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A 99 MEDIA PUBLICATION
VOLUME 11
ISSUE 05
january 2012
PRICE 100
l e u o frs t onrrie i t vae ba o nm n i severco u iesnd o n ah a p m t Cogrow
Supply Chain Building a multinational logistics and shipping organisation
Strategy
Technology
How leaders kill meaning at work
Growing and innovating retailing operations with IT
editorial Vol. 11 | Issue 05 | January 2012
Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: R Giridhar Copy Desk Managing Editor: Sangita Thakur Varma Sub Editors: Radhika Haswani & Mitia Nath Design Sr. Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Directors: PC Anoop & Atul Deshmukh Visualisers: Prasanth TR, Anil T & Shokeen Saifi Sr. Designers: Sristi Maurya & N V Baiju Designers: Suneesh K, Shigil N, Charu Dwivedi Raj Verma, Prince Antony, Binu MP & Peterson Chief Photographer: Subhojit Paul Sr. Photographer: Jiten Gandhi Sales & Marketing VP - Sales & Marketing: Krishna Kumar KG (09810206034) National Manager - Events & Special Projects: Mahantesh Godi (09880436623) Assistant Brand Manager: Maulshree Tewari GM (South & West): Vinodh Kaliappan (09740714817) South: Farooq Faniband (09886600175) North: Madhusudan Sinha (09310582516) East: Jayanta Bhattacharya (09331829284) Production & Logistics Sr. GM - Operations: Shivshankar M Hiremath Manager - Operations: Rakesh Upadhyay Assistant Production Manager: Vilas Mhatre Ad Coordination: Kishan Singh Assistant Manager - Logistics: Vijay Menon Executive - Logistics: MP Singh, Mohamed Ansari & Nilesh Shiravadekar
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Preparing for Change
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arge companies are acutely aware of the challenges confronting the manufacturing sector — and are making active efforts to address them. Whether it is managing the volatile material prices and currency fluctuations, developing new products to combat competition, improving sales and service networks — or lobbying for concessions from the government. They have the knowledge, skills and the talent to survive and thrive in tough times. But, what about small and mid-size manufacturing companies? How well are they coping with change? A casual check will reveal that many are struggling — and few have adopted next-generation manufacturing paradigms. For instance, very few firms have a presence on the internet, and most are not leveraging the power of the web to reach new customers. Small companies have also been slow to adopt IT solutions and manufacturing automation. Technologies like cloud computing and SaS now make it possible for even the smallest companies to use ERP, design tools, and CRM solutions without large investments or in-house technical expertise. Small manufacturers have also been slow to adopt manufacturing principles like lean and agile manufacturing. This makes them very vulnerable to sudden shifts in demand and supply. More recently, midsize enterprises are finding it increasingly difficult to attract and retain skilled work-
industry 2.0
R Giridhar editor@industry20.com
ers — and this is affecting their productivity. The good news is that many companies are making efforts to overcome these problems. But, will these reactive moves be enough? Experts believe that manufacturing organisations will need to actively adopt a number of best practices to remain in the game. They will need to work harder to anticipate the needs of the customer — instead of waiting for RFPs. Since the economy is changing rapidly, manufacturers will need to continuously innovate around their core competencies to remain successful. Manufacturers will also need to focus on collaboration — not just cooperation — with customers, suppliers and vendors. True collaboration is about aligning interests, and working together with high levels of trust and connectivity. However, working in this manner requires a radical change in thinking and attitude. You need to prepare the entire organisation for it. Finally, just like continuous improvement, manufactures will need to actively watch for, and forestall, commoditisation of their products and services. Don’t bank on past successes, and allow competitors to make your product a commodity. This will only lead to margins becoming thinner. Think creatively about how you can repackage, re-engineer, re-purpose and revamp your product to make it unique in the marketplace. Write in, and let us know how you are preparing for the future.
- technology management for decision-makers | january 2012
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contents advertiser index BFW..............................................15 Bonfiglioli Transmissions............13 Bry Air Asia ................................. 37 CHEP ........................................20-A Elcon............................................33 Exxon Mobil.................................53 Exxon Mobil......................... IFC, 53 GW Precision...............................BC Havell’s India................................. 7 KMT..................................11, 22-23 Mitsubishi...................................... 3 Omron..........................................64 Power Build Ltd........................... 21 Riello PCI India............................ 17 Schneider ..................................... 5 Schunk India...............................19 Taguetec.....................................IBC TE Connectivity.............................. 9
24 cover story Innovation is a matter of survival in sectors where advancing technologies and changing customer demands are driving strategic change to business models. In other fields, investing in innovation is the means to secure a competitive advantage. This is why innovation is high on the agenda CEOs. But, how do you create the processes, structures and practices to move your viable ideas all the way to implementation?
departments Editorial.......................................01 Advertisers’ Index...................... 02 Industry Update.......................... 04 Techwatch...................................16 Bookshelf................................... 59 Product Update...........................61
Cover design: Anoop PC
Opinion
management & strategy 34 How Restaurateurs Make Money
“Win-win relationships will enable more collaboration in supply chains”
52
Marcus Blosch,
VP of Research, Gartner
“Graphical system design is a platformbased approach to innovation” Jeffrey L Kodosky, National
Instrument’s Labview Solution
sector update 20 Paper Power Concerns over processing technologies, shortages of raw materials, and higher costs are threatening to derail growth
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As a manager, you never get the deal that you deserve — but the one you negotiate. So, how do you handle negotiations and concessions effectively?
38 A Lesson in Serial Entrepreneurship
creativity and productivity by damaging the morale of employees. Learn how to avoid the traps, and enhance the sense of purpose in your organisation
36 Is That the Best You Can Do?
54
The food service business is one of the most competitive sectors of the economy. Find out how the best organisations stay ahead, not by competing with each other, but by anticipating customer trends and finding profitable niches
From manufacturing polystyrene and bulk drugs to becoming a leader in education services, Vineet Gupta has done it all. He shares his learning and experiences on being an entrepreneur
42 How Leaders Kill Meaning at Work
Senior executives often undermine
- technology management for decision-makers
supply chain 56 Of Grit, Passion and Luck
Nearly 30 years ago, Shashi Kiran Shetty plunged into the world of transportation and logistics. Today, he heads the Rs 3,000 crore shipping giant, All Cargo Global Logistics
information technology 48 The Future of Retailing
Retail stores are rapidly adopting a wide variety of technology solutions to streamline their supply chains, reduce costs and increase efficiencies
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Innovative PLC based DCS flexibly and seamlessly integrates FA components for exceptional cost and energy savings. Mitsubishi Electric is improving water treatment efficiency in India. Through technologies such as iQ Plant Suite — which provides flow control and remote monitoring at reservoirs through integrated control of SCADA, inverters and redundant PLCs — and seamless data transmission via CC-Link IE, we are contributing to a stable water supply.
Modular PLC
HMI
Compact PLC
VFD
LVS
Mitsubishi Electric – Streamlining water treatment systems.
Micro PLC
Power Multi Meter
www.MitsubishiElectric.asia/india/ Mitsubishi Electric India Pvt. Ltd. 2nd Floor, Tower A& B, DLF Cyber Greens, DLF Cyber City, DLF Phase-III, Gurgaon - 122002, Haryana, India Phone: +91 (124) 463-0300 Fax: +91 (124) 463-0399
industry update
Upgraded Ansys Suite Optimises Product Development
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nsys has released version 14 of its engineering simulation technology suite with advanced features that make it easier, faster and less costly for organisations to bring new products to market. The suite delivers new benefits in three major areas, i.e., amplifying engineering, simulating complex systems, and driving innovation with high-
performance computing (HPC).” ”Simulation-driven product development has been a core theme for some time. Using simulation, companies can analyse many design iterations early in the process, thus driving innovation. HPC is a key enabler to reduce design cycle times,” explains Jim Cashman, President and Chief Executive Officer of Ansys.
Major Ports to be Modernised
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he Government of India has identified 23 projects to enhance the capacity of major ports by 236.63 MTPA (million tonnes per annum). The existing port capacity of major Indian ports is 670.13 million tonnes (MT). This augmentation will involve an estimated investment of Rs 16743.92 crore and will be done under the public private partnership (PPP) mode. Minister of Shipping, GK Vasan, indicated that modernisation of ports will encompass construction of new berths and terminals, upgrade of cargo handling equipment, mechanisation of cargo handling operations, deepening of channels and berths, etc. Under National Maritime Development Programme (NMDP), 276 projects have been identified for mechanisation, and 69 have been completed.
GM Plant Bags National Safety Award for 2011
LED Lighting Market Continues to Grow
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new research study by Frost & Sullivan reveals that the LED lighting market in India was $73.3 mn in 2010, and will continue to grow at a CAGR of 45.53 per cent until 2015. This rapid growth will be driven by street lighting applications and the railway sector. Together, these two sectors will account for more than 60 per cent of the total demand in 2012. According to Niju V, Deputy Director, Automation & Electronics Practice for Frost & Sullivan, South Asia & Middle East, “The excitement around LED
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Lighting applications is helping it to move towards newer user segments, thus expanding this market considerably. The absence of standards and the lack of awareness are being mitigated through the efforts of the Bureau of Energy Efficiency (BEE) and the LED industry. Phenomenal growth of the market is expected to make viable commercial volumes of local manufacturing. That will aid in driving down the prices of the products significantly. As energy conservation initiatives gain more prominence, this industry is all set to acquire a star status.”
- technology management for decision-makers
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eneral Motors India has secured the National Safety Award 2011 for its continued commitment to implement the highest safety standards at its manufacturing facility in Halol, Gujarat. This is the third consecutive win for them. Commenting on the accomplishment, P Balendran, Vice President, GM India said, “The award will motivate us to further improve the benchmarks.” The Government of India instituted the National Safety Awards in 1965 to recognise good safety performance on the part of industrial establishments, and encourage accident prevention and safety promotion programmes. The award is presented by the Directorate General of the Factory Advice Service & Labour Institute (DGFASLI).
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Anywhere in the world you need power, Schneider Electric is there. Power loss poses a threat to the equipment, people, and processes you rely on. And with today’s stricter security and safety regulations, process automation, and increasing dependence on sophisticated high-tech systems, the need for uninterrupted power is critical. Add the rising cost of energy and environmental concerns into the mix, and it becomes essential to protect your power with solutions that not only meet your availability demands, but are energy efficient, too.
Why Schneider Electric is the right power protection choice You may know us as the market leader in delivering IT power protection. But we also offer a full range of reliable and highly efficient power protection solutions designed to safeguard business-critical applications and environments outside the IT room. Our innovative, best-of-breed products, services, and solutions provide the secure and available power you need to keep your systems up and running, while increasing efficiency, performance, and safety.
Guaranteed availability for business-critical systems No matter what industry you’re in, our unrivalled portfolio offers a solution that’s guaranteed to suit your specific business needs and keep your power on. Thanks to Schneider Electric™ power and energy management capabilities, in-house expertise, broad investments in R&D, and global presence, you have a trusted resource for reliable power, anywhere in the world.
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Secure power solutions that deliver the performance you need Products: Our complete catalogue of power solutions, featuring our leading brands such as APC™ by Schneider Electric and Gutor™, offers an unmatched range of single- and three-phase UPS units, rectifiers, inverter systems, active filters, and static transfer switches from 1 kVA to several MVAs. Services: Schneider Electric Critical Power & Cooling Services can proactively monitor and maintain the health of your systems, protecting your investments, reducing total cost of ownership and operating expenses, and providing peace of mind throughout the equipment life cycle. Solutions: Choosing the right combination of products and services from Schneider Electric gives you the convenience of a total solution – systems, software, and services from a single source.
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©2012 Schneider Electric. All Rights Reserved. Schneider Electric, APC, Gutor, and Make the most of your energy are trademarks owned by Schneider Electric Industries SAS or its affiliated companies. 35 rue Joseph Monier, CS 30323, 95506 Rueil Malmaison Cedex (France) Tel. +33 (0) 1 41 29 70 00 • 998-4982_IN-GB
industry update
Carbon Neutral Shipping Service Offered
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HL and Blue Dart Express have announced the availability of an endto-end carbon neutral shipping services for customers in India. This new service, called ‘GoGreen’, is an extension of DHL’s global environment protection programme launched in 2008, and will provide users with an environmentally responsible shipping option. Commenting on the service offering, Malcolm Monteiro, Senior Vice President & Area Director, DHL Express, South Asia says, “The GoGreen service will allow customers to be our co-stakeholders in ensuring a cleaner, safer, environment, and do their bit towards ensuring a carbon neutral shipment.” Customers will be able to neutralise their carbon footprint by paying an offset charge over and above their shipping rates. The offset charge
will be calculated on the shipment weight and distance. Carbon emissions from customer shipments will be offset by reinvesting in environmental protection projects verified by SGS. A certificate will be issued to the customer mentioning the total amount of CO2 offset. The GoGreen service will be available across all of Blue Dart-DHL’s express service offerings, including Domestic Priority, Dart Apex, Dart Surface Line and international services for documents and parcels. It will also be available on customised solutions such as temperature-controlled logistics. Anil Khanna, Managing Director, Blue Dart Express says, “GoGreen will not only enable our customers to contribute to a greener future, but will also help fund the climate protection projects, and build healthier and productive communities.”
Hero Eco Acquires Ultra Motors
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ero Eco, the newly formed umbrella entity by Vijay Munjal-led companies that includes Hero Electric, Hero Exports, Hero Cycles, Mediva, Winn and Hero Ecotech, has acquired UK-based Ultra Motors. “Ultra Motors has three plants and is present in six countries, with sales networks in 22 nations across the globe. This will all come under Hero Eco. It will strengthen Hero’s brand globally,” comments Managing Director Naveen Munjal. Ultra Motors has its main manufacturing plant in Taiwan, and has two contract assembly plants in China. Hero Electric previously had a tie-up with Ultra Motors for Indian opera-
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tions, but it fell apart. “Eventually, the contract manufacturing activities of the two Chinese plants will shift to India. However, it will take at least six to eight months to proceed in that direction,” Hero Eco Chief Executive Officer Sohinder Gill said. The Rs 450 crore Hero Eco is aiming to achieve a group turnover of Rs 1,500 crore in the next five years, Naveen Munjal said. The group also plans to set up a bicycle unit in India within next 18 months, he added. Currently, Hero Eco has all its manufacturing facilities in Ludhiana, Punjab. It produces 65,000 units of electric two-wheelers, and 900,000 bicycles each year.
