Innovation at the Speed
of Thought
Kelly Fox
Dunn Lumber Co.
In-nov-a-tion…
► Taking something from good to great and
filling the vacuum left by inferior products or
ideas with a strong value proposition.
 Sounds easy enough, let’s get started!
 Super-sized and self checkout…
Science
► “It’s not rocket scientry”, Senator Mike
Gravel (D- Alaska 1968-1980)
 It is “building scientry” you silly Senator
► The evolution of building materials
 Building materials then and now
Then
► Jobsite mills
► Continuous framing
 “Yes, I need all 16’ers”
► Insulation
 “President Sackmann Catches Delicious Bass”
►Young Westerner’s News (February 6, 2010)
Now
► Mills and Lumber Dealers
 Look around, we are these guys!
► Engineered Products
 “Can I span 48’ with that?”
► Insulation
 Fiberglass and Levi Strauss
It happens all the time
► From concept to reality
 Product drivers
►Market need
►Use of byproducts
►Add value
Panel Growth
30000
CDX
20000
OSB
10000
OSB + ZIP
Growth Chart (years)
60
20
40
20
20
20
00
20
80
19
60
19
19
20
-10000
40
0
19
Million Square Feet
40000
In-nov-a-tion Again…
► Taking something from good to great and
filling the vacuum left by inferior/ superior
products or ideas with a strong value
proposition.
 The life cycle
 The LBM Industry
The Whole Log
► In the beginning… and on the twelfth day he
created random lengths...
 Cutting down the trees to fill up the land fill
 Made sense for mills, not for retailers or consumers
 And the box stores saved us all (those who wanted
to be saved anyway)
 And on the 197,897,146,378,634th day he
created engineered lumber…
Engineered Wood
► Plywood
 Used since the 1700’s for furniture
► I Joist and beams
 A miserable failure
 Over priced and under delivered
► I Joist and beams 2.0
 Competitively priced
 Yes I can span 48’ with that…
Designer’s Dream
► Engineered wood allowed mills to use the
waste and created and opportunity for
designers to stretch the limits of size and
shape in construction.
 “Win/Win”
 1300 SF rectangle v. 4300 SF framing nightmare
Wood Products
► Decking
 Nice looking
 Maintenance heavy
 Quality fiber became expensive
► Looking for something easier…
Composite Goods
► Composite decking
 Use of poly and wood fiber
 Offered a better mouse trap
► These were easier but people still want more…
PVC
► PVC decking delivers on the promise of what
composite decking wanted to be
 The deck of a lifetime with…
 Minimal maintenance
 What is the vacuum they leave in their wake for
innovation?
►Are you going to be ready to capitalize on the
opportunity?
Fire Retardant or Not?
The Cycle of Life
► A bright idea (read start up)
► This little piggy went to market (read got
venture capital)
► Everybody wants one… (read IPO and $$$)
► “Ooh, ooh… Pick me coach I got the good
crap” (read COMMODITY/ Everybody
has three)
Up v. Down
► Up Market
 Higher volume
 Lower margin
 Growth mechanism
► Large Company
 Better customers
► Maybe…
 Commodity traders
► Down Market
 Lower volume
 Higher Margin
 Growth mechanism
► Small Company
 New customers
► Used to be your
customers…
 Value adders
Size Matters to the Market
► In any market the size of the opportunity will
match the size of the organization, up or down!
 A small organization can not be a significant player
in a large market segment
►Typically will lack the infrastructure or the resources to
compete
 A large organization can’t fill the growth need with
a small market opportunity
►Typically need large markets to satisfy sales goals
Filling the Void
► As companies look for new business in the
“Up-Markets” they leave a vacuum of
opportunity in the “Down-Markets”
 Up is opportunity in BIGGER MARKETS
 small markets are downers…
Real World Example
►Steele’S StudS
► $300,000,000,000.00
in annual sales
► 10% annual growth =
$30,000,000,000.00
► Up markets and
disappointed share
holders (unless it is
2006)…
►Blake’s Boards
► $30,000,000.00 in
annual sales
► 10% annual growth =
$3,000,000.00
► Down markets and
happy share holders…
Acquisitions and Spin-offs
► Big business gets bigger through acquisition
 Increase market share
 Increase stock holder anxiety to meet growth needs
► Big business can’t meet the demands of the market
and spin-off companies to regain focus
 Ability to target markets
 Growth demands from share holders are attainable
► Proof in the pudding
 Russell 2000 Index 10%, Parent’s after Spin-off 31%,
Spin-off company 37% ROI after three years
What’s Next
► Everything we already talked about but…
GREEN
Innovative Values
► Selling trust and add value
 Trust the experts (hint; you have to be the experts)
 Experts add value to the customer
 Value is why the customer pays top $$$
► Or, do what you always do and get what you always
got and eventually you will lose it all to the person/
company who…
► Sells trust and adds value
 Trust the experts (hint; you have to be the experts)
 Experts add value to the…
“Whatever made you
successful in the past won’t in
the future”
Lew Platt, Chairman and CEO,
Hewlett-Packard
Value of Education
► LEARN, LEARN, LEARN…
 Your customers are, and because you are here I
am hoping you are!
 Share your knowledge, it really is a great service
to your customers!
 If for no other reason;
►The “learners” out perform the “knowers” every time!
Half Life of Education
► Half of everything you know will be gone in 4
years
 New products and applications make what you
know obsolete very quickly
 In 20 years just about everything will have changed
 We cannot stop the loss; all we can do is refill the
void with current knowledge…
100
80
Current Knowledge
60
Slow Learner
40
Market Demand
20
Time (Years)
24
20
16
12
8
4
ow
0
N
remaining)
Remaining (read customers
Percent of Knwoledge
Half Life of Education
“If you have two people who
think the same, fire one of
them. What do you need
duplication for?”
Jerry Krause, General Manager,
Chicago Bulls
Product or Service
► Product




Tangible
Consumable
Bought and sold
Take it or leave it
► Service




Intangible
Relationship driven
Bought and sold
Harder to leave behind
Product + Service = Offering
► Tangible + intangible = Offering
► Consumable + relationship = Offering
► Bought and sold + bought and sold =
Offering
► Take it or leave it + harder to leave behind =
Offering
► If you don’t get it yet you should be combining
your products and services to create an…
 OFFER
The More You Know
► This is the life cycle of all businesses and the
reason that good management will eventually
run your business into the ground!
 This does not have to be the case! Each of you
sitting here today have the opportunity to buy my
plan for three easy payments of $199.95 and if
you act now I will give you my book of secrets for
FREE! Do not delay as this will change the life
of your business.
Payment Options
► Please send self addressed, stamped envelope
containing cash payments to
 Dewey, Cheetham, and Howe Publicists LLC
 PO Box 111777
 Felony Way WA 98003
►206-465-8589
► www.facebook.com/kellytfox
Were do you put your
armor?
The story of Abraham Ward
“He came within 800’ of
immortality…”
Obituary of Raymond Lambert,
1914-1997
“To be courageous… (and
this) is an opportunity
sooner or later to be
presented to all of us”
John F. Kennedy,
Profiles in Courage