20 Years 20 Lessons in Product Innovation

I'm sitting in a plane looking out the window.  It's a short two hour flight, but I feel like I've been locked in a coffin for two days.  I try to read but can't focus. I would listen to music on my iPod but this is 1995 and they don't exist. Why is time dragging?? Because I'm on my way from Cincinnati to Montgomery, Alabama to face the president of a company who bought our new machining center, the Maxim, AND IT DOESN'T WORK.

"But Mike, why did Dan get the promotion? Didn't I guide the Synchron project successfully? Haven't we sold dozens of those flexible manufacturing cells at a nice profit? Why does Dan get to run a business unit and I'm still working on strategic alliances with OM (Japanese builder) and Mandelli (Italian builder)?

(Now comes the worst piece of career advice of the 20^th century and unfortunately I swallow it hook , line and sinker).

"Mark, you know your technical background is electronics and software. Here at Milacron you're viewed as a software geek. A nerd. You know, an ESD'er." (ESD was the Electronic Systems Division of Milacron led by Herb Fuldner).

"So what should I do? I'd like to advance my career at Milacron."

"Mark, you need to show everyone you can work with the iron, you know man up and build a machine, not create a bunch of computer code."

So with that I turned my back on software and digital systems, traded them in for those reddish/pink shop towels and metal chips in my shoes and asked to head up the next major machine tool project at Milacron.  I was Iron Man!

In early 1992 management asked me to scope a project that would replace our line of large horizontal machining centers (called the T-30, 40 & 50). The T-Line was fifteen years old and showing its age. We had lost some orders in the U.S. and could not export the product for a number of reasons including its non-metric design and its constant leaking of fluids. Manufacturers in the 1990's realized that the cleanliness of their shops had to rise along with the precision of their part making if they were to remain competitive. A machine with a hodge-podge of guarding and shielding that put more fluids on the floor than Niagara Falls was not a winner.

We organized a small, three person team to analyze the market, talk with customers and put a business plan together for this new, clean sheet machining center. When we were ready, we faced the leadership team of Milacron to get project approval. At the time we had a new product development process called Wolfpack that had come out of our plastics machinery group.  Its key elements were fast time to market and each new product had to cost 40% less than the one it was replacing.

When my time came to present I ran through a number of slides but when I came to a spreadsheet that described how we would achieve the targeted cost reduction the president of Milacron, Ray Ross stood up.

"Mark, I'm sick to death of people putting goddamned numbers up on that board and then always missing them. Your goddamned resume is stapled to those numbers. Do you understand that?"

And so that is how the Wolfpack project called Marauder was launched.

As the full team was formed I immediately ran into the dilemma that engineers were getting pulled off my project when problems would crop up in other parts of the business. Not only had we signed up to achieve a significant cost reduction we were also on an eighteen month window to launch the new machine at IMTS 1994. Milacron was located on a sprawling campus and with the help of some old hands we found a room in a building that was a long way from the main headquarters. By begging and some arm twisting I was able to get the entire team of twenty into this one room far away from their direct bosses.  It quickly built a team attitude and accelerated our progress.

As the project ramped up there were three important aspects to the new machine that would determine its success or failure. The first was a "catch up" feature. As I mentioned the current model leaked fluids everywhere and as manufacturers cleaned up their operations, machines that made a mess were going into the dust bin. The discussion about this "no leak" requirement went something like this:

"OK guys, this new machine will not leak one drop of coolant or lubricant."

"But Mark, we can't do that. Everyone knows machine tools leak."

"Well then I'll just contact some colleagues in Japan I know and get them to design this machine. If you can't do it then I know a group of engineers who can."

"Well, can we look at it again before you make that call?"

"OK"

It was amazing what they came up with once they acknowledged that no leaks was a hard requirement. Instead of a maze of guards and covers they essentially created a "bathtub" style base where all the fluids would collect and then concepted a one piece "top hat" that would bolt tightly to the bathtub base creating a completely sealed working environment.

The second critical issue, as we learned from our Synchron project, was the need for a strongly differentiating feature that would attract new customers and separate us from the competition. By scanning the emerging technologies in other industries we locked onto something called Digital I/O. In the process industries, chemical plants were being redesigned with this technology that eliminated thick bundles of wire with one single communication wire. The benefits were reduced cost, quicker installation times and higher product reliability due to reducing the number of potential failure points.

The final hurdle we faced was hitting that cost target. We kept a big board in the team room that was a running tally on our achieving the target cost. One day when the results we getting a bit high I had this exchange with the team.

"Hey guys, I noticed the cost board says we're running over. You know we've got to hit the target. Remember Ray Ross' challenge and my resume"?

