The Innovative Lean Enterprise

Business Management / Lean Methods & Implementation

Tony Sgroi has developed an innovative approach to making marketing decisions on a Lean basis.

... He includes an interesting visual system for assessing and communicating the quality of any

prospective marketing opportunity.

—Philip Kotler, Kellogg School of Management, Northwestern University

The Innovative Lean Enterprise is an interesting perspective on the planning process. Its

approach is both easy to apply and beneficial. A should-read for anyone in any field of business.

—Chris Mills, President, North America Consumer Products, BIC USA Inc.

Very rarely does a book get published that can make a huge difference to a business. The Innovative

Lean Enterprise is such a book. The information within this book is a road map to success. Every

business reaches a point where they have to innovate or perish. Tony Sgroi has given you the secret

to succeed. By implementing each step Tony Sgroi has outlined in each chapter, you will create a

building block for success.

—Ken Varga, author of How to Get Customers to Call, Buy & Beg for More!

The topic of the book from Tony Sgroi is not only for people who are interested in starting a

business, but also for any person involved in management of a business or government agency.

The composition is very clear, and his step-by-step of how-to-do portrayal assists the readers’

comprehension. ... the numerous diagrams and graphs add to or enhance the meaning and provide

a clear and attractive presentation to the reader.

—Dr. Henry C. Lee, Distinguished Chaired Professor, The Henry C. Lee Institute of

Forensic Science

Tony Sgroi has made an important contribution to the discipline of strategic planning. The

Innovative Lean Enterprise makes it easy to discover and exploit a unique competitive advantage

for a brand, a division, or a company!

—Bryan Mattimore, Author of Idea Stormers: How to Lead and Inspire Creative Breakthroughs

Explaining how to use Lean principles to drive innovation and strategic portfolio planning, The

Innovative Lean Enterprise: Using the Principles of Lean to Create and Deliver Innovation

to Customers outlines simple, yet powerful, visual Lean tools that can enhance idea generation

and product development in your organization. It discusses customer value in the form of the

benefits your customer’s desires and walks you through the processes of using Lean techniques

to effectively evaluate the quality of any prospective marketing opportunity. The book includes

easy-to-follow examples from a variety of industries, including healthcare, to help you develop

the understanding required to achieve a competitive advantage for your brand, division, or

company through Lean.

The Innovative Lean Enterprise

Using the Principles of Lean to Create

and Deliver Innovation to Customers

Sgroi

Anthony Sgroi, Jr.

The Innovative

Lean Enterprise

ISBN: 978-1-4822-0390-5

9 781482 203905

90000

www.productivitypress.com

K21339

6000 Broken Sound Parkway, NW

Suite 300, Boca Raton, FL 33487

711 Third Avenue

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an informa business

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For Business

and Technical

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K21339_Cover_final_revised.indd 1 7/26/13 2:02 PM

Endorsements

“Tony Sgroi has developed an innovative approach to making marketing decisions on a

Lean basis. Everything is done to create value and eliminate waste. He includes an interest￾ing visual system for assessing and communicating the quality of any prospective market￾ing opportunity.”

Philip Kotler

S. C. Johnson & Son Distinguished Professor of International Marketing

Kellogg School of Management, Northwestern University

“Very rarely does a book get published that can make a huge difference to a business. The

Innovative Lean Enterprise is such a book. The information within this book is a road map

to Success. Every business reaches a point where it has to innovate or perish. Tony Sgroi

has given you the secret to succeed. By implementing each step Tony Sgroi has outlined

in each chapter, you will create a building block for success. I really wish I had this book

when I was developing my 35 companies.”

Ken Varga

Author of How to Get Customers to Call, Buy & Beg for More!

and 10 Marketing Mistakes That Steal Your Cash

“Tony Sgroi has made an important contribution to the discipline of strategic planning. By

adapting the visual management tools of “Lean” to both define ‘the now’… AND envision

new and innovative strategic futures, The Innovative Lean Enterprise makes it easy to dis￾cover and exploit unique competitive advantages for a brand, a division or a company!”

Bryan Mattimore

Co-Founder, The Growth Engine Company

Author, Idea Stormers: How to Lead and Inspire Creative Breakthroughs

“The topic of the book from Tony Sgroi is not only for people who are interested in start￾ing a business, but also for any person involved in management of a business or govern￾ment agency. The composition is very clear, and his step-by-step of how-to-do portrayal

assists the readers’ comprehension. In addition, the numerous diagrams and graphs add to

or enhance the meaning and provide a clear and attractive presentation to the reader. In

today’s economic and global downturn, Tony’s view on maximizing value while minimiz￾ing waste is essential to business and daily life.”

Dr. Henry C. Lee

Distinguished Chaired Professor, Forensic Science

The Henry C. Lee Institute of Forensic Science

“The Innovative Lean Enterprise is a great resource for business and technical leaders and

entrepreneurs! Tony has laid out his thoughtful insight in a manner that brings the full

force of his over 20 years experience as an engineer, manager, and patent agent registered

to practice before the United States Patent and Trademark Office to bear on the complex

topic of developing a winning strategy. As an intellectual property attorney and instructor

on business and legal topics, it is my opinion that Tony masterfully melded together these

components to help ensure the alignment of the strategies that support your business.”

