Lance Wiggs

John Brackenridge is Chairman of the The New Zealand Merino Company, a key supplier to Icebreaker.

He sees their goal as being the smartest most robust and valuable part of the primary sector. Smart means listening to others, robust means sustainable and enduring and valuable means successfully commercial.

Applying design thinking to sheep was not so easy.

Their aspiration, which quickly flashed by, is to have a $6 billion industry for sheep in NZ. To deliver this they need to improve sheep, delivering a perfect multi-purpose animal. A perfect sheep has fit for market fibre, is grass fed, provides great leather, tasty meat, quality lanolin and milk, is productive and adaptable, hardy and is easy to care for.

15 years ago sheep were a commodity market, simple products and very competitive. Now the business is more market focused, blue ocean and complex. The targeted market was outdoor apparel, as evidenced by IceBreaker.

Bad or inconsistent stories will be exposed through social media. NZ has untold stories however, and can tell those stories better. We have better provenance, fibre, performance, better animal care, and so on to crafting better long term contracts with premier customers.

However they still saw a very adversarial supply chain, and so worked, with Icebreaker, on managing  the farming to retail chain. He notes that we are riding a commodity boom, and longer term supply contracts provide linger term value and stability to each end of the chain. They have 12000 grower and 1500 market contracts, with almost no default.

Their results, briefly explained, are strong for their partners and for themselves. They re delivering higher prices to suppliers, lower priced contracts to suppliers and over 25% ROI for the company itself. John also sees that they are helping to bring in and develop NZ talent and helping to position NZ.

Meat industry. John played a great video about the factory farming – the Meatrix.

(We are lucky not to have too much of that here, but I don’t eat standard raised chickens.) This presents is a threat, but more importantly an opportunity for NZ.

With Silver Fern farms NZMC has launched Silere Alpine Origin merino. They want ot inspire chefs to intoxicate consumers. The Grill by Sean Connelly tried it and is a fan.

(Watching the video pushing the purity of high country, and my initial response is negative as I think about the environmental damage that sheep cause there. That needs to be explained away – sheep are a lot better than cattle.)

Merino leather and lanolin are untapped markets, but are ripe for branded differentiation. They are even getting into ground up rams horn.

Brackenridge sees untapped potential in more collaboration within New Zealand. We need to understand that commercial companies are taking good to market, and government should be encouraging and helping then to do so.

We have lots of tools, we have a lot to do, we have a $24 billion primary sector. We have a lot of lost opportunity cost there. He is pulling together a primary sector study tour to the US.

Jeremy Moon interviewed his supplier, and noted that it has taken years to get the alignment in the industry. John says there is opportunity for NZTE and others to help make it happen, and to make us the exemplar and help make NZ the case study for the world. We could do the same with fish and cows.

NZMC keeps the female sheep, and slaughter most of the males for lamb. This does create a tension between the wonderfulness of sustainable annual wool production and the more brutal nature of the meat industry.  The answer, says John, is to be honest about it and to keep animal welfare foremost.

Casey Sheahan is the CEO of Patagonia, the apparel company with a conscience. He was introduced by Jeremy Moon from Icebreaker who is a big fan of the company. (When living in the US a friend and I used to call Patagonia Patagucci – due to the price of their clothing. Despite that I still managed to end up with far too many pieces and loved them on my motorcycle travels. These days I am overloaded with Icebreaker stuff, which is even better.)

(We are a secular society, and Casey started with a deep breathing and contemplation exercise that I struggled with – it ended with ‘think about whoever you believe is responsive for this great natural abundance.)

Being happy

When you are happy, your customers, employees, vendors are happy. That’s conscious capitalism. Patagonia are based in Ventura, CA, a great place to work with surf, solar panels and so on. He really enjoys going there (commutes from Colorado), and stil does after 7 years. Their receptionist is a former surf champion and frisbee dude, and sets the vibe of the place. They have a childcare center on the site, and the 75 kids voices permeate the building. (This is awesome – especially when you consider the teddy bear story. ) This all stems from the (married) founders own philosophies. The child care is certainly transformative – helping attract and retain awesome women in particular.  Yvon Chouinard, the other founder, at 73, still turns up to the office 6 months a year. Patagonia’s mission is very well put, and known by it seems all employees.

Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.

The are trying to get more companies to be more like them (the inspire part), and help get a common understanding on what business should be. (They are succeeding) Patagonia is expanding globally, but rather than cookie cutter stores they use old spaces rather than use new stores. You get what you intend to do.

