Reinventing R&D For Global Competitiveness

June 27, 2006

by Navi Radjou
with Laurie M. Orlov and Samuel Bright

• Deep observation of end users . . . Esselte’s ethnographers regularly study and interact with end users in their natural settings, observing, for example, how a mobile worker transacts business on the move, or how a CEO’s administrative assistant files bulky documents. When observing how end users perform these tasks, Esselte’s R&D look for issues that not only existing products couldn’t solve but which users weren’t even aware of. Armed with this insight, the R&D team starts the process of conceptualizing, prototyping, designing, and producing breakthrough offerings that meet users’ unspoken needs — such as Esselte’s new Leitz 180° Lever Arch File that can be opened 180 degrees — 50% more than in a traditional lever arch file, so users can now file more papers faster.²
  
  
• . . . across all regional markets. The one billion consumers in China have fundamentally different needs than the 60 million British users or the 300 million American buyers. To anticipate each market’s unique customer needs, Esselte regionalized its R&D and innovation activities. For instance, researchers in Shanghai are responsible for “hearing” the “inner voice” of consumers within China as well as in adjacent Asian markets like Taiwan and Japan.

• Cross-pollinating technical and market insights internally across regions. Fernandez heads Esselte’s Innovation Leadership Team (ILT), which includes R&D, supply chain, marketing, and regional presidents. This cross-unit team is tasked with “global knowledge reusability.” For instance, the group will connect the Asian, European, and US marketing teams with XPD’s designers to quickly expand a locally applied concept across Asian, European and US markets.
  
  
• Multiplying external innovation partnerships. Esselte is building a global Innovation Network — seamlessly weaving internally- and externally-available invention and go-to-market services to meet global innovation demand.³ For instance, it has encouraged XPD to allocate up to 50% of its invention resources to be available for other noncompeting firms and entities such as Motorola, Nissan, NASA, and Intel.⁴ Similarly, Esselte is also financing inventive startups such as Ideastream, whose creative product lines complement and enhance Esselte’s own brands, or PrintDreams, where Esselte licenses its technology to expand its own product offerings.

• Rank the commercial viability of R&D projects — based on market feedback. Marketing execs size and continually revaluate the market potential of zone 3 inventions that target unmet customer needs — identified by R&D’s demographic and ethnographic studies. The market relevance of zone 1 and zone 2 inventions is ranked based on end users’ early feedback to prototypes.
  
  
• Reallocate resources to prioritize inventions that will yield higher profit. Zone 1 and zone 2 prototypes with lowest customer scores are nixed first — freeing invention and transformation resources for the more lucrative zone 3 projects. And among the zone 3 projects, most resources are committed to those product ideas with the highest global market potential — because Esselte vies for cross-unit synergies — and least operationally challenging to bring to market.
  
  
• Marshal external Innovation Network resources to speed high-value ideas’ time-to-market.
  If XPD — Esselte’s internal R&D team — can’t develop and market a promising new zone 2 or zone 3 product due to resource crunch or lack of expertise, ILT will put out a bid to external Innovation Network specialists like IDEO and Frog Design to ensure that it doesn’t miss out on the window of opportunity.