- technology management for decision-makers
Carrier buys Sauter Race Technologies
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ir-conditioning major Carrier has acquired building automation and management systems company Sauter Race Technologies. “This acquisition will strengthen our position in the integrated building management segments and enable us to provide even more comprehensive end-to-end building management systems here, including controls, fire and security solutions,” a company release said. United Technologies, which owns Carrier, said it considers India to be a strategic market. “With acquisitions like this one, we will enhance our position by building scale, reach, product offerings and customer service capabilities across the country,” United Technologies India President Zubin Irani added.
Mahindra Navistar to Augment Chakan Unit
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ahindra Navistar Automotives (MNA) is planning to invest Rs 250 crore in its Chakan, Pune unit to strengthen the commercial vehicle manufacturing and distribution network. A joint venture between Mahindra & Mahindra and the USbased Navisar International, the company has already invested Rs 710 crore in the Chakan plant, out of the total project cost of Rs 1,000 crore. “We will invest around Rs 250 crore in the next couple of years to increase production capacity of HCVs, and expand our distribution network,” clarified Pawan Goenka, a director at Mahindra Navistar.
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industry update
Aditya Birla Group Makes Turkey Foray
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he Aditya Birla group is planning a $500 mn viscose staple fibre (VSF) plant in Turkey. “This initiative is in line with the group’s strategy of enhancing its VSF manufacturing capacity to 1.1 million tonnes from the current 750 ktpa over the next three years,” says KK Maheshwari, global Director for the VSF business. The 180 kilo tonnes per annum (ktpa) unit is likely to be located in Turkey’s Adana Organised Industrial Zone. The project will also feature a captive power plant, a chemical plant and a sulphuric acid plant. It is expected to
become operational by 2015. “Our aspiration is to significantly ramp up our global market share and our capacities by the turn of the decade. Establishing a world-class plant in Turkey is a step in this direction,” comments Kumar Mangalam Birla, Chairman of the group. While the plant will cater primarily to Turkey’s domestic market, around 20 per cent of the production will be exported to countries in the European Union and neighbouring regions. The plant, which will come up in two phases, is expected to provide employment to 500 Turkish nationals.
Urea Fertiliser Plant for Tripura
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NGC plans to set up a hydrocarbon-based urea fertilizer plant in Tripura, after the completion of the Rs 3,950 crore power project at Palatana in south Tripura. The company’s Chairman-cumManaging Director, Sudhir Vasudeva, said, “A survey for setting up an urea plant is going on. Based on the availability of gas at the Thobal facility
in north Tripura, the plant would be set up”. The request for the fertiliser plant was made by the Tripura Chief Minister, Manik Sarkar. The gas-based thermal power project at Palatana is expected to start operations in May 2012, with 363.3 MW generated in first phase. Three months later an additional 363.3 MW will be commissioned, according to Vasudeva.
Vizag Steel Collaborates with PowerGrid
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ower Grid of India (Powergrid) has entered into an agreement with Rashtriya Ispat Nigam (RINL) to set up a JV company for manufacturing of transmission line towers and tower parts. The MoU was signed by RN Nayak, Chairman & Managing Director of Powergrid, and AP Choudhary, Chairman-cum-Managing Director of RINL. Rashtriya Ispat Nigam, popularly known as Vizag Steel, has an annual capacity of 3 million tonnes of liquid steel, and a turnover exceed-
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ing Rs 11,500 crores. It produces various grades of long products like TMT rebars, wire rods, rounds, structurals and squares that are widely used in infrastructure projects. RINL is now doubling its capacity to 6.3 mtpa at a cost of Rs 12,500 crores. The new capacity will be available by the end of the year. Power Grid of India (Powergrid) is a central transmission utility (CTU) that owns and operates a transmission network exceeding 87,000 circuit km.
- technology management for decision-makers
Economic Growth Drives Hydraulic Components
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he boom in India’s infrastructure industry and the growth of the manufacturing sector has led renewed demand for hydraulic components. Frost & Sullivan estimates that the market for hydraulic components was in excess of Rs 18 bn during 2010, and is likely to grow at a compound annual growth rate of more than 14 per cent to reach Rs 50 bn by 2017. Construction equipment and bulk material handing are important drivers of demand for hydraulic components. “The power sector is also expected to give the market a leg up,” remarks a Frost & Sullivan analyst. However, despite the projected double-digit growth rate, the absence of reliable tube suppliers for hydraulic cylinders, low availability of raw materials, and competition from the unorganised sector are hampering the development of the industry. “With the rising prevalence of multinational companies in the country, competition from the price-sensitive unorganised sector will reduce,” says the analyst.
New Plant for Mahindra Conveyor Systems
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ahindra Conveyor Systems, a joint venture between Mahindra and Mahindra (M&M) and Tsubakimoto Bulk Systems of Japan, has set up a facility to manufacture material handling equipment and systems at Ambadwet near Pune. The investment in the plant is Rs 25 crore. Zhooben Bhiwandiwala, Executive Vice-President and Managing Partner, Mahindra Partners Division, M&M said, “Our new facility incorporates the latest facilities for the fabrication of conveyor systems and components.”
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industry update
Valeo Plant to Come up in Gujarat
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uto component manufacturer Valeo will be setting up a manufacturing facility in Sanand, Gujarat. The company expects to start construction soon, and have the plant running by 2013. Valeo currently manufactures clutches, friction materials and lighting systems at its plants in Chennai; while its Pune plant makes security systems, starters and alternators. By 2013, Valeo wants to locally manufacture wiper systems, top column module, compressors and air management systems, said PR Dhaamodharan,
Group President and Managing Director, Valeo India. “Of the 16 product groups we have globally, only four are manufactured locally at present. Valeo India will localise most products in the coming years,” he said. “Localisation is important to eliminate concerns from currency volatility, and tide over difficult economic conditions globally. Also, some products are customised to cater to unique needs of the Indian market which is in the small car segment,” adds Dhaamodharan.
ABB Gets Big Order from Powergrid
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BB, the power and automation technology group, has been awarded a Rs 175 crore order by the Powergrid Corporation of India to supply equipment for the Champa transmission sub-station in Chhattisgarh. The Champa substation will function as a pooling station to receive power at 765 and 400 kilovolt (kV), and is part of Powergrid’s plan to build a stronger national grid. ”We are already executing several
765 kV sub-station projects for Powergrid. This order reiterates our partnership approach and long-term customer focus,” says Peter Leupp, ABB’s head of Power Systems. ABB’s will be involved in the engineering, design, supply, installation, and commissioning of the 765 kV and 400 kV switchyards, including the civil works. Key products to be supplied include circuit breakers, current transformers, capacitive voltage transformers, surge arrestors, etc.
Havells Forms JV for a lighting products unit in china
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lectrical equipment manufacturer, Havells India, has signed an agreement to form a 50:50 joint venture with China’s Shanghai Yaming Lighting for a lighting products unit in China. The new company, Jiangsu Havells Sylvania Lighting Co, will invest $50 mn and target to achieve an annual revenue of $100 mn in the next three years. Havells’ Joint Managing Director, Anil Gupta, said the plant is slated to begin production by April 2012, and will make energy-efficient and green lighting products for the Chinese and international markets. “Manufacturing in China is commercially more viable,” Gupta explains. He adds that the joint venture would also facilitate innovation and quicker product releases in international markets, while providing a co-owned, reliable and stable supply source.
Switchgear Markets Anticipate Demand Surge
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rowth in sectors such as oil and gas, petrochemicals, steel, cement, and telecom, commercial and residential corridors across the country will raise energy consumption,” says Frost & Sullivan industry analyst Anup Barapatre. “The major participants in the low voltage (LV) switchgear space are fitting out their manufacturing facilities to adapt to this change.” Frost & Sullivan estimates that the LV switchgear market in India grossed revenues of $950 mn in 2010, and will reach $2170 mn by 2017. The medium voltage (MV) switchgear market was $795 mn in 2010, and is projected to reach $1735 mn by 2017. Both LV and MV switchgear
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markets in India are mature. Consequently, global companies are obtaining or upgrading technology from their parent organisations, while local participants are securing technology through acquisitions or technology transfers. Equipment user industries and T&D utilities have upped demand for space optimised designs and efficient switching, with prominent end-user industries investing heavily in indoor and gasinsulated switchgear. While the major manufacturers in the MV segment are all set to diversify their offerings, others are acquiring technologies to address future demand for environment-friendly, compact, and efficient MV switchgear.
- technology management for decision-makers
Despite robust market demand, the huge discount structure erodes the top and bottom line of organised participants. Pricing pressures due to stiff competition and bargaining power of customers also impedes the overall growth of the LV and MV switchgear markets. “It is challenging for participants to hedge against price fluctuations, maximise margins, and still be competitive,” notes Barapatre. “The price wars triggered by Tier-II and Tier-III suppliers can be offset to some extent by focussing on adopting best practices to improve production efficiencies and achieving economies of scale to reduce production costs and maintain profit margins.”
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Waterjet Cutting with KMT The Ideal Equipment for Every Application Cutting at the Highest Level
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industry update
Suzlon to Supply Wind Turbines to South Africa
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uzlon Energy has secured approvals from the South African government to supply wind turbines for the Cookhouse Wind Energy Facility at Eastern Cape. South Africa’s Minister for Energy, Dipuo Peters has approved the project, which will use Suzlon’s 2.1 MW turbines. African Clean Energy Developments (ACED) Managing Director Thomas Donnelly said, “The Cookhouse project
marks a major first step in our plans to build a 1 GW renewable energy portfolio over the next three years. Our 200 turbine agreement with Suzlon is at the core of our plans.” “South Africa needs more energy and sustainable ‘green’ jobs. The wind energy sector is well positioned to deliver both of these requirements,” says Suzlon’s Group Chairman and Managing Director Tulsi R Tanti.
L&T Puts in Advanced Water Treatment Plant
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&T Heavy Engineering has commissioned a water treatment system for its nuclear forging facility at Hazira, Gujarat. The 7,000 cubic meter per day purification system is fed water from the Tapi river, and combines ultrafiltration pre-treatment and reverse osmosis. Subsidiary treatment systems have been provided for steam boilers, compressors and cooling towers. The system’s global recovery rate is
claimed to reach 90 per cent. It uses Amiad automatic pre-filters, Dow PVDF ultrafiltration membranes, and Hydranautics high-tech ESPA2-LD reverse osmosis membranes. The compact system is highly integrated, and is quiet in operation. To reduce operating noise, engineers have installed the feed and recirculation pumps below ground level-a new practice for India. The system was designed, assembled and installed by H2O Innovation India.
TEMA Highlights National Security Issues
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n a communication to the Prime Minister and the Minster of Home Affairs, the Indian Telecom Equipment Manufacturers Association (TEMA) has highlighted the susceptibility of the country’s telecom network to the failure of foreign equipment providers. TEMA claims that India is overly dependant on foreign telecom companies for infrastructure equipment, and the consequent risks of failure. The USA also has similar concerns, and they have taken the issue of largescale use of foreign-made equipments in their telecom networks seriously.
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We are in a much worse condition, as almost all the critical sub-systems of our nationwide telecom network have foreign equipment. We are not taking any concrete step to mitigate this problem by promoting the use of indigenous equipment,” says Ashok K Aggarwal, Director General of TEMA. TEMA has suggested that the Indian government take steps to ameliorate the situation by making it mandatory for the Indian telecom service providers to induct homemade equipment for which complete know-how and expertise in available in the country.
- technology management for decision-makers
Wipro Kawasaki to Make Hydraulic Pumps
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ipro Infrastructure Engineering, the hydraulics business of Wipro, has formed a joint venture with Kawasaki Heavy Industries. The new entity will be called Wipro Kawasaki Precision Machinery Pvt Ltd, and will set up a plant to manufacture hydraulic pumps for excavators in Bangalore. The plant will have an initial capacity of 4,000 pumps, which will be enhanced to 15,000 pumps by 2015. The hydraulic pumps manufactured at the plant will be fitted in excavators ranging from seven to 20 tonnes.
JBT Green Tech Sets up facility
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BT Green Tech Equipment & Services, a subsidiary of the Industrial Services Middle East LLC, Dubai, a water purification and industrial service provider, has set up a manufacturing and assembling unit at the SIDCO Industrial Estate in Pappanamcode, Thiruvananthapuram. The new facility will manufacture water-purifying equipment and systems for households, hotels, hospitals and industrial establishments.
Moser Baer Plans More Solar Projects
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oser Baer Clean Energy will be investing up to $1 bn (Rs 5,100 crore) to set up solar projects with a cumulative capacity of 300 MW in India and overseas. The new projects are planned in Gujarat, Orissa, West Bengal and Rajasthan, as well as countries like Germany, Italy, and the UK. The company plans to achieve cumulative solar power generation capacity of 1 GW by 2015.
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industry update
Paramount, Aluplast to Build Greener Homes
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aramount Group, a real estate developer, has signed a memorandum of understanding (MoU) with Germany’s Aluplast, to leverage the latter’s leadership in window systems, folding shutters and window accessories. This is the first time Aluplast is collaborating directly with any Indian developer. Aluplast will design, manufacture, fabricate and install for Paramount more than 20,00,000 sq ft of windows, including specially designed tilt and turn windows. The products will be used in all ongoing and upcoming projects from Paramount. The instal-
lation will be supervised by Aluplast. “Aluplast U-PVC windows and doors are manufactured with eco-friendly unleaded stabilisers. We will provide Germany’s best energy saving window and door profile systems,” claims Arun Sharma, Director of Aluplast India. The MoU between the two companies was signed in presence of Manfred Seitz, Group Chairman, Aluplast Group, Germany, Mukesh Aggarwal, Managing Director of Paramount Group, Ashwani Prakash, Executive Director Paramount Group and Arun Sharma, General Director of Aluplast India.
Foundry Symposium Focusses on Technology
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ISA, a leading foundry machinery manufacturer, organised a one-day symposium on “New trends in molding technology”. The event comprised three technical sessions covering various issues in foundry operations and equipment like moulding machines; sand plants; surface preparation; dust extraction after-market business; spares and services.
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About 50 delegates from 30 foundries in Kolkata and Jamshedpur attended the symposium. Viraj Naidu, Managing Director of DISA India says, “This symposium was aimed at knowledge-sharing and providing insights into the foundry practices. I am pleased that industry stalwarts understand the need for sharing best practices through such forums.”
