December 2005

Interview with Brenda Arnold

Brenda Arnold is Vice President of Innovation for Valvoline, a $1 billion division of Ashland Inc.  Valvoline is a worldwide marketer of automotive lubricants and aftermarket products and services.  Brenda is responsible for finding promising 'white space' markets, developing and testing new products and services in those markets and establishing an innovative culture.

The interview is focused on ideating and bringing to market a new business venture.

Interview conducted by Doug Berger, Managing Partner of INNOVATE LLC.

Brenda:

The new venture is called 'On-Site.'  It is provides on-site maintenance for small to medium auto fleets, including oil changes and inspections. 

The venture was the first after the creation of my current position. Senior management created a VP of Innovation for the specific purpose of driving Valvoline’s top-line revenue. For the previous several years, Valvoline’s top-line revenue was essentially flat, though we were making double-digit growth in our operating margin.

We came up with (and by “we,” I mean a team of part-time people and myself) 12 market spaces in which we could play. Four of those were selected as being of the most interest. Fleet maintenance was one of two selected for immediate business development.

Doug:

What new paths did you travel in originating these ideas?

Brenda:

We looked at developing the ventures in a way that we hadn’t before. We looked from an external point of view instead of being internally focused. Historically, we had always looked first at what we do, then the next logical extension of that and finally at the level of people’s interest, generally our own. This time, we began by looking at the level of interest from the outside, and then asking ourselves, “Can we make that?”

There was another thing that was particularly interesting about On-Site. Valvoline had already tried a mobile oil change unit, in several different varieties, and they all failed. When this particular idea came up again, the team did not let it go. They kept evaluating it, and recommended it as one of the 12 for consideration, even though there were many people in the organization who said “been there, done that, didn’t work ... remember?”

Doug:

How did you deal with breaking the cycle of failed expectations?

Brenda:

The support of senior management was critical in order to continue developing and moving the venture forward. The team did several things. First, they said, “Well, we tried this before so let’s go talk to people, see what was attempted and why, and identify the reason it failed.” Then we compared those findings to what was now being prototyped and the recommendations we anticipated making. The team surmounted the hurdle of past-based expectations by approaching the project from a new future: “Yeah, we did it before, but we didn’t do it this way. We didn’t build it in this fashion; we didn’t look at these external factors. This is different because ....” This resulted in people now being very interested, supportive and willing to put resources against the idea. You do not want to ignore the past. You want to learn from it and use it to your advantage.

Doug:

What were other hurdles you encountered?

Brenda:

We have a business, a core line of business, Valvoline Instant Oil Change. It does preventative maintenance care at a fixed location. As with all of our existing business units, they are constantly looking for growth areas. Once this became an attractive idea to the senior management of an existing business unit they said, “Ok, that’s very interesting, and you know what? I’ll take it, and I’ll take it now.” …. another hurdle to for us to overcome. There was an extensive evaluation of what this new business was going offer compared with what Valvoline instant oil change offers. There were some synergies between the two business units that could be exploited. However, if you were immediately to fold the new business venture into the core line of business, you were going lose many of the elements that caused On-Site to become attractive.

We needed to keep the new business separate from all of the core businesses so that it could develop in its own right, and be optimized as a business unit. Therefore, it didn’t report up through the existing business. We had to coordinate with the core line of business, but there was no accountability from one to the other. This gave the On-Site team the freedom to look at everything, to explore all the options, contrary or not to core business initiatives. When people have the freedom to do that, the business can be optimized before there is any kind of integration. This is not to say that we won’t ever integrate ventures into existing units – it just needs to be at the right time.

Senior management now has a balancing act to do. They own this business. They needed to keep the business separate enough so that it would develop and be optimized. They could not let it get caught up in the bureaucracy of running the existing. At the same time, the executives could not be so far removed that there would be no buy-in or support. If they were too far away, they would become totally disconnected and have no relationship with the project at all. I became the initial conduit between the business development activities and the rest of the organization.

Doug:

What were the few things to which you attended with regards to the actual blocking and tackling of putting the business together?

