Saul Kaplan: Can you start by sharing the origin story of WD-40? I’m guessing a lot of people don’t know it and it’s a great innovation lesson.
Graham Milner: I’d be happy to. It’s a cloudy day in San Diego today. It was that way in 1953 when the fog rolled in, and in the Atlas space missile caused circuitry induced problems. General Dynamics put out a bid and said, “Can anybody create a solution to this problem for the Atlas space missile?”
Norm Larsen was working at the Rocket Chemical Company, and he invented Water Displacement Formula number 1. It wasn’t very good, so Norm came up with Water Displacement formula number 2.
7UP, we like to say, got it done in seven tries, but it took us 40 tries. I would say, as innovators, we are distinguished more by perspiration than any brilliance. But that has been a trademark of our innovation and I think the company culture ever since.
Saul: I love that story. Innovators, I think, everywhere can relate to that — 40 tries to get it right, constant iteration to get to a product that now we all know.
Tell us about your journey leading the innovation area within WD-40. What does that mean when you have an iconic product like that?
Evolving Beyond the Single Brand
Graham: When we had one single brand, WD-40 — which we did from 1962 to 1995 — we often, frankly, did not think that innovation was important.
We had this iconic brand. We put it in 85 percent of American homes. We put it in 175 countries around the world. Growth was fairly uniform and consistent. Innovation was not considered important.
In the mid-1990s, we did acquire some household brands, things like Lava soap and X-14 bathroom cleaners. In the consumer products industry, we realized that innovation was a form of survival. It was just day-to-day necessity.
We started looking inwards at ourselves and said, “What could we do with WD-40?” We really hadn’t changed it at all in this whole time. People were forever sending us letters complaining about losing the blankity-blank straw. I’m sure many of your listeners have lost many of those straws.
To cut a long story short, that led to us inventing what we now call the “Smart Straw,” which adorns almost every can. We realized that what we were talking about [when we said] innovation was a way to really add value to existing items.
It was a way to increase value in the end user’s mind, and [with] the Smart Straw, people were willing to pay extra for an innovation that increased the utility of the product that they had in their hands.
It really was that notion that [led us to create] a group called “Team Tomorrow” at WD-40. Team Tomorrow was, for many years, the global catalyst for innovation. I once heard somebody at Wal-mart say that you ought not to have people in charge of tomorrow who have responsibility for today, because the urgent always supersedes the important.
Origins of ‘Team Tomorrow’
Saul: What did Team Tomorrow do? First of all, who was it accountable to in the organization?
Graham: I’ll begin at the end and say that we just dissolved it, a year ago. But for the 10-plus years it existed, it was reporting directly to the CEO, and it was a group that was responsible for taking the time to look for ideas that people who were so busy occupied in today did not have time to pursue.
We had engineers and chemists. We had a team of product managers. We had consumer research specialists — a very small group of us, 7 to 10, at most — and we really combed the world looking for the white space. We were looking for, on various shelves, what products were missing, things that should be there but weren’t.
Over time, though, we began to realize that the WD-40 brand, because of some of the metrics I eluded to earlier, held a lot of potential. We started to focus very specifically on, “How could we, through innovation, unlock the power of the WD-40 brand?” And that Team Tomorrow group really focused its efforts in that area.
Saul: The listeners, I think, really are interested in these organizational approaches to innovation, and what works and what doesn’t work.
Graham: What worked was focus. At WD-40 Company, [we sold] one thing from 1963 to 1995, and that was WD-40.
In Team Tomorrow, we did one thing, and that was focus on innovation. If you don’t have products that you create and launch, it looks pretty silly to have an innovation group. So we were acutely aware that our job was innovation.
If an important customer called, if important research beckoned about the brand, that was not our focus.
The big turn was when we started focusing just on the WD-40 brand and began a project [that asked,] “How could we lever and launch innovation from that brand?”
What was difficult was, despite the fact that in all project meetings we included “today” members, like the marketing team and the brand managers for whatever brand we happened to be focused on, it was still remarkably difficult for people to recognize how intimately we were woven into the fabric of the business.
Had we not reported to the CEO, it would have been even more difficult. We spent a lot of time really selling that [the] innovation [group] was working for the brand managers, that we were not a separate entity.
Team Tomorrow’s mascot was a frog, and the reason was that you have to kiss a lot of frogs to find the handsome prince. We, in Team Tomorrow, felt it was our job to kiss the frogs, [so that we could] bring the brand and the company handsome princes.
We felt we were a service organization to the company, and in particular, to the brands that we were trying to innovate around.
Creating the Specialist Platform
Saul: Was there a precipitant to change the structure, or did it just happen gradually? Tell us what the new structure looks like. If Team Tomorrow doesn’t exist, how does the organization handle innovation today?
