Plavecsky's Ponderings By Jim Plavecsky
by Jim Plavecsky
October 25th, 2016

Defining Innovation at GlassBuild

“What’s new this year?” were the first words most often spoken last week on the show floor at the GlassBuild Show in Las Vegas. As a manufacturer’s rep, I visited exhibitors whom I represent to gauge the traffic flow and see what type of traffic we were getting. I have not seen attendance statistics yet, but it seemed to me that this was one of busiest shows in recent years. Prospects visiting the show seemed to have an agenda, and that agenda was seeking innovation.

It was two years ago that DWM released its first-ever industry benchmark survey. One of the most revealing parts of the survey was the responses from dealers regarding how they choose which manufacturer to represent. The availability of innovative products was the second-biggest factor in determining which window manufacturer to represent, second only to the manufacturer’s reputation, which is most likely also greatly affected by innovation.

So how do we define innovation? I like the definition put forward by Yale’s ITS Department. It is focused around information technology, but I believe this definition fits our industry as well.

Yale’s ITS Department defines innovation as “the process of implementing new ideas to create value for an organization. This may mean creating a new service, system, or process, or enhancing existing ones. Innovation can also take the form of discontinuing an inefficient or out-of-date service, system, or process.”

Now, the Yale ITS definition leaves out the word “product” since they are focusing on systems. But add the words “product” and “component” to their definition, and I believe we have something that fits the fenestration industry, as well as all its component suppliers. I like this blended definition, because as product and component suppliers, we sometimes forget that innovation can also involve services, systems and processes that can be improved in order to bring existing products to market in a manner which enhances customer satisfaction. In other words, innovation not only involves new products but also deals with bringing the ones we already have to market faster, cheaper and better, thereby increasing our value proposition to the end consumer.

What I also love about the Yale definition is that it also deals not only with the concept of creating things but also deleting things. If you have an existing service or process that is not running efficiently, then by all means, get rid of it so that you can focus company resources on other areas that can add value.

So back to that DWM Survey. A staggering 58 percent of respondents indicate they have had to reduce their profit margins to remain competitive with an additional 4 percent saying they are selling at or below cost. This is an especially troubling statistic since retained earnings is what manufacturing companies rely on to invest in new technology that is essential to fund innovation. So we need innovation to improve our profit picture, but we need a better profit picture to fund innovation. The old “which comes first” proverb surely seems to apply here.

In an onsite interview conducted at GlassBuild with Quanex’s Anthony Wright, the company’s director of strategic marketing and analysis, he noted that there is a recent shift in the marketplace away from multifamily activity and more toward R&R of existing single-family dwellings. This is partly due, he notes, to the low inventory of new homes at this time. Since many Baby Boomers are deciding to stay in their existing homes, they are upgrading these dwellings, which translates to more replacement windows. As we all know, replacement windows bring a higher price tag than new construction windows, and replacement windows going into single-family dwellings bring higher price tags vs. replacement windows and doors going into multi-family structures. This single-family replacement segment of the market responds more to value than price, so in light of this trend, anything we can do to add value to our current product offerings/services or to introduce new products with a better value proposition will surely pay off in the form of higher revenues and greater profit potential for door and window companies that do so.

So, in view of these recent market trends, what is your door and window company doing to innovate? Given the moderate pace of growth in the marketplace, the innovators will be poised to pull ahead in market share and will enjoy seeing their stagnating competitors in the rear-view mirror.

This blog is from Door and Window Market [DWM] magazine's free e-newsletter that covers the latest door and window industry news. Click HERE to sign up—there is no charge. Interested in a deeper dive? Free subscriptions to [DWM] magazine in print or digital format are available. Subscribe at no charge HERE.

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