Patagonia grow organically, within their means, taking inspiration from how trees grow. They adapt their growth approach to the economy, growing more in boom times, and less in quiet times. They are passionate about the products, placing incredible attention to detail. When designing they take things away until there is nothing left but product.

Patagonia were early adopters (or inventors perhaps) of recycling soda bottles into fleeces. They work hard to reduce packaging volume and waste. Back in 1995 they adopted an organic-only approach to cotton and in 2004 they commenced a recycling program – customers could bring back polypropylene clothing and it would be recycled.

As a company they look at being responsible to minimise their impact on their planet, each decision, each day. It can become a game with an example of a Tokyo store tracking and trying to reduce power to zero. Gore(tex) lasts forever in landfill, and so they worked with an outside firm to develop a new process for Patagonia and Gore.

They seek to minimise environmental harm, and embrace an open approach to information on how they ship products. They publish this as the footprint chronicles, also providing information and leadership on the field. On openness (from a video) “If we started to squirm in our chairs …we were probably hitting the right point.” They show, for example, good visibility on the offshore factories where the products are made.

They don’t have a great wool story versus Icebreaker, so went to Southern Argentina to look for a merino story. They saw that herding there actually helped plants regenerate quickly, and are launching it in socks soon. (Sounds a bit pushed). Like icebreaker they will track the source, even down to the individual animal. Japanese are the toughest consumers, demanding visibility to sources of food and water.

Common Threads initiative is aimed at asking consumers to look at consuming less. Be aware of your purchase decisions, if worn out repair, sell on eBay but fundamentally buy less stuff. “Consume not what we vaguely want, but what we need.” 25000 people have taken a pledge on this.

Patagonia ran a now well-known advertisement “don’t buy this jacket” on Thanksgiving Friday, promoting purchasing less products. Perversely their sales went up.

Founder Yvon Chouinard is still an evangelist for Patagonia’s approach. (I missed this but I thin he was responsible for…) Wal*mart saw what was happening, listened, and started making internal moves to be more sustainable. They began asking suppliers to reduce packaging and so on, which has had a profound roll-on effect through industry.

Patagonia’s own factories are changing too. One in Vietnam is opened up to the outside. “You can’t make a Ferrari in a GM factory – Jef Stokes, President Maxport (video)”. Jef went on to say they we should have a right to know how our products are built.

Patagonia gets 1000 applications for every job – from disaffected MBAs looking for the value based mission, to surfers, climbers and fly fishermen and environmentalists. College kids, millenials are fired up about the environment and will do something about it. (Something I was chatting about earlier – the new generation natively get climate change and sustainability, so that will be solved eventually. The issue is getting the older folks to get it now.) 

On customers and sustainability – it’s Lennon and McCartney, we have to work together on this.

All up – I’m a big Patagonia fan, and this resonated with everything I’ve seen and heard about them to date. We can all learn from them.

Dev Patnaik is from Jump Associates, which apparently sites between McKinsey and IDEO. He is the author of Wired to Care: How Companies Prosper When They Create Widespread Empathy

Dev (pronounced Dave) started with the announcement of the Sony PS2, which Microsoft saw as a genuine threat to the PC, and so launched the Xbox program. This was going to be a culturally difficult thing to do, and so they formed a team and gave them a complete mandate. The team loved to play video games, specifically games aimed at more mature audiences. They were males, loved violent and male dominant oriented games, and so developed the XBox to be able to play these. Their signature game was Halo, which was sold out for weeks.

They adopted the same skunkworks approach to respond to the iPod, and delivered the woeful Zune.

Dev and a team dg into this to discover what differentiated the two programs. The answer was captured in a quote – “The biggest challenge with Zune was trying to figure out who we were building it for. We XBox we knew those guys – hell we were those guys.” The Zune relied on consultant reports and data – and failed.

Patnaik sees three sources of innovation – empathy, creativity and execution, with the latter two pretty well covered by business literature. Empathy is the ability to walk in someone else’s shoes, and we have that instinctively individually. However we generally lose this when we work in groups.

He uses Harley Davidson as an example company that gets this – with HD motorcycle parking prioritised over cars and other bikes. They refer to their customers as riders, and are riders themselves. (This BMW rider suspects that most US HD riders simply ride to the coffee store and spend most of the time with their bike cleaning and polishing it. But riding is so much better than not riding, and as one HD salesman cleverly said to me once “there’s a Harley Davidson in everyone”)