Graham: We began this journey to look at WD-40, and the first question was, “Could we innovate around it? Could we license the brand, in effect, back to ourselves?” That three-year journey resulted in a sub-brand, WD-40 Specialist.
What we learned when talking to thousands of people around the globe was that they knew WD-40 did a lot of things, and they thought as a generalist. But in a world of increased specialization, they were eager to have specific products that did things maybe in one specific segment better than WD-40.
After a lot of work, we chose this name Specialist, because it really was the anti-WD-40, which was generalist. Under that, we have launched things like contact cleaners, white lithium grease, penetrants, rust removers, and rust preventers.
It has been very successful. This platform, as we refer now to Specialist, has given the company almost ultimate freedom to expand into specific niche areas that specific industries.
When Specialist was launched and became very successful, the company took a step back and said, “We now believe the engine for growth for our company and the brand will be Specialist. We should charge folks in different regions and countries with the responsibility of taking the umbrella Specialist item and extending it into the areas most relevant to their business.” At that point, the company frankly believed so strongly in Specialist — and this may be a personal interjection, not necessarily a corporate one — but didn’t believe they wanted to explore a lot of other areas.
They were so taken by Specialist and what protections appeared to be for growth, that they really said, “OK, Team Tomorrow, you have achieved your goal. Rather than globally trying to decide what is best, why don’t we launch under Specialist a number of regional- or industry-specific items?”
[That] happened to coincide with the global decision to pursue the bicycle market. We were looking for a way to do that. We decided that rather than research it, we would create a whole separate little bicycle business within WD-40 Company.
The regionalization of innovation — simultaneously with the need to create this little test business group that they wanted most of the Team Tomorrow folks to go do — resulted in what is now the Americas innovation group and the European innovation group, where we have split out innovation regionally to explore the Specialist brand, and simultaneously created this bicycle division.
Launching WD-40 BIKE
Saul: You’re the general manager of that division. Am I right?
Graham: Mike Irwin and I, we call ourselves the partners of WD-40 BIKE. We started the BIKE group just over three years ago.
Saul: Aren’t you an avid cyclist yourself?
Graham: I am, indeed. In fact, Saul, it’s funny, because I always said I would never take my passion and make it my profession. Here I sit in this tiny office, surrounded by nothing but bicycles and bicycle cleaning products.
Graham: The mission of BIKE is really to explore the independent bicycle dealers. These are the small bike shops you all have in your neighborhoods. There are 4,000 of them in the US, and 30,000 of them in Western Europe.
We don’t currently, as the WD-40 Company, sell to those folks. It’s a small industry, relatively speaking. The bike care piece of it is smaller still. There wasn’t a lot of secondary data to really quantify the potential of this market.
We felt we could invest a fair amount of money in research, or we could have four or five people in this tiny little office create a business and be, if you will, living research to prove whether the brand could go there, to prove whether there’s a business model there, and to really explore [the opportunity in a more definitive way] than research, is really theoretical. We’d get practical about our research.
Saul: What excites me about that is that it’s really the first story where you’re now beginning to create a platform for an entire different business model, serving markets in an entire different way. I’m certain it’s going to cause you to reach for capabilities that aren’t resident within the core WD-40 organization. Right?
Graham: That is absolutely true. One of the other things we have is speed. We went to the first big global show in the U.S. for BIKE. We had this notion that we would sell directly to bike shops. We would not use distributors.
We were an hour into the bike show when that very tenet of our business model changed on the spot. We said, “We can’t do this. We have to sell through distributors.” There is a flexibility of size, and there is an urgency in speed.
As an innovator it’s kind, of important in some ways to have the responsibility for not just the dream, but the execution. We all do it all here, from going to bike shows on weekends to going to bike races to hand out samples.
We just had somebody in our office five minutes ago showing us a new device. All of us had been testing it, and we were doing sort of live innovation in the room. He’s now going off to China to try and build a prototype.
Closing the gap between what I call the dream and the execution is fascinating. It’s also interesting, then, as you go and sell, successfully or not. Your feedback is amazing. It’s really this innovation/incubation test tube right here.
Scott Kirsner: We’ve got some listener questions. First question says, “It sounds like the innovation team launched a new business with WD-40 BIKE and this new regional innovation system to create Specialist products. Is there a path for you to continue launching new businesses, or have other kinds of impact on the company?”
Graham: I think having done the BIKE model, we demonstrated that we had, as a company, the acumen and the intestinal fortitude to launch. It’s not a secret. I’ll tell you we’re in about 2,800 of the 4,000 bike shops. We are now shipping WD-40 BIKE in 14 countries around the world.
