in your work with DuPont and I’m sure you’ve surveyed other other corporate entities to see how they were in managing growth, thinking about managing the innovation pipeline and things of that sort. I’m curious, did you see any kind of examples of people being very intentional about replacing, kind of getting new ways of thinking, being applied to all old core businesses? Like yeah, that’s not seeking innovation from the people that are talking to the customers every day and have been talking to them every day for the last 20 years. But, you know, a completely new, fresh lens. Any examples of that? Just curious.

John Patrin: Yeah. I mean, I have talked to a number of companies. I mean, you know, you may have I mean, some companies may approach it is they actually have a group of people that don’t have a lot of experience in the core. And they’re just not they’re not tethered to those that thought or that business model and they’re very open to new areas. Alternatively, you may have people that are from the core, but they’re very forward-thinkers. They have just a tremendous amount of experience. Maybe they’ve done innovations that have succeeded and others that have failed and they kind of know, you know, that approach of new ideas and how to test them. So, you know, I would say there’s not a recipe or one way, you know, one size fits all of our approach of how, you know, what people you use for that. But, I think the key part is you need to test things and you need to explore new paths and you need to de-risk them. And, you know, it’s really kind of that approach that you use in a firm to move these ideas forward.

Jeff White: On that, you know, who is managing or kind of shepherding that idea through to fruition standpoint? I mean, I have to think that this is also one way that you can retain that more ambitious entrepreneurial talent. You know, to be able to offer the opportunity to bring an idea to fruition. And I would assume we haven’t yet talked about that. The process in the gates that people would go through, you know, on that metered funding VC kind of model, you know, how rough is it at the start versus kind of as it begins to refine itself into potentially a, you know, at some point maybe it becomes a core business line?

John Patrin: Yeah, I mean, it can take many paths. I mean, it certainly, you know, in these new spaces is typically not linear. You think about the VC model. I mean, the companies that are investing in these startups, I mean, it’s you may have a problem that you’ve uncovered for a customer set that you have an idea or a solution and you go, you know, work and see if that is appropriate for solving that problem. And it may just be too small. It might not you might not even have the right technology, and then it’s done and then you try other paths. So there’s a lot of iteration. It’s definitely not a linear path. And when you’re doing innovation in the core, it’s a little bit more straightforward. I mean, still, there can be back and forth, but you know, in this new space, it’s a lot of learning and experimenting and testing and trying and de-risking and, you know, maybe going forward and then going backwards. So, you know, an example of some of the areas that we worked on, you know, those it may take a couple of years from the initial area of exploration or potential opportunities to have a product. And you know, that pathway was zig zag.

Jeff White: I’m sure you’ve seen the design squiggle diagram before. It’s very, very messy at the start. And then it gets linear and then it goes all nuts again. And finally, it comes out the other side.

Carman Pirie: So something you mentioned earlier that’s been kind of sticking with me, I want to kind of pry a bit, I guess. You’d mentioned about the like a 200-year-old company, you know, with kind of innovation basically baked into their DNA and then you also mentioned about kind of the upskilling of teams and to foster more innovation and growth. So you’re saying that there’s a juxtaposition there necessarily, but I’m trying to think of, okay, we’ve got a company, a manufacturer that in some ways is kind of built for innovation. And, I think a lot of people listening to the podcast may find themselves working in companies that they believe to be a lot like that as well. But there may be still some potential that hasn’t been on. What have you found?  Do you find any kind of secret sauce? As we look to upskilling folks to foster more innovation and growth, are there blind spots that you felt needed to be better addressed or, um, key learnings that helped move the yardsticks?

John Patrin: Well, I mean, one, one area that we probably all can relate to is typically people think about innovation and use of a product like, you know, improve this product. But you know, bringing new value to customers can be beyond just the product. It could be a different business model. It could be bringing services to them, you know, helping customers optimize their process, using that product. And that may be a service that you do. So, you know, to answer your question, I think that people need to think more openly and open the aperture up of really beyond product. And really maybe it’s business model innovation and exploring new pathways there. So I mean, once you start developing products and you’ve done that for maybe decades in your career, you know, it kind of gets embedded. You’re thinking about incremental changes or, you know, a product, but that business model, innovation and thinking beyond that, you know, that takes some time. It takes some time like how do you do the testing and de-risking of those innovations? So that’s kind of a new area for many innovators to explore is, you know, putting the aperture up for what the innovation could be.

Carman Pirie: Man, I bet there’s a lot of people listening that see themselves in that, that notion of the companies that are very, very, very good at innovating at the product level. But maybe it’s just, yeah, opening the lens up further is that’s a really interesting thought. You know, is it just enough to say, Hey guys, let’s look at earlier business models and services that we can also innovate in? You know, is it just enough to say it? Or did you find that you had to kind of introduce some experiences or training that kind of brought people out of their patterns?

John Patrin: Well, I mean, it actually is a little bit challenging because you think about just an enterprise has its business model and let’s just say they develop products and, you know, they design them, test them, manufacture them, bring them to market. Now you want to just as an example, let’s say you want to help your customers optimize their process using their products, and that’s more of a service. That actually is a change in the company’s business model and the people you need to engage with customers, you know, your how you charge, you know, what the price is for that, what the revenue stream is. It actually I mean, conceptually it sounds very straightforward, but implementing that change can be quite disruptive and you really have to think holistically how you’re going to do that across the organization in how those functions engage with that new offering that you have. So, you know, and that’s why it can be limiting is just because it’s such a big hurdle to overcome to make that change. And the revenue might be relatively small at the beginning compared to your product revenue that you’re like, okay, well, it’s really not that big of an opportunity. But, you know, you see companies like Apple think of all the services that that they’re providing now to, you know, data storage, you know, all these other things. And it’s billions of dollars now and it’s a very substantial part of their business. So yeah, that hurdle in having the people and just kind of the diligence to plow through that and go through all those obstacles that you may see it, it takes a special person to go through that and bring that to the finish line.

