Helping Others Go Vertical

Innovation in Entrepreneurship - A Case Study on Keen Mobility

by Meri Gruber

Keen Mobility is a story of innovation, invention and entrepreneurship. Innovation is often focused on inventions and new products, but innovation is also a new way of thinking about conventional wisdom. Jeffrey Phillips wrote an insightful post "Innovation, Invention and Entrepreneurs", defining innovation as "a new idea that is put into valuable or profitable action." What is so wonderful about the Keen Mobility story is how Vail Blackwell Horton and Jerry Carleton combined innovation, invention and entrepreneurship to deliver value for a large, underserved population and create a profitable, growing business.

Keen Mobility was founded by Vail Blackwell Horton and Jerry Carleton. Vail and Jerry were college roommates at the University of Portland (UP). Vail, born without legs, had been using artificial legs to walk but the crutches he needed to use with the artificial legs were destroying his shoulders. He wanted to find a better way to keep walking - for him, and for others. Vail went in search of a way to fulfill this mission.

Vail brought an idea for a new type of crutch - one with shock absorbing technology - to a group of engineering students at UP. He suggested the engineers try to build a working prototype for their senior project. They agreed, and the student engineers went to work. The concept worked! The engineering students successfully built a working prototype, and Vail and Jerry realized their concept could fly. They set off to start a company to build a product that would help Vail stay vertically mobile, and help others do so as well.

Full of enthusiasm, Jerry and Vail looked at each other across the table of their rented student digs in North Portland, asking what all entrepreneurs ask at this point, "What now?" They had zero idea how to launch a company and needed expertise and funding. Financing is tough at the best of times, but this was in 2001, in the midst of the dot com and telecom bust.

Jerry and Vail called the UP Center for Entrepreneurship. They also set up every meeting, coffee and lunch they could with people they could learn from. By approaching people for mentorship, not funding, they built relationships for the long haul. The company wasn’t bankable at this time, but many of these early contacts later became investors.

The UP Center for Entrepreneurship encouraged the team to enter UP's Entrepreneurs Challenge and other business competitions. By April 2002 they had won the $10,000 first prize in the UP competition and third place in Portland Business Journal's business plan competition, winning $35,000 in cash and services. UP sent them to more competitions around the U.S. where they consistently finished in the top three.

The team also looked for other sources of funding. They wrote a successful proposal to UP to fund their trade show booth and travel costs. They contacted the National Collegiate Inventors and Innovators Alliance (NCIIA). With support from the Lemelson Foundation, NCIIA awards approximately two million dollars in grants annually to college students or recent graduates of member institutions. Keen was awarded a $10,000 NCIIA grant funding prototype development and provisional patent filing costs.

A great partnership, Vail focused on creating the product and the vision for company while Jerry continued fundraising efforts. The VC environment continued to be difficult. Jerry "took every meeting he could get." Innovation continued. They partnered with universities where student engineering teams would apply to NCIIA to prototype Keen's new product ideas. Frugality reigned supreme. In one example, now part of the company's lore, Jerry opened the company bank account at US Bank because of their "Five Star Service Guarantee" that said if you waited in line for more than five minutes, they credited $5 to your account. Jerry made sure to pick the longest line in the bank every time.

The business plan competitions were great for press, as was their compelling mission to keep Vail and others vertically mobile. Jerry recalls, "We were never in crisis capital mode, we had options." When they went out to raise their first preferred round, they "couldn't stomach" the VC terms, so they turned to angel investors. Jerry was on the road, once meeting in six different states in 48 hours. Jerry had the mindset, "every person was a potential investor, or knew a potential investor." Jerry hit the mark - the company's first preferred round was oversubscribed.

Innovation also comes from understanding your market. One of Keen Mobility's best selling products lines today, Tru-ReliefTM foam, started as an important addition to their shock absorbing crutch. When looking for a solution for shock absorbing underarm foam, they discovered a superb foam that could also relieve pressure points. Pressure sores can cause severe discomfort to wheelchair users and can be life threatening.

A crutch with shock absorbing technology was the company inspiration but ultimately represented only a small market. The team realized they needed a full suite of "world-class products focused on safety, mobility, and comfort for the disabled, elderly and injured." They now focused their efforts on building out their product line.

The team went on to close their Series B preferred, again oversubscribed, with about half coming from Series A investors, and half new investors. In 2005, Keen added their first intuitional investor, Crobern Management Partnership, after the Series B close. Jerry describes Crobern as "a venture firm with an angel attitude." Crobern's focus in health care, and their ability to provide value beyond the dollars, has been a great fit with Keen. Jerry points to their early years as an important training ground. "The training we received in the lean years gave us such a respect for the money we raised." Needing only half of the first tranche, the company gained credibility with their new investor when they bought CD's with the extra money.

Keen Mobility today has "over $2.5 million in annual sales, 25 different product lines, more than $1.7 million in capital, and 12 employees. Keen Mobility has also been recognized by the Oregon Entrepreneurs Forum as one of the three most successful growth-stage companies in the state, ranked number 30 on the 100 Fastest Growing Private Companies List, and was placed on the Governor's Honor Role for Employers of People with Disabilities."