- technology management for decision-makers
RInfra Upgrades Power Management System
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eliance Infrastructure, an integrated power distribution company, has launched India’s first GIS based Outage Management System (OMS) in Mumbai. According to the company, the new system will enable quick response and resolution of power outages in the network by identifying the faulty locations. Commenting on the development, Lalit Jalan, Chief Executive Officer for Reliance Infrastructure said, “Technology adoption in power distribution is essential to improve efficiency and meet consumer expectations. RInfra has been a pioneer in implementing latest technologies in network operation and maintenance, fault identification and database management.” In a statement RInfra said with this upgrade, its 27 lakh suburban consumers will now experience quicker response and faster outage resolution and this will automatically decrease their inconveniences. Using the OMS, RInfra will integrate its existing complaint handling system with SCADA, GIS and SAP to identify a probable faulty section prior to a site visit by field personnel. The SCADA will pinpoint the location of the breakdown in the network, and the GIS will capture network details from the source to the consumer supply point. Emergency service officials will also be able to access key information about the outage and will be updated on real time basis, during the resolution of the complaint. Historical data on faults by area, duration and equipment is expected to help the company better plan preventive maintenance schedules, and reduce the frequency of outages.
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techwatch
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esearchers at the Wyss Institute for Biologically Inspired Engineering at Harvard University have developed a new material that replicates the exceptional strength, toughness, and versatility of insect cuticle. The new material, called ‘Shrilk’, is low-cost, biodegradable, and biocompatible — and an excellent replacement for plastics in many applications. The research findings appeared on December 13, in the online issue of Advanced Materials. The work was conducted by Wyss Institute postdoctoral fellow, Javier G Fernandez, PhD, with Wyss Institute Founding Director Donald Ingber, MD, PhD. Ingber is the Judah Folkman Professor of Vascular Biology at Harvard Medical School and Children’s Hospital Boston and is Professor of Bioengineering at the Harvard School of Engineering and Applied Sciences. Natural insect cuticle, such as that found in the rigid exoskeleton of a housefly or grasshopper, is uniquely suited to the challenge of providing protection without adding weight or bulk. It can deflect external chemical and physical strains without damaging the insect’s internal components, while
Shrilk is similar in strength and toughness to an aluminum alloy, but it is only half the weight. Shown here is a replica of an insect wing, which was made with the new material providing structure for the insect’s muscles and wings. It is so light that it doesn’t inhibit flight and so thin that it allows flexibility. Also remarkable is its ability to vary its properties, from rigid along the insect’s body segments and wings to elastic along its limb joints. Insect cuticle is a composite material consisting of layers of chitin, a polysaccharide polymer, and protein organised in a laminar, plywood-like structure. Mechanical and chemical interactions between these materials provide the cuticle with its unique mechanical and chemical properties. By studying these complex interactions
Picture Courtesy: Wyss Institute for Biologically Inspired Engineering at Harvard
Insect Cuticle Leads to a Tough Material and recreating this unique chemistry and laminar design in the lab, Dr Javier Fernandez and Dr Donald Ingber were able to engineer a thin, clear film that has the same composition and structure as insect cuticle. The material is called Shrilk because it is composed of fibroin protein from silk and from chitin, which is commonly extracted from discarded shrimp shells. Shrilk is similar in strength and toughness to an aluminum alloy, but it is only half the weight. It is biodegradable and can be produced at a very lost cost, since chitin is readily available as a shrimp waste product. It is also easily moulded into complex shapes, such as tubes. By controlling the water content in the fabrication process, the researchers were even able to reproduce the wide variations in stiffness, from elasticity to rigidity. As a cheap, environmentally safe alternative to plastic, Shrilk could be used to make trash bags, packaging, and diapers that degrade quickly. As an exceptionally strong, biocompatible material, it could be used to suture wounds that bear high loads, such as in hernia repair, or as a scaffold for tissue regeneration.
Butterfly Wings Inspire Water-Repellent Tech
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he wings of a butterfly easily shed water because of the way ultra-tiny structures on its wings trap air, and create a cushion between water and wing. Engineers are keen to emulate this water repelling effect, but past attempts at artificial air traps tended to lose their contents over time due to external perturbations. Now, an international team of researchers from Sweden, the United States, and Korea has taken advantage of defects in nanomanufacturing processes to create a multilayered silicon structure that traps air, and holds it for longer than one year.
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The researchers used an etching process to carve out micro-scale pores, and sculpt tiny cones from the silicon. The team found that features of the
- technology management for decision-makers
resulting structure that might usually be considered defects, such as undercuts beneath the etching mask and scalloped surfaces, actually improved the water repellent properties of the silicon by creating a multilayered hierarchy of air traps. The intricate structure of pores, cones, bumps, and grooves also succeeded in trapping light, almost perfectly absorbing wavelengths just above the visible range. The researchers are optimistic that this biologically inspired surface will have uses in electro-optical devices, infrared imaging detectors, and chemical sensors.
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techwatch
New Dye Boosts Solar Cells
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North Carolina State University invention has significant potential to improve the efficiency of solar cells and other technologies that derive energy from light. Dr Ahmed El-Shafei’s research group has invented a new ‘sensitiser’, or dye, that harvests more ambient and solar light than any dyes currently on the market for use in dye-sensitised solar cells (DSSCs). “A third-party solar energy company compared our new dye, NCSU-10, against the state-of-the-art dye on the market. Our dye had 14 per cent more power density,” says El-Shafei, an assistant professor in the Textile Engineering, Chemistry and Science department. “NCSU-10 allows us to harvest more energy from the same amount of light.” DSSCs are made of inexpensive and environmentally benign materials
including a dye, an electrolyte and titanium dioxide (TiO2). DSSCs work by absorbing photons, or discrete packets of light energy, from incident light (or direct light that falls on a surface) to create free electrons in nanoporous semiconductors such as TiO2, in the cell. These electrons travel to the outside circuit to generate an electric current. Since DSSCs are independent of the angle of incident light and have a high response to low level lighting conditions, they outperform conventional silicon photovoltaics under diffuse light, cloudy days and in indoor ambient light. The new dye will help significantly boost the efficiency of DSSCs. Since NCSU-10 can absorb more photons at lower dye concentrations, it can be employed to create more effective solar cells on windows and facades — while still allowing the windows to be highly transparent.
Cheap Beads Store Solar Energy
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low-cost material that can store heat energy collected from the sun during the day, and release it slowly over night has been developed by researchers in the India. The material is based on paraffin wax and stearic acid, and could help keep homes warm in sunny parts of the world that get very cold at night. Meenakshi Reddy of Sri Venkateswara College of Engineering and Technology, Chittoor, Andra Pradesh, and colleagues have discovered how certain materials, known as phase change materials (PCM) can store a large amount of heat in the form of latent heat in a small volume. Heat is absorbed when the material melts and released when it freezes. The team has now tested spherical capsules just 38 mm in diameter containing a blend of paraffin and stearic acid.
Tiny Piezo Levers Make Big Moves
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team of university researchers, aided by scientists at the US National Institute of Standards and Technology (NIST), have succeeded in integrating a new, highly efficient piezoelectric material into a silicon micro electromechanical system (MEMS). This development could lead to significant advances in sensing, imaging and energy harvesting. A piezoelectric material, such as quartz, expands slightly when fed electricity and, generates an electric charge when squeezed. Quartz watches take advantage of this property to keep time: electricity from the watch’s battery causes a piece of quartz to expand and contract inside a small chamber at a
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specific frequency that circuitry in the watch translates into time. Piezoelectric materials are also used for sensors in sonar and ultrasound systems to translate sound waves into electrical signals. Although conventional piezoelectric materials work fairly well for many applications, researchers have long sought to invent new ones that expand more, and produce stronger electrical signals. More reactive materials would make better sensors and could enable new technologies such as ‘energy harvesting’. A large team of scientists has developed way to incorporate a material called PMN-PT (a crystalline alloy of lead, magnesium niobate and lead titanate) into tiny, diving-board like cantilevers on
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a silicon base. They have demonstrated that PMN-PT can deliver two to four times more movement with stronger force, while using only 3V. The structure also generates a similarly strong electric charge when compressed, which is good news for those in the sensing and energy harvesting businesses. “Silicon is good for these systems, but it is passive and can only move if heated or using electrostatics, which requires high voltage or large dissipated power,” says NIST researcher Vladimir Aksyuk. “Our work shows definitively that the addition of PMN-PT to MEMS designed for sensing or as energy harvesters will provide a tremendous boost to their sensitivity and efficiency.”
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sector update
Paper Power
The world’s fastest growing paper market, India is poised for major expansion
Picture courtesy: www.photos.com
by sangeeta shaukand
Nearly half of all the paper produced in the country is derived from forest and agro-based products like hardwood fibre, bamboo fibre and agro waste
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ndia is the 15th largest paper manufacturer in the world, accounting for 2.5 per cent of the world’s output. It is also the world’s fastest growing paper market, having grown at a compound annual rate of nearly seven per cent between 2006 and 2010. Last year was particularly good for the paper industry, yielding a nearly ten-fold increase in demand. According to leading market research and ratings company CARE, demand for paper in India grew 10 per cent year-on-year in 2010-11, compared with less than one per cent in 2009-10. Two primary reasons for this increase are reduction in excise duty and increased government spending on education, according to CARE. It also says improved activity from the service sector, print media, fast moving consumer goods (FMCG), consumer durables and the pharmaceuticals sector has pushed the demand up. US-based Environmental Paper Network says paper consumption has been growing most rapidly in China and India, in parallel with their expanding economies. In a recent report, the network said that between 2005 and 2021, global demand for
january 2012 | industry 2.0
- technology management for decision-makers
paper and paperboard is expected to increase nearly 60 per cent, from 368 million tonnes in 2005 to nearly 580 million tonnes in 2021. The biggest growth in paper consumption over the next decade is predicted to take place in Asia. This growth, driven largely by India and China’s rising populations and expanding markets, is expected to increase dramatically over the next 10 years, the network added. The network helps organisations in converting the pulp and paper industry to socially and environmentally sustainable processes. According to the Indian Agro and Recycled Paper Mills Association, the Indian paper industry is broadly classified into three segments, based on the type of paper made. Paperboard, the largest segment, accounts for nearly half of all the paper made in India. This is followed by paper used for printing and writing, which is 35 per cent of the total production. Newsprint takes up 20 per cent of the production share. Paper in India is made from hardwood and bamboo fibre, agro waste and recycled fibre. Loosely, forest-based and agro-based pulp together account for nearly half of all the paper produced in the country. Recycled fibre-based paper constitutes the balance, according to the CARE study. The cost efficiency of domestic producers vis-avis major paper exporting countries plays an important role in determining sustainable profitable operations, given that raw material forms about 75-85 per cent of the total manufacturing costs. According to international ratings agency Fitch Ratings, growth in paper demand, coupled with the scaling down of capacities in developed markets, has affected the availability of pulp in the short to medium term. To counter this, large Indian paper manufacturers have gone for backward integration through social farm forestry, and setting up captive pulping facilities to secure pulp supplies for their
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HANDLING INDIA’S MOST IMPORTANT AUTO COMPONENTS
sector update manufacturing facilities. Moreover, domestic paper manufacturers are increasingly adopting flexible pulping facilities, which can use multiple input materials such as agri-residue, waste paper and wood. The Indian Paper Manufacturers Association says paper consumption is poised for a big leap forward in sync with the economic growth and is estimated to touch 14 million tonnes by 2015-16. IPMA projects that India’s demand for paper will touch 20 million tonnes by 2020. The association represents 16 major paper manufacturers of the country. India produces many varieties of paper, namely printing and writing paper, packaging paper, coated paper and some speciality paper. Newsprint and publication paper account for two million tonnes. Of this, 1.2 million tonnes of newsprint is manufactured in India and the remaining 800,000 tonnes is imported, according to IPMA. India also imports about two million tonnes of pulp for making newsprint. The future of the paper industry in India looks extremely positive as the demand for the upstream market of paper products, like, tissue paper, tea
bags, filter paper, light weight online coated paper and medical grade coated paper is growing. On its website, the IPMA says that the Indian paper industry’s estimated turnover is INR 25,000 crore (nearly US$6 bn), contributing almost INR 3,000 crore (US$700 mn) to the exchequer. The industry provides employment to more than 120,000 people directly and 340,000 people indirectly, according to IPMA. The operating capacity of the industry is nearly 10 million tonnes, almost the same as demand, says IPMA. Quoting industry figures, IPMA says India’s overall paper consumption (including newsprint) has touched nine million tonnes and per capita consumption is pegged at a little more than eight kg. The futuristic view is that growth in paper consumption would be in multiples of GDP and hence an increase in consumption by one kg per capita would lead to an increase in demand of one million tonnes. Economic expansion and demand for newer types of paper will drive the fortunes of the industry north for a long long time.
Advertising feature
Making a deep impact The technology of cutting with water has been around for more than 40 years. Over time, it has established itself in a lot of industries thanks to its many advantages. Steady development in the use of ever higher pressure ranges has led to better efficiency. Development efforts at KMT Waterjet Systems have boosted waterjet cutting to pressure ranges of 6,200 bar (90,000 psi) and beyond
KMT
Waterjet Systems — a leading multinational manufacturer of high pressure waterjet cutting systems — was a pioneer as the company developed the first commercial system in 1971. Since then, continuous investment in innovation has made KMT a market leader in the waterjet cutting industry, with a wide product portfolio. These include ultra high pressure pumps, cutting heads, abrasive management systems, high pressure fittings and tubing, and spare parts. For a long time, water pressures of 3800 bar to 4,136 bar (55,000–60,000 psi) was the industry standard for waterjet cutting. In 2008, however, KMT introduced its ultra high pressure pump, the Streamline PRO-I Series, which are designed to produce a pressure range of up to 6,200 bar (90,000 psi).
bar, significantly more pieces can be cut in the same time period with Pro technology. A test carried out by Water Jet Germany Private Limited (WJG) has shown that the cutting speed can be increased by 60 per cent or even more with KMT Pro (6,200 bar) pump compared to KMT PLUS (4,137 bar) pump. WJG performed the test with a 30 mm thick mild steel sheet to cut the component shown in the drawing. The test was conducted with two difTest 1: Single Cutting Head Operation
Streamline Pro
This technology leap provided many advantages. By applying higher pressures, the user can both reduce the cutting costs per piece and improve the cutting-edge quality. This is possible due to the fact that the cutting speed as well as the abrasive dosage can be increased. So, more energy can be released to cut the work piece. Thus, whencompared to cutting at the standard 4,000
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Test 2: Twin Cutting Head Operation
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ferent configurations (in terms of number of cutting heads). In both the tests; the same Pro pump (6,200 bar) and KMT Plus pumps (4,137 bar) are used.
