Jeff Standridge: This is Jeff Standridge, and this is the Innovation Junkies podcast. If you want to drastically improve your business, learn proven growth strategy, and generate sustained results for your organization, you’ve come to the right place. Over the next half hour, we’re going to be sharing specific strategies, tactics, and tips that you can use to grow your business no matter the size, no matter the industry, and no matter the geography. Weekly, we’ll bring in a top mover and shaker, someone who’s done something unbelievable with his or her business, and we’ll dig deep. We’ll uncover specific strategies, tactics, and tools that they use to help you achieve your business goals. Welcome to the Innovation Junkies podcast.
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Jeff Standridge: Hey guys, Jeff Standridge here. Welcome to the Innovation Junkies podcast.
Jeff Amerine: Hey. This is Jeff Amerine. I’m glad to be back. And Jeff, today, we’ve got a really fantastic guest. I’ll tell you a little bit about him. It’s Dr. Bill McCoy. He’s the chief science and technology officer, and also the co-founder of Phigenics. Phigenics, an innovative water quality management company that I’ve known for a bunch of years. I actually serve on their board of advisors. They meet the increasingly complex needs of facility owners and managers to improve overall water safety while reducing operational, which are things like water, chemical, and energy, and capital costs.
Jeff Amerine: Their solutions and business model represent a clear shift in thinking. They really make sure that these corporate and industrial customers don’t over treat their water, don’t under treat their water, and that the water is safe and avoids the pathogens that can cause real problems like Legionella, Legionnaires disease, et cetera. Bill has been continuously innovating in chemistry, microbiology, and the analytical diagnostics and water management for a lot of years. He’s published more than a hundred scientific articles. He has 29 US patents, with international coverage as well. He’s written eight book chapters. Bill is just an amazing guy. He’s really helped drive the ASHRAE standard for indoor water and air quality, as well. And we’re just so lucky to have him on this morning.
Jeff Standridge: Wow. Thanks for being with us Bill.
Bill McCoy: Well, thank you. Good morning.
Jeff Amerine: Did I get most of that right?
Bill McCoy: You did. I have to update the number of patents. We’re working on our next two. I guess I can maybe update that to 33.
Jeff Standridge: Wow. That’s unbelievable.
Jeff Amerine: Wow. That’s incredible. That’s incredible. Bill, give us a little bit more background Phigenics, how you all created the company, and how important innovation has been in launching what is a very successful business?
Bill McCoy: Okay. The three of us, Ashton McCombs, Jay Reading, and myself met and, well, we’ve known each other now for, boy, close to I guess 35 years. But we began working together in a very large water treatment company. And we were colleagues in that company. I was always on the technical side. Jay and Ashton on the sales and general management side. We worked together in industrial water treatment. And we recognized a very significant problem that the large corporation we worked for, and the whole market, not just that company, but all of its competitors, failed to solve. This problem relates to public health and is quite serious. This corporation approach, large corporation approach, just failed to solve the problem.
Bill McCoy: And we looked at it and said, we can sit down and shut up, so to speak, and just go along with the flow. Or, we can leave and take a shot at solving the problem. We did that 15 years ago. My friends and family, essentially, said you’re crazy. I had no motive, no monetary motive to do that, because the big corporation is treating me very well. But we wanted to be a part of solving a very significant problem. So we left. And that was disruptive to a lot of things, our family, and certainly to the market. 15 years later though, we’ve got 150 employees. We’re quite profitable, thanks to our investors, including you, Jeff. And we’ve done well. We’ve taken a bite out of the problem. It hasn’t been solved, but we are definitely making progress. And we’re proud of being part of solving a problem that the big corporations could not, or would not solve.
Jeff Amerine: Give a little bit more on that. Not everyone has heard of Legionnaires’ disease or legionellosis. Was that the main catalyst, the main pathogen that really was creating the opportunity? Talk a little bit more about that, Bill.
Bill McCoy: The answer is yes, that was the main pathogen because Legionella, which is a bacterium naturally occurring in water, causes a very severe disease that results in notifiable cases. And that means if somebody comes into hospital with Legionnaire’s disease, it’s required by law that that disease be reported to the federal government through the CDC. And so it is the most recognizable disease associated with water and buildings, because of this notification.
