The Story of Keen Footwear: Dynamic Capabilities – Part 2
This article is part of a series on what causes a firm’s value to increase
In Part 1 of this article I wrote on a key emerging approach to strategic management called Dynamic Capabilities. Part 2 will chronicle how Keen Footwear, an early adopter of dynamic capabilities, became a global superstar virtually overnight.
Recall from Part 1 last month there are eight skills that are required for Dynamic Capabilities. Keen Footwear embodies all of them and in May 2003 started perfecting them like almost no other firm had done before. It is a fascinating story of how inexpensive shoe design tools and part time designers, offshore factories, and free buzz marketing helped Keen go from idea to a $30 million hit virtually overnight. I will paraphrase from an article in Business 2.0 Magazine by Michael Copeland and present my own research into Keen.
Jim Van Dine and his three partners were still debating the design of its first shoe, Mary Janes, in May 2003, just eight weeks before they would need samples for retailers for their summer 2004 line. In other words these four people were still debating the business model and concept for Keen Footwear, their new shoe company. Two months later, a factory in China was churning out Mary Janes and fifteen other styles. What happened next is business history – in 2004 Keen sold $30 million worth of shoes, around 700,000 pairs. To put this into perspective, it took Teva, another new start-up in this shoe and sandal space, three years to reach just $1 million in annual sales.
How did Keen go from shoe concept to viable contender at warp speed? They did it by practising Dynamic Capabilities using resources never before available so cheaply to start-ups.
To get to market fast, Keen farmed out almost everything to specialized companies springing up all over of the world, from shoe design, logistics, manufacturing and billing to sales and after sales support. Recall having global contacts is a dynamic capabilities skill. One of Van Dine’s partners had overseas manufacturing contacts and had already reserved capacity in two Chinese factories for massive production runs.
And Van Dine’s 10 year experience at Reebok allowed him to know there are plenty of freelance shoe designers who could quickly translate his team’s vision into manufacturing specs. They do this with three dimensional software communicated in 24/7 virtual collaboration rooms on the internet or the cloud. And yet other specialized companies take those specs and translate them into manufacturing runs to the required quality Keen specified.
So here is the formula to turn your next idea into a quick winning new venture. This formula also works for the established company that wants to innovate quickly:
- Design Your Next Hit Product in Record Time:
What is your hit product going to look like? Mattel and Hasbro, hamstrung with massive product design teams and elaborate productions procedures takes one year or more to get a new toy out. Kidrobot, who makes collectible dolls, does it in four months from design to manufacture. Their designers use Adobe Illustrator, cost of $500, to quickly sketch six views. Then they move to Basecamp that links everyone who is working on Kidrobot’s toys – from its New York design team to manufacturers in China. Basecamp costs $100/month. In brief the formula is Sketch Your Vision, Build a Prototype, Move into Production.
- Get Someone to Make Your Product
Outsourced manufacturing used to be only for the big firms. Now start-ups can quickly gain access. Specialized firms like Union Electric in Taiwan and numerous others can give you the speed and quality you need. Their clients include Brookstone, Radio Shack and many start-ups. These firms help you take your Prototype idea and move into production fast. Just Google manufacturing assistance in China and you will find a lot of Union Electrics. Or you might find a similar product on eBay and find out who made it. Firms like Union Electric are really your representative, finding the best manufacturing solution for you.
- Build the Hype Machine
Many large firms are already switching a lot of their marketing budget from broadcast advertising to public relations (PR). The new social media is taking public relations to a new level. Stella Artois beer repositioned the brand from a working man’s beer in Europe to a premium beer in the US through very inexpensive PR. Chefs drinking it while cooking, Robert Redford holding one at the Sundance Festival, etc. The popular blog Cool Tools said of Keen Footwear “they are a gift from above” and sales started happening. Months later the blog Metacool said of Keen “All the kids are wearing them”. Now we know of the negative side if you get on the wrong side of blogs, but they are virtually free advertising and go viral quickly.
Keen Footwear is a successful example of dynamic capabilities. Could this approach be useful for your firm here in Shreveport/Bossier?
Next Up: Thinking You Can Do Anything: The Case Of Masco Corporation
Bill Bigler is Director of MBA Programs and associate professor of strategy at LSU Shreveport. He spent twenty five years in the strategy consulting industry before returning to academia full time at LSUS. He is the immediate past president of the board of directors of the Association for Strategic Planning, one of the leading professional associations in the field of strategy. He can be reached at bbigler@lsus.edu