Single Cutting Head
It took around 26.25 minutes to complete the cutting with the plus pump, while WJG could finish the same job in just 16.37 minutes with KMT PRO pump. WJG achieved 38 per cent saving in cutting time with the PRO pump, which means
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Advertising feature • A flexibility to cut at any pressure up to 6,200 bar pressure • The cutting speed improves as whole i.e., in piercing, straight cut and corner cut • Less taper, and improved cutting-edge quality • Reduction in abrasive consumption per piece • Some metals with lower thicknesses can be cut without abrasive • Much lower delamination in the case of composites
The Green Benefit
While you produce a job much faster with KMT Pro technology, you also save dramatically on power, water and abrasive to produce a component. In this test, we noticed • 37 per cent saving in electricity consumption • 51 per cent saving in water consumption • 20 per cent saving in abrasive consumption Therefore, Pro technology helps reduce use of valuable resources per component.
KMT Design Philosophy a whopping 60 per cent higher productivity in the same time.
Double Cutting Head
Then WJG changed the configuration to dual cutting heads, and cut the component. It took around 29.12 minutes to cut two pieces with the PLUS Pump, whereas WJG could finish two pieces in just 18.08 minutes with PRO pump. Again the user obtained a 38 per cent saving in cutting time, and productivity increase of 61 per cent.
Productivity Gains
Who does not want higher productivity in this
competitive world? Probably, everyone does, and especially when one can achieve the same at similar or lower cutting costs per component. WJG also observed a notable reduction in the cutting costs per piece during the tests. While calculating the cutting cost per component, various aspects of the costs like water, power, consumables, abrasive, etc were all considered. The results of the test, as summarised by S Sriram, Managing Director of WJG, clearly show the productivity increase by 60 per cent. In addition to cutting it faster at comparable cost, various other benefits are also obtained:
While designing a product, KMT gives utmost priority to the critical aspects like safety, performance, reliability, durability, flexibility, ease of maintenance, cost of operation and support. KMT Streamline Pro pumps are available in 60 HP and 125 HP variants. However, KMT has a broad range of its offerings for various segments of the industry. KMT also supplies a complete range of cutting heads, abrasive management system, high pressure fittings & tubing and other accessories suitable for 6,200 bar Technology. n Disclaimer: The cutting test was performed in controlled conditions. Depending on various parameters, the actual performance may vary on case to case basis.
Karolin Machine Tool Pvt. Ltd.
(100% Subsidiary of KMT GmbH, KMT Waterjet Systems) Phone: +91-22-285-724-94 / 94 Fax: +91-22-285-724-97 E-Mail: Bhavin.Mavani@kmt-waterjet.com Website: www.kmt-waterjet.com
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[Advertorial]
- technology management for decision-makers | january 2012 | VOL. I
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cover story
Innovate or Perish by john sviokla, chris wasden and cristina ampil
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- technology management for decision-makers
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Illustration: PC ANOOP
W
hether you are in Minneapolis or Mumbai, the internet is changing the way we live our lives and conduct business. Happily, most of these changes deliver more choices with better pricing for consumers, and far greater access to new markets for businesses.
Yet, we know change is also disruptive. This is why CEOs believe innovation is now as important to growing their businesses as expanding in existing markets.
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Innovation is a matter of survival in sectors where advancing technologies and changing customer demands are driving strategic change to business models. For others, investing in innovation provides the means to secure competitive advantage or the promise of new revenue. Innovation is high on the agenda for virtually all industries. It is highest in industries where technologies are rerouting customer expectations, or where convergence is influencing business models deeply. For example, 43 per cent of the CEOs polled for PwC’s 14th Annual Global CEO Survey in the pharmaceuticals, and entertainment and media sectors, believe their greatest opportunities for growth lie in new products and services, against 29 per cent of all CEOs. The economics of their businesses are changing rapidly, and these leaders are rushing to adapt. As a result, they are re-imagining ways to target growth, and that includes new, more open approaches to innovation. A majority of entertainment and media CEOs (57%), for example, expect their company’s innovations will be co-developed with outside partners. Drug makers know they also need to encourage more collaboration among industry, academia, regulators, governments and healthcare providers. These changes are increasingly taking place in a global context: 41per cent of pharmaceuticals and life sciences CEO expect the majority of their innovations will be developed in markets outside the country where they are based. Over the past two decades, over a billion new consumers have entered the market economy, mostly in emerging markets. That is where the action is, in the eyes of CEOs, regardless of their home market. As a result, businesses seek innovations that will lead to competitive advantage in the right markets. Those reliant on mature markets need to differentiate, while those based in emerging markets are moving up the value chain to lessen their dependence on cost advantages they know can be fleeting.
Innovation Misconceptions
For CEOs, innovation clearly has moved beyond allocating resources for men in white coats working on mystery projects in isolated labs. Rather, innovation now encompasses the continuous need to improve and re-invent products, processes and services and even brands. That task involves a lot more people — inside and outside the organisation — with more rigorous processes, structures and practices to ensure that expectations are met. In all, 78 per cent of CEOs surveyed believe innovation will generate ‘significant’ new revenue and cost reduction opportunities over the next three years. To put the responses in perspective, the US National Science Foundation found that only nine per cent of an estimated 1.5 million for-profit companies described themselves as active innovators in 2006–08 revealing a gap between where most companies are — and where CEOs want to go. So how do successful innovators create the processes, structures and practices to move the handful of viable ideas
industry 2.0
- technology management for decision-makers | january 2012
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cover story from among the thousands circulating within all organisations all the way to implementation?
Misconception #1: Innovation can be delegated Not so. The drive to innovate begins at the top. The CEO sets the tone that defines the most deeply held assumptions of the organisation, and that alone will determine whether a culture of innovation can thrive. Looked at another way: If the CEO does not reward innovation, protect the process, or change internal relationships to foster innovation, the effort will fail. Operational excellence is necessary to run the business of today, but the CEO must also create the business of tomorrow. This dual focus creates tension across the organisation. Nowhere is this better illustrated than by the experience of 3M in the early 2000s, when the company launched a Six Sigma approach to cut waste and improve efficiency. The effort was successful — costs went down and profit rose. Yet, there was an unexpected downside: top line growth stalled. Specifically, revenue growth from innovative new products ceased to materialise the way
it used to. To 3M’s credit, the company’s new leadership rectified the problem — not by eliminating the lean-discipline cost approach, but rather by mitigating its influence on innovation processes. This has restored the company’s reputation for reinvention. CEOs must help the organisation value failure, and use it effectively to learn and thereby improve the company’ innovation capabilities and culture. “Management’s job is not to prevent risk but to build the capability to recover when failures occur,” writes Ed Catmull, President of Pixar and Disney Animation Studios in the Harvard Business Review. “We must constantly challenge all of our assumptions and search for the flaws that could destroy our culture.” Innovation by its nature cannot be controlled directly. However, CEOs can influence innovation by supporting a culture that nourishes and rewards fresh thinking. Southwest Airlines and internet shoe retailer Zappos are well-known examples of effective innovation to improve customer service and loyalty. Both outpaced established rivals in very competitive industries. How? By building the right culture, Zappos
Who is investing in innovation and why? CEOs: Innovation for my company means By Industry
Communication Entertainment & Media Pharma & Life Sc Business & Prof Serv Forestry, Paper & Packaging Technology Chemicals Transportation & Logistics Metals Insurance Industrial Manufacturing
Automotive Total Financial Services Consumer Goods Retail Oil & Gas Utilities Engg & Construction
The main way to grow
Efficiencies for an edge
Significant revenue opportunity
1
2
3
49% 43% 43% 41% 35% 34% 34% 32% 32% 32% 32% 28% 26% 25% 21% 20% 19% 18%
41% 17% 15% 12% 12% 34% 34% 40% 32% 30% 26% 38% 31% 25% 20% 33% 15% 23%
43% 33% 36% 26% 8% 42% 29% 33% 25% 28% 33% 36% 28% 33% 19% 24% 11% 19%
Source: *PwC 14th Annual Global CEO Survey 2011 Base: 11-153 (industries), 31-108 (regions)
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By Region
The main way to grow
Efficiencies for an edge
Significant revenue opportunity
1
2
3
China/ Hong Kong
39%
50%
37%
Germany
39%
31%
25%
India
38%
13%
23%
Mexico
34%
26%
31%
United States
33%
23%
38%
Brazil
28%
33%
43%
Canada
28%
30%
30%
Russia
26%
35%
32%
United Kingdom
25%
22%
25%
Japan
23%
23%
19%
France
12%
32%
32%
1. Percentage of CEOs who saynew products and services are their company’s main opportunity for growth over the next 12 months. 2. Percentage of CEOs who strongly agree their company’s innovations will lead to operational efficiencies that provide a competitive edge. 3. Percentage of CEOs who stongly agree their company’s innovations will lead to significant new revenue opportunities.
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CEO, Tony Hsieh has said. When companies get the culture right, other elements such as the customer service or innovation all fall into place. The goal for the entire leadership team in an innovation environment then is to celebrate failure, enable it to happen fast, and to learn from the failures to explore other options that improve the quantity and quality of ideas that could lead to innovation. It is not enough to be a sponsor and instruct others to take the lead. You must lead, because a failure to innovate is a failure of leadership.
Misconception #2: Senior and midlevel managers are the natural allies of innovation Managers may not be the enemies of innovation, but they are not the natural champions either. Their focus on improving profits through ever greater operating efficiency encourages them to reject new ideas that detract from these perpetual improvements. Companies tend to promote executives who successfully operate the largest parts of the organisation, often under a tight cost discipline. Innovation, however, often occurs at the periphery — close to the pain points where changing customer demands are first felt. A global insurance business encountered this middle-management effect when it surveyed 5,000 employees across all organisational levels, geographies and major divisions. In the end, the people most interested in being innovative were those in the senior leadership and those at lower levels. Those in middle management were the least interested and the most resistant to innovation. They found innovation disruptive to their day-to-day activities and felt it got in the way of running an efficient operation — which is what they were paid to do. The company’s leadership recognised that the inherent tension stifled innovation. They had never created any expectations or incentives for middle managers to innovate. In fact, they had unwittingly done just the opposite.
Misconception #3: Innovative talent works for the money Innovative people are motivated by the rewards that will come with a successful launch. Yet pay packages alone will not determine the outcome of an innovation effort. Measures to improve retention of innovative employees should include many non-monetary rewards such as recognition and a degree of autonomy. These are important components of a culture that fosters innovative thinking at the outset. Empirical studies looking at new offering launches, as well as VC success rates, have suggested as a general rule that only one in 1,000 ideas will ever yield money for the company. Firms need a clear incentive programme, framed around front-line em-
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How Much Innovation Do You Need? A stable industry is de-maturing when at least two of the following five situations arise: Core customer behaviour changes: The accelerating uptake of electronic book formats offers a dramatic example from the publishing industry. E-book sales, as a percentage of the book market have more than doubled to 8.32 per cent in 2010. Core technologies to produce the product or service changes: Video-on-demand, video-sharing sites like YouTube, Netflix and peerto-peer file sharing are among the technology-driven disruptions to traditional models of content distribution, and to advertising revenue for broadcasters and music companies. The number of large competitors interested in the same market rises: Increasing interest among automakers to grow in China offers an example. In the US, consider the number of IT companies like Cisco, Intel, Microsoft and Google, to name a few, that are interested in getting into healthcare. Significant change in government regulation is underway: Clearly, regulatory change is affecting financial services and healthcare providers in many countries. Access to the customer is lost: The company who is ‘first’ in the demand chain often wins. In the last decade, we have seen new players emerge, like Amazon, Apple and Google, who have permanently changed how businesses reach their ‘end’ customers, making them vulnerable to these new interlopers and at risk to de-maturity.
ployees to reward successful innovation and engage employees to think about their role in improving the business. Both Google and 3M embrace approaches that allow innovative individuals and groups to spend some of their time harnessing their passions. Businesses are putting these steps in action: PwC’s CEO survey shows the top CEO response to addressing perceived talent shortages is to add more non-financial rewards. We find that the most successful innovators are liberal with praise and recognition. Unlike money, which is a scarce resource, organisations can create an abundance of praise and recognition to reward employee innovation. Innovation itself is an approach to employee engagement. Top talent wants to work for companies with reputations (as well as rewards) for innovation, so building that reputation for innovation helps a company become an employer of choice. People like being creative; it is a basic human interest that leadership ought to tap into and harness. This is particularly relevant as skill shortages rise to the top of CEOs’ concerns. Talent shortages are becoming the ‘new normal’ and are likely to remain so. Establishing a culture that embeds innovation into the organisation and its employees will attract and retain the best talent.
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- technology management for decision-makers | january 2012
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cover story CEOs are turning to new product and service development
Percentange of CEOs on the main opportunity to grow their business in the next 12 months
40% 37%
30%
30%
29%
23%
20%
20%
20%
17% 21%
15% 19%
13%
10%
0%
38%
14%
2007
15%
2008
17% 13% 13%
11%
10%
2009
2010
10%
2011
Source: *Growth re-imagined: Prospects in emerging markets. * PwC 14th Annual Global CEO Survery. http://www.pwc.com/ceo survey Base: 1,084 (2007), 1,150 (2008), 1,124 (2009), 1,108 (2010), 1,201 (2011)
Misconception #4: Innovation results from lucky accidents If only it were so. It is a fact that innovative people and companies spend most of their time running up blind alleys and taking wrong turns. Yet, crucially, they are also disciplining the creative process, increasing the chance that some of their ideas will score. What they do differently is work in structures and apply practices that are designed specifically to deliver innovations successfully and quickly. The innovation discipline increases serendipity to increase the odds of success with every shot on goal.
january 2012 | industry 2.0
17% 14%
14%
The ‘Millennials’ generation, today’s ‘digital natives,’ may require engagement strategies of their own. Companies that adopt some of the Millennials’ behaviour, and the collaboration and social media tools that they use to exchange ideas, will be well positioned to unleash these leaders of the future. “With Generation Y coming into the business, hierarchies have to disappear. Generation Y expects to work in communities of mutual interest and passion — not structured hierarchies. Consequently, people management strategies will have to change so that they look more like Facebook and less like the pyramid structures that we are used to,” says Vineet Nayar, Vice Chairman and CEO of HCL Technologies.
