Finance

Dr. Jack G. Truong: Innovating, inventing and the art of understanding customer behavior

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Jack Truong
Former President and Chief Executive Officer, Electrolux Major Appliances North America

Innovation is more than a buzzword at AB Electrolux, the venerable Stockholm-based household and professional appliances manufacturer—it’s the lifeblood of the company. In North America, the company sells appliance brands that include Electrolux, Frigidaire, Tappan and Kelvinator, names that have been in the homes of America consumers for close to 100 years. Maintaining that brand loyalty means innovating with a purpose, anticipating what consumers want—even before they know it themselves.Dr. Jack Truong is an engineer and inventor himself. He earned his Ph.D. in chemical engineering from the Rensselaer Polytechnic Institute in Troy, N.Y., and is the recipient of 11 U.S. patents and several international patents. But he knows that invention alone does not lead to business success. Here, Truong talks about how Electrolux uses in-home consumer research and data analytics to conceive new products, and how targeted innovation often trumps mere creativity. [Editor’s note: Dr. Truong left his position at Electrolux North America in April 2015.]

How do you foster a culture of creativity at Electrolux that allows you to regularly introduce new consumer products?

I make a distinction between creativity and innovation. Very simply, creativity is when you have a lot of great, wonderful ideas, but you can’t commercialize them. They don’t really fit the needs of the consumer. Consumers don’t buy them, and therefore those ideas become just costs. Whereas an innovation is something that really meets the demands of consumers. That creates value, and turns that cost into a profit.

With innovation, it’s really about trying to harness the power of people who have different ways of thinking. Every one of us can look at the same thing, but all of us are thinking differently about it. So the key is, how do we capture all of those thoughts? Most importantly, we encourage a culture within our company that people want to listen to each others’ ideas. There are many ways to look at the same thing.

It’s really about there’s no such thing as a bad idea. Great ideas can come from anybody. You have to have a culture of listening. And in the end, there’s no such thing as failure unless you make the same mistake twice.

How does Electrolux’s Innovation Triangle help the company focus on getting value from innovation?

The Innovation Triangle is all about bringing three functions together to collaborate and innovate – marketing, design and technology. Before we had the Innovation Triangle in place, Electrolux had product development run mostly by engineers and sales. Sometimes that meant that sales would come up with a product that the retailer put on their floor, but the consumer didn’t really want it. And other times, the engineers came up with these products that had super technology that were sometimes overkill for the needs of consumers and the products didn’t move.

We’ve seen a shift in consumer behavior. Consumers not only want to have appliances that deliver on benefits, but they want the product to look nice. They want the product to reflect their own personality, it’s a statement of who they are. That’s why it’s important for us as a company to have balance among our marketing, design and technology functions, and have it all really come together to produce a great product. Marketing has a good understanding of the consumer needs and then we balance that with the technology and design. So we can use technology to deliver the right benefits but at the same time, it has to look nice to have a product that consumers are proud to have in their home.

How does that manifest itself in Electolux’s products?

We launched a new line of innovative Electrolux brand washers and dryers. It’s beautifully designed, but I think one of the key things we did that took it to the next level is that we did a lot of ethnographic research with consumers. And what we observed in those homes is that consumers would walk into the laundry area with a basket of dirty clothes, and they’d get to the front-load washer and not be able to open the door unless they put down the basket of clothes. We recognized that as a latent need. So we designed a door that you can open with your hip so the consumer can just dump the clothes into the washer, close the door, push the button and go. That’s been a big hit with consumers.

Has your experience as an inventor influenced your views on driving innovation in a company?

Absolutely. In my career I have met many, many creative researchers in R&D who had some very wonderful ideas. But then I’d walk away, shaking my head and thinking, ‘We’re never going to make one dime out of that.’ But then I’d also meet some very innovative folks that have equally creative ideas, but they know exactly how to turn them into the products or services that consumers want. It’s really two different groups of folks.

Do you still dabble in invention yourself?

Oh yes. You have to remember that when you talk about invention and innovation, it’s not just about products. You’ve got to continue to re-invent your business model and how and when you go to market. You have to continue to re-invent how you market your product because consumers are changing the way they receive and process information. You have to innovate with your supply chain and your way of looking at information. So you have to re-invent and innovate everything you do. That’s a prerequisite if you want to not just survive but thrive.

How do market research and data analytics help Electrolux do that?

We spend a lot of time and money on really understanding consumer behavior, not only for today, but also for tomorrow. The goal is to develop the right product line that fits the changing needs of consumers, and also the changing homes they live in.

A lot of what we invest in is really long term because it can take two to five years to develop the next generation of products. So having the analytics to really understand all of that changing consumer behavior, all of the data and information about how consumers shop, what they want, how they vote with their money is very important.

We have to cut through all of the billions of bits and bytes and get down to the essence of that changing behavior so that we can have the right investment and the right focus on technology and product development. You have to understand all of the data so that you pick out what the few trends are. What I really want to know is what the contributing factors to the financial trends are. Where are the causes that drove these effects? Once you know that, then you know what you have to fix; where you have to improve and where you have to accelerate.

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