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Growth Forum: Extra-preneurship

Over the past few years, we have heard much about the importance of "entrepreneurship" to the success of new product development. But what if the company culture is unable to support the entrepreneurial spirit? What if the company cannot support new product development staff full-time, but recognizes the time and/or skill limitations of existing staff?

Don Thompson, Chairman and CEO of Hunt Corporation, and Todd Peterson, a Principal of Foster Chamberlain, talk about extra-preneurship, and how it has benefited Hunt Corporation's new product development process.

DL: Give me some background on Hunt Corporation.

DT: Hunt Corporation is a 100 year-old, publicly-traded, manufacturing company that is trying to transform itself. We define ourselves as a leading provider of products used to enhance and expand the use of images, with a focus on digital images.

DL: Can you tell me about Hunt's new product concept?

DT: It's a revolutionary way to make mounting and laminating images, generally signs and presentations, much easier. With our new product line, a novice can simultaneously laminate and mount images to foamboard, saving time and money. Currently, lamination tends to create a lot of waste from destroyed images, since few people laminate enough images to refine the subtle skills needed to do it properly.

TP: Additionally, the image mounting process is highly labor-intensive, and current spray mount adhesives post both health and environmental hazards.

Hunt, in conjunction with one of its customers, identified the need for a solution to the problems commonly experienced by end-users of mounting and lamination products.

DL: How does it work?

TP: Hunt's new product line includes a special type of foamboard called pouchboard that has a sheet of laminate hinged to it, creating a pouch, into which an image can be slipped. The pouchboard is then run through a newly created, multi-purpose machine, which simultaneously mounts and laminates the image inside.

DL: What was so different about this product concept?

DT: We have expertise spanning laminates, adhesives, foamboard, machines and images. We knew we had a high-potential new product idea, but there was no clearly appropriate business unit in which to develop it because the opportunity cut across all of Hunt's distribution channels. We wanted to ensure that we exploited the full potential of the product, but simply weren't set up to do so.

DL: Why not develop the product in-house?

DT: Hunt has a small marketing department that is already pressed with just its day-to-day work. And we are trying to reinvent ourselves as well. I knew we needed intellectual capital with new, fresh and innovative approaches as well as the focus that can only be provided by full-time resources.

DL: Why not recruit talent from outside Hunt?

DT: There were several reasons. They boil down to time and money. One approach would be to hire a marketing professional from Proctor and Gamble or Frito Lay. This would be a lengthy process, because it is difficult to attract such talent to what is essentially a manufacturing organization. By hiring Foster Chamberlain, I could find what I needed overnight.

Moreover, I don't burden the corporation with the cost of a specialized function. While we need a lot of expertise now, next year we will require less.

DL: You said that the product concept was originally developed inside one of your own business units. Did they have any problem with giving up "control" of the concept's development?

DL: Not really. Although our marketing department came up with the idea, they understood that this was potentially a blockbuster for the company. They also knew their strengths and weaknesses . . . and their limitations. Consequently, they wanted Foster Chamberlain's resources and expertise.

I will also say that it helped a lot that Todd Peterson and John Ulrich, principals at Foster Chamberlain, did a good job of working with our people. Their work spanned all our business functions – manufacturing, marketing and sales. The fact that they were outsiders actually helped. They didn't come with a lot of biases, and therefore they were perceived as very supportive.

DL: What is the concept behind the term "extrapreneurship?"

TP: Extrapreneurship is the term we coined and then registered to describe our outsourced business development services. Essentially, we act as "contract entrepreneurs" for our clients. You probably remember that a few years ago, the new thinking in new product development revolved around intrapreneurship, the notion that success was linked to the ability of the product management team to think and act like small company entrepreneurs. But experts tell us that few large companies are able to retain a sufficient amount of entrepreneurial talent, partially from a failure to reward entrepreneurial behavior. It is simply counter to most large corporate cultures.

Using extrapreneurs, companies can overcome this phenomenon by accessing entrepreneurial resources on an as-needed basis.

DL: Isn't this what all consultants do?

TP: I think our implementation focus makes us different from consultants. We don't install new product development processes or train product developers. We manage the business development continuum from the fuzzy front end through launch, often acting as temporary management until the product or business is up and running.