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Increased share in existing markets New product/service development New geographic markets Mergers and acquisitions New joint ventures and/ or strategic alliances
- technology management for decision-makers
Most innovations are not radical. Leadership should not disparage smaller-scale innovations. The non-stop discussion of disruptive, transformative, and radical innovation within the business community and academia tends to create the impression that if it isn’t radical then it isn’t an innovation. It creates unrealistic expectations about the volume and nature of innovations that organisations will bring to the marketplace. As Paul Polman, CEO of Unilever told PwC, “People tend to see innovation strictly in terms of revolutionary, breakthrough products — technologies to sequester carbon emissions or microchips that can process data 600 times faster. That’s fine. But most innovations are the result of steady, continuous improvement.” Much of what we see in Apple’s iPhone and iPad products, for example, is a breakthrough combination of many incremental innovations. The concept of using a tablet with ‘finger interactions’ did not arise with the iPad. Yet Apple’s approach to systematically attacking challenges until the device met a minimum performance standard, and to marry it to an applications management infrastructure in the iTunes Music Store and the AppStore, led to disruptive innovation. Radical innovation usually results from a combination of features, functions, distribution and value that often, but not always, leads to a new business model.
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With companies counting on innovations to create new revenue opportunities, and to improve productivity, it is time to create a process designed to filter ideas quickly and advance the best ones to execution. The most successful organisations marry creativity and disciplined execution systems in a way that enables them to flex the focus depending on the opportunity they are addressing. PwC has broken down the innovative process into four phases. Market discipline through market feedback and testing are incorporated into each to reduce the impact of internal thinking and consensus on the innovations. Moreover, the process structurally and operationally separates early stage innovations to give them freedom and flexibility to adapt, iterate, and morph into commercially viable solutions before bringing them into the mainstream once they achieve established milestones (See box on the four-step innovation process).
Misconception #5: The more open the innovation process, the less disciplined Many organisations are keen to adopt more open approaches to innovation, and are reaching outside their companies to customers, suppliers, and partners in new ways. Close to 40 per cent of CEOs from
Ceos face a limited supply of candidates with the right skills
Q. Considering the talent required for the success of your businessover the next three years, what are the key challenges you expect to face?
Challenges recruiting/ integrating younger staff
Limited supply of candidates with the right skills
66 54
Providing attractive career paths in our industry
Technically skilled talent lack flexibility/creativity
Competitors recruiting some of your best people
52 50 45 44
Key employees changing careers for personal reasons Audit of reward structures by regulators/investors Poor retention of female talents
40
39 23
35
Difficulty in deploying experienced talent globally Understand and forecast talent in new markets
Retirement of older workers
12
Source: *Source: *PwC 14th Annual Global CEO Survey 2011 Base: 1,201 CEOs surveyed globally
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across all regions, expect their company’s innovations will be co-developed, the survey shows. In part, these business leaders are tapping into an established tradition behind a more open approach in some industries — think of the automotive supply chain, where automakers rely on suppliers to continuously improve components ranging from seat belts to brakes, and everything in between. What is changing is that more businesses, in varied sectors, are moving towards collaboration.
“People tend to see innovation strictly in terms of revolutionary, breakthrough products…That’s fine. But most innovations are the results of steady, continuous improvement” — Paul Polman, CEO, Unilever The attractions are manifold and based on a growing acceptance that the rate of change and the complexity it creates means that no one organisation has enough of the right people and enough resources to innovate on its own. P&G, for example, has set a target for 50 per cent of revenues to come from innovations that have their genesis from outside sources. “Today, nearly every new item we bring out was produced with at least one partner somewhere in the world. So, for example, we co-locate scientists from partner organisations and from our organisation in the same laboratory. It’s amazing what you can do when you knock down the barriers in an organisation or the barriers between organisations,” Bob McDonald, Chairman of the Board, President and CEO, The Procter & Gamble Company, told PwC for the survey. Many are looking across the supply chain to boost new development as well as to customers and even competitors. There is no doubt organisations are struggling to determine how to best exploit greater customer access and input with minimum disruption to current production processes. Some companies are adding incentives for outsiders to submit ideas. GE launched its Ecomagination Challenge in 2010, backed with $200 mn in seed capital for the best ideas or start-ups for the power grid. GE said it formed a dozen new partnerships, as a result. Advances in collaboration tools, like social networking, are accelerating open innovation. Within their organisations, companies can deploy internal social networks along with collaborative
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The Innovation Process Discovery Phase: Ideas and problems are explored, screened and selected. They are sourced from customers, suppliers, partners and other external organisations, as much as from employees. The sources, in fact, are as varied as there are different business needs. Emerging trends are also scanned. P&G, for example, uses ethnographic research to learn how products are used. Customer panels, demographic studies and other techniques are used to better understand customer pain points and to generate innovation options that remove them. The enterprise discovery team that supports this phase of the innovation process is generally a small group of 10 to 15 people, as we have found at clients with successful innovation teams. It is not a committee of the half-committed part-timers, but rather a working group dedicated to helping inventors and innovators refine and advance the best ideas. They are also not just engineers or marketing people. Ideally, this group has a range of innovation, commercial and technical experience. They have often spent time in product development or marketing strategy, or have worked for startups, for example. Incubation phase: Good ideas need to be further refined, developed and tested to see if they are technically feasible and make business sense. This is the purpose of this phase–developing the business case. Companies differ in how they select ideas to be incubated, and where the incubation takes place. Some rely on subject matter experts outside the company to help filter and select ideas. Others use their own em-
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ployees as a proxy for potential customers. Still others adopt evaluation criteria or scoring methodologies that weigh risk, return, feasibility and restraints and other relevant metrics. The key principle here is that most innovative ideas need to have some structural separation from the day-to-day business to be further developed and tested, and the incubator, whether inside the business unit, enterprise, or external provides the protection and support the innovation needs to advance towards commercialisation. The incubation team is good at project management, and will often have design capabilities so that they can redesign components of the idea to retest in the host environment. Members and resources are drawn from other departments for technical expertise, and to agree on a budget to conduct a market test. This phase must have senior sponsorship, as various departments within the company have to sign up to help. It also can require substantial funding. Some team members as well as the original inventor may stay involved throughout the
1 Success
3 launches
10 Pilots
100 selected 1,000 ideas
- technology management for decision-makers
whole process, but they do not have to. As an example, a global financial services organisation developed an incubation process that selects five to seven good ideas each year. The company’s innovation team provides a project manager, while various departments and partners provide near full-time resources to create the pilot and/or prototypes. Acceleration phase: Just as most ideas do not make it past discovery phase, many do not survive incubation. The few that do are now ready to be piloted in a limited commercial launch to evaluate and improve their commercial viability. Thus, they are most focussed on specific changing customer needs, market segments or system improvements. Some companies may use surveys, interviews or focus groups with customers in to improve the value proposition and commercial success in this phase. The best test of commercial success, of course, is a targeted commercial launch of the products and/or services. More formal structures and practices are adopted at this stage as the innovation moves towards the disciplines and practices that are well-understood within the organisation. However, this transition phase must remain flexible enough to modify the product, process or service at any time to meet the emergent market’s needs. Here, the innovation has a fully dedicated team, which generally leverages Scaling those support functions from the rest of the enterprise. The acceleration team is solely focussed on creating a marketAccelerating ready product in a controlled and limited launch that will likely need modifications after market launch. Scale phase: The final step Incubating is mass commercialisation and mass marketing innovations. By now, the innovation is refined enough to slip into mainstream of the organisaDiscovering tion devoted to marketing and selling products and services. Resources
The different phases of the innovation process can be aligned with the people and resources typically involved at each of them.
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tools to develop interactions that go far beyond just a network of specialists. Social tools connect people who are ‘loosely tied’ to the problem-solving challenge. When the open collaboration process works, these loosely connected people successfully translate the problem in their own context and suggest how to solve it. Significant variations to the open model exist. Businesses are seeking to adopt the model that shelters where they think they can extract the value from their innovation without shutting out external contributors or supply partners. Some are open in the discovery phase, but try to be very closed in the scaling phase. Medical device makers, among others, use that model. In a truly open model, companies not only take things in, but spin things out that they don’t believe they can turn into value. Sometimes it may make sense to bring the innovation back in later. Transitioning to a more open approach on innovation can be difficult. Companies are very concerned about giving away their intellectual property (IP) if they share in an open system, which causes lawyers to get involved to help protect and secure their IP. One company spent over 18 months negotiating with a partner over the terms for an open approach to specific innovation challenges. Still controls are often in place even in the most open systems. Google, for example, remains committed to the open source platform for its Android mobile operating system, and encourages device makers to customise features. However, the company recently reiterated its requirement that device makers conform to certain specifications, in order to prevent fragmentation. While innovation is a knowledge-intensive activity, companies can innovate without creating entirely new knowledge. Much of what needs to be discovered or created in terms of knowledge already exists, either internally or externally. Experts on innovation have shown that many barriers to successful innovations can be resolved by applying existing knowledge correctly and transferring it from one domain to another. This is why the best innovators and inventors tend to be those that have a broad range of experience from which to draw upon. And the process is getting easier; software products are automating the search and recognition process with semantic search engine technology.
Misconception #6: Businesses know how much innovation they need Business leaders need to ask themselves: How much growth does the firm need from innovation? This involves considering how much growth will be driven by existing products and services, and how much is re-
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quired from new offerings, business models, processes, distribution and marketing strategies. Furthermore, leaders must calculate how much inorganic growth the company needs. This simple analysis has become increasingly important as most companies focussed on developed markets expect low single digit organic growth without innovation. Innovation is the engine that must fill the gap to get them to double-digit growth. Of course, the marketplace — not just your firm — dictates the pace of change. If innovation in the outside world is advancing more quickly than at the company, the company will eventually fail. Firms in industries where new technologies are substantially changing business models require disruptive innovation to survive — think media, retail, healthcare or telecom. We call this process of disruptive change
“Today, nearly every new item we bring out was produced with at least one partner somewhere in the world” — Bob McDonald, Chairman of the Board, President and CEO, Procter & Gamble ‘de-maturity,’ because mature industries are becoming more vibrant again. Some previously stable industries are in the process of de-maturing now. Others will follow in five or 10 years. Think of the effects of the $67 Chotukool refrigerator, launched in India by Godrej & Boyce, on the white goods business, while refrigerators in the US routinely cost around $800. De-maturing industries are more likely to be disrupted by innovation because customer needs, along with the competitive landscape, are in flux. As we have mentioned, the level and rate of innovation needs to be set by the CEO. For example, if the CEO seeks to create five new, billion-dollar businesses in the next five years, that puts in motion a completely different set of organisational moves than if the goal were only incremental growth. In substantially de-maturing industries, leadership needs to be willing to cannibalise its current businesses, because competitors are already doing so. It is something that most leaders are not willing to do.
Misconception #7: Innovation cannot be measured Innovation can and should be measured. Leadership needs to identify some RoII (return on innovation investment) measures to establish support. Thus, inno-
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cover story
Effectively Measuring Innovation •R&D spending •Ideas • People
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•Offerings • Growth phases •Relationships
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Innovation will create tension. That is a given — and it is good, for tension is the energy that powers the innovation process. However, that energy needs to be harnessed by a process that applies the right type of discipline and the right type of measures, supported by a culture of enablement, open mindedness, creativity and questioning. Such a discipline provides the built- in capacity to tolerate, manage and even encourage risk-taking, which will inevitably lead to fast, frequent, frugal failures that accelerate learning and innovation.
january 2012 | industry 2.0
Innovation scorecard
s vice Ser
im en s
Setting the Stage
Input
Impact
vation should face the same rigour as applied in other areas, with the understanding that there are very high levels of uncertainty and risk in the early phases. Innovation can be managed, like any other portfolio of capital investments: Allocate resources, set out the milestones. PwC advocates measures in multiple dimensions. More robust and broad measurement allows an organisation to see how it is doing to better manage and discipline the innovation process. It identifies gaps in performance that it can close by applying leading practices to drive improvement.
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In 2010, PwC created an Innovation Scorecard to measure the technology transfer office efforts at 15 academic medical centres. The university environment is ahead of most corporations in supporting and measuring innovation, in this regard. The corporate world, looking for better ways to support and accelerate innovation, can learn a lot from leading practices applied in the university setting. The Scorecard measures the innovation performance across four pillars and eight dimensions. The first pillar, Inputs, measures the dimensions of resources, and the workforce that supports the inventors and the commercialisation process. The second pillar, Activities, measures the dimensions of services offered by the technology transfer offices, and how they reached both inside and outside the university to develop and commercialise innovations. The Output pillar measures the efficiency and productivity of the technology transfer efforts. The final pillar, Impact, measures the overall effect of the innovations on the institutions, the market and society. Technology transfer offices that applied leading practices had shorter times to ‘go or no-go’ decisions on inventions and patents and also had higher levels of inventor engagement, which resulted in the improved success and impact of the office as measured by revenues generated.
ld Yie
• Patents, licences • Efficiency • ROII
Thus, the onus is on the CEO and the leadership team to lead from the front by integrating innovation in the strategic goals of the business and to hold the members of the senior teams accountable for results both individually and collectively. This will create a culture that instills innovation into the organisation and its employees. CEOs set the tone by creating a work environment that is more open to innovation and systematic in its approach. Since good ideas come from many places within the firm’s network of relationships, CEOs also need to create the partnerships and alliances. In the end, the best talent will migrate to those firms that have inspiring goals, along with process, culture, incentives and investment that seeks out exciting innovation-driven growth opportunities. Those firms that attract that talent into a superior innovation culture will win in the global marketplace. Dr. John Sviokla is US Business Leader for Strategy and Innovation, Chris Wasden is responsible for Global Healthcare Strategy and Innovation, and Cristina Ampil is the leader of the US Thought Leadership Institute at PricewaterhouseCoopers This report is courtesy of PricewaterhouseCoopers.
