Geox brought disruptive innovation to the shoe making industry by developing a patented breathable membrane for shoes. This allowed shoes to breathe while remaining waterproof. After starting his own company, Geox, with this technology in 1992, it grew to be the 2nd largest casual footwear brand within 14 years. Geox's strategy centered around continuous product innovation through research and protecting innovations with patents, which helped it gain a competitive advantage over other shoe brands like Nike and Adidas.

1. GEOX: BREATHING INNOVATION INTO SHOES
1. Case Synopsis
The case isabout bringingdisruptive innovationinanalreadyestablishedshoe makingindustry.This
innovationwasanideaof an inventor,entrepreneurandwinemakerMarioMoretti Polegatowho
understoodthe needof creatingof “shoesthatbreathe”.In1992 Polegatodevelopedandpatenteda
breathable membraneforshoesthatwouldallow one’sfeettobreathe while remainingwatertight. As
existingshoe manufacturersshowednointerestinhisinnovation,he decidedtostartmanufacturing
these “breathing”shoesunderthe GEOXbrandname.
Afterjust14 years,Geox wasrankedthe world’s2nd
largestcasual lifestyle footwearsectoroperator.In
2002, Geox tookthe conceptof theirpatentedtechnologyandenteredthe apparelmarketwitha
patentedjacketthatallowedairthroughthe shoulders.
On 1 December2004, Geox was listedonthe Milanstockexchange with71% stake inPolegato’spocket.
In the initial stage Geox decidednotenterthe sportsshoe marketbutlatercompetedwithbigsports
shoesbrand. Geox expandeditsreachbybuyingDiadora,Italy’sfamousbutdebt-ladensportswear
brand.The global footwearindustrywasagiant inthe consumerworld.The US was the leading
consumerinthismarketbut India& Chinawere regardedasattractive new customertargetgroups.
“Innovation isthecombination of threefactors:creativity,patent,& scientific research.”
-Mario Polegato
Geox’scompetitorsinthe global marketincludedClarks,ECCO,Birkenstock,HushPuppies,Rockport(in
the casual footwear) andNike (withmanyof itssubsidiaries)&Adidas(inthe sportsfootwear).
Geox’sgroupstructure isalso mentionedinthe case.
Major part of salescame fromfootwearandonlya small proportionwasof apparel.The companyhad
positioneditself asa one of a kindbrand cateringto the entire family.Productwasdividedintotwo
categories(classic&casual) whichwere pricedformmediumtomediumhighprice range.
Productionactivitieswere outsourcedi.e.givento3rd
party.
Geox’sMarketingstrategieswerecenteredonthe product’sventilationfeatures&focuswason
innovation.Geox usedimagesof product&its breathable sole technologyforadvertisingratherthan
usingmodels.10%of company’sturnoverwasinvestedinpromotion.Distributionwasdeveloped
accordingto each country’sindividual distributionstructure.Theyentered intoapartnershipHongKong
listedcompany,Belle fordistribution.Geox made continuousexperimentsonnew technologyfor
footwearforfootwear&apparel products.Geox investedalotinR&D and believedinInnovation.
1. What do creativity and innovation signify and entail? What are the key types of innovation?
Creativityisactof doingsomethinganew anddifferentmannerwhile Innovationisimplementationof
somethingnew.MarioPolegatosaysinnovationisthe combinationof three factors:creativity,patent&
scientificresearch. Creativityandinnovationsignifychange;theymuststrive tochange the world.
It mustinnovate beyondthe imaginationof itsclients&mustbe globallyintegrated.Creativityand