I wouldn’t say it’s a smashing success, but I would say, in bike parlance, that we are pedaling our way to success pretty quickly right now. That’s a good sign. I think what it does is show the company that we can break away little areas of interest and make them successful.
The Specialist model will take a long time, I think, to be fully realized and maximized. It’s very successful today. We are making money on it. It’s no secret we have Specialist [products] in many of our biggest customers. It’s selling very well.
Influencing Senior Leadership
Scott: Another listener question is about influencing C-level management to accept the innovation program. What’s the best method for influencing them?
Graham: Without the CEO’s push, support, and passion, we would not have been as successful as we were. There are still, however, people that run individual business units at the C-level, people that run the Americas, that run Europe, that run Asia, and then people that run supply chain or marketing, who may not necessarily have drunk the Kool-Aid quite as quickly nor as deeply as the CEO had.
From that perspective, how do you get innovation? Do things that work. The path to success is not instant. You need some time. I think it’s really the ability to create a compelling story of the value that you intend to deliver.
We used the frog analogy, because we wanted it to be clear that we were partners with the brands. We were not on our own seeking some dramatic glory. We were there to help the brand and marketing people be successful.
One of the key things that I’ve said and say when I speak to innovation groups is having it report directly to the CEO eliminates a lot of water cooler chatter. It elevates the presence and importance immediately. I think that, simplistically, was the single biggest reason for our success during the time we operated.
The Danger of the Ivory Tower
Scott: Let me ask one more question from a listener. Having done innovation for more than a decade there, are there some obvious mistakes you see other established companies making when they form an innovation group?
Graham: I hesitate to say that we are the gold standard. I would never want to put that out there.
What I see sometimes is this notion of ivory tower. Divorcing from the practical piece of the business is necessary, but you need to understand or demonstrate your understanding of the base business, whatever is important to the company as a business.
I’d say that ivory tower syndrome would be, to me, the biggest single thing I see out there. [Innovators] can’t be seen as magicians. They need to be seen as practical exponents of whatever the key business strategy is.
Scott: You talk a little bit about the innovation campaign, innovation initiative, as being in the past tense. Do you still have it as part of your title or have you moved over and you’re solely a principal at WD-40 BIKE?
Graham: I carry two business cards. One of them is a corporate business card. It looks corporate. It says, “Executive Vice President, Global Business Development Group.”
The one is a business card that has my name and WD-40 BIKE. It doesn’t have a title. We don’t really have titles at WD-40 BIKE.
In terms of my personal role, I do not have direct control or reporting responsibility with the two main innovation groups, the one in Europe and the one in the U.S. My conversations with [those groups] tend to be less frequent than they were in the beginning, when it was multiple, multiple times a day.
Now, it’s more quarterly stuff. It’s really bigger-picture innovation things that I look at. I really look at my role now, in addition to BIKE, [as looking at] what other new business ventures are there that can take the brand further. That may or may not be innovation.
Saul: I want to tie it back together here a little bit, Graham. Team Tomorrow really produced both a way to operationalize innovation, in the form of products and capabilities within the operating entities, and also, a new business model opportunity with WD-40 BIKE.
I really like that narrative. As I was listening to you tell the story, of course, I was rooting that Team Tomorrow would still exist in some capacity. It’s only a matter of time until some group needs to continue to come up with the next generation of ideas, particularly, new business model ideas.
I guess I’ll come back to the question Scott asked to close. How does what Team Tomorrow did continue to get done in the organization?
Graham: Saul, I think that is an extremely insightful question. When we look at our company today and [ask] what can go wrong — which I think is the job of leadership, what do we do right and what can go wrong? — there is a concern that should our vision of Specialist, which includes BIKE as a subset of that, not materialize the way it’s forecast, what will happen? What will we do?
It took a while for Team Tomorrow to get going. It didn’t just spring up one day and be instantly productive. It takes a couple of years, and there is a concern that if the vision doesn’t happen, without a Team Tomorrow there, who then picks it up?
We haven’t really addressed that. I would say that we are aware that that is a potential issue or potential problem. At the moment, we are blessed with a company performing very well.
I think the question is well-founded, and we have asked it of ourselves. You can’t instantly switch on Team Tomorrow. What would happen? That’s a concern. As a company, we’re a small company. I should mention we’re only about 400 people globally. It’s hard to have this other group sitting almost in the wings in case something goes wrong.
Saul: Graham, thank you for your candor. I find it really insightful. I hope others on this call did, as well. I appreciate it.
Graham: Thank you, guys. Thanks, Saul. It was a pleasure to be here. Thanks, Scott, for the opportunity to share our little company story. Hopefully, it added some value to somebody’s day today.