No one really needs a battery-operated electric pencil sharpener. The electric pencil sharpener is not in any way a part of Maslow’s hierarchy of needs. You don’t need it to survive. Really.
And let’s face it, the world could live without Post-it Notes, luggage with wheels, the Swiffer, battery operated toothbrushes and a whole host of other stuff we’ve come to rely on.
But there’s a subtle genius to these innovations that morphed them from indulgences to must-haves in the lives of many Americans.
“We don’t need all of this stuff … but for some reason, I just want to buy it,” explains John Nottingham, co-president and co-founder of Nottingham-Spirk Design Associates. “We have a strong emotional response to these things.”
We, as consumers, have become more discerning about our stuff, whatever that stuff may be. It’s not enough that the price is low and the quality is high; even the average consumer has the audacity to expect constant innovation and a sleek design.
“In the ’50s and ’60s, the consumer market was controlled by the manufacturer,” says Nottingham. “They made it, and the retailers had to buy. But recently, there has been a wholesale power shift to the consumer. Retailers are servants to the consumer; the consumer calls the shots.”
Nottingham knows as much about this topic as anyone. He is one of the two Johns that make up Nottingham-Spirk, a 31-year-old, 50-employee design firm founded by Nottingham and his partner John Spirk, a couple of Case Western Reserve University engineering grads.
While you may not have heard of their company, there’s little doubt you’ve used at least one of the products they’ve designed. Nottingham-Spirk has worked for or sold to such large corporate names as General Electric, Sony Electronics, Newell-Rubbermaid, Sherwin-Williams and Black & Decker.
Every time you pour paint from one of the new Sherwin-Williams paint cans with a spout, or brush your teeth with the Crest SpinBrush, you’re using the tangible result of an idea that originated at Nottingham-Spirk.
Combined sales of the lines of products developed by the company exceed $10 billion. But what’s more fascinating are the 12 companies that have originated or were incubated at Nottingham-Spirk, then subsequently moved out, including several that were acquired by larger entities.
One could easily say that Nottingham-Spirk is one of the region’s most successful innovation centers.
Inexhaustible demand
“There is an inexhaustible demand for consumer products,” says Nottingham, “Buyers are always looking for what’s new. That makes product design and innovation the key to new markets.”
Nottingham-Spirk and a number of unnamed investors understand this well. They also realize there are markets that sorely lack these innovative products, and once they see a gap, they go after it.
“It’s a tripod model,” says Nottingham. “There’s the product line, the capital leg … and the jockey leg … we found a ‘jockey’ with successful experience in that field.”
Not many men who stand over 6 feet tall have the distinction of being called a jockey, but Tony Lammers is proud of the title.
“It really describes what I do,” he says.
Lammers, a former executive with Parker Pen and United Stationers Inc., is president, or jockey, of Cleveland-based InnoDesk, an office product company that was incubated at Nottingham-Spirk.
The jockey moniker makes sense when you understand how InnoDesk came into being.
“We refer to it as the Home Depot deal,” says Lammers. “About once a month, we would run into each other at Home Depot … we had a conversation on and off for three to four years. He (Nottingham) kept saying he wanted to do something in office supply.”
That something turned out to be a capless or Retrac-tip highlighter, which turned into a line of inexpensive desktop, cordless office products: the electric pencil sharpener ($6.95), envelope opener ($8.99), paper shredder ($14.99) and dust blower ($9.99).
The idea for this line originated during a four-step design and focus group process at the Nottingham-Spirk office. And although the company itself was never a part of the design firm, Lammers and InnoDesk had an office, or closet, at Nottingham-Spirk’s headquarters.
“We started in August 2001. The office product industry is a very traditional, noninnovative industry,” says Lammers. “There is so little new product … the most innovative thing you get is another color of stapler.”
According to SHOPA (School, Home & Office Products Association), there are more than 38 million home offices in the United States; this is expected to increase to 49 million by 2005.
With that gap in the market and the need for a mobile desktop, the group, with Lammers as jockey, set out on an 18-month form process that has resulted in InnoDesk products in 4,000 stores, with 6,000 expected by year’s end.
From the onset, InnoDesk was Lammers’ responsibility. Nottinghan-Spirk designed and prototyped the products at a reduced fee. Handpicked investors — including Nottingham and Spirk — funded and housed the company until it was on its feet. Eventually, an exit strategy would be needed to make the investments liquid, in one of a number of ways.
But first, to understand why Nottingham-Spirk’s other start-ups have been so successful, it’s important to understand the process they use.
The process
There’s a misconception that most good ideas are just happy accidents, something that comes along once in a lifetime, but there really is a process.
“Our process is not unlike others, maybe a little more organized,” says Nottingham. “What you have to remember is that every great idea was thought impossible at one time.”
Not much has proven impossible for Nottingham-Spirk. Between the two Johns, the company holds 310 patents and counts among its former and current clients many of the largest consumer products companies in the world.
“We are averaging about one patent a year,” says Nottingham. “We’ve made a lot of patent attorneys very happy.”