"Sure Mark, we remember but we were thinking of the saying "product development is a team sport" and in sports when the team fails they just fire the coach." Grins break out throughout the room.

I thought for a moment and replied, "Well, I agree product development is a team sport and you guys have been a great team but here's my metaphor. We're not a team; we're the crew on an airplane. I'm the pilot and guess what happens if I go down?"

"OK? Let's get back to work and hit our numbers!"

We launched the Marauder under the brand name Magnum at IMTS 1994 and it went on to capture 40% share of the domestic market and helped us grow our export and flexible systems businesses as well.

Lesson #2 - For major clean sheet product development projects, team co-location is a must and demanding design challenges should be given to any development team. Only with a strong technical or commercial challenge does great engineering come out.

I looked out at a sea of business people lined up thirty deep waiting to enter IMTS. IMTS; The Super Bowl of the global machine tool industry. IMTS stands for International Machine Tool Show and it's held every two years at McCormack Place in Chicago. Today, September 4, 1990 was one of those crystal clear fall days on the shores of Lake Michigan. Even though it was 55 degrees outside there was sweat trickling down my forehead.

You see, Mayor Richard Daley was standing next to our new product, The Synchron Flexible Cell, and was about to officially open IMTS to the public. Over eight days 100,000 people would attend the show and our booth sat dead center on the front row. Cincinnati Milacron had been the world's largest machine tool builder in the 50's and 60's and we still held the premium spot at the show.

So to get a little evening television the mayor was here at McCormack to kick off the show. It had been decided that he would press the Cycle Start button on our new product and when the machinery started to move that would signal the start of the show. Now, the $64,000 question - would the damn thing work?

But first, let's snap back two years to a meeting in Cincinnati with the executives of Milacron. I'm in a room with them trying to explain how we just lost a $3M deal in N. Carolina to a European company named Fritz-Werner.

 "Who in the hell is Fritz-Werner?" I was asked. I explained that they were a small German machine tool builder that focused on simple flexible machining cells, had a good reputation and a large installed base of machines in Europe.

"How can they be 50% of our price?"

"I'm not really sure," I replied. "The customer was not willing to disclose much about their product. They just made it clear that their price was half of ours and Fritz-Werner's equipment will get the job done. "

"Well get your ass on a plane and figure this out," was the coaching I received. And so, the product development project that would create Synchron was born.

Fortunately for me Milacron considered flexible manufacturing systems (FMS) the future of the industry so I had the help of many gifted software, electrical and mechanical engineers during the project but all their technical abilities would be wasted if we couldn't unlock the huge competitive disadvantage we were facing. We knew from the sales of our FMS's that customer like Lockheed Martin or Vought Aerospace really valued its ability to run around the clock, precisely machining a large variety of parts with no downtime for changeover.

OK, but where did the pricing power come from? Without diving too deep into the details Fritz-Werner had lowered their cost structure in two ways. First they used a simple Rail Guided Vehicle (RGV) to move the raw materials around.  We employed a much more expensive Autonomous Guided Vehicle (AGV). Secondly they employed a low cost PLC (Programmable Logic Controller) to control the cell. We built our system controller with a mini computer that was housed in an air conditioned room to protect it from the heat of the factory and was operated by a computer programmer.

"Great, good work Adkins. Glad you uncovered their advantages. Now let's get this thing designed and built so we can push these guys back to Germany."

A pat on the back was good but something just didn't feel right. It was tempting to just reverse engineer their solution, match them in price and hope our customers would "Buy American" but during our two months of market research we had learned more than just the design of the Fritz-Werner system.

We had been asking ourselves 1) Are there technologies outside our industry that would not only let us lower our manufacturing costs but provide a competitive advantage?  And 2) wouldn't more companies buy flexible manufacturing if they could operate it from their shop floor, not from a computer room in the sky?

In 1998-99 there was emerging both hardware and software technologies that fit that bill - Unix Workstations and Graphical Users Interfaces (GUI's).  Our vision was to replace the minicomputer and bring the control of the cell to the shop floor. Not only would we bring it to the shop floor but design an interface that allowed the shop floor people to operate the cell instead of that computer programmer sitting up in an air conditioned office above (literally and figuratively) the shop floor.

Back to Chicago, McCormack Place, 10:00a.m., Tuesday morning, September 4^th, 1990. Mayor Daley listens to our instructions, smiles for the cameras and pushes the button. The rest is history. The system starts running, we wow people who attend the show with our revolutionary shop floor cell controller and go onto sell over 100 of these Synchron Flexible Cells for over $200M that decade.  What happens to me? Well, that comes later...

Lesson #1 - Identify a real, tangible benefit for the customer, execute a technology scan for technologies that can be brought into your industry and then define the differentiated feature(s) that merge technology and user requirements into a clear competitive advantage.