Bill McCoy: Now there are many other diseases caused by bacteria in water that are not notifiable. So Legionella is not the only bacteria, but it’s the most famous. But here’s the thing that your listeners might not realize. This disease, Legionnaire’s disease, is only transmitted from water in buildings to people, for the most part. It can occur in nature, but it’s not ever really a significant problem. It’s almost always from water in buildings. And here’s the thing that the general public has only recently become aware of. The water that comes into your building is generally safe and ready to use. But in the building, the water quality can degrade because of what the facility managers do to the water in processing the water in the building, so much so that it becomes hazardous. And this is the reason why there was a need to address the problem of building water quality. And that’s what motivated us.
Jeff Standridge: Bill, let’s talk a little bit about… You said something that’s very timely. In fact, Jeff and I were talking this morning about innovation really starts with defining a problem to solve, and getting very clear about what that problem is, and not having a bias toward a solution before you really understand the problem you’re solving. Talk a little bit about the process that you guys went through when you said that there was a problem to solve, that the big corporations were not solving it, and you guys felt that you could solve that problem. Tell us kind of the process you went through to do that.
Bill McCoy: Okay. And this will relate to innovation as well. It’s a strategic approach to innovation. And the first thing is to really understand the problem. I mean, not just read about it, but you have to live the problem. You have to know, really, more organically, so to speak, the problem deeply, not in a superficial way, to really almost empathetically understand the ramifications of the problem. And that leads to a strategic approach to innovation because what we want to do is seek a longstanding problem that’s recognized as significant and others have been trying to solve. In fact, in my innovation career, I’ve always approached it that way, Jeff.
Bill McCoy: What we want to do is find a problem that everyone recognizes and people have been trying to solve, but have failed. That’s the kind of innovation project that we always look for. And it’s a strategic approach to innovation. In the case of Phigenics, the long standing problem was the degradation of building water quality in facilities, big facilities like hospitals and universities and retail, big retail organizations. So we look at the problem and start working on why is it that this problem has not been solved? And that leads us to other strategic approaches to solving the problem.
Jeff Standridge: That’s fantastic. Longstanding problem, everyone perceives it as the problem, or understands the problem, and others have been trying to solve it, yet have failed.
Bill McCoy: That’s it.
Jeff Standridge: Strategic approach to innovation. I love that.
Bill McCoy: Yeah. And we have a little kind of a term for that I think Ashton made up. And that is, we want a tailwind. You know, we want a tailwind pushing our innovation. We don’t want to be trying to create a product or a solution for a problem that doesn’t exist. It sounds almost trivial to say it that way, but you’d be surprised at how much innovation goes on to develop things for problems that we haven’t really… We don’t have a problem to solve with the innovation. We go to the other direction.
Jeff Standridge: Well, or perhaps there’s a headwind in customer education, right?
Bill McCoy: Right.
Jeff Standridge: One of the most expensive markets to break into is one where you have to educate the customer about the need that they have, or the problems that they have.
Bill McCoy: Well said. We want a tailwind.
Jeff Standridge: And we find that, and we do some work with academic researchers and healthcare researchers in some instances, and oftentimes, research interests that they have may not be tied to that tailwind that you speak. It may not be tied to a big enough market or a commercializable opportunity. It’s great academic inquiry, but it may not solve a big enough problem for enough people to have a business viability behind it, or a commercialization viability behind it.
Bill McCoy: Yeah. That’s a good point. I don’t mean to knock innovation that approaches development of technology for which there’s no problem. I didn’t mean to say that that’s a bad thing.
Jeff Standridge: Sure.
Bill McCoy: Because sometimes, what comes out of that kind of research is just mind blowing and spectacular. So I’m not knocking it. It’s just that when it comes to strategy, it’s kind of like choosing a road you want to be on. And the road that I want to be on is innovation where there’s a tailwind. But that’s not to say that innovation in the other category that you were just describing isn’t incredibly valuable.
Jeff Standridge: Right.
Bill McCoy: It can be a lot of fun, too.
Jeff Amerine: Bill, in the early days of Phigenics, you were in that sort of early adopter segment of innovation growth. And you had a lot of great clients, but they were really the people that had the insights and the understanding and were maybe a little more enlightened that this was something to work on. Something else you did as part of your strategy, which I think is instructive, is you also work very actively as part of the industry standard group. So that this went from something where it’s great guidance, to, no, you’ve got to do this, because if you don’t, you’re going to be violating an ASHRAE standard. And talk a little bit about how that can inform companies that are pursuing innovation that solves a real problem, but there’s not necessarily that compelling call to action to go from early adopters to fast followers until some regulatory action is taken. I think that’s kind of a key learning as well. Can you talk a little bit more about that?