Ned McMahon

Partner at Ohlandt, Greeley, Ruggiero & Perle, LLP.

“I found Tony Sgroi’s book very educational with graphic examples of how to move proj￾ects forward. He explains how complicated decisions can be made by breaking them down

into basic elements. A must read for entrepreneurs of every field.”

Don Gringer

Chairman, Allway Tools

“The Innovative Lean Enterprise is a vital resource for employees at all levels of your busi￾ness. It presents a unique strategy framework highlighted with engaging examples to dem￾onstrate successful implementation and execution of your business plan.”

Evan Anderson

President, Allway Tools

“The Innovative Lean Enterprise is an interesting perspective on the planning process. Its

approach is both easy to apply and beneficial. A should read for anyone in any field of

business.”

Chris Mills

President, North America Consumer Products

BIC USA Inc.

“After reading Mr. Tony Sgroi’s book The Innovative Lean Enterprise I was struck by the

depth of information and knowledge Tony was able to deliver. The book ties together

marketing strategy, innovation and Lean product development concepts very nicely. The

information in the book is powerful and will be important reading for most types of busi￾ness professionals including general managers, brand marketing executives, and R&D

professionals.

I highly recommend reading The Innovative Lean Enterprise and believe it will be an

important addition to any company’s training effort focused on delivering customer value

and innovation in the marketplace.”

Steve O’Brien

Director, Global Human Resources

Unger Global Companies

The Innovative

Lean Enterprise

Using the Principles of Lean to Create

and Deliver Innovation to Customers

Anthony Sgroi, Jr.

CRC Press

Taylor & Francis Group

6000 Broken Sound Parkway NW, Suite 300

Boca Raton, FL 33487-2742

© 2014 by Taylor & Francis Group, LLC

CRC Press is an imprint of Taylor & Francis Group, an Informa business

No claim to original U.S. Government works

Version Date: 20130412

International Standard Book Number-13: 978-1-4822-0391-2 (eBook - PDF)

This book contains information obtained from authentic and highly regarded sources. Reasonable efforts have been

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Visit the Taylor & Francis Web site at

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For my wife, Tammy,

my daughter, Erica,

and my son, Tony

vii

Contents

Acknowledgments .......................................................................... xiii

Introduction .....................................................................................xv

1 Visual Strategy.............................................................................1

First Parameter of Strategy..........................................................................2

Utility ...................................................................................................3

Emotion ...............................................................................................3

Second Parameter of Strategy.....................................................................4

Third Parameter of Strategy........................................................................4

Fourth Parameter of Strategy......................................................................5

Strategy Icon................................................................................................7

Conclusion.................................................................................................16

Chapter Overviews ...................................................................................16

Chapter 2: Understanding the Current State.....................................16

Chapter 3: Opportunity Identification ..............................................17

Chapter 4: Idea Generation...............................................................17

Chapter 5: Delivering Profitable Innovation to Targeted

Customers ..........................................................................................17

Chapter 6: Barriers to Imitation ........................................................17

Chapter 7: Applications of Graphical Strategy Tools........................18

Chapter 8: Ranking Offerings ...........................................................18

Chapter 9: Strategy Transformation Process.....................................18

Chapter 10: Strategy Transformation Example .................................18

Chapter 11: Alignment and Position Statements...............................19

2 Understanding the Current State...............................................21

2-D Perceptual Map ..................................................................................22

2-D Map.....................................................................................................24

Utility Knife Industry ................................................................................27

viii  ◾  Contents

First Innovation: The Retractable Utility Knife.................................27

Second Innovation: Quick Blade Change.........................................28

Third Innovation: Folding Utility Knives..........................................28

Switchback Knife...............................................................................29

Product Features: Lock-Back-Style Folding Utility Knives ...............30

Product Features: Folding Retractable Utility Knife with Blade

Storage ...............................................................................................31

Product Features: Fast-Open Gravity Utility Knife...........................31

Conclusion.................................................................................................39

3 Opportunity Identification ........................................................41

Must-Be Requirements ..............................................................................43

One-Dimensional Requirements ..............................................................43

Attractive Requirements ............................................................................44

Top Portion of Product Fulfillment Map..................................................47

Acquisition.........................................................................................47

Product Use .......................................................................................47

Barriers to Use...................................................................................48

Product Robustness ...........................................................................48

End of Life .........................................................................................49

Left-Side Portion of Product Fulfillment Map ..........................................49

Utility: Product Function Category ...................................................49

Risk: Category in Which Customers Seek Risk Avoidance ..............50

Simplicity or Convenience ................................................................50

Emotional Well-Being or Social Well-Being .....................................51

Supports the Green Movement.........................................................51

Financial ............................................................................................52

Product Fulfillment Map Example............................................................52

