InnoQuest Session Summary – 12/3/13 “Innovation: Mid-Market Company and Value Pricing” Kichler Lighting, Independence, OH Presenters: Tony Davidson, CEO & President, [email protected] Jack Miller, Director of Product Management, [email protected] John Andrisin, Director of Engineering, [email protected] Greg Martin, Director of Design, [email protected] Chaz Napoli, COO, [email protected] Jonathon Konkoly, Director, [email protected]

What were the most important take-aways for you?  Innovation o Kichler’s Definition of Innovation: Creating new Product and Services that are VALUED by the Customer that competitors are not providing. o Trust is one of the most underestimated innovation strategies in business today. o To achieve sustainable growth, companies must better integrate product innovation with business model, process, and service innovations. o Influences for innovation: . Asking : Who is our customer? Who do we want to be our customer? What is truly valued by our consumers? Where are the gaps in the marketplace that competition is not filling? Why is this not Kichler? How CAN it be Kichler? . Listening: Consumers, Showrooms, Sales Reps/other (“What’s Out There” Meetings) . Looking: Trade Shows, Retail, The world around us o Managing innovation and executive buy-in; got to have support from upper management. o Dedicated resources – people, time and money . Point person for innovation – i.e. someone in charge of and can help translate ideas . Need better filter of ideas (ex. Sharepoint – website for tracking and filtering ideas) . Stage gate or another product development process is needed for innovation . Spend time with not only with customers but also with suppliers and partners . Skunk-works innovation area o 9 points for Exceptional Innovation Management (see EDGE slides) o “Lease your ideas” (rather than owning them) o Validate innovation along the way o Changing worker’s mentality will be hard.  Find balance and interest for them to see that being innovative can be a good thing. o Innovation failures can cost your customers money. o Listening to the customer, while trying to push your idea further.  Culture Issues o Define our value system for employees, customers and vendors . Need to look at the different values we embrace. . Stuck on organizational memory . Innovation needs to be a culture of the organization . Creating an environment for innovation is a side luxury to daily grind.  It has to be low pressure, transparent and trustworthy. . Trust – its importance in driving out fear. o Communication – everyone on same page; brand value o New ideas to help employee engagement o We sometimes fail to live up to our expectations, but we always strive to do so.  Value Pricing o 97% of companies do a fair to poor job at managing pricing. o Set up more consistent pricing structure for high and low volume customers o Re-evaluate pricing strategies; new strategies to help our bottom line. o Pricing value in your product/How to go about pricing new innovative products  Much more value in these meetings (EDGE) than I anticipated. What is your action plan as a result of attending?  Research stage gate and look to implement.  Find out what our action plan is from these meetings  Continually try to push the notion of innovation, trust, and communication.  Need to discuss our pricing strategy with sales and other management.  It’s OK to charge for value.  Try to be more inclusive and open about the process to others.  Try not to put up walls to those who are less open to change.  Put together a plan for building a dedicated innovation team.  Look at organizational values – i.e. what values are where?  Taking back what I have learned to the rest of the management team to help us grow through innovation, pricing structure and enhancing employee engagement.  Improve capture and management of ideas – especially feedback.  Take more action steps and show my production team that change can be good and needed.  Share meeting notes with team; really look at where fear is rooted.  I will share Price for Profit information with our sales executive.  I believe he is already doing some of the recommended practices.  Keep driving and improving  stage gate process  Add development resources  Revise “Brand Mission”  Explore possibilities for pilot plant/area  Work to get closer to learn what’s valuable to the customer

What are the most important issues you face going forward?  How to promote leadership buy-in and support with resources for innovative initiatives.  Managing and promoting our initiatives so that they have a chance to succeed.  Crawling before starting to walk (with innovation).  Resources and equipment; engrained beliefs; dedicate resources for innovation  Implementation of a stage gate process  Need my management to keep sending me. I want to continue to grow.  Change and employee engagement  Regressive pricing and increasing material, labor and insurance costs.  Must innovate methods to grow profits.  Rapid growth, culture change, TRUST for and of other leaders in the company  Employees’ mentality to change.  Culture change and environment/space in time to innovate.  Changing our culture  Patience and persistence; must keep growing team.  Working through the process we’ve created and refining it.  Pricing and forecasting for 2014

Possible Future Topics:  Creating a culture where employees want to be here.  Changing culture to support innovation.  Detailed stage-gate process set-up and working strategies  Developing customer service skills  Filling the pipeline – weed out process Resources:  The Price Advantage – Walter Baker, Mike Marn, Craig Zawada  Power Pricing: How Managing Price Transforms the Bottom Line – Robert Dolan, Hermann Simon  Pricing Profitability: A Practical Guide for Business Leaders – Meehan, Simonetto, et al (Deloitte) Next Meeting: Thursday, February 288h (8:00 – noon): “Mid-Market Innovation / Spin-off Co.” at Pressco Technology in Solon Special Guest: Drew Boyd (16 years of innovation leadership at Johnson and Johnson) Co-author of Inside the Box: A Proven System of Creativity for Breakthrough Results