Timberland_Case_Study

| Introduction The Timberland Company is a highly successful shoe and clothing manufacturer whose strategy and structure have changed drastically over its history. Formed in 1952, by Nathan Swartz, the company’s initial success was driven by radical innovation, such as the production of the first truly waterproof pair of work boots. However, as they grew in size, Timberland moved away from this game changing innovation strategy, to place more focus on specific consumer markets with the creation of in-line teams. Timberland was eventually convinced to return to its innovative roots following the difficulty in implementing a new idea known as Smart Comfort, as a result of the fashion oriented business structure. They achieved this through the creation of a separate department known as the Invention Factory (dubbed iF), who would act as idea generators and concept designers. Whilst placing focus once again on the generation of game changing innovations to retain organisational success, iF has a number of detrimental impacts which inhibit its effectiveness. These faults lie in the areas of cultural misalignment, lack of strategic clarity, organisational structure, failure to create social capital, and integration of innovative ideas into the mainstream in-line teams. It is necessary for Timberland to address these issues to maintain their long-term success. Cultural Misalignment Since 2002, Timberland has been separated into the following distinctive departments; Inline Team, Speed Team and Advanced Concept Team (iF). The in-line teams would remain organised by consumer segments and focus on products in the seasonal calendar as well as focus heavily on global consumer segmentation and brand marketing. The speed team was formed to handle responsiveness for products that could be placed on a shorter calendar, developed quickly and immediately sent to market. iF had a longer time horizon which focused on new ideas requiring longer development, new factory partnerships, higher risks, new platforms with the aim to produce Timberland’s next breakthrough product and process concept. Timberland is currently facing a “culture clash” that has been created between the iF department and the speed and inline teams. This clash has emerged as a result of the favouritism iF has received, compared to the other departments (e.g. obtaining a separate biomechanics lab, research, design and development areas). In these areas there are iF logos featured on the walls and “restricted area” signs decorating the areas layout. As well as this, members of the iF department were “specially recruited” from the inline teams as a sort of hybrid organisation that was comprised of the star members of the inline teams or the “best of the best”. This creates a divide in the organisation amongst the various departments, with iF appearing to be the more favoured of the three groups. Members of the inline and speed teams may feel disenfranchised as a result of this special treatment, creating a rift between the various departments within Timberland and promoting unconstructive internal competition. “Culture clashes become class warfare if there are two classes of corporate citizens” (Kanter, 2006) which became apparent between iF and the speed and inline teams with the failure of the Travel Gear concept. This clash and internal competition is also evident through one senior executive who quoted, “we sometimes fight ourselves”, in reference to a lack of collaboration across groups (Kanter, 2006). Lack of Strategic Clarity Timberland has displayed a lack of strategic clarity amongst the departments. iF focuses on long-term, high-risk radical ideas, which may not be able to gain market acceptance immediately and produce immediate financial returns. They are therefore strategically looking at a product which will “change the marketplace” indefinitely and will need to sort through many ideas to come up with one great idea, which requires constant short term failures in order for long term successes. In contrast, the speed and inline teams focus more on the short-term ideas which reap immediate returns and widespread and rapid market acceptance. They are therefore focusing on products that are more main stream and with a guaranteed high rate of success. Because of their strategic focus both groups will have opposing goals which may not fit in line with one another and may causes clashes as a result. Organizational Structure Through changing their structure to be more efficient at producing products for specific consumer segments, Timberland was able to grow as a company and be more competitive with prestigious fashion companies. However, this compromised their role as innovators in the industry which was the very thing that had made them successful market leaders in the past. The move to produce products that were fashion over function was a profitable and successful initiative, but the way Timberland reorganized structure within the company was not sustainable in the long term (Kanter, 2006; Raffaelli, 2008). As the key innovation practices are only the responsibility of the Invention Factory, and thus, are not fully integrated into the other departments, you get a classic innovation trap relating specifically to an organisation’s structure, where connections are too loose and separations are too sharp. This relates to Timberland with the iF department separated both geographically and psychologically away from the inline and speed teams, resulting in