One day after Apple announced its new iPhone X with its edge-to-edge display and futuristic features, a ghost from the past re-emerged. On its 80th birthday and a decade after halting production of analog cameras, Polaroid announced it is bringing back its most famous instant camera, the OneStep, in addition to producing new film.
The iconic manufacturer made headlines for reimagining retired products and incorporating a few modern features along the way in an effort to entice a new customer base. While their gamble may not pay off in the long term, executives should take notice of their creative thinking.
As competition continues to increase, manufacturers are racing to identify new strategies to work smarter, increase efficiencies, widen margins, and grow revenue. There’s been rapid development in recent years of new tools like smart sensors, futuristic automation technologies, and the Internet of Things to help manufacturers stay ahead. While many organizations are summoning innovation as some sort of mystical savior of modern manufacturing, some may be potentially overlooking opportunities to tap into their own magic: existing products, processes and people.
So while you explore new ideas and technologies, don’t forget to look inward. Innovation can be found in both areas.
Training and talent: If you’re looking for ways to remain competitive without creating a new product or tapping into a new market, look within. We’ve found that our most successful manufacturing clients maintain a strong focus on their own training and culture. They create a work environment that attracts the best talent to do the best job (in a very tight industry labor market). These clients have typically seen great positive results in market share simply by investing in their people and reducing costly turnover.
(Sales and marketing) Process innovation
Online tools: Have you been exploring ways to streamline your existing sales process? Many manufacturers record millions in sales each month, yet continue to use an antiquated printed or PDF product catalog. Existing customers might be used to the clunky document, but if you make it hard for your customers (new and old) to find you and browse your products — they may tire of the hassle and never convert. If you list products online, but don’t have an e-commerce site or a technology-enabled way to reach your sales team, get on board now or you’re going to run the risk of becoming invisible to your market.
On the contrary, make sure you’re thoughtful about how you present your products online. One client spent top dollar to build a new website but it generated opportunities well beyond their geographic region. If they had more strategically limited the “top of the funnel” or been prepared to produce and deliver product more broadly, they wouldn’t have missed out on significant new sales.
Positioning: How are you marketing your existing products to customers? Polaroid made a few tweaks to modernize a product that had long since been retired and re-launched it with a nostalgia-marketing angle and updated branding, which appeals to both millennials and their original customer base.
Product (and services) innovation
Pricing models: Perhaps you can draw inspiration for new pricing strategies from Apple’s iPhone. As mentioned, the tech giant recently introduced their latest model with an entirely new pricing strategy. With the launch of the iPhone X, which retails around $1,000, the brand is looking beyond the “iPhone for everyone” model and is breaking into the luxury market. Your products may afford similar opportunities — offering the majority of your customers a general purpose/utility version, and offering a select customer group a premium outfitted (and priced) alternative.
Niche expansion: One manufacturing client is the majority owner of a very narrow and specialized market for their product. By making the most minor of changes to their existing product (basically, producing it just a bit smaller), they were able to break into a whole new (and much larger) customer segment, ultimately tripling their market potential. Even little alterations to product design or production process can sometimes create a major opportunity.
80/20 rule: Are you still selling products that aren’t profitable? Or maintaining customer relationships that are too costly? If so, now is the time to prioritize and consider making changes. Typically 80 percent of profits come from 20 percent of your products and/or customers. You may need to make some difficult decisions to cut what doesn’t work or go in another direction to ultimately grow your business. At my company, EKS&H, we assisted one client recently with a strategy SKU rationalization. They looked at 1,000 different SKUs and specific product units and ranked them on profit and complexity (cost). Which ones opened doors for them? Which ones required too much energy or were too expensive to produce? Making the cuts allowed the business to focus on growing the more profitable product segments.
Innovation doesn’t always mean a brand new, revolutionary idea — it also means thinking differently about what is in front of you. Remember to look internally at your existing people, processes, and products and make the strategic tweaks to modernize, reimagine, and improve your business.
Chris Otto is Partner and Manufacturing Practice Lead at EKS&H, a nationally recognized professional services firm providing audit, tax, technology, wealth advisory and business consulting services to public and private clients locally, nationally, and internationally.