DL: How does this differ from outsourcing?

TP: I'm not sure that it does. Companies are less averse these days to using outside contractors for such functions as IT, research and development and industrial design. They realize that they don't have to have core competency in all of these areas. It is, however, critical that the external companies work as though they are a fully integrated part of the client organization.

DT: When I think of outsourcing, I think of "work." When I think of consulting, I think of "intellectual capital." This project differed from straight outsourcing in the sense that the emphasis was on creativity and intellectual capital, although Foster Chamberlain is now translating that intellectual capital into actionable "work" in its current project.

DL: Give an example of the deliverables.

TP: Initially, we developed a business plan for the new product line: market opportunity, marketing and operational strategy, staffing requirements and action steps, etc. However, it soon became clear that this new product opportunity represented a departure from the Hunt's traditional new product work.

DL: How so?

DT: I believe that really good marketing is iterative. That is to say, the marketing process should be continually refined, with customer feedback driving ongoing product devlopment and improvement efforts. Because this new product line had such broad potential, I realized that we had to refocus the whole company toward a solutions-based approach to the market. To do this, we needed an organization that we didn't have.

DL: Can you further define the concept of "consumer solution?"

TP: Solution is a nebulous term. Fundamentally, any product that satisfies end-user needs may be called a solution. However, the important insight is that by engaging in "solution" development, as opposed to product development, companies focus on the product attributes that really matter to end-users. Truly outstanding consumer solutions are able to disrupt the competitive structure of an industry and alter or even eliminate entire pieces of the value chain.

DL: What unique services did Foster Chamberlain provide?

DT: The combination of entrepreneurial drive and analytical rigor. Here is a group of really smart, hard working people who are not part of some old, huge, main-line company. I really felt they were working both for and with us.

DL: What lessons did you learn as a result of this project?

DT: This process has confirmed the value of basic, sound marketing, which is hard to do in small manufacturing companies. It validates my belief that companies like Hunt are really marketing companies, working to integrate our core competencies with the needs of our customers.

TP: Don mentioned that good marketing is iterative. It is critical in both business and product development for companies to capture and incorporate customer feedback immediately and to use this data to enhance new products rapidly. Too often, companies fail to capture valuable insights that early adopters can provide to create a better mass-market product.

For instance, one of Hunt's distribution channels has already sold hundreds of machines into their customer base, which represents a valuable source of lead-user information. We want to know how, why, and when these customers are using the product. This information is valuable, not only for product enhancement, but also for designing promotions. By better understanding the applications that end-users have found for our products, we can educate potential future customers about the usefulness of our products.

DL: Do you have any other advice that you would offer companies developing new products?

TP: Be sure to monitor product launch using critical performance metrics so that adjustments to the marketing mix can be made immediatley. Work with finance and accounting to make sure you capture sales data in a format that enables meaningful analysis and robust decision-making. Often, sales data is not captured in a useful format, requiring product and financial managers to manipulate imperfect information to get information that is, at best, directionally accurate. You can do everyone a favor by orienting the company towards capturing information on a real-time basis.

DT: My advice would be to ensure that you have the talent to manage external resources. It is important to understand that while external resources may work more quickly, managing them to achieve the desired results demands a rare blend of skills. First, a strategic perspective is necessary to ensure that work is directed toward the vision of the company. Additionally, strong communication skills are required to convey the corporate objective to the external resources. Finally, managing outsourced work demands detail-oriented project management expertise to ensure that commitments are completed on schedule.

Hunt Corporation is located in Philadelphia and is known to the market place for many consumer and office product brands, including X-Acto (artist knives), Boston (pencil sharpeners, staplers, etc.), and Bienfang (foam board).

Foster Chamberlain, LLC, a business development company, is located in Philadelphia and provides extrapreneurship services to its corporate clients.


CALLOUTS:

"Because this new product line had such broad potential, I realized that we had to refocus the whole company toward a solutions-based approach to the market. To do this, we needed an organization that we didn't have."

This project differed from straight outsourcing in the sense that the emphasis was on creativity and intellectual capital . . .


Diana Laitner, Laitner and Associates (laitner@concentric.net)


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July, 1999 – PDMA Visions

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