Jeff White: Well, then you also have to consider how are those new business models, those new services going to be perceived by the customer, you know, who maybe sees you as a product company or something like that? I obviously have a very consumer-oriented example, but a good friend of mine last week took his Toyota Highlander to the dealer because the remote start had stopped working. And what he found out was that he was only on the first year free part of the subscription of the remote start service. And if he wanted it, he needed to pay $19.95 a month going forward. So changing that business model of how products are received and interacted with may generate not just positive things but potentially negative experiences as well. 

Carman Pirie: Yeah, I mean, I think you’re pointing to the, you know, the inherent, as John was mentioning, really the just kind of riskier profile of innovations in the space that you’re not used to innovating in. You’re used to innovating in products, you are used to making better cooler new features or what have you. That’s one thing. But innovating and new service delivery methods are business models does introduce a whole new set of risks. And John, you’ve mentioned before that you use you’ve used the Agile teams and Scrum methodology as a way of kind of organizing for managing risk and frankly as a way of de-risking initiatives. Can you peel it back a bit more for our listeners?

John Patrin: Yeah, that was an effort that we did. I mean, we had a couple of Agile coaches in the innovation team to really help our market segment teams and I think what that really brought forward in the organization is, you know, oftentimes you run projects, it’s more planning and you just kind of go from, you know, phase 1 2 3 and forward, but agile, you know, it’s a way or approach of really looking at your project and focusing on those areas that are high risk and addressing those first versus, you know, maybe waiting later into the program and or the project. And then you realize, wow, this actually is a really big issue. And it may end the project life and you’ve waited way too long. So I think that whole approach and you know it’s a disciplined approach Agile or the Scrum framework requires frequent meetings and reprioritizing your backlog. And I think that’s all really good because sometimes projects, you know, people might meet only every month and, you know, maybe that’s not sufficient enough. And then there were some other efforts that we use, you know, external consultants of, you know, we call them learning plans. But in these high-risk areas or these business model innovations or these innovations, you know, there is an approach that you use to, you know, looking at the business model canvas and looking at the areas that are of high risk and de-risking them first. So, you know, it’s all about prioritization and de-risking and that, you know, that’s a learning process itself. So getting people to be good at that and focusing on doing good tests to de-risk those areas that that have high uncertainty.

Jeff White: John, in the short time that we have left. I’m wondering, are there any examples of success stories you can share either from your own experience or others of, you know, organizations that you may be aware of that have kind of employed this innovation process and succeeded?

John Patrin: Yeah, I mean, within the water business at DuPont, I mean, there’s a couple examples and this is public information. You know, last year well, as I mentioned, you know, we were exploring new areas like green energy or sustainability. So, you know, we explored new paths that people are looking at for energy. For example, in green hydrogen. That’s becoming an area of high investment in Europe and in the US as well. You know, the governments are spending a lot of money on that because, you know, it uses essentially water, splits water in two and you have hydrogen, which is a very clean source of energy. But we did bring forward a new product for that space for green hydrogen last year. So we’re really excited about that new totally new market space for us and, you know, expect significant growth there. You know, another area, again, kind of in that energy space is, you know, the whole EV market is driving consumption of lithium. Lithium typically comes from mining, and mining of rock. There are various processes that are used to extract the lithium. But another source of lithium is in brine. So coming from the earth, California has brines. South America has, you know, many sources of brines. You can use membranes to take and concentrate that lithium in those brines. And it’s a very kind of efficient process. So we had another, you know, product, a membrane product that we launched last year for addressing that market. So, you know, those are kind of two new market spaces for us. We didn’t know anything about them. The rapidly growing, you know, So we had to dedicate some resources to that space and develop those products. So that was that was pretty exciting. So those are the ones you hear about. Believe me, there are a lot of ones that we explored that were killed. But, you know, that’s part of the process is that you’re going to look at new areas. They may not be the right timing for you. You might not have the right technology. And they were killed quite quickly and had a few fractions of people working on them. And we brought them to a certain stage and said, no, those aren’t good. But you know, it’s nice to have a couple of wins last year that we brought forward.

Carman Pirie: That’s very cool. I like and I’m sure you know, everybody, uh, everybody can certainly understand that there be some innovations that got cast away along the way to those two successes. But there are two very interesting examples that you shared and, it just speaks to the cutting-edge nature of the work that you were doing. I’m curious, John, as to any kind of parting advice that you might share with our listeners who are endeavouring to encourage more innovation in their organizations and maybe running into a roadblock or, you know, any kind of last nugget of advice of how to think about it that might get them over the finish line?

John Patrin: Well, you know, in reflecting back on my career and, you know, the time I spent in working on innovation, very intense time, you know, really, I think about growth now for an enterprise. And how do you approach growth through innovation and the approach of, you know, thinking like this two-pronged way of innovating, staying in the core, innovating there, being having a certain resource allocation there? But it’s an and it’s and explore new areas. It takes very different thinking. But for sustained growth in your enterprise or your business, it’s really imperative that you think about that again you’ll take the approach that whatever is appropriate for your growth plans. But I think that’s just so critical, you know, to enable sustained growth is to really kind of have these two pathways. And, you know, I think all enterprises have the capabilities and abilities within them to do that might take some capability building of the people and the processes. But there’s enough information out there for people to do that.

Carman Pirie: There’s been a fascinating conversation. John, thank you so much for sharing with us today.

John Patrin: Thanks. I enjoyed the conversation.

Jeff White: Thanks, John.

John Patrin: Thanks, Carman. Thanks, Jeff.
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