2. innovationentailsunderstandingthe needsof customers.Geox broughtinnovationinanalready
establishedmarket.Innovationhelpedthemrace againstcompetition.Geox demonstratedthe powerof
innovationandcreativity.Inthiscase Mario got the ideaof breathable shoesbecause of hisown
experience.Geox usedthe innovativeconcepttoenterthe apparel market,thusexpandingthe target
market.Innovationleadstocreativity.
KEY TYPES OF INNOVATIONS:
 Incremental Innovation: Thisinvolves ideasthatincrease the worthof product/service forthe
customersbyimprovingfeatures,designsetc.inthe existingproductline.Itentailsaddingor
removingcertainfeaturesforimprovingthe customerexperience.Example:Androidupdatesin
mobile phonesoranyotherupdate.Here attentionisonaddingextravalue tocurrentproduct.
 Disruptive Innovation: Itinvolvesapplyingnew technologyorprocessestothe existingthe
market.A disruptiveinnovationcantotallyinterruptthe marketbyitsnew concept.The Geox
broughtinnovationinthe alreadyestablishedmarketandcompletelydisruptedthe
marketplace.
 Radical Innovation: Itbringsrevolutionand createsnew industries. Itinvolvesheavyand
aggressive use of technology.Radical innovationcompletelychangesthe wayconsumersuse
products.
2. Analyze Geox'sinnovative strategyindetail.What are featuresof this strategy that have made
Geoxshoesa success? Whatfactors, otherthan product innovation,doesGeoxowe itscompetitive
advantage to?
Mario Moretti Polegatocame up withthisinnovative ideaashe himself experiencedandfeltthe needof
breathable shoes.Geox wasmarketorientedandthe whole organizationworkedforservingits
customers.Theirideacompletelydisruptedthe marketasuseda new technologytosucceedinthe
existingwell establishedmarket.Innovationhelpedthemrace againstcompetitors. Theirinnovative
strategyinvolveddevelopmentresearchwhichwasexhaustive. Theirproductwas a result of innovation
hence,protectingtheir product through patents was very necessary.Mario Polegatohas emphasized
a loton the importance of patentduring his interview.
Afterreferringtopublicationsandencyclopedias,he gottoknow aboutthe breathable membraneused
inthe material engagedformanufacturingthe overallswornbyNASA astronauts.He thencollaborated
withseveral universityresearchcenterstogenerate anew technologyforthe ventilatedsoles.
The central feature of the strategywas the new technologythathelped inbuildingamembrane inthe
shoe’ssole thathadmany small channels.These channelswere toosmall toallow watertoenter,but
wide enoughtoallowvaportoexit.ResearchandDevelopmenthere played averysignificantrole.
“Geox,firstisa technologycompany,”saysMarioPolegato,emphasizingthatthe companyinvested
heavilyinresearchanddevelopment(R&D).Disruptiveinnovationinvolvedcontinuousexperimentson
newtechnologyforfootwear&apparel products.
No doubt product innovationplayed a significantrole here,but there are some other factors also that
helpedGeoxgaincompetitive advantage.
As we have alreadymentioned,R&Dwasveryimportanttoinnovate andone innovationleadtoother,
expandingthe targetmarket. Patenthere playedagreat role as there wasa needtoprotecttheir
innovation.

3. Geox didnot enterthe sportsshoe marketuntil 2008 as Polegatofeltitisverydifficulttocaterthe
entire shoe marketbecause of differentmindsetof everysector. One of the majorfactorsthat we
consideristhe global footwearindustrywhichwasagiant inthe consumerworld.
Otheristhe Geox groupstructure.
Group wascontrolledbyGeox S.p.A whichactedas an operatingholdingcompany,&compromised
three keygroups.
 Technical productioncompanies:NotechKftwasthe companythatheadedthe group’s
productionactivitiesinEurope.
 EU tradingcompanies:These companiesmanagedthe group’sownshopsinthe EU,and also
providedcustomerservicesandco-ordinatedthe salesnetwork.
 Non-EUtradingcompanies:The role of these companieswastomonitoranddevelopthe
businessin various snon-EUmarkets.
Geox understoodthatonlytechnological innovationwon’thelpbutproduct’sappearance shouldalsobe
good.Here Divisionof laborplayedanimportantrole.
2. Assessthe market environmentofthe industriesGeox operate in.Who are Geox’skey
competitors?What Strategiesand options are available to Geoxfor sustainingits positionin
these industries?
There wasa greatdemandfor shoesinthe market and onlynew ideacouldhelpthe new entrants.
EarlierNike controlled56%of the marketinthe US. Polegatohoweverhadfull faithinGEOX’sunique
“NET Systemtechnology.”
In 2007, the global production was16 billionpairsof shoes.Chinaruledthe marketcontributingover
63% inthe world’sproduction.The USwas the chief consumerinthismarket,fundingabout1/3rd
of the
dollardemand.IndiaandChinawere beingprogressivelyregardedasattractive new customertarget
groups.Major worldwide sportswearbrands,especiallyNike&Adidas,hadstrengthenedtheirexistence
inthe Chinese market,followingthe 2008 Olympics.
Geox’scompetitorsinthe global marketincludedClarks,ECCO,Birkenstock,HushPuppies,Rockport(in
the casual footwear) andNike (withmanyof itssubsidiaries)&Adidas(inthe sportsfootwear).
Bringinginnovationinanalreadyestablishedmarketwasone of the optionsavailable toGeox for
sustainingitspositioninthese industries.Innovationhelpedthemrace againstcompetitors.
A goodresearchand developmentstructure assistedtheminunderstandingcustomerneeds.Geox was
Market oriented;servingcustomerswasthe goal of the entire business.
The Product positioningstrategiesdifferentiatedGeox formcompetitors.Geox had positioneditself asa
one of kindbrandcateringto the entire family.Geox alsoworkedtowardsimprovingappearance of the
product.Divisionlaborhelpedtheminsustainingitspositioninthe industry.
Marketingstrategieswere centeredonthe product’s ventilationfeatures.Focuswaspurelyon
Innovation.Geox usedimagesof product& itsbreathable sole technologyforadvertisingratherthan
usingmodels.10%of company’sturnoverwasinvestedinpromotion.The communicationstrategywas
simple andeffective &involvedvariousadvertisingcampaignsandmediasuchasbillpostingandprint.

4. Afterall thisprotectionof theirinnovationthroughpatentrightsalsohelpedthemachieve success.If
there hadbeenno patentrightsavailable withcompany,competitorswouldhave kickedthemoutof
the industry.
“ I tell all my studentsto makesurethey patenttheir ideas.Afterall, one idea is worth morethan a
factory.”
-Mario Moretti Polegato,founderand chairman of Geox