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management & strategy
How Restaurateurs Make Money Learn from restaurants, and apply the successful strategies they are using to your own businesses by daniel burrus
A
Illustration: Prince Antony
recent Forbes article listed some of the most profitable businesses in America and, to my surprise, many of them were restaurants. In fact, two of restaurants noted had four year growth rates of over 120 per cent. The four year growth rate is important, because it includes the recession, meaning that these restaurants are growing even during hard economic times. How is a business that provides a non-essential service (eating out) doing well in a time when people are being more conservative with their spending? Because rather than competing with other restaurants, they are redefining their competitive position, anticipating trends, and finding new and growing niches. We can all learn a lot from these restaurants and apply the successful strategies they are using to our own businesses. Stop competing on price: There are many ways to compete, yet most companies tend to compete on price. However, the more you compete on price, the lower
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- technology management for decision-makers
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your margins. This means you need high volume to make up for it. If your intent is to be a competitor of price, then fine. Just realise you have many more options. The restaurant Buffalo Wild Wings (BW3) decided to compete in areas other than price and are experiencing a 121 per cent growth rate because of it. If you go to the restaurant’s website, you’ll see a very atypical site complete with avatars and animated graphics. It even challenges visitors to play some computer games. It’s fun and sells the experience of patronising the restaurant to their targeted demographic. This restaurant chain realised that people flock to places that deliver an experience so that’s their competitive advantage, not price. In addition to competing on price, you can also compete on time, reputation, values, technology, image, experience, service, design, innovation, quality, information, knowledge, consultative value, loyalty, and process. To get away from competing on price ask yourself, “Do I have a strategy for every one of those different ways of competing?” Most companies compete in only one or two areas and have a detailed strategy for both. But few compete in all areas. Therefore, to gain an advantage, detail how you are different in each area so you can go beyond competing and accelerate growth. Anticipate trends: No matter how long you’ve been in business, you need to get outside your shell, look around, and check out what’s changing in your industry. But you don’t want to simply react to changes, as that keeps you behind the curve. Instead, you want to anticipate the changes that are coming and be in front of them. After all, the ones who are anticipating the best are the ones who are growing the most.
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Chipolte Mexican Grill anticipated a key trend and is now experiencing a growth rate of 123 per cent. Chipolte saw what the popular fast food Mexican food chains, such as Taco Bell, were doing and realised the menu options were not attracting the health conscious Baby Boomer market. So instead of being just another fast food joint, they decided to cater to the underserved Baby Boomer niche and offer fast yet healthy Mexican fare. Therefore, consider how you can differentiate yourself by catering to an underserved niche.
If you have an older clientele of Baby Boomers, then you have different certainties to consider. As people age, their eyesight becomes a problem, so they need bigger font on marketing materials. Comfort is key for aging Baby Boomers, so your furniture must be soft and inviting. Relationships are more important to this crowd, so you need highly trained staff who can give extra attention. These are just a few examples of how looking at the certainties of your demographic and then catering to those needs can increase your customer base.
The ones who are anticipating the best are the ones who are growing the most How do you find that niche? Look at the hard trends going on around you. Based on what you know about your marketplace, what trends can you see growing? Play to the demographics: Take note of your most loyal customers and then determine the certainties of that demographic. For example, if you primarily have younger customers, things like speed, efficiency, trendiness, and WiFi are key things that matter to them. Perhaps this crowd would even prefer to get information about products using QR codes or via texting. To attract more of this younger crowd, consider using social media tools. For example, Kogi Truck is a travelling Los Angeles landmark that serves up KoreanMexican tacos. They have rapidly grown to needing five food trucks and plan to add more. They attribute their success to the fact that they have 70,000 followers on Twitter and tweet where each truck is during the day.
One thing is certain: Competition in the specialty products business will intensify. So take a lesson from another industry and do what these successful restaurants have done. Stand out by innovating, anticipating, and serving your market’s present and future needs. When you follow this proven strategy, you’ll have the upper hand that leads to long term profits. — Daniel Burrus is considered one of the world’s leading technology forecasters and business strategists, and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology driven trends to help clients better understand how technological, social and business forces are converging to create enormous, untapped opportunities. He is the author of six books, including the national bestseller “Flash Foresight: How To See the Invisible and Do the Impossible” as well as the highly acclaimed Technotrends. — This article has been reprinted with permission from CIO Update. To see more articles regarding IT management best practices, please visit www.cioupdate.com.
industry 2.0
- technology management for decision-makers | january 2012
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management & strategy
Is that the
Best you can do?
As a manager, you never get that deal you deserve — but the one you negotiate. Let’s look at how to deal with concessions by david lim
don’t want to seem unreasonable, or because they want to be liked. So, here are some basic guidelines and sample conversations to help you get better at this:
Quick Tips •D evelop a strategy for concessionmaking • I f you accept the first offer, about 99 per cent of the time you could have done better •M ake people work for the concession
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A
s Samuel Johnson said, “Life cannot subsist in society but by reciprocal concessions.” How can we effectively ask for, and get the concessions we want? How can we effectively make reasonable concessions allowing the other party to feel like they are getting something, without giving up the entire company? Understanding the psychology behind the concessionmaking process is essential. After
january 2012 | industry 2.0
studying this process in many negotiations, I’m convinced that there are certain principles or guidelines that can help anyone to be more effective in this art of both getting and giving concessions. One of the key initial things to consider is whether or not you have issues about asking for a concession. Many people are reluctant to do so, because they don’t want to give the appearance of being cheap or grasping. But, people often give concessions either because they
- technology management for decision-makers
On the major issues, use the strategy of forbearance. In other words, simply hold fast to those important items, making no offer to compromise. This presumes, of course, that you may make concessions on other less important items. You may use those concessions as reasons you cannot compromise on the more important (to you) items. Know the relative importance of each item to each party so that you can develop a strategy for concession-making. Use questions like: “Issac, what really is most important to you here?” “Of these three things, Isaac, what is the least important?” Give as little as possible, but what you do concede should be things that are of high value to the other party (and hopefully of less value to you). For example, you can say, “Satish, I could give you A, B,
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1. Don’t make the first concession on a major item
C. All I need in exchange is D.” On the surface it would appear that Satish is getting the best of the deal. But, in reality, A, B, and C were items you built into your proposal to enable you to concede them easily, while holding fast to D.
2. The best time to get a concession is when you are asked for one
Stated another way, don’t give a concession without getting one in return, even if the concession is just a ‘small one’. The law of reciprocity comes into play here. People expect value for value. Capitalise on basic human nature and remember that one of the best times to get a concession is when one asked of you.
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3. Rarely accept the first offer
With practically every negotiator, some concessions are possible. Begin every negotiation by saying to yourself, “Every negotiator will concede something!” Ninety nine per cent of the time, you will be right. Explore the deal together to see if you can maximise the value for everyone. Remember, you want the best deal for all parties. By not accepting the first offer and by creatively probing for areas where concessions are possible, you open your mind, and hopefully the mind of the other party, to every possibility. If you accept the first offer, about 99 per cent of the time you could have done better!
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4. Make people work for their concessions
David Lim is an expert on leadership and negotiation. Learn more from his blog at http://theasiannegotiator.wordpress.com , OR contact him at david@everestmotivation .com
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Let us assume you want to buy my car. You ask, “What do you want for the car, David?” “Rs 500,000,” I say. After a quick inspection and brief test run, you say, “OK. I’ll have a bank draft for you at noon. You get the papers ready, and we’ll complete the deal then. I want to take my family out this evening in the car.” I just got what I asked for the car, in less than an hour from the very first person who approached me to buy it. Put yourself in my position. I’m happy, right? Wrong! Why? I’m thinking, “I could have made more money from the sale! I asked for too little! I should have asked Rs 600,000! I left money on the table!” Why do I feel that way? Because you didn’t make me work for any concessions. Go back to the beginning of the transaction. You look at my car. You find a few problems with it. (Every car has got some problem!). We negotiate for some time. You end up paying Rs 480,000 for my car. And yet…I’m happy! Remember: Make people work for the concession.
management & strategy
A Lesson in
Serial
Entrepreneurship
In two decades as an entrepreneur, Vineet Gupta has built multiple businesses in manufacturing and services. His second venture, the 650-crore Parabolic Drugs, has been his most successful. However, nothing excites him as much as education. With 19 centres, Jamboree, his test preparation centre for examinations is one of the country’s leading coaching businesses by pooja kothari
P
eople go to the Indian Institute of Technology (IIT) to become engineers. However, I got my first taste of entrepreneurship while at IIT, Delhi. Since I had no real interest in engineering, I started working with AIESEC — eventually becoming the local committee president for IIT, Delhi. That was a highly entrepreneurial stint. Most student organisations are supervised by teachers. But AIESEC is a body of students run by students. It was almost like running a small company — and it sparked my interest in entrepreneurship; so much so that I decided not to go to Yale. That was a tough decision to make. I am one of three boys, and both my brothers were already studying in the US then. Yet, I chose to be an entrepreneur — and, that too, in 1991, when the very concept was ruled by brick and mortar. Setting up a factory was the most obvious option. Things were very different then. I neither had the capital, nor a big idea. After evaluating many options, I found a sick plant in Ballabhgarh near Faridabad. It was a decent-sized plant that manufactured styrofoam, and would cost me 9 lakh. I raised that amount from my father and another partner, who put in 3 lakh. I wasn’t scared of taking on a new business. Actually, I was quite confident from day one. It was prob-
A Builder at Heart
Vineet Gupta loves the thrill that comes from creating new businesses
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Picture courtesy: Subhojit Paul
ably my experiences from college that gave me this confidence. Despite the difficulties we faced, from labour issues to inspections, we turned that plant around in 13 months. My professional qualifications eased things up for me, and people were willing to give me a break. Within the next few years, we got all large corporates, which were using Styrofoam for packaging, on board as clients. We also moved our plant closer to Delhi. My brother, Pranav, came back to India in 1995, after doing an MBA and working with Ford Motor Company. He decided to start a garments business with a family friend. However, on the first day itself, they realised that they couldn’t really work together. That’s when he and I decided to work together. It was a spontaneous decision. We decided to co-own every business we did, no matter what it was. We never discussed money. That decision still stands. We have equal ownership across all our businesses — packaging, real estate, education, pharma, and so on. So, Pranav joined me in the packaging plant, and we worked together for two years. By 1999, we built a huge plant for this business in Greater Noida, where all big businesses like LG and Samsung were located. With that kind of capacity, we became the second-largest poly producer in India, producing 1,400 tonnes a year. In 2005, we sold off the Greater Noida plant. The profit margins were quite low in this business; and, large companies kept squeezing us further. I realised that growth would be limited. That experience taught me an important lesson — as an entrepreneur, I could do my best, and yet, not get the results I expect. It’s important to know when to move on and explore other avenues.
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For two years before we closed it, the plant was making losses. Despite having the largest Styrofoam capacity in the country, and knowing the business very well, we simply couldn’t turn things around. It was a very painful decision — even some of my family members weren’t in favour of it. Yet, I took the decision to sell off our plant. That business still exists though. It’s run by our partner and does about 5 crore in turnover a year. It’s quite tempting to close down the existing plant, and use the land to build commercial offices there. Once Pranav and I started working together, we realised that we could do more than
manufacturing business. We took on half of that in debt, and borrowed the rest from family and friends. We brought in five partners, who are still on our board. Some of them have invested in our other ventures as well. I was highly involved in Parabolic initially. The first three years were tough. Manufacturing bulk drugs is highly capital intensive, and our pockets weren’t deep enough. The business made losses, and by 2001, we had wiped out our capital. We had absolutely no idea what to do with the business. We were in such a crisis that we were willing to give the business away for free as long as the buyer took the debt on. We didn’t want to be paid anything.
“I wasn’t scared of taking on a new business. People go to IIT to study engineering; I picked up entrepreneurship there” one business. So, in 1997, we started looking for fresh opportunities, and began evaluating projects that would give us the maximum return on our investment. A year later, we settled on pharmaceuticals because the Punjab government was offering good incentives to business people. Our due diligence showed it was a sensible business to get into. Pranav relocated to Panchkula and started the first plant of Parabolic Drugs at Dera Bassi. At that time, our other brother used to run an IT company in the US, called Parabolic Technologies. We used the same name, thinking that eventually, we might need to create a single identity. However, that wasn’t to be. My brother sold the company later. We didn’t have the 2.6 crore required to set up the pharma
Chandigarh was a hub for pharma then. We got in touch with Ranbaxy and Max; and started doing contract manufacturing work for them. We didn’t have to buy any material on our own. We converted the raw material they gave us into the final drug. That helped turn things around — and, really made us learn the ropes of the pharma industry. Our clients audited our plants, and rejected our material. They made us implement changes in our production processes, and improve efficiencies. They taught us what right yields meant. We realised that we had been losing money on that — and had really low yields by industry standards. We were not monitoring the reactions properly. We were also hiring the wrong people. Because we had started small, with four workers, we were apprehensive of hiring high-
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management & strategy
Sold on Education
Vineet Gupta is motivated to make a difference in the lives of students. His next milestone is to start a university in Punjab or Haryana
salaried people. However, the business needed a high-quality person. Back then, we didn’t think like that, and didn’t want to pay as much. We came out of that, and started hiring better people. Twelve years later, we’ve built it into a 650-crore business with four plants and more than a thousand employees. We have one of the biggest research and development facilities in north India. Last June, Parabolic went public and raised 200 crore. Since then, a lot of my time’s spent interacting with investors. I feel it’s our moral obligation to keep the investors updated with the progress we’re making. I went through many lows while building these two businesses. Thankfully, I have always had my brother for counsel. In critical decisions, entrepreneurs are usually alone, but I never felt that. Both of us think alike. We’ve never been driven by personal wealth. Problems occur when you start thinking only about individual benefit.