Brenda:

We had a general manager, somebody who provided oversight and direction for the whole group. We put full-time people against it. We hired people based upon the skill sets we needed to ensure that the business was developed and launched. People were not empowered by our traditional HR hierarchy so we invented a new one…one without specific titles or job descriptions. People became known as Entrepreneur 1, Entrepreneur 2, and Entrepreneur 3. This motivated them to roll up their sleeves, get in there, and do whatever it took to get the job done.

Doug:

When the team got to work, they could have approached this with a 2-3 year time to market. Yet they were in the market within 9 months. What were the few things to which they attended at the outset that enabled them to fast track getting to market?

Brenda:

To begin with, I don’t think they were operating from a mindset around time. They were all very excited and very passionate about making this work. They enjoyed the work, and they worked very hard. They worked long hours. There were key assumptions which they were trying to prove or disprove. These conclusions would tell them in what direction to take the business. They looked in the right places to ascertain the necessary information from which to steer the business. There was a comfort in their foundational direction before they were off and running. That was the genesis for the speed.

For example, instead of using a trial and error approach, they did some up-front homework. They asked the right questions first …ie, “What truck do we need? How big does it need to be? Does it need to be a box? Does it need to have a sleeper cab?” In the past they would have gone out and gotten the truck first and then asked the questions. Therefore, when they actually did go out and get their pilot truck, they had a plan. They thought it through, and then, as they were piloting the truck, they kept making further refinements on efficiencies and configuration. For example “how much oil do you need to carry on the truck? How much inventory do you need to carry on the truck?”

Doug:

One of the challenges is getting adequate, up-front funding to reach a point of momentum and establish that you have a viable business.

Brenda:

Yes, and that is one of the areas at Valvoline that really worked. From the get-go, when they decided to develop this business, senior management put five full-time people against it. Five is huge for Valvoline. That was one of the fundamental drivers. It was five full-time people. In the next venture we put together, Valvoline could only afford to put two full-time people against it and it took twice as long.

Doug:

Was there some other conceptual framework or some individual who godfathered and guided the venture?

Brenda:

Yes. We set up a venture board. The venture board became a place where the venture team could bounce ideas back and forth, …. “Here is a direction in which we intend to go. Here is what we have found recently. What do you think?” The venture board had several people from within Valvoline who had different skill sets and could actually give good advice back to the venture. It was also comprised of some outside people who were experts in certain areas to provide specific expertise to the venture. The venture board was not a directive body at all, but was a sounding board and a forum for feedback. This enabled the On-Site crew to continue making their decisions and moving the venture forward.

Doug:

If we look at this from an after-action review, what were some of the lessons learned?

Brenda:

Most critically, do not let the venture get integrated into an existing business too early. I see some of that happening with On-Site right now, as well as with the venture that we launched after On-Site. It was integrated into the business too early, and the nature and the scope of the venture were dramatically changed, negatively. If the new business is allowed to maintain its own identity for a prolonged period of time, then you have a real chance of making something good.

Doug:

This is my last question: Many start-up ventures find that the market they targeted was not the same market in which they succeeded. What was your experience?

Brenda:

Yes, and this is my reason for saying that the team was very smart in doing all of their up-front homework. When they launched, they started to test specific hypotheses about who would want and need their services the most. As they got out there, they realized that some of the assumptions they had made about the business were not ‘spot-on’. There were surprises, which necessitated some changes in their business model. This was one of the critical success factors of making that venture work. It's one thing to be passionate about the business, but it’s another to be stuck to a particular idea that you won’t let go, even in the face of evidence to the contrary. Success with breakthrough ventures such as On-Site absolutely requires the flexibility to say “Oh, This isn’t as right on as we thought it would be. We need to modify this.”

 

Velcro Points

1. Use past failures to your advantage; identify specific failure points.
2. Test your critical hypotheses early.
3. Keep the new business separate; you can always integrate later.
4. Organize a venture board, with whom the business team can bounce ideas and get suggestions.

   

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