Nautilus – A Value Innovation Success Story

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NautilusIn March 2012, the Nautilus Directors of Product Development and Product Management attended a Mastering Value Innovation Workshop in Denver, CO.  Two months later the Director of Product Development attended our first Mastering Contextual Interviewing Workshop.

Seeing sales of their upright exercise bikes plummeting, the two directors decided to set up a project to understand the unmet needs of their Most Important Customers, who up to that point they had assumed were the heads of purchasing at sporting goods store (e.g., Sports Authority and Dick’s Sporting Goods) and Amazon.

18 months later, using the Value Innovation Process to define what they needed to do to deliver exceptional value to the Most Important Customer (serious and committed users), the new lines of exercise bikes were introduced and the sales decline was reversed.

Take a look at an overview of the steps the Nautilus project team took moving through the Value Innovation Process and the results they achieved.

Here is the Cardio Control Unit in 2012 and the “As Is” & “Best in Class” Value Curves:

The Value Curves show why Nautilus could not compete:

As-Is_Cardio_Control Unit_1502032012_Cardio_Control_UnitHere is the 2013 edition of the Cardio Control Unit and the “As Is” & “To Be” Value Curves:

ToBe_VC_Cardio_Control_Unit_150203ToBe_Cardio_Control_unit_1502033Q, 2014 Results:

Nautilus reported their 3Q, 2014 results on November 3, 2014:

Here’s an excerpt that relates directly to their new line of upright exercise bikes introduced in September, 2014

“Net sales for the Retail segment were $23.5 million in the third quarter 2014, an increase of 21% over the third quarter last year. The improvement in Retail net sales reflects continued strong retailer and consumer acceptance of the Company’s lineup of cardio products launched last fall, along with additional new products introduced this fall. The Retail results also benefited from a few customers accelerating some of their fourth quarter orders into the third quarter to get their supply chains in desired position for the upcoming peak selling season. For the first nine months of 2014, net sales for the Retail segment totaled $58.6 million, an increase of 31% over the same period last year.”

Bottom Line:

Using the Value Innovation Process, Nautilus generated a 31% increase in net sales over 2013 with an increase in gross margin.

Comments on the February 3, 2015 Posting on LinkedIn:

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Want to up your innovation game? Want to up your organization’s innovation game? Attending one of our Mastering Value Innovation Workshops is a great place to start. In 2016 we are going to change our approach. We will work with you to develop your own custom workshop that addresses your problems and you define the length and location. More information can be found in the Workshop Brochure.