poor communication between the three groups. This poses a problem for Timberland in terms of its innovation capabilities because “companies may miss innovation opportunities altogether as game changing innovations often cut across established channels or combine elements of existing capacity in new ways”(Kanter, 2006). Furthermore “the likelihood that companies will miss or stifle innovations increases when the potential innovations involve expertise from different industries or knowledge of different technologies” (Kanter, 2006). Thus Timberland is not capitalizing on the potential benefits that can arise through cooperation between all departments of the organisation. This is highlighted by the innovative Smart Comfort concept, whose implementation was inhibited by the structure Timberland had created to better service consumer needs (Kanter, 2006; Raffaelli, 2008). To remedy this, Timberland needs to evoke the concept of a team rather than a hierarchy, they should seek to compliment, not compete, with each other (Kanter, 2006; Raffaelli, 2008). Recommendations Timberland needs to facilitate better interaction between iF and the speed and inline teams. One way is to increase the human connections amongst the various members of the organisation, with “productive conversations taking place regularly between innovators and mainstream business managers” (Kanter, 2006). As well as this “companies can facilitate informal conversations or identify the people who lead informal cross unit networks and encourage their efforts at making connections” (Kanter, 2006). One simple yet effective way of accomplishing this is by setting up locations within the organisation’s physical structures, such as coffee rooms, water fountains or relaxation rooms, which force members from different areas to “bump” into one another and converse. As well as leading to positive benefits from innovation flow, it would help to build interdepartmental networking relationships and promote dialogue and knowledge exchange, strengthening a collaborating organisational culture, as members are encouraged to feel as if they are part of the ‘organisation’ and not just part of their ‘unit’ (Hansen & Birkenshaw, 2007). Another suggestion in combating the “culture clash” evident at Timberland would be to spread resources more evenly around the organisation, so that no one group feels favoured over the other. This is particularly relevant to the Invention Factory which should do away with the heavy branding of the iF logos and symbols within its offices and on its business cards etc. This is merely creating a cultural divide between the iF department and the speed and inline teams who feel disenfranchised as a result of the favouritism. They also need to take away the special status and perks of iF team so they have equal rights with other teams. Presently, iF is a separate organization which needs to be more connected to the company. Cross-functioning training should be used to facilitate communication between different teams to allow an understanding of the other team’s operation (Hansen & Birkinshaw, 2007). Member’s from the iF team need be held accountable for the intergration of their innovations into the market place. This would require them to work closely with the in line-teams and share some of the responsibilties of futher development of products created by iF. This will be discussed in more detail in the integrating innovation in the mainstream section. Failure to put Theory into Action….Unable to Create Social Capital The first project undertaken by iF was the innovative concept of Travel Gear, whose development demonstrated the team’s strength in creating and developing new ideas. However, this product failed because of the difficulties in cross-departmental communication, collaboration and garnering support for their ideas from other parties. Another reason is that the design of Travel Gear seemed too radical to be accepted easily; it was too big a change in a short amount of time (Kanter, 2006). Moreover, there was no idea championing or improvements made after it was rejected, and therefore they did not re-touch the project which truly undid the group’s time and effort. Timberlands situation can be explained by the innovative value chain that discussed by Hansen and Birkinshaw. They mention that innovation is a process with an integrated flow of idea generation, conversion and diffusion, with each part being critical to the success of a new innovation (Hansen & Birkinshaw, 2007). The failure of Travel Gear can be connected to a weakness in the diffusion link (spread of the idea across the company). If theory cannot be turned into action, then it will always be a theory and therefore is useless to an organization [pic](Hamel, 2006; Hansen & Birkinshaw, 2007; O'Connor & Rice, 2001). Recommendations It is apparent that Timberland needed to change the structure and the process of iF to be able to succeed in future innovations, and vital to Timberland strengthening their innovation value chain is the creation of social capital. This can be achieved through addressing the structural, cognitive, and relational dimensions. Change of Structure Dimension Timberlands iF team was very exclusive, unstructured and very diverse. This was the only ‘team’ that was creating innovative ideas and processing them as their own. It is our recommendation that ‘innovation’ thinking be integrated throughout the organisation. This can be achieved by complying with the recommendations