As Larry Keeley at Doblin Group likes to say, product innovation is one of the most over-rated and over-used approaches to innovation. There are many other areas of an organization that can benefit from a focus on innovation. One of those that is done less often is to change your distribution channel, say from one type of store to another (specialty to big-box) or from indirect to direct.

There are probably many reasons why this is the case, but off the top of my head I can think of three:

1. It’s a high risk proposition: it directly impacts your top line with potentially catastrophic effects in the near term, and possibly long term as well
2. It’s very expensive to change, as all your sales and marketing efforts tend to be aligned around certain channels, and when you change you affect all their cost structures
3. Retail channels are all about relationships, and when you change you have to create brand new relationships (often requiring expensive new staff or consultants to help), and you risk losing (ie, pissing off) the ones you’ve spent years building up to get a good level of trust and benefit.

This largely explains why companies who are new to a market are more likely to explore alternate distribution models. Think of Progressive Insurance with its direct web-based model, or Netflix with its, er, web-based model.

But both of these companies have also been innovative with their “product” offering, as well as how they have distributed it. They have taken advantage of the new opportunities presented by rethinking the distribution channel, their lack of baggage of historic distribution methods, and used these to shape a new-to-world product.

Long before Amazon changed the world of book selling, and Lulu threatens to change the world of book making, another company rethought how books are designed and sold: 71 years ago, Penguin books came in to existence because of a realization of an unmet need, as described on Penguin’s website:

Penguin was the brainchild of Allen Lane who was then a director of [publishing house] The Bodley Head. After a weekend spent with Agatha Christie in Devon, Lane searched Exeter station’s bookstall for something to read on his journey back to London, but found only popular magazines and reprints of Victorian novels. Following this, he recognised the need for good quality contemporary fiction at an attractive price. Lane was determined that the new range be available not just in traditional bookshops, but also in railway stations and chain stores such as Woolworths.

The first Penguin paperbacks appeared in the summer of 1935 and were a mix of biography, crime writing and novels. Genres were indicated by the colour of the band on the cover, biography being dark blue, crime green and fiction orange. All the titles were by contemporary writers including Ernest Hemingway, Eric Linklater and Agatha Christie. They cost just sixpence, the same price as a packet of cigarettes.

The site goes on to imply why the Penguin model was “unthinkable” to established publishers:

Within twelve months, Penguin had sold a staggering 3 million paperbacks, but was generally viewed with suspicion and uncertainty by traditional publishers. Hardback fiction sold at seven or eight shillings, and it was feared that the new cheap paperbacks might undermine this market. Some authors were also unsettled by what the advent of Penguin might bring.

An early example of disruptive innovation! Penguin even tried such things as book dispensing machines, known as the Penguincubator.

Note the earlier statement about different colors for different genres. All the Penguin books had a consistent “look and feel” in modern parlance, and did not adopt pictures on their jackets until several years later. This is an important lesson in the power of design: It allows you to quickly create an iconic, recognizable presence if you are new to a market. It’s also an object lesson in taking your “weaknesses” (low budget, poor quality printing and paper) and turning them into strengths. Penguin has been particularly “ruthless” in its application of its visual design language, making its standard lines consistently recognizable from a train-car length away. As the International Herald Tribune noted:

The arrival of Jan Tschichold, the German graphic designer, in 1947 transformed Penguin. He wrote a strict set of rules governing every element of design and ensured that they were enforced by editors and printers. In three years, he established Penguin as an exemplar of modern book design.

Penguin is also surely one of the earliest examples of brand tiering done so overtly in the book segment, introducing brand extensions like the Pelican, Puffin, King Penguin, and Penguin Classics lines. Interestingly, Penguin is a successful example of starting at the low tier and working your way up, usually considered the more difficult route. Throughout its history Penguin has also made periodic controversial decisions which have the by-product of keeping it in the public eye: The first publication of the unabridged Lady Chatterley’s Lover by DH Lawrence, and Salman Rushdie’s Satanic Verses are two examples.

I first thought about Penguin in this design/distribution context a year or so ago while I was working with a client who was trying to create a new product line and develop new distribution channels. I ended up not using the Penguin example as it was too remote, but I’ve been intrigued by their history ever since. So I was delighted to see this post at 37signals a little while back that lauded Penguin’s new line of books, Great Ideas, which have striking designs very much in the spirit of the first books 70 years ago, but with a decidedly contemporary edge. So here’s a belated tip of the hat to them.