Herb Baum understands why companies choose to be fast followers. But that strategy is not for him. He didn’t like it when he was CEO of Quaker State in the 1990s, and he doesn’t like it now that he’s president and CEO of Dial, the $1.3 billion maker of soaps, detergents, and other products. (Dial, which is based in Scottsdale, Arizona, was acquired by Germany’s Henkel Group in March.) Baum is transforming Dial from a company that made goods a little different and a little cheaper than its competitors into an upstart product pioneer. Since Baum came on board, the company has more than doubled its patent filings and embarked on an innovation campaign that extends from scientists to secretaries. HBR asked Baum about the innovation mill he is erecting at this once-staid company. When you joined Dial in 2000, it hadn’t had a breakthrough product since 1988. How did you convince people that you were serious about innovation? I needed employees to start thinking about their jobs as innovating, not just researching and developing. R&D means improvements to existing products, quality assurance, line extensions. Innovation is something truly different in the market that makes your customers’ lives better. So right away we changed the name of the Dial Research and Development Center—which is in a separate building here—to the Dial Center for Innovation. Then I sat down with our then-head of R&D and I said, “How many innovation projects are you working on?” And he said, “158.” Well you can’t be working on 158 real innovations. So I said, “You can work on three.” Based on the number of scientists we have—and our budget—I thought that’s what we could handle. The innovation group is free to do research and idea generation for 20 products if they want. But we will only spend money on and develop three at a time. We also started giving awards for innovation, and I created a position of vice president for innovation, which reports to me. And we said to each of our scientists: You must develop two new patentable ideas per year in order to work here. How did your scientists react to that? We’ve turned over the top management in that group from caretakers to a more aggressive leadership. All of our innovation group heads are new, from companies like Colgate, and L’Oréal, and Unilever. Among the staff, though, there’s been minimal turnover. And it’s really focused them on their mission. Before, they were looking more at iterative things. But in the past 12 months, they’ve developed 96 new products outside the “big idea” innovation process, including formulas, fragrances, and packaging. Do you involve employees not in product development? We believe that ideas come from everywhere. So we’ve started an annual Innovation Day, where employees learn about creativity and generate ideas. All 650 employees here in Scottsdale participate. On Innovation Day last year, we scattered pet food and spilled drinks and dirt all over our kitchen areas and rest rooms. Then we divided employees into groups and had them brainstorm ideas to clean up the mess. They came up with hundreds of ideas worth further evaluation and several that have moved into concept testing. Are you soliciting ideas from outside the company too? When I was president of Hasbro, I learned how creative independent inventors are. At the annual Toy Fair, we would wine and dine inventors in hopes that they would come to us with their great ideas. When I got here, I thought we could do even better. So we created a competition called Quest for the Best, which solicits product ideas through inventors’ organizations and publications. We had the first one in May 2004. The inventors were very enthusiastic. Most big companies won’t even talk to them. We received thousands of entries. About 300 fit well enough with our product segments and were far enough along that we did a full evaluation. We then invited the 13 finalists to a big dinner and set up a booth for each so our employees could wander around and see the inventions. We gave cash awards to the top three ideas, and, if there’s enough consumer interest, we will license and develop them. I expect to do this at least once a year from now on.