mentioned earlier, and boasts the benefits of faster and cheaper accessibility to information (Nahapiet & Ghoshal, 1998), whilst improving the knowledge flow throughout the organization, facilitating superior market responsiveness (Hamel, 2006; Nahapiet & Ghoshal, 1998). Change of Cognitive Dimension Differences in the language and codes used by iF are a barrier to idea diffusion, as those in the organisation who are unfamiliar with such jargon may not understand the product. Initiatives which aim to facilitate understanding could solve this issue. For example, Timberland could create an intranet, blogs, chat room or web-handbook to assist non technical specialists understanding. These could be used when face to face collaborations aren’t possible or viable, but means team members still have the facilities to conduct efficient, meaning and productive exchanges (Hansen & Birkinshaw, 2007; Nahapiet & Ghoshal, 1998). Better however, would be for training to occur through an informal mentoring process, whereby iF members could answer any questions, and explain any misconceptions that the speed and in-line teams have. This will educate the teams and individuals over time (Leonard & Swap, 2004), while having the added benefit of possible knowledge creation through re-examining instilled beliefs (i.e. ‘new knowledge is created at the edge of old’). Change of Relational Dimension Trusting and cooperative relationships between team mates and other parties, and consensus on each progressive stage of innovation, further develops access to information, anticipation of value and motivation for exchange. Flexible organizational structures, in which teams across functions or disciplines organize around solutions, can facilitate good connections. If Timberland was to invite iF and in-line team members to select to work on projects that interest them, instead of just ‘picking the best’ employees (which endorses division), they would create closer ties within the team, as members will have a common interest (O'Connor & Rice, 2001). As members move between projects they network, meeting new people and exchanging ideas, which increases idea pollination and individuals knowledge stock (both tacit and explicit knowledge) (Hansen & Birkinshaw, 2007). By creating tighter relationships and networks it can also add a safety element to projects, as there is a higher probability of flaws being identified through a greater store of past experience, potentially resulting in cost and reputational savings. It will additionally allow for greater risk taking, experimentation and increased creativity (due to greater diversification of ideas), all of which are imperative to Timberlands survival. Risks and Barriers in Implementation of Recommendation These recommendations need to be coupled with good management and leadership skills as well as a complying organisational culture. Two main risks of these changes is that being too de-structured can cause confusion and stress, which can limit the potential transfer of knowledge and collaboration. Furthermore, integrating more innovation involvement may create double-up effects (quantity of ideas rather than quality ideas) and the development of internal competition which was discussed earlier. Integrating Innovation into the Mainstream While iF generates lots of innovative ideas that could radically change the shoe industry, without proper integration into the mainstream business, these practices just become a draw on Timberlands resources. The lack of idea diffusion (Hansen & Birkinshaw, 2007) is a consequence of Timberlands division of its R&D department (iF) and its in-line teams. iF develop innovative products such as Travel Gear, and then pass the product onto the in-line teams without an understanding of the magnitude of work required to market and adapt the product for customer use. Besides not having the resources to finish off the unexpected and complex product designs, since the in-line teams didn’t have a hand in the development of the idea, they hold a “not invented here” mentality, and often doubt the marketability of some of iF’s products (like the Urban Renewal range). This results in disinterest towards new innovations, and lowers their chance for success. Recommendations 1) In-Line Team Involvement To solve the mainstream integration problem, iF created a formal four phase innovation process: (1) understand (i.e. define the problem); (2) observe & visualize; (3) evaluate & implement; and (4) transition to the in-line teams. We believe that this process is flawed in that they shouldn’t be handing a finished product to the in-line teams, as it does not solve any of the issues mentioned above. Instead, members from the in-line teams should be involved throughout this process (Kanter, 2006). The in-line teams pride themselves on “knowing their customer segment better than anyone else”, and thus, they may present iF with unmet market needs which will facilitate idea generation. In-line team member’s knowledge of consumer sectors would compliment iF’s “duct-tape” learning through consumer observation. Through their deep understanding of consumer likes and dislikes, in-line members would be able to quickly narrow down solution options to those that are viable, as well as possibly having some valuable insights which could enrich the concept design. By introducing in-line involvement in the design phase, it allows iF to be more closely connected to markets and customers, and facilitates the faster introduction of innovations (Kanter, 2006). Finally, transition back into the in-line teams would be smoother, as the product has been designed to be marketable (O’Connor & Rice, 2001), and the design involvement means they will likely be more enthusiastic about selling the idea to wholesalers. 