Innovation is the current buzzword, but in many ways, it’s become an overused term that means all things to all people. Anything can be “innovative,” regardless if it’s more of the same, or a revolutionary product that doesn’t make things better.
A refinement, however, is specific: It involves taking something that already exists, improving it, and making it easier to adopt. A refinement has the added benefit that somebody else has already done much of the legwork of getting established in the marketplace.
“When somebody invents something, it usually means there’s a high level of customer education required,” says Eric Ryan, co-founder of San Francisco-based Method, a company specializing in green cleaning products with sleek designs. “The most successful things find a new way to differentiate on top of a set of established behaviors. We didn’t invent home cleaning, we just found a new way to do it.”
It may sound less sexy than “invention” and less futuristic than “innovation,” but throughout the history of American business, refinement has been the backbone of entrepreneurial success.
Henry Ford is one of the first titans who, in essence, refined the wheel. He was far from the first auto manufacturer to develop a four-wheeled gas-powered car. That would be Gottlieb Daimler in 1886, 17 years before the Ford Motor Company was incorporated. Ford, however, pioneered features such as lightweight vanadium steel, removable cylinder heads, a suspension designed to handle America’s rural roads and a one-piece underside shell in his easy-to-maintain-or-modify Model T.
More importantly, Ford refined Oldsmobile’s rudimentary assembly line. “He was the first to bring the work to the workers, making this a real assembly line and one that remains the standard,” says Russ Banham, author of The Ford Century.
Previous manufacturing methods, in which workers moved from one part of the factory to another building a car, took so much time the finished automobile was unaffordable for average Americans. By adding a movable conveyor belt to the assembly line, Ford cut down production time from more than 12 hours to 93 minutes. Between 1913 and 1927, the company would produce some 15 million Model Ts, changing the automotive and economic landscape forever.
The 21st century version is perhaps best exemplified by the iPod. The device made its debut in November 2001, a few years after mp3 players like the Rio PMP-300 hit the market. And while the original scroll-wheel iPod was powerful, offering 5 GB of storage that could hold 1,000 songs, it was also expensive, at $400. The iPod proved so popular that even at that price, many users quit their illegal downloading by switching to the more streamlined and user-friendly iTunes.
“It seems to me that the true visionaries are the ones who look at the same equation that everyone else is looking at and still come out with something that changes the game,” says Robert B. Tucker, President of The Innovation Resource and author of Driving Growth Through Innovation.
In the case of Apple, they saw the growth of mp3 along with the problem of illegal downloads, so they came out with iTunes, a system that offers a complete solution to the customer.
Apple had the same impact on the marketplace as Ford, selling more than 210 million iPods worldwide. As of June 2008, 5 billion songs have been downloaded from iTunes, which has also become the dominant player in digital TV and movie downloads. Apple is constantly refining its successes. “The iPhone is nothing more than a product extension of the iPod,” says Ryan. “It’s a major breakthrough in the way phones are set up, but before it came out, any of us who has a Mac or an iPod knew how it worked.” In less than two years, total sales of the iPhone hit 37 million units.
Being a “lead user” of a product is often the first step on the road to refinement according to Eric von Hipple, professor in the Innovation and Entrepreneurship program at MIT, and author of Democratizing Innovation. “Successful entrepreneurs are often the lead users of the product themselves who try different variations while the market is still small and uncertain.” The opportunities come out of understanding the communities they serve.
Refinement is not just for startups, as corporate titans have learned in recent years. Travelocity founder and former CEO Terry Jones built the online travel agency company while working as CIO for Sabre, which was in the in-house IT arm of American Airlines. American’s CEO provided the funding, Jones says, because he knew a shift to online booking and ticketing was inevitable. Jones moved his team off campus and put together a staff that mixed younger IT folks with veterans from travel. Created in 1996, Travelocity would eventually become its own entity, but the incubator for the first online travel agency was at American Airlines. Jones’s experience as a start-up tucked away inside a huge corporation shows it’s possible for business owners of any kind to create the company mindset that leads to refinement.
“Our philosophy was we were still a travel agent, just a very different kind of travel agent, but we had a culture that celebrated experimentation and didn’t punish failure,” Jones says. “You never know where the idea is going to come from that breaks the paradigm.”
These days, one of Jones’s endeavors is serving as chairman at Kayak.com. It’s a search engine referral service for flights, hotels, cruises, and such, but it doesn’t issue tickets like Travelocity. Rather, Kayak directs customers to the airlines and so forth, so it’s not a travel agency in the traditional sense.
In other words, a refinement.
