Today I had a great meeting with a group from MIT’s Sloan Program in Innovation and Global Leadership. The team asked to visit Seven Cycles and learn about how we approach innovation. We also had a surprise guest: Kim Blair who heads up the MIT wind tunnel.
These are serious business folks: Gavin McCallum is the Commercial Director of BP Alternative Energy, Brandon Lee is a Battalion Commander for the Singapore Ministry of Defense, Tetsu Yoshida is the Director of Business Development at Mitsui & Co., and Rene Martin Hillion is Marketing Systems Project Leader for The Boston Consulting Group.
They arrived at Seven with strong interest in really understanding us and the way we think about innovation. Gavin even owns a Seven--a beautiful white Elium Steel--on which he commuted to Seven! They had done their homework and had already decided we had at least two areas of innovation that might be worth investigating:
- The way in which we apply
materials to frame design
- Seven’s customization process
and relationship with the customer
We started by talking about Seven’s R&D process: what, if any, formalized process and tools we use? We employ a number of tools including Product Attractiveness Matrices, Product Portfolio Management, Risk Reward Analysis, Quality Function Deployment, and a few other consistently employed tools. They seemed a bit surprised that we have any formalized process.
Not What You Expect?
The group quickly saw that I was interested in talking about the business side of innovation—not just product innovation. Some topics we covered I am not comfortable sharing here because they focus specifically on some strategic advantages we want to hold close to our chests.
Regardless, we covered a lot of ground in our two-and-a-half hour conversation and factory tour. Here are a few of the topics with which they seemed most intrigued:
Customization of Everything
Just as we customize each frame and our relationship with each customer, we also customize our relationship with our retailers, and even our employees. It became clear to the team that while we have about 200 retailers and distributors around the world, we also have 200 distinctive relationships with those Seven representatives.
We discussed examples of the extremes of large retailers like Belmont Wheelworks that carries—at last count—23 brands that offer bikes in the same price range as Seven, to ‘small’ retailers like HubBub that carry only one or two brands at the same price point as Seven. Both retailers have had tremendous success with Seven; one of the reasons--beyond their business capabilities--is Seven's efforts to treat both retailers as individual entities, not just as 'independent bicycle retailers'.
We also discussed retailers that appear nearly identical on the surface—like HubBub and Cronometro—and how they benefit from not making the mistake of thinking of them as similar at all. Subtle differences in business model can offer tremendous opportunity for individualized project and program management.
When I hear suppliers discuss territory management, I universally hear it talked about in the context of geographic territory. The physical area of a city is not a particularly relevant way to determine appropriate space for a retailer—it’s a fairly two dimensional view of life. Seven focuses on demographic and psycho-graphic territory protection. I’ll explain more in another post…
Single Piece Flow
We do everything this way, and to the Nth degree. The Sloan group was surprised at how militant I am about this view of the world. I was able to explain why and they seemed to appreciate the approach. More on that later…
Customization Is Not the Same as Fit
Every other builder of which I am aware uses the terms ‘custom’ and ‘fit’ interchangeably. This is a sad statement. Fit is an element of customization. Customization is not fit. For the builders and retailers that view fit as the focus of customization miss out on tremendous value: performance, handling, tube set tailoring, balance of the bike, and many other critical and subtle elements. More on that later, too…
We also discussed a lot more than what I mention here. I will try to post about this later. It's always energizing for me to discuss business with smart, thoughtful, interested people. The group from Sloan absolutely got me energized!