Bill McCoy: Sure. And this is common to almost all technology areas. If there’s no technical consensus opinion about what to do, not how to do it, but what to do, if there’s no technical consensus opinion about that, the market just is confused. And most people in the market will be conservative and choose to do nothing because the worst thing is to make matters worse than they were before. So the market will be scared, conservative, and not do anything. Or, do very little until there’s a technical consensus opinion.
Bill McCoy: Now in our market, since it’s public health-related, there’s regulation, there’s a lot of liability. You don’t want to do things that would hurt anybody because that would be worse than not doing anything at all. So you have that. But you’ll find it common in any market area, like in software for example, until the technical people agree on, for example, like what would be the standard for a coding project, until the technical people come up with that kind of consensus opinion, it’s hard for products to really take off.
Bill McCoy: So yes, I spent a lot of time, I spent a lot of energy, and just a lot of my personal capital, so to speak, working with my peers, technical peers, in the industry. And we worked through ASHRAE, which is the American Society for Heating Refrigerating and Air Conditioning Engineers. And what we did was develop a consensus opinion on what to do. And that was published in 2015. Our innovation is centered in that. See? So there’s two reasons for, from a Phigenics point of view, for me to do that. One is to help develop the consensus opinion, so that it’s technically correct. But the other is so that we can stay right in the fairway, so to speak, for what will be the direction that the market goes. So those are the two advantages Phigenics gets from all the energy expended in helping to develop the consensus opinion. So I can tell you that all of our innovations, both in data management and in analysis diagnostics, fit well within what the tech consensus opinion is because we helped develop it.
Jeff Amerine: Hey folks, we’ll be right back with the episode. But first, we want to tell you about a limited opportunity to take advantage of our Growth DX. For a limited time, we’re offering a free strategy call to see whether our unique diagnostic tool is right for you. Go to innovationjunkie.com\growthDX to learn more.
Jeff Amerine: Having that consensus in that standard that you helped craft really kept you from barking up the wrong tree all those years, or heading in a direction that wasn’t ultimately going to make sense.
Bill McCoy: Yeah.
Jeff Amerine: That seemed very, very crucial.
Bill McCoy: Right.
Jeff Amerine: Jeff, what else on that?
Jeff Standridge: You mentioned a few moments ago that you’re working on two or three more patents to add to the more than two dozen you already have. And so, how do you spend your time today? From an innovation perspective, how do you spend your time today to make sure that Phigenics is staying on the cutting edge of this industry and continuing to innovate?
Bill McCoy: Well, it all begins with people, smart, creative, enthusiastic, and motivated people. So I spend most of my time these days helping people develop their careers. We started Phigenics with two goals. One is to solve the problem we’ve been talking about. But the other is to provide career development opportunities for like-minded people. And so I spend a lot of time there.
Bill McCoy: Now, what do I do with the people? Well, in the innovation area, what I try and do is inform on what our strategy is and what our tactics are for innovation. And our strategies began with finding a tailwind project, we talked about, seeking inspiration for how will we solve this problem that nobody else has solved? We always need some kind of inspiration to get going. And then the other part of strategy is so important, now I motivate people on, is simplicity. We simplify, simplify, simplify until the innovation doesn’t work anymore. Do we know we’ve oversimplified? If it’s not simple, it won’t work in the real world.
Bill McCoy:
And then lastly, I help our people sell internally. I have this saying. I think it might… I don’t know if it bugs Ashton and Jay or not, but they tolerate me saying this. But I really feel it’s true and I think it’s really important. We’re all in sales. Everyone in the company is in sales. And a lot of times we’re selling internally, but that’s just as important when you’re in innovation. In fact, I say it’s more important than selling externally, especially when you’re doing tailwind kind of innovation. Because really, most of the resistance to new innovations comes internally, not externally. So I motivate people, to answer your question, Jeff, strategically like that.
Bill McCoy: And then tactically, what I do with our people is educate and motivate, and really convince people that in order to be successful with innovation, you must follow a commercial development process. And I know your previous guests have alluded to this, but the staging gate process. Comes by many other names, new product process. There’s all kinds of different versions, but they all have the same common, very same process oriented approach. That is absolutely critical. And I always tell the people in innovation at Phigenics that the reason for tactically using the process is to develop a promotional and sales plan. That’s the reason. Because I’ll tell you, there’s nothing more frustrating to a creative person to work hard on a great idea, and then get to the end of it, and nobody wants to sell it, or there’s no promotional plan, there’s no sales plan. Incredibly frustrating. So that’s what I do with the people, and I do it every day, Jeff.