“Speed and execution are critical to success in business. Ideas don’t excite me as much” 40
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My brother and I take decisions in seconds; people wonder how we do that. We go a lot by raw instinct, even for important issues. Speed and execution are critical to success in business. Ideas don’t excite me as much. We’ve sailed through the downturns together. Not just Pranav and I, but even my partner, Bansal, from my first venture, who later invested in our pharma business as well. We’ve been partners for 19 years. Then, in the last decade, came the next phase of my journey. My wife, Akrita, had started Jamboree, centres that prepared students for foreign education and examinations, out of a garage in her parents’ house in 1993. She was running two centres in Delhi for nearly a decade, when she started feeling burnt out. In 2005, she decided to give up that business. I had to increase my involvement to keep things running. I liked the fact that our work was making a real difference to the lives of our students. I had to figure out how to keep the brand alive without my wife, around whom it had been built. I managed to scale up the business. Jamboree is one of the largest coaching businesses (for exams students need to take for education abroad) in India with 17 centres across the country, including one in Dubai. We are opening two more shortly, and are also planning to take our courses online. We’ve grown with partners and franchisees in this business. We have five franchise centres and two in partnership. It made sense to take on a partner while entering a new country like Dubai, where people didn’t know us. They’ve helped us in hiring locally and fire fighting on a day-to-day
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basis. It’s been a good decision. Jamboree’s a profitable business. I am satisfied with how it’s growing. It allows us to add two to four centres a year, but I don’t have plans to scale it up hugely. We’ve explored other coaching courses but I’m not sure if we can replicate the “wow” factor there. Till I am sure we can, I don’t want to enter new fields. In my two decades as an entrepreneur, I’ve worked in both the manufacturing and services industries. People are the backbone of a service business. At Jamboree, I’ve had to build the team, train them right, and standardise delivery at all our centres. We’ve got more than a hundred people in this business. Even after all this time, I’m still learning. Each of my ventures has given me a thrill especially when the results have been directly proportional to the effort put in. As an entrepreneur, you have no choice but to work hard. But, it’s not necessary the hard work will translate into success. You start believing in destiny along the way. You also realise how important it is to go through downturns. They really humble you, and give you a reality check, just in case you start thinking you made things happen. My stint with Jamboree has helped me see my future lies in higher education. I am motivated by the thought of making a difference. One of the milestones I’ve set is starting a university in the north — in either Punjab, or Haryana. I am already a founder and donor of Ashoka University, a not-for-profit venture that recently announced scholarships under the Young India Fellowships brand. I feel I can create easier access to high-quality education. Today, Indians head to the US for quality education. There’s no reason why we cannot reverse this in the next two decades.
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management & strategy
Leaders Kill Meaning at Work Senior executives routinely undermine creativity, productivity, and commitment by damaging the inner work lives of their employees in avoidable ways by teresa amabile and steven kramer
A
s a senior executive, you may think you know what Job Number 1 is: developing a killer strategy. In fact, this is only Job 1a. You have a second, equally important task. Call it Job 1b: enabling the ongoing engagement and everyday progress of the people in the trenches of your organisation who strive to execute that strategy.
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A multi-year research project whose results we described in our recent book, The Progress Principle, found that of all the events that can deeply engage people in their jobs, the single most important is making progress in meaningful work. Even incremental steps forward — small wins — boost what we call “inner work life”: the constant flow of emotions, motivations, and perceptions that constitute a person’s reactions to the events of the work day. Beyond affecting the well-being of employees, inner work life affects the bottom line. People are more creative, productive, committed, and collegial in their jobs when they have positive inner work lives. But, it’s not just any sort of progress in work that matters. The first, and fundamental, requirement is that the work be meaningful to the people doing it.
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Illustration: Prince Antony
How
In our book and a recent Harvard Business Review article, we argue that managers at all levels routinely — and unwittingly — undermine the meaningfulness of work for their direct subordinates through everyday words and actions. These include dismissing the importance of subordinates’ work or ideas, destroying a sense of ownership by switching people off project teams before work is finalised, shifting goals so frequently that people despair that their work will ever see the light of day, and neglecting to keep subordinates up to date on changing priorities for customers. But what about a company’s most senior leaders? What is their role in making — or killing — meaning at work? To be sure, as a high-level leader, you have fewer opportunities to directly affect the inner work lives of employees than do frontline supervisors. Yet, your smallest actions pack a wallop because what you say and do is intensely observed by people down the line. A sense of purpose in the work, and consistent action to reinforce it, has to come from the top.
The Four Traps
To better understand the role of upper-level managers, we recently dug back into our data: nearly 12,000 daily electronic diaries from dozens of professionals working on important innovation projects at seven North American companies. We selected those entries in which diarists mentioned upper or top-level managers — 868 narratives in all. Qualitative analysis of the narratives highlighted four traps that lie in wait for senior executives. Most of these pitfalls showed up in several companies. Six of the seven suffered from one or more of the traps, and in only a single company did leaders avoid them. The existence of this outlier suggests that it is possible for senior executives to sustain meaning consistently, but that’s difficult and requires vigilance. This article should help you determine whether you risk falling into some of these traps yourself — and unknowingly drag your organisation into the abyss with you. We also offer a few thoughts on avoiding the problems, advice inspired by the actions and words of a senior leader at the one company that did so. We don’t claim to have all the answers. But, we are convinced that executives who sidestep these traps reduce their risk of inadvertently draining meaning from the work of the people in their organisations. Those leaders also will boost the odds of tapping into the motivational power of progress — something surprisingly few do. We surveyed 669 managers at all levels of management, from dozens of companies and various industries around the world. We asked them to rank the importance of five employee motivators: incentives, recognition, clear goals, interpersonal support, and
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“Top managers were so focussed on cost savings…that drove new-product innovation into the ground” progress in the work. Only eight per cent of senior executives ranked progress as the most important motivator. Had they chosen randomly, 20 per cent would have done so. In short, our survey showed that most executives don’t understand the power of progress in meaningful work. And the traps revealed by the diaries suggest that most executives don’t act as though progress matters. You can do better.
Trap 1: Signals of Mediocrity
Most likely, your company aspires to greatness, articulating a high purpose for the organisation in its corporate mission statement. But, are you inadvertently signalling the opposite through your words and actions? We saw this dynamic repeatedly at a well-known consumer products company we’ll call Karpenter Corporation, which was experiencing a rapid deterioration in the inner work lives of its employees as a result of the actions of a new top management team. Within three years of our studying Karpenter, it had become unprofitable and was acquired by a smaller rival. Karpenter’s top management team espoused a vision of entrepreneurial cross-functional business teams. In theory, each team would operate autonomously, managing its share of the company’s resources to back its own new-product innovations. During the year we collected data from Karpenter teams, the annual report was full of references to the company’s innovation focus; in the first five sentences, “innovation” appeared three times. In practice, however, those top managers were so focussed on cost savings that they repeatedly negated the teams’ autonomy, dictated cost reduction goals that had to be met before any other priorities were, and — as a result — drove newproduct innovation into the ground. This unintended, de facto hypocrisy took its toll, as a diary excerpt from a longtime Karpenter product engineer emphasises: “Today I found out that our team will be concentrating on [cost savings] for the next several months instead of any new products. . . . It is getting very difficult to concentrate on removing pennies from the standard cost of an item. That is the only place that we have control over. Most of the time, quality suffers. It seems that our competition is put-
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management & strategy ting out new products at a faster rate. . . We are no longer the leader in innovation. We are the followers.” This employee’s work had begun to lose its meaning, and he wasn’t alone. Many of the other 65 Karpenter professionals in our study felt that they were doing mediocre work for a mediocre company — one for which they had previously felt fierce pride. By the end of our time collecting data at Karpenter, many of these employees were completely disengaged. Some of the very best had left. The mediocrity trap was not unique to Karpenter. We saw it revealed in different guises in several of the companies we studied. At a chemicals firm, it stemmed from the top managers’ risk aversion. Consider these words from one researcher there: “A proposal for liquid/medical filtration using our new technology was tabled for the second time by the Gate 1 committee (five directors that screen new ideas). Although we had plenty of info for this stage of the game, the committee is uncomfortable with the risk and liability. The team, and myself, are frustrated about hurdles that we don’t know how to answer.”
“Misbegotten goals help to destroy the employees’ sense of purpose” This company’s leaders also inadvertently signalled that despite their rhetoric about being innovative and cutting edge, they were really more comfortable being ordinary.
Trap 2: Strategic Attention Deficit
As an experienced leader, you probably scan your company’s external environment constantly for guidance in making your next strategic moves. What are competitors planning? Where are new ones popping up? What’s happening in the global economy, and what might the implications be for financing or future market priorities? You are probably brimming with ideas on where you’d like to take the company next. All of that is good, in theory. In practice, we see too many top managers start and abandon initiatives so frequently that they appear to display a kind of attention deficit disorder (ADD) when it comes to strategy and tactics. They don’t allow sufficient time to discover whether initiatives are working, and they communicate insufficient rationales to their employees when they make strategic shifts. Karpenter’s strategic ADD seemed to stem from its leaders’ short attention span, perhaps fuelled by the CEO’s desire to embrace the latest management
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trends. The problem was evident in decisions at the level of product lines, and extended all the way up to corporate strategy. If you blinked, you could miss the next strategic shift. In one employee’s words: “A quarterly product review was held with members of the [top team] and the general manager and president. Primary outcome from the meeting was a change in direction away from spray jet mops to revitalisation of existing window squeegees. Four priorities were defined for product development, none of which were identified as priorities at our last quarterly update. The needle still points north, but we’ve turned the compass again.” At another company we studied, strategic ADD appeared to stem from a top team warring with itself. Corporate executives spent many months trying to nail down a new market strategy. Meanwhile, different vice presidents were pushing in different directions, rendering each of the leaders incapable of giving consistent direction to their people. This wreaked havoc in the trenches. One diarist, a project manager, felt that rather than committing herself to doing something great for particular customers, she needed to hedge her bets: “The VP gave us his opinion of which target candidates [for new products] may fit with overall company strategy — but, in reality, neither he nor anyone in our management structure knows what the strategy is. It makes this project a real balancing act — we need to go forward, but need to weigh commitments very carefully.” If high-level leaders don’t appear to have their act together on exactly where the organisation should be heading, it’s awfully difficult for the troops to maintain a strong sense of purpose.
Trap 3: Corporate Fumbles
In the early decades of cinema, a popular series of silent-film comedies featured the Keystone Kops — fictional policemen so incompetent that they ran around in circles, mistakenly bashing each other on the head, and fumbling one case after another. The title of that series became synonymous with miscoordination. Our research found that many executives who think everything is going smoothly in the everyday workings of their organisations are blithely unaware that they preside over their own corporate version of the Keystone Kops. Some contribute to the farce through their actions, others by failing to act. At Karpenter, for example, top managers set up overly complex matrix reporting structures, repeatedly failed to hold support functions (such as purchasing and sales) accountable for coordinated action, and displayed a chronic indecisiveness that bred rushed analyses. In the words of one diarist: “Last minute changes continue on [an important
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“The fundamental requirement is that the work be meaningful to the people doing it” customer’s] assortments. Rather than think through the whole process and logically decide which assortments we want to show [the customer], we are instead using a shotgun approach of trying multiple assortments until we find one that works. In the meantime, we are expending a lot of time and effort on potential assortments only to find out later that an assortment has been dropped.” Although Karpenter’s example was egregious, the company was far from alone in creating chaotic situations for its workers. In one high-tech company we studied, Keystone Kop–like scenarios played out around the actions of a rogue marketing function. As described in one engineer’s diary, the attempts of many teams to move forward with their projects were continually thwarted by signals from marketing that conflicted with those coming from R&D and other key functions. Marketers even failed to show up for many key meetings: “At a meeting with Pierce, Clay, and Joseph, I was told that someone from marketing would be attending our team meetings (finally). The meeting also gave me a chance to demonstrate to Joseph that we were getting mixed signals from marketing.” When coordination and support are absent within an organisation, people stop believing that they can produce something of high quality. This makes it extremely difficult to maintain a sense of purpose.
Trap 4: Misbegotten Goals
Management gurus Jim Collins and Jerry Porras encourage organisations to develop a “big, hairy, audacious goal” (BHAG, pronounced bee-hag) — a bold strategic vision statement that has powerful emotional appeal. BHAGs help infuse work with meaning by articulating the goals of the organisation in a way that connects emotionally with peoples’ values. (Think of Google’s stated mission to “organise the world’s information and make it universally accessible and useful.”) At some companies, however, such statements are grandiose, containing little relevance or meaning for people in the trenches. They can be so extreme
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as to seem unattainable, and so vague as to seem empty. The result is a meaning vacuum. Cynicism rises and drive plummets. Although we saw this trap clearly in only one of the seven companies we studied, we think it is sufficiently seductive and dangerous to warrant consideration. A chemicals firm set a BHAG that all projects had to be innovative blockbusters that would yield a minimum of $100 mn in revenue annually, within five years of a project’s initiation. This goal did not infuse the work with meaning, because it had little to do with the day-to-day activities of people in the organisation. It did not articulate milestones toward the goal; it did not provide for a range of experiments and outcomes to meet it; worst of all, it did not connect with anything the employees valued. Most of them wanted to provide something of value to their customers; an aggressive revenue target told them only about the value to the organisation, not to the customer. Far from what Collins and Porras intended, this misbegotten BHAG was helping to destroy the employees’ sense of purpose.
Avoiding the Traps
Spotting the traps from the executive suite is difficult enough; sidestepping them is harder still — and wasn’t the focus of our research. Nonetheless, it’s instructive to look at the one company in our study that avoided the traps, a creator of coated fabrics for weatherproof clothing and other applications. We recently interviewed its head, whom we’ll call Mark Hamilton. That conversation generated a few ideas that we hope will spark a lively discussion in your own C-suite. When you communicate with employees, do you provide strategic clarity that’s consistent with your organisation’s capabilities and an understanding of where it can add the most value? Hamilton and his top team believed that innovating in processes, rather than products, was the key to creating the right combination of quality and value for customers. So, he talked about process innovation at every all-company meeting, and he steadfastly supported it throughout the organisation. This consistency helped
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management & strategy everyone understand the strategy, and even become jazzed about it. Can you keep sight of the individual employee’s perspective? The best executives we studied internalise their early experiences and use them as reference points for gauging the signals that their own behaviour will send to the troops. “Try hard to remember when you were working in the trenches,” Hamilton
and purchasing can highlight pain points that demand senior management’s attention because they are starting to sap meaning from your people’s work. In Hamilton’s view, senior executives bear the responsibility for identifying and clearing away systemic impediments that prevent quality work from getting done. Hamilton’s company was doing very well. But, we believe
“When coordination and support are absent, it is extremely difficult to maintain a sense of purpose” says. “If somebody asked you to do a bunch of work on something they hadn’t thought through, how meaningful could it be for you? How committed could you be?” Do you have any early-warning systems that indicate when your view from the top doesn’t match the reality on the ground? Regular audits to gauge the effectiveness of coordination and support processes in areas such as marketing, sales,
that senior executives can provide a sense of purpose and progress even in bad economic times. Consider the situation that then–newly appointed Xerox head Anne Mulcahy faced in 2000, when the company verged on bankruptcy. Mulcahy refused her advisers’ recommendation to file for bankruptcy (unless all other options were exhausted) because of the demoralising
signal it would send to frontline employees. “What we have going for us,” she said, “is that our people believe we are in a war that we can win.” She was right, and her conviction helped carry Xerox through four years of arduous struggle, and to later success. As an executive, you are in a better position than anyone to identify and articulate the higher purpose of what people do within your organisation. Make that purpose real, support its achievement through consistent everyday actions, and you will create the meaning that motivates people toward greatness. Along the way, you may find greater meaning in your own work as a leader. Teresa Amabile is the Edsel Bryant Ford Professor of Business Administration at Harvard Business School. Steven Kramer is an independent researcher and writer. This article was originally published in McKinsey Quarterly, www. mckinseyquarterly.com. Copyright (c) 2011 McKinsey & Company. All rights reserved. Reprinted by permission.
