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(Editor’s note: The Amway Business Innovations Team, along with the Keller Futures Center of Grand Rapids Community College, sponsored a no-cost, three-day educational session on human-centered design at GRid70 in early June. MiBiz Managing Editor Joe Boomgaard was invited to participate in the event. The interviews with Amway’s Seth Starner for this story took place before the session. For blogs about the session, click here.)

Amway’s founders started the company on the basis of freedom, family, hope and reward. It’s a model that’s worked well for the $9.2 billion direct seller for over 50 years. Business Innovations Manager Seth Starner’s role isn’t to change that model, but rather to find new business opportunities and appeal to new people in new ways, all by using a process steeped in human-centered design. PHOTOS: JOE BOOMGAARD

Seth Starner, left, and Terry Denscek, right, of Amway’s Business Innovations Team, discuss ideas at the company’s space adjacent to GRid70 in downtown Grand Rapids. The team uses human-centered design to inform its methodology of finding new applications for the company’s direct selling business model.

By Joe Boomgaard | MiBiz
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GRAND RAPIDS — Innovation can be a tough nut to crack. It can be even tougher when you have the title of Manager of Business Innovations at a $9.2 billion private company and your job is to learn new methods of innovating and then spread them throughout the corporate culture.

Amway’s Seth Starner works in that space as part of a seven-person team of eclectic individuals on the hunt for the next successful business innovation at the international direct selling giant. They’re tasked with keeping the monolith moving, prodding it along so it doesn’t just ride its past successes into an ever-changing future.

“I think every big corporation knows they need to do something around innovation. You can’t be stagnant. It will put you in a bad place, if not kill you. There’s certainly a desire and an understanding to keep progressing as an organization,” Starner told MiBiz. “I think all organizations struggle with what they want out of innovation. No one likes change, but everyone likes progress. To be progressive, you have to change.”

Businesses like Amway have an algorithm, a formula they’ve employed to succeed over time. Starner argues that corporate structures are in place to preserve that algorithm, but those structures needn’t be immovable. While all good companies bank on what’s worked in the past — satisfying customers’ needs and at the same time remaining profitable — they need to innovate to what will work in the future, he said.

“You need to figure a balance between change and progress, and work in the system to find additional places,” he said. “It’s not get rid of the current business, it’s improve the current business. For Amway, that’s in the direct selling sphere. The owner is very clear — we’re true to our direct selling roots. … That’s certainly a workable space.”

Where Starner and his colleagues focus is not on the product side — “our research and development team is very capable” — but rather on business opportunities, how Amway can apply its business model in new ways, and importantly, how to encourage people across the organization to embrace a culture of innovation. Starner argues that anyone can innovate — it doesn’t matter what the position or title the person has.

Sowing innovation seeds

Several years ago, Amway started working with nationally renowned design and innovation consulting firms like IDEO, but the process felt like the consultants swooped in, charged a lot of money, and left the company with a pile of ideas and no way to implement them. Then Starner and others in the company enrolled in the Institute of Design at the Illinois Institute of Technology. He credits that program with setting out “the overarching approach” to applying human centered design thinking to the process of innovation. Incidentally, he helped encourage IIT to offer its master of design methods in Grand Rapids at GRid70, the downtown design hub Amway partnered with Steelcase, Wolverine World Wide, Meijer, Pennant Health Alliance and others to create.

As Starner and the business innovations team started rolling out those ideas across the organization, the value of the innovation methods became clearer and people from the top down wanted to know more.

“About a year ago, people in the organization said, ‘We get it. Innovation is possible. But show me how,’” Starner said. “But how do you impart those tools across the corporate structure? To be honest … I can’t say we nailed it. But now, like with anything in life, we know to start simple.”

The company connected with Pittsburgh-based LUMA Institute, which helped the team break down their approach into more manageable pieces, which could then be presented to and understood by anyone in the company.

“LUMA took a fairly complicated set of approaches and pieced it out into simple pieces,” Starner said. “An individual Lego piece is useful, but when you get all the pieces together, you can make some interesting stuff.”

