Based in Toledo, Ohio, Owens Corning — a leading manufacturer since 1938 — is known for its entrepreneurial spirit, focus and thirst for being better. The company is also commonly recognized for its PINK insulation.
“Why is it pink?” people often ask.” Typical answers include:
- The company wanted to make it look like cotton candy.
- It makes you feel comfortable.
- It takes advantage of the popularity of the Pink Panther movies of the 1970s.
The real story is that when Owens Corning first tested All Fiber (AF) fiberglass wool insulation at its Newark, Ohio plant, it used red dye to distinguish the product from the existing white insulation. The red dye colored the AF wool pink and the new PINK insulation tested well against the competition with installers.
However, when the new AF fiberglass insulation was put on the market, Owens Corning didn’t use the dye. What happened? Installers didn’t like it and instead asked for the PINK insulation. That’s how PINK was born and it’s been a “hit” ever since. Building materials manufacturers would die for that kind of brand recognition. In 1987, the company made legal history as the first company to trademark a single color, PINK.
Although Owens Corning is famous for its PINK insulation, it’s also a highly diversified manufacturer of building and composite materials — a Fortune 500 company for more than 50 years, employing more 19,000 people, doing business in 37 countries and earning about $ 6+ billion in sales each year.
This success doesn’t mean that there haven’t been difficult times.
In 2009, when the bottom fell out of the housing market, building materials manufacturers were hit hard. Economic challenges combined with increased pressure from low-cost manufacturers and increasingly diverse and complex channels within the market, meant Owens Corning was facing a tremendously competitive environment. (It’s important to note here that Owens Corning customers were, and still are, big-box retailers, national distributors, original equipment manufacturers and independent contractors and dealers.)
Like boy scouts, they were prepared.
In 2005 and 2006 the U.S. was enjoying a robust building economy. Despite that, the company began to recognize signs that the market was softening. While they had many advantages such as disciplined manufacturing practices, strong marketing and what they believed to be good – even great – customer relationships, they suspected that these may not be enough to withstand the challenges that might be ahead.
Therefore, at the beginning of 2007, a critical objective was issued to the organization, all employees must be accountable for the value they create for their customers. In a company meeting it was boldly declared: “The fundamental reason this corporation exists is to create value for its customers.”
Everyone believed that Owens Corning had been creating customer value for a long time, after all, they’d been in business since 1938. But leaders saw an opportunity to win in the marketplace by measuring customer value and making the entire organization accountable for doing so. After all, this is how real improvement is made. So, Christian Nolte, then the director of strategic marketing, spearheaded discussions on how to turn the objective into something tangible within the organization. Christian was – and is – the epitome of a “change agent.” He understood what was being requested and, as described in Winning with Customers, he began getting his organization prepared to operate from an outside-in perspective. His first meeting with the president of the roofing division, is particularly memorable, she had countless questions. Ultimately, Christian successfully gained buy-in from all the leaders to try something new. This new process involved interviewing more than 120 customers in about six weeks and their voice could not be denied. To Owens Corning’s credit, they listened, understood and took action. In doing so, they achieved a 600 percent ROI within the first year.
How Owens Corning Weathered the Storm and Became a Winner
In an industry with several large customers and a product that is fairly commoditized, it was difficult to define a go-to market strategy that created more money for customers relative to the competition.
In the past, Owens Corning’s approach had been to paint customer relationships with a broad brush and chalk them up to the “market.” However, during the customer interviews it became clear that this method just wasn’t working. In fact, the account teams learned that the investments they believed they were making on behalf of their customers were not really helping the customer at all and certainly were not helping to differentiate them from their competition. As far as their customers were concerned, because Owens Corning’s investments and go-to market strategy were so broad, they had become a transactional supplier.
Beyond that, in some cases they were dangerously close to costing their customers money relative to their competition due to turnover in the sales organization and increasing channel conflict. One customer in particular stated that “we have lost the edge we once shared together.” In this case, the real challenge was to regain their edge with this customer while minimizing channel conflict with other customers in the marketplace.
The solution? Get clear (quickly) on the value of their investments to this customer’s bottom line and validate what investments could be made to improve their profitability. By taking a rigorous approach with the customer, the account team was able to clearly define the specific needs of their customer, build a customer-specific plan that facilitated co-creation of win-win solutions, and measure their successes and failures together. These actions transformed the customer relationship from “treading water” to a true partnership.
According to the previously-mentioned customer, Owens Corning went from a transactional supplier to a value-added partner in just over a year as a result of delivering the specific opportunities the customer identified during the Discovery Interview. Because of these findings, they became intentional about understanding their customer’s specific needs and worked on doubling their impact to its bottom line. As a result, Owens Corning grew globally with the customer, maintained their share and margin positions.
In parallel to winning with this customer, the account teams also sat down with other customers and found that in some cases investments were working, and in others, they were not. They found that there were some common needs among customers that warranted big investments, while in other cases they were already effectively meeting their requirements. By intentionally engaging with their customers, Owens Corning gained clarity into how they go to market.
Ultimately, this work changed their culture for the better. Now, at Owens Corning the customer is at every meeting. Together, they evaluate standard reports that are organized by value attributes. By doing this review together, they gain insight into the ways in which their value proposition stacks up to the customers’ needs. These discussions generate next steps that vary from simple organizational communications to new investments.
“At Owens Corning today, if you were to walk around the hallways or sit in any of our meetings, you would like hear us mention differential value. It has become the way that we talk about how we operate with our customers…Differential value is really a simply defined phenomenon. Are we making a difference and do our customers make more money doing business with us than with the other guy.”
—Bob Harlan, Owens Corning, Director of Business Insights
At Luminas, through our Customer Value Xcelerator (CVX), we help our clients do the work to distinguish and confirm their company’s differential value proposition and know with certainty what they do to help customers make more money.
By proactively taking this approach, like Owens Corning, it’s possible for your company to not only be prepared for the potential economic downturn, but positioned to thrive through it. Let’s talk!