Opportunity Scores...................................................................................56

Conclusion.................................................................................................61

4 Idea Generation .........................................................................63

Internal Perspective Techniques...............................................................64

Surveys...............................................................................................65

Focus Groups ....................................................................................65

One-on-One Interview......................................................................66

Intercepts ...........................................................................................66

Product User Testing .........................................................................66

Customer Feedback and Complaints ................................................67

Ethnographic Research......................................................................67

Contents  ◾  ix

Idea Generation.................................................................................67

Problem Solution Statement..............................................................68

Job Mapping ......................................................................................68

Internal Ideation Methods ........................................................................70

Brain Writing .....................................................................................70

Brain Walking....................................................................................70

Worst Idea..........................................................................................71

Patent Prompts ..................................................................................71

Picture Prompts .................................................................................71

White Board Technique ....................................................................72

External Perspective Techniques..............................................................72

Looking to Alternative Industries .....................................................73

Looking to Alternate Strategic Groups .............................................76

Looking at Different Buyer Groups ..................................................78

Looking to Complementary Product and Service Offerings............83

Adding or Removing Functional or Emotional Characteristics........85

Identifying New Trends ....................................................................89

Conclusion.................................................................................................92

5 Delivering Profitable Innovation to Targeted Customers ..........93

Utility.........................................................................................................95

Emotion .....................................................................................................95

Conclusion...............................................................................................113

6 Barriers to Imitation................................................................ 115

Brand Power............................................................................................ 116

Firm’s Knowledge ................................................................................... 117

Customer Relationships........................................................................... 117

Supplier Relationships............................................................................. 118

High-Efficiency Operations .................................................................... 118

Skill of People ......................................................................................... 118

Processes ................................................................................................. 118

Technology and Money .......................................................................... 119

Regulatory Pioneering............................................................................. 119

Economies of Scale ................................................................................. 119

Switching Cost of the Consumer............................................................120

Intellectual Property ...............................................................................121

Patents..............................................................................................121

Types of Patents ......................................................................................123

Patent Claims ...................................................................................125

x  ◾  Contents

The Power of Patent Pending (a defensive tool)............................129

Trademarks ......................................................................................132

Trade Dress as an IP Tool...............................................................132

Copyrights as an IP Tool.................................................................133

Trade Secrets as an IP Tool.............................................................133

Conclusion...............................................................................................134

7 Applications of Graphical Strategy Tools ................................137

SWOT Analysis........................................................................................ 145

Strength............................................................................................146

Weakness.........................................................................................146

Opportunities ..................................................................................146

Threats ............................................................................................. 147

Balanced Scorecard Approach................................................................ 149

Learning and Growth Perspective .................................................. 149

Business Process Perspective.......................................................... 150

Customer Perspective...................................................................... 150

Financial Perspective....................................................................... 151

Disruptive Innovation ............................................................................. 152

New Market Disruptions ................................................................. 153

Low-End Disruptions....................................................................... 154

Conclusion............................................................................................... 159

8 Ranking Offerings...................................................................161

Conclusion............................................................................................... 175

9 Strategy Transformation Process.............................................177

10 Strategy Transformation Example ...........................................193

Conclusion...............................................................................................226

11 Alignment and Position Statements.........................................227

Conclusion...............................................................................................237

12 Epilogue...................................................................................239

Bibliography...................................................................................243

Appendix 1.....................................................................................247

Appendix 2.....................................................................................251

Appendix 3.....................................................................................261

Contents  ◾  xi

Notes...............................................................................................271

About the Author............................................................................291

xiii

Acknowledgments

I am grateful to many people who I have encountered throughout my

journey. For the beginning of my journey, I owe many thanks to a select

few professors in my early adult life. George Geyer was one particular

individual who provided me with the confidence that I could learn phys￾ics. I don’t know if I would have continued school if I never crossed his

path.

I also thank the dedicated professors at the University of New Haven. The

professors within the Department of Mechanical Engineering are second to

none. The same holds true for the professors whom I experienced in the

executive MBA program. Your teachings helped me to realize that a well￾rounded executive extends past engineering.

Special thanks to James Champy, who spent the time to review my first

manuscript. Your recommendations shaped this book to where it is today.

I owe many thanks to the team of CRC Press. My gratitude first extends

to Kristine Mednansky. Thank you for seeing the book beyond the original

title and suggesting the title change. I also thank Kate Gallo for all of her

hard work in putting the pieces of this book together as well as Jay Margolis

for his help during the editing of this book and Sophie Kirkwood, the

typesetter.

I owe many thanks to my parents. Your constant encouragement to

become an engineer while tinkering with everything around the house has

created my career path. This has truly made me who I am today. Dad, sorry

about the lawn mower, welding your toolbox shut, your lost tools, all of the

loose chairs, and jamming up the key locks with toothpicks.

Finally, I thank my wife, Tammy, for standing by me all these years as I

continued to build on my knowledge base. Any success that I have achieved

or will achieve would not be possible without her continuous support.