2) Idea Evangelist The second recommendation to improve Timberlands idea integration is through the use of an idea evangelist. Idea diffusion isn’t automatic, but it can be facilitated through creating excitement about new concepts; this is the idea evangelist’s role (Hansen & Birkinshaw, 2007). He/she utilises their extensive personal networks, spanning across organisational departments, to promote the benefits of the new, innovative concept or product (Hansen & Birkinshaw, 2007). Timberland informally used an idea evangelist in the transition of their PreciseFit product from iF to the men’s casual in-line team. The case says that transition wasn’t going well due in part, to an overestimated resource saving and additional effort required to teach retail and wholesale people how to sell the product. Seeing this, the initial product researcher and designer, John Healy, stayed involved, calling meetings to support the in-line teams and using his network of senior leaders and product management resources to strengthen PreciseFit’s position. He constantly addressed the concerns of cynics, and conducted a pilot study to convince wholesalers that it would sell. He finally invited the in-line team to modify the design to make it more marketable, and found that they actually improved the product, “they came up with something that was much cooler”. This creativity demonstrated by the in-line team supports our earlier argument that their input would be a valuable addition in product design. We recommend that the position of an “idea evangelist” become a formal, rotational position, as this increases the chance for effective concept diffusion, and aids the building of networks between iF and the in-line teams, assisting future concept transitions (Hansen & Birkinshaw, 2007). 3) Compensation Our third recommendation is in light of a lack of motivation to sell innovative products due to the additional work required (i.e. selling the concept to wholesalers, and teaching retailers how to sell it to consumers). We propose that Timberland introduce monetary bonuses for selling innovative products, as this will compensate in-line team members for the extra work. Barriers to Implementations While we believe that these recommendations will solve Timberlands idea diffusion issue, they have barriers which hamper their effectiveness. Recommendation one may be inhibited by the pride of iF members. As a consequence of iF being the hand-picked, top performers, they may be disinclined to accept the advice of the in-line team members. To inexpensively combat this, Timberland executives should pay more attention to the in-line staff, and circulate good ideas that they have, throughout iF (such as the modifications to PreciseFit). The clash of cultures is another barrier to implementation of recommendations one and two, with solutions discussed earlier in the lack of strategic clarity section. Conclusion As an organisation that prides itself on its innovative qualities, Timberland is currently facing severe problems relating to faults in its innovative processes which are prevalent throughout the entire organisation. Effective idea diffusion is inhibited through the conduits of internal competition, communication barriers, and “not invented here” disinterest, which is consequential to limiting innovation to the iF department. While favouritism towards iF (evident from Timberlands structure) and a lack of strategic clarity creates a culture clash, which also endorses unconstructive internal competition and restricts organisation-wide collaboration. We have found that there is a need for the creation of social capital through addressing these structural, cognitive, and relational dimensions, with the goal to achieve a more directly focused organisational strategic vision, which can be embraced by members from all departments. A number of recommendations have been put forward, though, the main change that we believe is essential, is for the innovation process to incorporate inspiration from all areas in the organisations, and not limit it to iF solely. This will allow Timberland to increase market responsiveness, generate more innovative ideas, and improve the successful implementation rate of its innovations, strengthening their position as a world leader in the footwear and retail dimension. References • Hamel, G 2006, 'The Why, What, and How of Management Innovation', Harvard Business Review, vol. 84, no. 2, pp. 72- 84. • Hansen, M., Birkinshaw, J., 2007, ‘The Innovation Value Chain’, Harvard Business Review, June 2007 • Kanter, R., 2006, ‘Innovation: The Classic Traps’, Harvard Business Review, June 2007 • Leonard, D., Swap, W., 2004, ‘Deep Smarts’, Harvard Business Review, September 2004 • Nahapiet, J & Ghoshal, S 1998, 'Social Capital, Intellectual Capital and the Organisational Advantage', Academy of Management Review, vol. 23, no. 2, pp. 242-66. • O’Connor, G., Rice, M., 2001, ‘Opportunity Recognition and Breakthrough Innovation in Large Established Firms’, California Management Review, Vol. 43, No. 2 • Soo, C. (2008) ‘Organisational Learning and Innovation Lecture Notes’ (Weeks 1, 2, and 4) ----------------------- By Lloyd Miller, Marcus Buzz, Phoebe Tong, and Sean Wrigley