It’s the customer, stupid

Human-centered design (HCD) makes the customer or end user the driving force behind innovation. It’s important to know the customer inside and out and to engage with him frequently in the innovation process to ensure the innovation is on the right track. The approach has a great deal of ambiguity, but proponents say that’s what keeps organizations flexible in times of great uncertainty.

Moreover, while such a user-focused system might slow the process to bring a new idea to market, HCD is said to manage risks because the end product has been informed by countless engagements with potential customers.

“Innovation is not risky. Not innovating is risky,” Starner said. “In the environment we talked about, doing small tests is a way to manage your risk portfolio. You may find a good idea and it may have a potential to be profitable in 10 years and not add a lot to the bottom line now, but it’s insurance. You know you have it as a backup model if things falter. You have a portfolio of options you can put into action.

“Innovating smartly certainly involves advanced testing and thorough prototyping — do something on a simple level, test it rigorously, then invest significantly. With live-model testing, you spend a little money (to build a working model). It’s not perfect or exact, and it may be ugly. But you get a lot of understanding and insight, rather than being pummeled by reality after you launch. I’d rather do that up front.”

Don’t keep innovations hostage

Starner suggests that the idea of speed to market doesn’t take into account the true timeline for a product. It’s nothing for companies to accept constant fixes and tweaks to the product after it’s launched — and after the significant investment in people, time and tooling. But it doesn’t have to be that way. He said HCD provides “speed to market traction” — when the product is adopted by customers or users in the market.

“You’re not going back to fix things. You’ve had your customer engaged throughout the process,” he said. “It’s not speed to launch, it’s speed to making money. People criticize that engaging in (HCD) takes longer, and they’re right, it does take longer. But you do not have to fix things for a year after it gets launched. When you look at the true time scale, it’s a lot more efficient. Successful innovation programs manage risk and speed to market, but you need to think about the metrics differently.”

Paying attention to the ignored

So what’s an example of how HCD is working at Amway?

While Starner couldn’t get into specifics for competitive reasons, he said the company started looking at how it might be able to apply its business model to new segments of the global marketplace, including low-income people in developing countries. Think sub-Saharan Africa and areas in South America where people live on just a couple of dollars a day.

“Most companies only serve 2 billion people in the world, yet the world is 6 billion people. We thought there might be a market there, but the only way to understand it is to go to it, figure something out and get involved,” Starner said. “We decided (the other 4 billion people in the world) are viable customers. They have a desire to engage in the global economy and most people ignore them. Most companies and governments ignore them. But what if we create a model that services them — not only services them, but helps them grow in life? So we spent a year trying to figure that out in one of those markets … and developed a live-model test.”

Another project in Australia wasn’t focused on becoming a new business for the company, but rather on testing ideas about community building. That project led the company to develop a “playbook” that it can apply to either a new business or use to inform the existing business. Innovation, according to Starner, isn’t always about launching something. It can be just as powerful when it’s aimed at some internal focus.

The business innovations team employed many of LUMA Institute’s methodologies leading up to a live-model test of the developing world business model. The team and key Amway executives had boots on the ground for a “walk-a-mile immersion” to learn about the people and what they valued. They worked with people to see how they interacted and how they reacted to brands. They framed the opportunities using a “rose, bud, thorn” approach to identify positives, potentials and possible pain points. Armed with that information, they prototyped and tested their assumptions, eventually opening a trial in-country business unit.

“We’ve not launched anything yet,” he said. “We’re still very much in the test mode, piloting and growing it. But we see very well there could be an opportunity for the company. It’s an insurance policy. It hasn’t launched yet, it’s still in the test phase, but it’s growing well. It’s on a path to profitability. It works. The real question is, is it the right place for the organization to focus? I think the answer is, we want to touch as many people as we can with opportunity and our product. There’s a good chance it will become a viable part of our business. It takes about three years to figure these things out, and we’re heading toward the three-year mark.”

Other companies have recently started to look to similar markets, but Starner argues Amway is ahead of the curve. It has the intellectual property and the expertise in place that the competition doesn’t have, and he believes those factors position Amway for success — if it chooses to enter the market.

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• amway
• amway business innovations team
• grand rapids
• grand rapids community college
• keller futures center
• seth starner
• terry denscek