Jeff Standridge: Do you have any specific tool? You mentioned this commercial development process. Do you have any specific tools that you use to help your people innovate, and frameworks that you’re using, or what have you?
Bill McCoy: Yeah. Back in the nineties, the staging gate process was developed, and I knew that people were doing that. I got really involved with that. And then at our previous employer, Jay, Ashton, and I, we use that. So I modified it with help from a lot of people at Phigenics to make it fit in our organization. And so if you were to look at our staging gate process, I can show you a graphic of it. You would recognize all of the pieces of it. And we manage to it. We were very systematic about it. We’re getting better.
Bill McCoy: You know, it’s funny, because when we first started, Jeff Amerine knows this, but I mean, we were operating on our dollars, and our friends and family. So I didn’t spend a tremendous amount. We were just trying to survive the first couple of years. But I saw internalized staging gate. So I’m sort of running it, personally, without making a lot of noise about it. Now that we have so many people, we’re able to use staging gate as a tool. That’s a great word you used there, Jeff. It’s a tool to help communicate to the whole organization where we’re at in the development of a new product or service.
Jeff Amerine: The thing that’s critical about that is the fact that it’s a process of iteration. And it’s a process that if you do it well and with discipline, you kill a bad idea as early as possible in the process, as well. So you don’t spend resources, foolishly ending up trying to pull something, carry something to market that’s not going to work. That process of iteration and spiraling through, whether it’s stage gate or whether it’s a modern lean canvas approach, they have common elements that I think are really critical in the innovation process.
Bill McCoy: Right. Yeah. And they also give us a common language. If I say to anyone in marketing, or I say, “This project is in stage three.” We all, everybody recognizes that’s development. We’re spending money. We better have already defined the features and benefits and made the business case before we start spending money on developing it in stage three. And likewise, people always want to rush to the field and to that stage four, is field trials. Well, we don’t go to the field until we have already established the IP. Because if you start messing with it in the field, you may lose your opportunity to even file a patent.
Bill McCoy: And then I have some very strict guidelines on what a field trial should be, what it must be. That’s in stage four. So yeah, it gives us a common language. I would say, this is a bold statement, but I would say there are probably no successful commercial products that have not been subjected to a process like this, even if it’s been sort of informal and just in the head of a couple of people. But if you don’t go through it systematically like this, you’re probably not going to be commercially successful.
Jeff Standridge: You’ve used the reference to people a lot, and Jeff and I just dropped an episode this week about the war for talent. Talk to us a little bit about how, you know, you have 150 people now, the business is growing, what kind of thoughts do you have about how you recruit, select, and then retain quality, innovative talent.
Bill McCoy: Great question. And this is the key success factor for a business. So we’re in a very technically oriented, high liability, compliance kind of business. So we really need gray matter. We really have to hire, especially in the technology areas, we really need to hire smart people. But I learned a long time ago that getting straight A’s in school and all that is not the best measure of real intelligence when it comes to operating in the real world. It’s an indicator. I’m not saying it’s not relevant at all. But we would never say that as the primary criteria, you know, just getting really good grades. So what we want to do is find really smart people.
Bill McCoy: Now, the next component is enthusiasm for our area. And to me, that’s one of the main shutdowns for me. If I get the sense that somebody’s not really passionate about what we’re interested in, I just move on, usually. Because I think to really make an impact in this kind of business, or really any business, if you’re not getting up every morning running to your objectives, you’re probably not going to make much of an impact.
Bill McCoy: And then all the other factors that we always talk about, leadership, those kinds of things. Competitive drive. It’s interesting. When you look at an academically oriented person, really smart, like say a scientist or an engineer, you have to dig a little bit to find where the competitive drive is, because they may not be overtly extroverted, like, “Yeah, I’m going to beat the world.” That kind of competitive drive. But you can find it. If you can’t find any evidence for leadership and competitive drive in a scientist or engineer, then you might want to keep looking.
Jeff Standridge: Yeah.
Bill McCoy: There’s other things, but those are maybe the top ones.
Jeff Standridge: That’s great. So go ahead, Jeff. You were going to ask?
Jeff Amerine: I was just going to say, and this is, again, a little bit about the directionality of the business, and I’m going to, without giving away anything internally, this plan, but I think your views on this are going to be interesting. Phigenics is positioned in this very interesting spot between the big treatment chemical providers and the corporations that you serve. You’re kind of that fair broker that makes sure that they’re not, over-treating the lines. They’re not over-treating any of their systems. That they’re doing it right and compliant with the standard. And you provide that kind of monitoring visibility. You’re like the sheriff, so to speak. As you see things going forward from the technology base that you have today to where things are going with industrial IoT and AI systems, how does that look to you? What’s on your mind about some of that stuff that’s coming down the road, and how will it factor into how you innovate within Phigenics?
