Case Problem $5-$A$,$ "The Blade Knife Company Seeks Cutting$-$Edge Innovation

   

Case Problem 5-A The Blade Knife Company Seeks a Cutting-Edge Innovation The Blade Knife company is a medium-size manufac- turer of kitchen knives, chef knives, and pocket knives. The carefully-designed knives are made one at a time in a rural community in Portland, Oregon. Each knife is made of stainless steel, and ground to a perfect edge. The higher-end knives have beautifully crafted handles. Sales have been stable for about five years, but Mia, the CEO and founder of the Blade Knife Company is worried. During a Friday afternoon meeting with the management team, Mia said to the group: made in China, Malaysia, and Vietnam. For now, the only innovation I can think of is diversifying into pots and pans, but I am working on the problem. because we are in a stable market. A big driver with Sean (chief financial officer): Our sales are flat revenue is people setting up new households. With population growth being flat, I don't see much growth there. Our financials are good, so I am not too worried about Blade Knife. I would worry about investing a ton "I am so proud of the high quality and beauty of of money in innovation that might not pay off. our knives. I am also proud of our management team and our hard-working, highly-skilled employees. But I am worried about the future of Blade Knife. Our product mix is about the same as it was when 1 founded this company 25 years ago. What do you think is blocking our sales growth? What can we do to innovate our product line?" Fred (manufacturing vice-president): A major reason our sales are flat is that our products are too high quality and too durable. Some of our customers keep our knives in their kitchen permanently unless they are thrown out accidentally. Even if someone sells a restaurant, our knives are likely to be included in the deal. Maybe we could innovate by making scissors, tweezers, and manicure kits. Or, how about stainless steel beer kegs? Lola (chief marketing officer): A big problem I face in marketing our knives is that there are lower-priced alternatives available. At the extreme, you can purchase a decent set of three kitchen knives at Dollar General for four dollars. Maybe a gourmet cook, or a chef in an upscale restaurant wouldn't like those knives, but for the average person the inexpensive knives get the job done. We also are underpriced by decent quality knives Melissa (head of administration and HR): I love expanding industry or a hot market. A great strength our products, but I realize that we are not in an I see of our company is our people, at all job levels. Let's unleash the talent of all our employees by asking them to submit creative ideas that could lead to a breakthrough innovation for us. I think we might all be pleasantly surprised by the innovative capacity of our employees. Mia: We are now in the preliminary stage of develop- ing an innovation that will spur revenue and growth for our company. We have to think big and disrupt what we are doing. We will make innovation a top company priority. Case Questions 1 2 3 What is your evaluation of the suggestions offered for product diversification instead of innovation? Which one of the suggestions offered do you think has the best chance of bringing an innovation to Blade Knife? In what way could Blade Knife possibly come up with a disruption for kitchen cutlery?