"One of my biggest regrets," says Frank St. Onge, "is that we never got a scented lightbulb out." St. Onge is reminiscing about when he ran marketing for the Sylvania group that ginned up BooBulbs, orange-and-black-colored lightbulbs that were a hit at Halloween.
Sylvania wasn't prepared to invest in St. Onge's ideas then. But as general manager of the New Ventures Group, a company-within-the-company effort to revolutionize the way Sylvania makes lighting products, he's betting that things have changed, even if he doesn't get wafting watts. Screw-in lightbulbs have been the most predictable of businesses. Take the number of households, multiply by the number of sockets and average lightbulb lifespan, then fire up production lines.
But those days will soon be over. Incandescent bulbs in the United States will be phased out starting in 2012, while the Energy Act of 2007 dictates that bulbs need to be 70% more efficient by 2020. Although compact-fluorescent lightbulbs are the popular alternative today, light-emitting diodes (LEDs) look to be the long-term replacement for incandescents because they basically do not burn out. "This will result in a dramatic contraction of the replacement market," warned a 2006 iSuppli report. The one bit of good news? "The spectral-tuning abilities offered by LEDs will open up fantastic new applications over the next decade."
St. Onge's group is Osram Sylvania's best effort to tap into these fantastic new apps and get consumers to buy lighting based not on need but on whim. NVG, as the group is known, has created table runners, showerheads, coasters, and the popular Dot-It stick-ups. St. Onge's group is thriving, even as the economy slows. NVG — which banged out 20 new products in the last fiscal year — is the fastest-growing unit of Sylvania's billion-dollar LED business and already profitable in its second year, with revenues due to triple by 2013.
NVG is also a powerful strategic wedge for the company's other core products. In fact, NVG has already broken major new accounts for the company, such as Costco and Sam's Club, which don't tend to carry Sylvania lighting products. (The brand hadn't been in Costco in six years.) "This effort is a trump card for Sylvania versus its main rivals," says Konkana Khaund, an analyst at Frost & Sullivan, referring to Philips and General Electric.
During the holiday season, St. Onge opened five different retail concepts for Sylvania in Buffalo, New York — area malls, from a kiosk to a branded storefront. In addition, Lowe's let Sylvania put an 8-foot-by-12-foot stand-alone display in 50 stores last fall. None of the mall experiments gave Sylvania the lighting version of the Apple Store, but St. Onge says that Sylvania didn't lose money on the ventures, "and that's a gold mine for us — we're using these to get more of the consumer experience, which helps us develop products."
St. Onge takes ideas for new products from everywhere. One retail buyer wondered if a motion light could be combined with a security camera; St. Onge now has a prototype. The light-up table-runner concept arose after NVG's designers found an Italian textile company that was weaving fiber optics into material. Macy's, which likes the table runner, wants a whole home product line, so NVG has dreamed up things such as an inexpensive vase and a light-up bowl that can hold water to create a votive effect.
St. Onge's group has upended protocol all across staid Sylvania. NVG has its own packaging specialist, its own logistics expert, and its own quality control. St. Onge outsources most of his production. "Every day, I get somebody like the head of purchasing saying, 'Hey, your organization is the only one that has a purchasing person in it. That person needs to report to me,' " St. Onge says.
Running cover for St. Onge is Geoff Hunt, Sylvania's senior vice president of communications and human resources. Hunt beats back the traditional forces of bureaucracy and brings antacid to the bean counters queasy about, say, St. Onge ordering inventory before knowing he has a customer. (He does it to meet retail cycles, St. Onge says.) Hunt recruited St. Onge because, he says, "I needed somebody who was a bit of a dreamer but could navigate our system."
"We think these will sell," says Mike Rosart, a buyer at Canada's Home Hardware Store, a 1,000-store chain based in Jacobs, Ontario, that carries an array of NVG's products. Rosart predicts the goods will be recession-resistant because they are distinctive and not too expensive. In fact, Rosart says he has started meeting with his Sylvania salesperson once a month, instead of quarterly, so he can keep up with the new products. "Whether it's a gimmick item or it's got a practical use," he says, "there'll be someplace around the home where customers will use it."