Bill McCoy: Right. Yeah. That’s a big question. I think I would approach an answer like this. When we started 15 years ago, there was a need for the sheriff. Ashton, my co-founder partner who is our CEO, he is really good with analogies. And his analogy, he wouldn’t like sheriff so much. He would like the analogy be the conductor. He wants to be the conductor of the orchestra. Yeah. That’s a really nice analogy. It’s a little bit less aggressive, but it makes the point. And there was a real need for that, Jeff. We had gross commercial conflict of interest that was leading to disease and injury. It’s just disgusting. That’s why we left.But now, we’re 15 years later. We’ve got a consensus opinion on what to do that’s been ratified and expanded. I won’t bore you with details, but there’s all kinds of details on how that’s being enforced, through the CMS, through the Veterans Health Administration, all kinds of motivations for people to do things.
Bill McCoy: So now there’s less of a need for a conductor. There’s still a need, and we still have quite a long runway. But the way I would answer your question is now that the problem is being addressed much more effectively and much more systematically, now the need… I believe, that in the future the need will come for more innovation in the actual hazard control products. Whereas, where we’ve been focusing is in data management, with our fine analytics tool, and with diagnostics with our PVT time zero. These are tools for the conductor. They’re the batons for the conductor. But now as this matures more, I’m really excited about because, I’ll tell you what. When it comes to making money for shareholders and for our partners, man, the real money comes when you’re selling the control measures that are unique, patented, new. That we get, like, a new anti-microbial, or a new filtration system, or something like that. A new dispersant. These things are what will happen in the future for innovation in our field.
Jeff Amerine: And you’re talking about things way beyond a chlorine, chloramine, bromine. These are like innovative technologies that allow you to solve the core problem of water treatment in a better, more efficient way.
Bill McCoy: Right. Right.
Jeff Amerine: Got it.
Jeff Standridge: Bill, it’s been great having you with us. I’m fascinated by your approach to innovation. I’ve worked with a lot of technologists and scientists in my career, and I haven’t worked with a lot who speaks in such a balanced fashion around the technical and innovative aspects of your role, coupled with the sales and marketing, the influencing and the people aspects, as well. And so it’s very fascinating to talk with you. and I might just need to drive up to Northwest Arkansas and take you to lunch or something soon to talk more about that.
Bill McCoy: Well, I’d love that. My compliments to you guys. Yeah. This is a great podcast. I listened to several of the episodes, and this is a really, really good service you’re doing.
Jeff Standridge: Well, thanks so much. Tell our listeners where they can find you and Phigenics if they want to learn more about what you guys do.
Bill McCoy: Sure. Our website www.phigenics.com. My email is WMcCoy@phigenics.com. I’d love to hear from anyone who might like to talk more about this. And yeah, you can go right to the website or email me directly anytime.
Jeff Standridge: Fantastic. Fantastic. Jeff, any parting questions?
Jeff Amerine: Yeah. No. Just Bill, thanks for coming on. You’re always a treat to talk to and getting to know you over the years has spent a lot of fun. And we’re really proud that Phigenics has made Northwest Arkansas one of its key locations, and the headquarters. And we hope to get you down here full-time at some point. I know you’re doing some cool research in Nevada, and you spend part of your time in Chicago. We’d really love to have you down here as well. And I’m not selling you on the area any more than you’ve already been sold, but it’ll be great to be able to spend a little more time with you in the future.
Bill McCoy: Well, thank you. I love Northwest Arkansas. I’m there frequently. And Jeff, I wanted to thank you for investing in us.
Jeff Amerine: Glad to do it. It’s been a fun ride, and it seems like it’s getting a little better all the time. Thanks for all you do.
Bill McCoy: You’re welcome.
Jeff Standridge: Ladies and gentlemen, this has been the Innovation Junkies podcast with Bill McCoy, the chief science and technology officer of Phigenics. Thank you for joining, and we’ll see you on the next episode.
Jeff Amerine: Hey, folks. This is Jeff Amerine. We want to thank you for tuning in. We sincerely appreciate your time. If you’re enjoying the Innovation Junkies podcast, please do us a huge favor. Click the subscribe button right now and please leave us a review. It would mean the world to both of us. And don’t forget to share us on social media.