Innovation at Timberland :

Thinking Outside the Shoe Box

Syndicate 1
M. Gilang Ramadhan (29114308)
Diza Rahman Sulistian (29114438)
Hafizha Nuril Ulfah (29114463)

Innovation at Timberland

In 2005, CEO Jeff Swartz and COO Ken Pucker hoped the
Invention Factory
An advanced concept lab, would develop new breakthrough
products and reinvigorate the company's culture of innovation


Timberland's revenues had increased from $862 million to $1.5
billion from significant expansion in international sales, growth
of new customer segments, improvements, and working capital
management. As Timberland's leaders looked to the future,
they hoped Doug Clark, a biomechanics expert and footware
veteran, and his Invention Factory (iF) team would bring a
scientific approach toward building the next generation of
Timberland products and ideas

Objective of Invention
Factory

Mission : identify and develop innovative and high impact

concepts (products, processes, and materials) that will enhance
and extend Timberlands brand equity, foster business
opportunities, and drive profitability over the long term.


Invention Factory (iF), the R&D unit of Timberland had to have
a consequential impact on the rest of the business. Its
structured needed to be examined to see if its structure was
effective using change management skills to connect with the
mainstream of Timberland. iFs mission is to identify and
develop innovative and high impact concepts (products,
processes, and materials) that will enhance and extend
Timberlands brand equity, foster business opportunities, and
drive profitability over the long term.

iF's Initial Project: Travel

Gear

Factory partnership During their initial brainstorming sessions, the iF team

wondered how they would prototype. It was one thing the draw pictures of
the new concepts, but they needed to physically make mock-up samples
that they could use to evaluate and also generate excitement.
Dave Vattes, iF's Senior Director of Product Development, was asked to
analyze Timberland's existing factory partners and determine which had
the most versatility, the longest relationship with Timberland, and had
shown they had some of the competencies to solve problems and create
new things. They eventually chose the Pou-Yuen factory in China; it was
part of the Pou-Chen Corporation, which owned a leather tannery, several
mold makers, and other companies.


Pou-Yuen would have early insight into Timberland's
longer term direction (potentially presenting new business
opportunities for them), and as an important benefit, their
employees would gain unique training in problem solving and
the creation of new materials.
Integration to in-line teams When prototypes started
coming back from the factory, Clark approached Pucker to
discuss which in-line team was best suited to take over the
concept and prepare it to go to market. After several meetings,
they agreed that the men's casual team would sell


Packaging & pricing Although Heffernan was not part of iF,
he had several of his own innovative solutions. He hired an
independent research company that had pioneered a method
to evaluate consumer preferences when faced with multivariable decisions to help determine what combinations of
shells and chassis consumers would be willing to buy
Wholesaler acceptance Before trying to sell the concept
to Timberland's wholesalers, Heffernan and the iF team
tested Travel Gear in Timberland's retail stores in North
America, Europe, and Asia during the 2004 test pilot season
and then for a full season to follow

Reinventing Invention:
Quicker Strides, Shorter

Sprints

In October 2004, after two years of work, Clark's teram, now 19 strong,
revisited their scope, priorities, and organization, iF now had a budget now
20% higher, conducted bi-annual concept shows to highlight new ideas in the
pipeline for the broader Timberland community, managed a fully operational
biomechanics lab, and oversaw a Chinese factory. Clark challenged the group
to evaluate what they had learned over the two year period.
To support their new mission and objectives, they created a formal four phase
innovation process:
1)
2)
3)
4)

understand,
observe & visualize,
evaluate & implement, and
transition

PreciseFit

One early steering committee directive was for iF to look into

the broad issue of improving shoe fit while reducing complexity
in the shoe sizing process, which could mean significant
efficiency gains, service improvement, and enhanced margins.
Categorized as a systems project, it sat for awhile before Clark
handed it over to his Research & Technology Director, John
Healy. Healy had previously worked for Nike and Converse and
taught physiology at the University of New Hampshire.

MiOn

Timberland's commitment to innovation attracted Martin Keen, a

legendary sailor who had helped found Keen footwear. After his
separation from the company Keen, Martin Keen worked on a shoe that
could perform in the harshest land or water conditions. He approached
Pucker with the concept and Pucker presented it to Jeff Swartz and the
steering committee. After debating where such a product might fit into
Timberland's line, they decided iF should make it a separate brand.
Since this would be the first time Timberland had ever created a
separate brand, iF seemed the perfect candidate to "own" the project.
The new line, called Miiin (pronounced "my-own") would keep the feet
of "amphibious athletes" as comfortable as possible in wet conditions

Urban Renewal

iF also conceived of an offshoot of the line, called Urban

Renewal, which replicated the firefighter boots and made them
available for urban youth. Near a boot display in the iF lab was
a poster of a hip-hop band wearing firefighter boots from a
photo in a leading music magazine. The goal of the project was
to focus on heroes, especially those made popular after the
9/11 terrorist attacks. The concept drew on a philosophy
created by the Timberland and City Year partnership: everyone
who wore Timberland boots could be a hero in their community.
The in-line teams had agreed to adopt Urban Renewal and
launch it in the holiday line of 2006.

 From 1998-2004, Timberland's revenues had increased from $862

million to $1.5 billion, operating profits rose from $95 million to
$234 million, and market capitalization bourgeoned from $523
million to $2.2 billion. Timberland's top executives attributed the
growth to several factors: significant expansiOn in international
sales, growth of new customer segments (e.g., urban, kids and
PRO), and improvements in gross margin and working capital
management. (See Exhibit 9 for Timberland's product, channel and
geography portfolio.) By 2005, Timberland competed in both
footwear and apparel, occupying the #6 position in the industry for
revenue, #3 for operating margin, and #2 for return on investment
capital. (See Exhibit 10 for Timberland industry data and Exhibit 11
financial data.) In 2005, Timberland acquired SmartWool, known for
its premium performance socks, apparel and accessories, for $82
million. SmartWool was expected to remain an independent
subsidiary.

Analysis

Schwartz (CEO) and Pucker (COO) are concerned culture of

innovation and always figure out the essential elements in
putting Timberlands best foot forward
Invention Factory is in is high risk, time consuming, and
resource intensive
iFs mission should redefined, and shift their focus toward
getting in-line adoption, rather than only product creation and
development


created a formal four phase innovation process:
1. understand
2. observe & visualize
3. evaluate
4. transition
IF had proved highly imaginative and the structure is effective
with their change management to connect with mainstream of
Timberland