Keeping Your Eyes Peeled for the Next Baby Carrot
Low Tech Innovation: Endeavors of Insight, Foresight and Infrequent Limelight
By Rod Hart and J. Alex Bacchetti
In 1986, California carrot grower Mike Yurosek changed the world.
With most of his carrot crop not straight and perfect enough for sale to his only profitable market, grocery stores — almost 70% of his crop resulted in losses destined for pig feed or the waste bin — Mr. Yurosek, known for his creative problem solving abilities, knew something had to change. After a little experimenting and repurposing of a commercial green bean cutter and mechanical potato peeler, the baby carrot (technically the “baby cut” carrot) was born. When one of his best customers, a supermarket in Los Angeles, reacted to their first shipment from Mr. Yorosek by requesting he only continue to send them these new, delightful creations, he knew he was on to something.
According to the World Carrot Museum (yes, apparently there is one — www.carrotmuseum.com), stores that once paid ten cents for a bag of Mr. Yorosek’s regular carrots and resold them to consumers for seventeen cents, were now paying fifty cents for a pound of his new babies. And selling them to shoppers for a dollar. By the next year, consumers were eating 30% more carrots, and by 1997, over double the amount of carrots from 1987 levels. The entire carrot industry, which had been in decline, was re-invented…and not a single micro-chip or iPhone App was required. (Roberto A. Ferdman, “How baby carrots, birthed by necessity, became big business,” The Washington Post, January 18, 2016)
Innovation can come from many sources, and more often than not, it is not reliant upon new or proprietary technologies. The power to envision a baby-carrot-like breakthrough requires acknowledging that while technology certainly enables much innovation, it need not be the driving force for creating new, and even unexpected, value for customers. Rather, innovation derives from a need or desire to enhance a value chain supported by a sustainable business model.
Technology-driven innovation tends to capture most of the spotlight; however, there are many great examples of non-technology driven innovation that can be very instructive for organizations. “Necessity is the mother of invention” rings especially true in times of crisis when resources are more scarce and/or needs change unexpectedly and dramatically. Tapping the ingenuity within your organization at times like this often requires agility, flexibility and getting down to basics: driving innovation through either repurposing existing technologies or identifying and creatively addressing new unmet needs. Consider distillers who quickly repurposed equipment from liquor production to hand sanitizer, or textile companies offering face masks that are not only effective, but reusable, comfortable and fashionable.
This is not to say technology is unimportant or unnecessary, as low-tech innovations often use technology as part of their model. However, the technology is not the distinguishing differentiator in the innovation and, in fact, can be generally available to competitors. The green bean cutter and potato peeler were widely available to others, but Mr. Yorosek put them to novel use to address the problem he was trying to solve.
Some low-tech innovations come from creative individuals, some from new start-ups, and others from large, mature companies. Some may even evolve over years or decades across several companies in different countries. The ubiquitous intermodal (shipping) container, whose story is effectively told in Marc Levinson’s 2006 book, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, is another powerful example. Instead of stevedores and longshoremen (when was the last time you met someone from either of those occupations?) unpacking and re-packing different transportation vehicles (from ocean-crossing freighters, to railroad boxcars, to over-the-road semi-truck trailers), the same shipping box is just lifted and placed by a crane operator, and continues on its way. It’s a seemingly simple concept (notwithstanding a few recent, highly-published incidents of boxes falling into the sea) with a long, complex journey to full implementation that became a significant contributor to the globalized economy and a critical enabler of China’s economic rise.
Innovation and Value Creation
Whether innovating around current or new products, for existing or new customers, the greatest impact of the innovation is more likely to occur when there is a deep understanding of the full potential value added. Often, innovation may be driven by a need to reduce production costs or the costs of inputs, or to eliminate or reduce waste (as in the baby carrot case), but optimizing its value requires consideration of how ultimately the customer experience is enhanced. This marks the difference between what we refer to as “low-insight” versus “high-insight” innovation. A true value enhancing business model results from understanding not only how the innovation may solve a need of the business, but demonstrating high-insight into how such an innovation can fundamentally benefit the customer and thus drive greater revenue, market share or customer profitability (see Figure 1).
Essentially, without a value enhancing business model, an innovation is merely an invention. As a co-founder of General Electric, Thomas Edison seemed to understand this, and died wealthy as a result. Nikola Tesla was not so fortunate. With a series of transformational inventions but huge business missteps (such as allowing George Westinghouse and J.P. Morgan to reap the biggest benefits of two of his most significant inventions, the alternating-current motor and a wireless communication system), he died a relatively poor man. (“Pioneers Die Broke,” FORBES, Dec. 23, 2002) At least his name continues to live on and inspire others.