Nike has a similar approach, with each sport-oriented department decked out in the appropriate attire, the names of the meeting rooms reflect the sort and so on.
The blur the line between outside and inside, think like the people who are their customers. The surround themselves with information from the outside world but are often not great at research or very touchy feelly. (I 100% agree here – its far better to be the customer than to try to understand the customer. On the flip side don’t try to do something you know nothing about – go out and hire and be people who are genuine fans).
Empathetic companies have the intuition to feel a vibe, gut sense to take action, passion to take a leap, courage to stick with it and clarity to make decisions faster.
Delta Airline executives live near their main airport, get their flights booked by an assistant, get driven to the airport through a special hole in the fence and greeted on the plane with a drink. They don’t understand customers as they are not living the same experience. They have to commission expensive reports, endlessly discuss them and so on before realising intellectually (forget about emotionally) that they suck.
Many companies (in the US) have become impersonal, focusing on the powerpoint decks and not on the world around them.
Why not hire customers? Customers have to appeal to multiple types of people, and over time even former customers lose touch, while they will miss the emerging threats. (Entertainingly Harley Davidson is an example of this – and initially got whacked by the Japanese bikes). The Wii was a good example of a product that attacked a part of the video game market that formerly didn’t exist.
To become a empathic company requires that you

• make it easy (avoid creating extra work),
• make it experiential (no powerpoint); and
• make it everyday (a habit).

He uses the example of Jetblue founder getting on flights, sitting with the punters and working with the crew. (Standard practise these days it seems). The best way to lead is to model the behaviour you want. Skip meetings and go outside to be with customers and your products, and conduct meetings outside. Target executives often conduct meetings in their and competitor stores. The office environment is a reflection of the company – so change it and you will change behaviour. Higher ceilings create more formality, lower ceilings less formality and more honesty.

He likened California to New Zealand, similar climate, remote and so forth, but with a created mythology to live to. (Remote, hippies, gold minters, coders). Is this a design challenge for NZ – what is our narrative? He believes we need to actively craft one.

He finished with the payoff – that you’ll realise why it all matters.

A great talk, a great speaker and excellent content – read his book. Wired to Care: How Companies Prosper When They Create Widespread Empathy

In the intro Jeremy Moon recounted how clothing companies moved from wholesaling to wholesaling and retailing, worrying unnecessarily as it turns out, about retailer concern about disintermediation. , Their latest challenge for the industry is selling directly online, again worrying about the response from store retailers but it seems again unnecessarily so,

Lorna Borenstein - speaks about the youth of today.

Youth are creating new habits which we are adopting – they are the Bellwethers. (No kidding – more specifically teenage girls are the leading indicator of what’s coming).

• They are extremely productive and always multitasking. (Kind of like I am doing writing this while listening to Loren.)
• Their filter for immediacy and control. Self expressive yet in groups which they belong to rather than individually. The younger folks are never alone – always with a group online, and wanting to know what everyone else is doing.
• Coddled and Complimented – they are raised to beleive that everything about them is special, with the pass/fail moving to constant praise, multiple graduations (in the US) and so on.
• Optimistic and Self-entitled. 
• As a generation they are special, sheltered, confident, team oriented, achieving, pressured and conventional. They process information up to 5 x faster than (most) adults. Books are slow, realtime more faster information is best.
• Targeting youth means interactiveness, personalised and moving media.   They want to be part of what is new (Tumblr example of creating and sharing), share and take part. Media sharing is a form of communication.
• They have money, are wired and want to make their own content. Social Media is tech, people and media converging.  Pew study – 77% have computers, 44% smartphones 18% tablets, each of the last 2 rising quickly. They are all used at once = with news, for example, is accessed from multiple devices. (I’ve used a Macbook Air, iPad and my iPhone to blog, tweet and goodness knows what else today.) The consuming device matters – we expect different user interfaces on each device.
• Younger folks embrace and use their devices much more than older ones. It pays to create personas to understand how and when they consumer media. Waiting in line at the coffee shop, commuting, while watching TV and so on.

Lorna says that brand preferences are set between the ages of 10-15. (Source: Cognitive Marketing Inc – NOP World/Roper 2005). That’s before the time that they have much direct money to buy products, so it’s important to engage early, right now that means  Facebook.

They also filter from multiple sources, and the different devices encourage different methods of filtering. Discovery is also through connection, e.g. 39% of Twitter users say the news they get from there is news they would never have received otherwise.

The first generation of digital natives are now, apparently, coming of age. (I’d argue they have been here for quote a while.) Borenstein uses the cinnamon challenge as an example, with her own son trying the challenge (posted by somewhat idiotic glozell) and posting the result on YouTube. They did so to get feedback, but no advertisers were there at the time to understand the trend. Marketers need to watch for these moments, and take some risks.