Keen Mobility has been named in 2008 and in 2009 to Inc.'s annual ranking of the fastest-growing private companies in America and to the Portland Business Journal's Oregon 100 Fastest Growing Private Companies list three consecutive years. Vail and Jerry were both named to the "Top Forty Under Forty" list by the Portland Business Journal.

Vail holds numerous honors, including his appointment to the Secretary of State Advisory Committee for Worldwide Disability Policy and was named an "Oregon Healthcare Hero" by Senator Gordon Smith on the floor of the US Senate. Vail is also founder and chairman of Incight Foundation, dedicated to empowering people with disabilities through education, employment, networking and independence.

Jerry, who from year two was amazingly attending law school at night, was admitted to the Oregon Bar in 2007 and joined Bullivant Houser Bailey PC. "Having a real life case study to immediately apply my classroom lessons was an incredible opportunity." Jerry's hard won lessons in founding and growing Keen Mobility inspired him to "pay that forward, taking companies into and through the trenches." He continues to be part of Keen Mobility as a Director and Officer of the company.

Vail and Jerry's story, the story of Keen Mobility, is a story of innovation, invention and entrepreneurship. From Vail's initial inspiration and invention, they used creativity, ingenuity, dedication and hard work to grow their company. What Vail and Jerry show us is that innovation is a mindset, that when confronted with challenges, new ideas can change the game.


Don't miss an article - Subscribe to our RSS feed and join our Continuous Innovation group!

---

Meri Gruber is a leading expert on business execution. She blogs on the intersection of innovation and business execution at www.competingonexecution.com

Human Capital x Social Capital = Productivity and Innovation

by Meri Gruber

As a culture we like to think of our achievements as the triumph of the individual. But last week I used a memorable chicken breeding example to show you that group performance outweighs individual performance in a group environment because a focus on individual performance comes at a cost to the group performance.

The reality is that company performance is a complex group effort. Without positive group productivity, companies under perform. And most companies under perform. We are used to seeing numbers like 90% of companies fail to execute on their goals, that excellence in business execution is the chief concern of CEO's. What's going on here? "Companies assume people are atomistic and economic, versus social creatures", writes Stanford professors Jeffrey Pfeffer and Bob Sutton in "The Knowing-Doing Gap, How Smart Companies Turn Knowledge into Action."

There are two things going on here that get in the way of group productivity, two deeply held organizational operating assumptions that are completely out of sync with reality. The first is that company performance is atomistic. The atomistic model assumes individual control and that company results are the consequence of individual decisions. The second is that individual performance is motivated largely by extrinsic, (financial) rewards based on individual performance." Companies operate on oversimplified or incorrect models of human behavior relevant to shareholder (short term) interests, irrelevant or counterproductive for ultimate success of the business."

In "Managing the 21st century organization", Valdis Krebs of orgnet.com reminds us that what you know (human capital) multiplied by who you know (social capital) creates productivity and innovation. Traditional company hierarchies have an up-down formal information flow: you report up the chain, you receive information down the chain. But to actually get your work done, you tap into the organization sideways so to speak, leveraging your informal contacts across the company.

Research sited by Krebs found that "the ability to reach a diverse set of others in the network through very few links was the key to success for both individuals and teams." We know this from our own experience. A good networker gets more stuff done because companies are not atomistic, they are complex group environments. So if you think about it, with the exception of the few jobs in the company that don't interact with anyone, you should be interviewing people for their social skills, not their functional skills.

We might be done there, but we're not. Because relying on social skills and ad-hoc networking is terribly inefficient and capricious. And all too often, it is down right discouraged by performance targets that misunderstand human motivation and pit employees against each other in an endless game of internal competition. At a recent TED talk, Dan Pink, author of "A Whole New Mind, Why Right Brainers will Rule the Future", made the case for businesses to rethink their "business operating system":


"There is a mismatch between what science knows and what business does. And what worries me, as we stand here in the rubble of the economic collapse, is that too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science. And if we really want to get out of this economic mess, and if we really want high performance on those definitional tasks of the 21st century, the solution is not to do more of the wrong things. To entice people with a sweeter carrot, or threaten them with a sharper stick. We need a whole new approach."


Innovation and productivity doesn't happen by carrot or stick, it happens through connectivity. What Pfeffer and Sutton found was that "firms where measurement helped measured things that were core to their culture and values and intimately tied to their basic business model and strategy, and used these measures to make business processes visible to all employees."

To close the group productivity gap and foster innovation, enable and empower connectivity in your company. This requires you to revisit your assumptions about company performance and individual motivation. So before your write "superstar wanted" in you next job tweet, read the chicken story one more time. Hopefully you will come to realize that "super collaborator" is what you really need. And before you start your quarterly/annual performance goal setting process, listen to Dan Pink's TED talk one more time on what really motivates and stimulates the kinds of creative solutions you need today.

Finally, think about group productivity as part of an overall business execution platform. The mindful implementation of Enterprise 2.0 emergent social software platforms and performance management solutions are components of a connected company, and a connected company outperforms its peers. What does this kind of emergent business execution platform look like? Stay tuned.

---

Meri Gruber is a leading expert on business execution. She blogs on the intersection of innovation and business execution at www.competingonexecution.com