Bent racquets, skunk works and corporate success

AUTHOR: John Hancock   DATE: 30.11.01   ISSUE 3, 2001

AGSM lecturer, Dr Hann Kim, has put together a new course for the full-time MBA program. Called Innovation and Strategy, it examines how general managers can keep their companies’ products and processes moving in the best direction for future success.

The main theme of the course is managerial rather than technical. Kim takes the modern approach, in which technology strategy is viewed as a responsibility of general managers rather than IT or scientific specialists.

The course presents conceptual frameworks and analytical tools managers can use to identify changes in the marketplace, develop their companies’ capabilities and exploit new opportunities. As a result, students don’t need high-level technical expertise to benefit from the course.

This is just as well, because the readings and case studies include products as diverse as 18th-century pocket watches, heavy earthmoving equipment, computer peripherals, theme parks, stealth fighters and tennis racquets.

Racquet design formed the basis of Kim’s presentation to the AGSM’s Centre for Corporate Change research briefing on knowledge and innovation to practitioners last July. The crux of his message was that technology can win in the laboratory yet lose in the marketplace. He cited pioneering ‘ergonomic’ racquet designs featuring bent handles and skewed heads. In performance tests these designs rated consistently higher than conventional racquets, in some cases up to 18 per cent higher. Yet they never succeeded as products, because tennis players didn't like the way they looked.

Kim stresses that a key element of most successful innovation strategies is the inclusion of operations and marketing people in the team. Their purpose is to act as spokespersons for the shop floor and the consumer. Because even when a new product performs brilliantly, if the company can't actually make it or customers won't buy it - it remains merely a technical masterstroke.

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WINNERS AND LOSERS Pioneering racquet designs featuring bent handles and skewed heads performed well yet didn’t succeed.

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He also warns that too often companies facing technological breakthroughs retain outdated definitions of their competencies and their customers. “In terms of both their products and their customer bases, established companies tend to exploit the known rather than to explore the unknown,” says Kim.

The famous solution to this problem is a 'skunks works.' Pioneered by aero engineer Kelly Johnson at Lockheed in the 1940s, and named after the moonshine distillery in the cartoon strip Li’l Abner, skunk works now exist - often tenuously in all sorts of technology-based companies. They avoid technological myopia by subverting the dominant corporate culture. They operate outside normal channels of communication, in some cases without the permission, or even the knowledge, of senior management.

Kim’s course notes include a marvellous quote from Skip Ulmer, a DuPont skunk worker whose six-person team wanted to see if it could replace the rubber in disposable nappies with Lycra™ Spandex. “Everybody expected us to fail,” he recalled, “so we had unlimited licence and were not checked on weekly”. Four years later it was a US$25 million business. Ten years later DuPont had 30 per cent of the global market.

Practising managers in the MBA program will appreciate Kim’s applied approach. For instance, the last two weeks of the course cover ‘Delivering innovation to the market’ and ‘Profiting from innovation’. The course notes include a useful modelling tool that allows a manager to assess quickly even a global business idea (the example is Kao’s multi-billion-yen entry into the floppy disk sector) on a simple spreadsheet.

Hann Kim is a native of Seoul and received his BBA and MBA from the University of Korea. He received his PhD from Wharton in the US. His current research is in the fields of technological innovation, corporate strategy and evolutionary economics.