Milliken Makes Bigger Splash

While driving your child home from practice, you notice his burger just leaked ketchup and mustard onto the soft fabric of your new luxury-car seats. Panicking, you grab a rag to wipe it up and spill your latte on the carpet. No matter, you think. These seats are made to deal with this.
A line of new textiles launched by Milliken at the recent Detroit Auto Show not only saves you in this scenario -- or at least, saves your seats -- it illustrates that even the auto industry's calcified, commodity-oriented supply chain can be profitably transformed by a disruptive innovation.

VALUABLE LESSON. Milliken is one of the world's leading textile companies and a respected major supplier to automotive manufacturers, albeit from the bottom of the supply chain. But with Yes Essentials, as the new line is called, Milliken has transformed itself from the maker of a commodity material to one selling a high-margin, branded product based on proprietary technology.

The story of Milliken's success reveals important lessons for any organization looking to break out of the constraints of its current business model. Here are the key steps:

Inculcate Innovation. Presidents Ken Compton and later Marshall Washburn created an environment in which innovation was possible by laying out a clear roadmap based on a solid vision and strategy. They focused innovation efforts on producing differentiated products based on proprietary technology that would provide some relief from the incredible margin pressure exerted by the automotive purchasing bureaucracy.

"The work done then -- creating the vision and business objectives -- was definitely a key factor of our success," says Barbara Haaksma, director of design & marketing. "It gave the organization permission to do something bold like this." Milliken's internal culture is very competitive and performance-oriented, and once managers got the mandate, the culture's bias for action was able to be demonstrated.

Check Your Market. Next, Milliken began focusing on the needs of consumers rather than their industrial customers. They had already been manufacturing a stain-resistant fabric used in the Honda Element, and even Milliken was surprised by its popularity.

Some shoppers who examined the fabric at the dealerships were motivated enough to track down the manufacturer and e-mail Milliken to express their feelings. One woman even wrote, "I don't like the car, but I really like the fabric." In the past, Milliken hadn't responded seriously to input like this. After all, their customer was the big car manufacturer who knows exactly what it wants. But this time they listened.

Team Play. Mike Guggenheimer, Yes Essentials product manager, and Haaksma were joined by Stacy Walker, marketing communications manager, and Chris Heard, director of development for Milliken Automotive Fabrics, to form an entrepreneurial cross-functional team tasked with developing the performance fabric. It was also a time when technical advances were allowing a wide range of new functional benefits to be engineered. Fortuitously, DaimlerChrysler (DCX) simultaneously asked Milliken to come up with a fabric to help them compete in the market.

Continual Tweaks. What happened next was unusual for Milliken. "We used consumer research differently than we ever had before. In the past we finished a product first before testing it. This time we evolved the product during the research process," noted Walker. They jumped on what was meaningful to the customer and dug in to find out more about quality-of-life issues. This gave them the insights needed to move forward with a platform that could outperform competitive fabrics on a wide range of features, from stain resistance to design, and the confidence to build a 100-page marketing plan around it.

It wasn't all smooth driving, however. Performance product needs to be premium priced to justify manufacturing costs, and there was some internal resistance to the risks of offering a pricey product to Milliken's often commodity-minded buyers. But because the development team was so passionate and could articulate the product's value to consumers, they shifted the conversation from cost equation to value and return on investment.

Milliken's new product line -- which is available in Chrysler, Jeep, and Dodge cars -- has the potential to be highly disruptive. It has moved the company from the bottom end of the supply chain to a higher profile, with its brand identified and promoted in cars and in dealerships. The company accomplished this by focusing on creating a value for both its customers and the end consumer. As Haaksma says, "It's value, not price, that customers really want. And delivering meaningful features like this make happy customers."
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Source: http://www.businessweek.com/innovate/content/feb2006/id20060210_209422.htm
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A textile and chemicals concern, Milliken & Co. makes 19,000 products. Among them: fabric for cars interiors, airbags, tennis balls and printer ribbons; and chemicals used to produce colors for marker pens and to give texture to food products. Milliken & Co. traces its roots to the Deering Milliken Co., a woolen fabrics jobbing firm founded in Portland, Maine by Seth Milliken and William Deering in 1865. The company now has 55 factories worldwide.

Source: Forbes.com