With his baby carrots, Mr. Yurosek identified an innovative way to reduce waste by chopping, shaping and peeling his misshapen and unwanted carrots into something grocery stores would now be willing to buy at a premium. He understood how this innovation could transform the production cost side of the value equation by substantially reducing his waste, but arguably had low-insight, at least early on, into how this innovation would fundamentally change the value model for the end consumers who now had their product peeled, sized and packaged for convenient consumption. Mr. Yurosek effectively missed that the biggest premium was on the retail side, rather than wholesale, given how it would transform the way shoppers bought and consumed carrots. In fact, it wasn’t until 2010, five years after Mr. Yurosek’s death, that carrot producers began marketing this great innovation as a snack alternative to junk food. (Bruce Horovitz, “Baby carrots take on junk food with hip marketing campaign,” USA Today, September 3, 2010)
Chicken or Egg?
Do great innovations begin with an idea or solution, and then a person/team searches for a problem it can solve or a need it can fill? Or does innovation begin with a person/team having an insight that identifies an existing problem or a new need that they then seek out to address? The answer is actually both, which is to say that innovation does not occur in a bubble and often the most effective approach is an iterative one. Post-it Notes began as a failure — a search for a super-strength glue that resulted in a reusable, low-stick adhesive. According to Wikipedia, for five years, Dr. Spencer Silver, the 3M scientist who created the adhesive promoted his “solution without a problem” within the company both informally and through seminars, but failed to gain acceptance. Eventually, a colleague who had attended one of his seminars, Art Fry, came up with the idea of using the adhesive to anchor his bookmark in his hymn book. Fry then utilized 3M’s officially sanctioned “permitted bootlegging” policy to develop the idea. The original notes’ yellow color was chosen by accident, as the lab next door to the Post-It team had only yellow scrap paper to use. This iterated “accident” has become an indispensable staple for most conference rooms, offices and refrigerator doors.
On the other hand, health care’s Evidence-Based Medicine evolved over decades from a realization that historical clinical approaches were inconsistently applied; that the pace of new medical research was too overwhelming for any clinician to keep up with, and; that drug and device manufacturers’ aggressive marketing tactics were unduly influencing doctors’ clinical decisions — reinforcing the need to emphasize the science, over the art, of medicine.
An Innovation Methodology
Innovation is not a straight-line process, as evidenced by the number of companies that have pivoted at least once from their initial vision. Netflix started as a DVD-by-mail company, evolving to a streaming service and ground-breaking producer and licensor of its own content. Before Groupon became…well, Groupon…it focused on unique methods to build critical mass for raising money for social causes — though many would argue as evidenced by long-term negative stock price trends and questions about the viability of their business model (“The Death of the Daily Deal” Knowledge@Wharton, March 28, 2017), that Groupon is long overdue for yet another pivot. And Play-Doh was always a re-malleable form of modeling clay, right? Actually, no. It began as a cleaner to remove coal furnace ash deposits from wallpaper.
In our experience and research, we have identified three steps to successful implementation:
● Insight/Need — identify or reframe a need, such as an internal opportunity to reduce waste or manual workarounds, or; external opportunities likely to result from demographic trends or an unexpected event
● Idea/Solution — conduct research, get fresh perspectives from other industries, and look at the intersection of various trends and technologies to brainstorm the potential opportunities
● Endeavor — take the idea/solution to market and rapidly iterate improvements
Innovation initiatives or start-ups that are inflexible or over-reactive are likely to fail whereas successful innovations more often evolve through integration and methodical iteration across all of these steps. They succeed by constantly clarifying and refining both their understanding of the need and the nature of the solution along with its relevance to the marketplace. (See Figure 2). This iterating, preferably as much as possible while still under the radar, is critical to assuring innovations hit that sweet spot of delivering significant new value while also being user-friendly and not too far “out there” to be unrelatable or unbelievable to the many skeptics waiting to pounce on the first high profile misstep. Sadly, as Christian Claytensen articulated so well in The Innovator’s Dilemma, in many mature companies the worst skeptics are internal staff entrenched in the status quo who are looking for reasons to pull the plug on something that could disrupt their currently successful business.
In this first of a series of articles on low-tech innovation, we introduced the value creation model and proposed an innovation methodology…a way to find that elusive next baby carrot. These are part of a Unified Innovation Framework which also includes organizational culture. The Post-It note story is emblematic of the need for embracing the entire framework we espouse. Without 3M’s culture that embraced sharing knowledge and promoted “bootlegging” technology; provided the resources to explore and ideate, and; built the structure that required clear identification of value, it is unlikely our world would be so adorned with small colorful sticky sheets of paper.
In future articles, we will dive deeper into these concepts and how critical it is to integrate all elements for successful, sustained innovation. We will also present a number of other case studies in low-tech innovation, including our take on lessons learned in the context of the Unified Innovation Framework. Although our case studies will represent a variety of industries (plus one of the most innovative athletes in professional sports), our lifelong careers in healthcare will likely mean more than a few examples from our home court, as well as lessons from other industries that we can apply to healthcare as it continues its transformation from volume to value.
About the authors:
Rod Hart, M.B.A. is an executive with a healthcare improvement company. He is an innovator focused on helping healthcare providers transform their clinical operations and customer experience, with a focus on advanced analytics and human-centric design.
J. Alex Bacchetti, M.B.A., is an independent consultant and an adjunct faculty member of The Quinlan School of Business at Loyola University-Chicago, teaching finance, marketing and strategic management to healthcare MBA students.