Her son also started a Tumblr blog, and she raised Pinterest, the new hotness. Polyvore a Pinterest competitor, had expert stylists to create their boards, and failed because they failed to let the consumers create and they would denigrate their brand. (Polyvore’s site is horrible compared to Pinterest).

Millenials have no fear of losing privacy. There are 100m 11-29 year olds (born 1982-2000) spending 200 billion each year. They are the tastemakers and the customers of the future. Word of mouth amplifies everything tremendously. They make no distinction between sharing and communicating and prefer sharing via text to live interaction as it allows them to control the conversation.

Brand advocate millenials tell about twice as meany people about their purchases as non advocates, and will disproportionally generate revenue through brand purchases. They are more likely to both recommend and to get friends to actually buy products. 18% of advocates (and 9% of non advocates) write a blog post about their purchase. The same stats apply to IMing, posting pictures, reviewing and so on.

(Disturbingly Loren kept trying to differentiate between ‘over 40 year olds’ and younger people, saying there are differences for example with how people consume online, use electronics and so forth. Not my personal experience.)

Matt McKendry

Learned from Apple that the employee experience is as important as the customer experience, something that applies absolutely to consulting companies like Deloitte.

Learned from Stanford D School (design school) to move away from Powerpoint. Ironically Matt is using powerpoint to show pretty pictures during this talk.

Matt took some learnings back, and first tried to understand what the employee experience is like. They found that employees often felt they were kept in the dark, asked to trust the system, process and rules. Often they didn’t know what they were doing. Matt sees they are a training and education business with respect to employees, and these methods were mired in the past. They have moved from rules and checklists to experiences, using interior walls as canvas, asking what they are good and not so good at.

It’s still very early, but very encouraging to see a monster like Deloitte move into design thinking land. They are actually seeing productivity increases, and certainly are seeing a better employee environment.

Comvita’s David Bathgate

Comvita, which is led by a fellow B Tech alum, Brett Hewitt, went has been through the BBD process. Brett stood up at the 2010 BBD CEO conference and said he was going to appoint a designer, and David asked him for the job – which he got  They have and continue to achieve remarkable growth, with a CAGR over the last few years of 23%.

David’s first job was to go bring people out to meet customers and gain end user insights. They developed personas, understood their unmet needs and opportunities to capture them. They now have product ideas which they are turning into products.

Following the last summit and CEO tour they also knocked down some walls, created a design space and put more information on the walls in the spirit of show and don’t tell. This last point helps speed communication, gets ideas out early, promoting discussions early and often.

They have also tried to spread the notion of customer empathy, using a gift giving exercise build for the purpose. They put large posters up of representative core customers, along with data, and took videos from customer videos.

They largely did this on their own, and while he admits expert advice may have helped them do it better, the most important thing was that they did it. (I 10% agree).

His parting shot was that it’s a journey, and it’s about being better through changing the way they do things. They are seeing better results, shifting from 3 to 78 retail outlets moving from whlesale to retail, from 3% to 20% direct to consumer sales. The gross margin has also risen from 43% to 57%.

(Comvita was subject to a hostile takeover bid in the last year, a lowball offer which was rejected. I’m pretty sure shareholders will be very happy with future results.)

Icebreaker’s Tony Balfour

He went through the gift giving process at IDEO, creating ‘the best gift ever’ for someone. The session rapidly progressed to rapid prototyping, and his lesson was that anything can be prototyped. He uses examples from childhood where we turn anything (like a cardboard box) into anything else.

Prototyping is taking something out of your brain and putting it onto explainable form. It’s difficult to do so in traditional environments. Design is not a department, and shouldn’t be left to designers. Everyone can prototype.

Leaving design to designers is like leaving people to the HR department.

Pens post it notes, paper and iPhone are the main tools for Icebreaker. They use iPhone to take pictures and send around the world.

Icebreaker does 40% of their store business from their compact in store base units. This came from a pencil drawing prototype. As did (from prototype)  a new tagline greeting customers in each store “Welcome to Icebreaker – we believe nature is better than plastic”

Icebreaker uses two team for prototyping – a building team and a feedback team. They use a bitch list (situation analysis) to capture issues, turned into a from/to list to make it actionable. They then draw up an objective or intention that explains what they are trying to do, and they work hard on word-smithing to get the meaning correct. Next are visual models, which seems to mean diagrams on a whiteboard. Project management is the final step.

Golden rules are 1: get the right view, before you choose the right way; 2: prototype like you are right, listen like you are wrong 3: Use speed to reduce attachment, and 80/20.

They even used this to design their new ERP system, in-store customer journeys, as well as launches, website, reporting tool and product development and the Christmas party.

A fantastic series of talks – BBD in action and delivering change and profits.