But how does one come up with the next great product — let alone the next 20 great new products — and why not keep these innovations in-house or sell them outright to the corporate giants once they’ve been developed and the bugs worked out?
To answer that, you must understand the fickle nature of the consumer market. Nottingham spends hours roaming the aisles at Wal-Mart and OfficeMax, looking not at what’s on the shelves but at what’s not on them.
However, the nuts and bolts part of the creative process starts with sitting down and being, well, creative.
“We start with a creative session, people from our team that can complement each other, and we come up with as many ideas as you can,” says Nottingham.
This meeting has no criteria, and ideas range from “mild to wild.” Negative comments, says Nottingham, are verboten.
The ideas generated during the initial meeting are pared down in the next meeting, with slightly more critical, yet also simple, criteria.
“I pass around notecards, each with a word or phrase on it that says, Who Cares, Nice or WOW,” says Nottingham.
The products are then judged.
Who Cares is an easy call. So is WOW. But it’s the Nice that causes the problems.
“In the world, we have too many nice products,” says Nottingham.
Nice, it appears, is not good enough anymore.
Pleasure principle
Nottingham believes that most people analyze things to death. That, he says, is the key to understanding what a consumer will buy.
“If something is $10 or under, you don’t have to make an intellectual decision,” says Nottingham. “The question is, ‘How do I feel emotionally about this product?'” After all, he explains, “shopping has become our form of entertainment.”
Again, it goes back to two factors: What you need and what you want.
You may not need the electric pencil sharpener, but at $6.95, it has become InnoDesk’s most sold product. Why? The question really is, “Why not?”
What’s $10, really, in the big scheme of things? Who wouldn’t spend that little to make life easier and save a little time? And wouldn’t you spend $10 on something that’s really cool?
It’s the old carrot and stick theory. Pain and pleasure. Consumers want products that can solve their present pain.
That’s what the Targets and Wal-Marts of the world bank on. That’s what OfficeMax saw when it got the first look at InnoDesk’s new line and ordered products for 940 of it stores.
In fact, OfficeMax ordered all four items in the InnoDesk line after seeing only a prototype. That leap of faith moved the company’s production schedule into high gear.
“We went in there just to get feedback,” says Lammers. “And they said they liked it, if you can do it for this price. They saw a cardboard mock-up in early November 2002 and they wanted orders by early 2003.”
Lammers chalks up the company’s meteoric growth — 2,400 percent in 2003 — to the innovation behind the InnoDesk products.
“Price is a given anymore, quality is a given,” says Lammers. “All that leaves is design. The difference is style, and you don’t get a premium for that anymore.”
But, it will give your products an edge in the market.
“And really, if you are willing to step out of the mold, it doesn’t cost anything more to manufacture,” he says.
What InnoDesk is playing off of is that big conglomerates are good at a lot of things, but quickly bringing an innovative product to market is not always one of them.
Companies like Procter & Gamble and McDonald’s have come to recognize that with their vast marketing and distribution abilities, in some cases it is better to acquire companies with innovative products or fresh ideas than to take the risk internally.
“With big companies, there are committees and bureaucracy, even if they can make a decision,” says Lammers. “There is also a fear of failure and so much inertia to overcome. We can make a decision today and start making it (the product) tomorrow.”
What they make tomorrow can be had at a price. And a nice price at that.
Last year, Procter & Gamble bought Dr. Johns Products Ltd., a Nottingham-Spirk incubated company that developed the SpinBrush, a battery-operated toothbrush that retails for under $5, and grew sales to $200 million a year.
It is all about competition. Why fight against a product that has proven successful when you can just acquire the company that makes it?
“If P&G acquires a company for $400 million, that’s only about 1 percent of their earnings,” says Nottingham.
The lack of bureaucracy in Nottingham-Spirk’s process allows the InnoDesks of the world to change and add product lines without the perceived risk that larger organizations often shun.
“We can be faster and scrappier and more innovative than the big companies,” says Nottingham.
Scrappier, and more adaptable.
InnoDesk and its predecessors are resigned to very specific fates.
The inevitable exit plan is decided upon during the initial phases of the company’s development, and for InnoDesk, it is “a group of patient money” that Lammers refers to as professional tech investors.
But at some point, investors want their investment become liquid, and InnoDesk, like Nottingham-Spirk’s other start-ups, faces one of several futures. The company may be so successful that it continues to operate on its own. It could go the IPO path. Or, it may be in the position to add one or all of the product lines to another company, like P&G or Newell-Rubbermaid.
“A company that has good products, has proven itself in the market and is making real money is more attractive to these companies,” says Lammers.
In the end, it allows Nottingham-Spirk to do what it does best — make stuff, while one sold-off company funds the next project, allowing the firm to grow without getting too big or bogged down in one industry.
Simple genius, much like what they design. And, according to Nottingham, it can be yours for a price.
“Nottingham-Spirk as an identity is not for sale,” he says. “But everything else is.” How to reach: Nottingham, Spirk, (216) 231-7830 or www.ns-design.com; InnoDesk, (216) 360-7950 or www.innodesk.com