Information Technology
The
Future of
Retailing
Picture Courtesy: www.photos.com
Masimo Bongiovanni, President of Coop Centrale, speaks about the increasing role of technology in retail by brad brown, johnson sikes and lorenzo forina
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T
he Cooperative Consumers Coop, better known as Coop, was Italy’s first retailer to embrace hypermarkets, in the 1980s, and then began opening even bigger superstore venues while expanding its offerings to include insurance and banking services, electricity, and prescription drugs. Throughout this expansion, Coop sought innovative ways to support its strategy with technology. Massimo Bongiovanni has helped the company realise that goal as president of Coop Centrale, which manages purchasing and distribution for the retailer’s cooperative network of stores, as well as the IT and services that support marketing, pricing, and other elements of Coop’s commercial policies. He speaks about the role of technology in fostering growth and innovation. McKinsey: How do you manage technology within Coop’s networked corporate structure? Bongiovanni: First of all, Centrale is a service company. We manage the purchasing and distribution for the network of cooperatives, as well as the information technology and services that support marketing, pricing, and other elements of Coop’s commercial policies. The P&L and strategic decisions are the responsibility of the cooperatives. Since different cooperatives have different commercial policies, you can imagine the challenges involved in harmonising the technology requirements for pricing, promotion and other merchandising levers — all at the same time. For example, Centrale manages more than 100 price lines for a single product, as well as all promotional activities for it. That level of complexity has put a premium on developing sophisticated technology and IT tools.
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McKinsey: What business imperatives drive the adoption of technology at Coop? Bongiovanni: Traditional customer categories are now blurring across hypermarkets, discount stores, and superstores. We see the same customers shopping across all our store formats — something that did not happen in the past. So, our business processes, formats, and technology need to become more customer-centric. This has meant developing a single view of the customer across all our store formats and brands. We also need a business model that allows us to show customers new prices and products very frequently, on a weekly or even a daily basis. As the cost of technology decreases, we are evaluating, for example,
want to massively enhance our ability to do customer profiling. We could combine profiling with new technologies, such as iPhones, apps, and other mobile devices. All of this would allow us to engage in new interactions with customers at the point of sale, creating a dialogue about new products, pricing, offers, etc. Customers will have new reasons for coming to our stores. Of course, we need to do all this while respecting the privacy of the customer. McKinsey: How will this change affect your IT and processes? Bongiovanni: The underlying challenge is to execute quickly and flexibly on both the business and technology fronts. Our current commercial and management processes must be able to change
“We are very close to a set of discontinuities where technology can play a critical role” things on a weekly or daily basis, rather than a quarterly basis.
electronic labelling, which will support the rapid change of prices at the store level. It will also enable us to customise the information we provide to customers — improving the display and accessibility of products. McKinsey: Where do you take this next? Bongiovanni: Another stream of innovation I foresee is the adoption of multimedia technology at the point of sale, to make the shopping experience more interactive and more dynamic for customers. We imagine the new point of sale as a theatre. While some areas will be more stable, others will frequently change. For example, we envision the ability to display multiple offers and events at each point of sale during the course of a single day. We also
McKinsey: How you keep the momentum going behind this agenda? Bongiovanni: As chief executive, I need to have a vision to inform, guide, and excite the organisation. Since there is always resistance to change, we are constantly looking for ways to bring the vision to life in tangible ways. We, therefore, do a great deal of piloting and prototyping, which helps in several ways. We are able to quickly test new tools and ensure that they are easy for our staff and employees to use — and not just for the software engineers who designed them. We can also prove the new tools’ bottom-line value by comparing the results with those at other stores or functions before we roll out the changes more broadly, reducing the
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Information Technology risk to our customers and stakeholders. The challenge isn’t really the technology itself but its application to business. Can people across the organisation — and particularly our customers — use the technology? So, the key is transforming technology into a business enabler. McKinsey: Can you give us an example of how this approach works? Bongiovanni: Eight or nine years ago, we launched the first pilot of a selfscanning checkout at selected points of sale. The real challenge wasn’t the cost of the technology, but the interaction between it and the business. How user friendly was this technology in the eyes of the consumer? Was it well received? We continually asked these questions and adjusted the technology and
“We do a great deal of piloting and prototyping” training for our employees, as well as the messaging to our customers. Eight years ago, only one customer out of 100 was scanning her own purchases. Nowadays, around 50 percent of our customers use self-scanning. It was a really gradual process to get there. McKinsey: At Coop, where does technological innovation start — at the top or at a lower level of the organisation? Bongiovanni: There is an initial phase where the approach is top down. But, this really depends on the profile of the top executives. If they are innovators, innovation happens; but if they are conservative and more focussed on the way things have always been done, it doesn’t. The style and attitudes of top management
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strongly influence attitudes at all levels of the organisation toward innovation. After this initial topdown phase creates the groundwork for innovation, executives need to focus on creating a process and a path forward for the organisation. Then the strategic vision has to be digested, developed, and modified by middle managers. The involvement and commitment of middle management is absolutely key in translating the strategic vision into an operational vision or a process. McKinsey: As a CEO, how do you stay on top of technology options? Bongiovanni: That starts with putting yourself in the shoes of the customer. You also need to be curious and open minded, always on the lookout for new ideas. There’s an element of dreaming in this, too. While many dreams or wild ideas go nowhere, one that becomes reality could dramatically change the way we do business. McKinsey: How do you build on this approach across the organisation? Bongiovanni: I encourage managers to travel and observe what others are doing, looking at our own industry and especially at other industries, both in Italy and in other countries. And this happens at both the management level and at the board level. We study restaurants, bookstores, and electronics stores — all places where consumers look not just for products but also for entertainment and emotional engagement. Of course, not everything that we observe in the United States or in the UK is easily adaptable or replicable in Italy. But, trips there typically give us ideas we can test to see what may be applicable to Coop. McKinsey: Looking forward, what
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role will technology play in transforming the retailing industry? Bongiovanni: In the retail landscape, I think we are very close to a set of discontinuities where technology can play a critical role. The first area is food safety — the growing need and demand for safe and traceable food, from the farmer through production to store shelves. The solution here might be electronic labels or optical bars that can provide customers with a more complete accounting of the history of specific items. We also need technology to deal with the saturation of our market. Most European markets already are saturated or will be soon. There’s no room for growth, so companies will need to reduce costs and improve efficiency to remain competitive on prices. This involves all aspects of cost, from labour to indirect costs, and IT will be a great tool here. Finally, there’s the evolving and changing consumer behaviour. Consumers are much less loyal to retailers and more selective about what they want. So, technology will play a role in how we attract customers and maintain their loyalty. This future will be very different from how we have operated in the past. We cannot — and we should not — transform stores into something out of Star Trek: Enterprise. But we need to work on an approach that is friendly to employees, actively engages our existing customers, and allows us to provide compelling experiences and offers that will draw in more customers over time. Brad Brown is a director in McKinsey’s New York office, where Johnson Sikes is a consultant; Lorenzo Forina is a principal in the Milan office. This article was originally published in McKinsey Quarterly, www. mckinseyquarterly.com. Copyright (c) 2011 McKinsey & Company. All rights reserved. Reprinted by permission.
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opinion
“Win-Win Relationships Will Enable More Collaboration”
In an interaction with Industry 2.0, Dr Marcus Blosch, VP of Research, in Gartner’s supply chain team for the Asia-Pacific region speaks about contemporary trends and issues in supply chain management. Excerpts from a conversation with R Giridhar
Marcus Blosch
is an expert in supply chains in emerging markets and technology solutions. Prior to joining Gartner, he worked at DHL’s global headquarters
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Industry 2.0: What is the role of technology in enabling innovation in the SC? Technology is underpinning the transformation of the supply chain. It not only enables you to share information across departments and partners, but also facilitates effective collaboration. Technology tools help you optimise the supply chain using analytics. I would say, technology gives you key capabilities as well as new ones. With technology you can move business processes that impact the supply chain like sales and operations planning (S&OP)
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down the line. For instance, at Samsung they have very good S&OP. They have full visibility of the entire portfolio of products through the channel. It is no longer just a distribution view — they have a very close collaborative relationship with dealers and distributors. This allows them to maximise profitability and returns by lowering inventory, managing the product life cycle, reducing costs and measuring trade promotions. Industry 2.0: What trends do you see in supply chain management? What we are seeing is that leading supply chain practitioners are putting customers in the centre, and optimising the supply chain around them. They are moving away from an inward or internal-focussed view that looks at moving products from a manufacturer to a customer,
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to how to deliver a service to the customer. The other part of the strategy is learning how to manage uncertainty in a global environment. The economic challenges in the US and Europe are compelling organisations to reach new customers in new markets and geographies. The supply chain is seen as an prime enabler to drive growth. Industry 2.0: Why is it so hard to create collaborative supply networks? Many supply chains are constructed in silos — each division or unit has its own processes and suppliers, and they don’t talk to each other. They also have multiple systems and use different technologies — so it is hard to exchange information. Sometimes, so many partners are involved that the sheer complexity makes it hard to collaborate effectively. Given that product life cycles
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are becoming shorter and that you need to be much more agile and proactive, it is critical that you work together. So, we need to work on building win-win relationships and models that will enable more collaboration. Industry 2.0: What are the main challenges in realising a green supply chain? I believe that green will become a cornerstone theme for the supply chain going forward. China’s 12th Five Year Plan has set very ambitious goals for energy reduction, carbon limits, etc. So, even in emerging economies there is a greater realisation of the problem of sustainability. On the other hand, you can’t afford to ignore the costs of implementing sustaibility-related measures. To have a perceptible impact, we will need to have both political will, the regulatory framework and policies in place. On the user side, you need to change the way organisations think about building and operating supply chains. Any CEO will tell you today that sustainability is big issue — and you will see the supply chain playing a big role in making it happen. Customers are also driving sustainability initiatives within their ecosystems. Large companies like Walmart and P&G are auditing suppliers (and their suppliers), and mandating improvements in energy efficiency, use of renewable
Industry 2.0: Are there any changes in the way supply agreements are being negotiated? While contracts are often specific to companies, we are seeing a trend to move away from cost-based contracts to valuebased ones. They are asking suppliers questions like, how will you help us innovate or drive change? What kind of continuous improvements can you give us? How green are you as a company? What about your suppliers? The other thing you see is a greater emphasis on risk assessment of suppliers and supply locations.
Industry 2.0: Is the expectation from service provides changing? The logistics market is changing quite dramatically. There is a greater expectation by customers from service providers to bring a good set of services to the table. Customers are now looking beyond transportation and handling. They are seeking an evolution from logistics to managed services. They are asking, what more can you do for me? Customers want service providers to orchestrate the collaboration and cooperation with partners and suppliers, so that they can focus on their core activities. They are looking for service providers to deliver and manage sophisticated systems and processes.
Industry 2.0: What are your views about measuring supply chain performance? Organisations need to see the link between supply chain performance and the company’s financial goals. You have to look at the SC as the execution piece of the corporate puzzle. This means that you need to move away from measuring the traditional cost per silo (activity or task) — like warehousing or transportation costs. You have to look at the cost of the end-to-end service delivery. Increasingly, organisations will need to put the putting customer at the centre. All key measures of the supply chain will customer-oriented measures, not internal costs.
Industry 2.0: What are the challenges in enabling proper visibility in the supply chain? Visibility in the supply chain is a key to effective collaboration. However, there are a number of obstacles to achieving good visibility. Organisations use a variety of processes and technologies — which creates silos and hampers information exchange. Data capture is sometime not complete or adequate, or the quality of the data is not very good. This hampers visibility through the chain. You also need effective governance models to achieve collaboration and sharing of data among suppliers and partners. It is not always a technology problem.
materials, etc. This is also having a huge impact.
opinion
“Graphical system design is a platformbased approach to innovation” The genial and soft-spoken Jeffrey L Kodosky is a man with a mission. Twenty-five years ago he set out to simplify data collection from sensors and instruments to enable engineers and scientists do “more important stuff”. In 1986, along with Dr James Truchard, Kodosky developed Labview, an innovative visual programming system that revolutionised system design
K
odosky has continued to shepherd Labview through numerous releases and iterations, and has in the process earned 68 patents. Today, thousands of developers around the world use the software to design and develop a wide variety of industrial and commercial solutions — from washing machines to cameras and cars — quickly, reliably and efficiently.
Jefferey L Kodosky made instrument automation available to everyone
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Industry 2.0: How did Labview come about? Kodosky: In the early days, we (National Instruments) made GPIB interfaces to connect instruments to computers. It was quite difficult and tedious to build advanced measurement systems, and engineers had to write lots of custom programming code to collect data from sensors and
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instruments. The entire process was error prone, tedious and time consuming. When I saw the Mac (with its GUI and mouse), I began to think about hiding the complications of programming. I wanted to create a tool that would be useful to scientists and engineers who are involved in automating measurements, just the way spreadsheets help accountants. We wanted to create a tool that offered a significant improvement in productivity. While I admit nobody asked us to build Labview, we were quite confident that people would like it — once they experienced it. Industry 2.0: Why do you think Labview became so popular? In the early days, we decided to base the Labview core programming language on a structured data flow. That’s because we
- technology management for decision-makers
realised that the flexibility and control that would be needed to support various kinds of inputsoutputs (I/O) and processing could only be achieved if our solution could adapt to the inherent parallelism in the acquisition-analysispresentation problems our customers were solving. Once the decision on the software model was made, we decided that the representation should closely resemble actual circuits and block diagrams. We thought it would be convenient for users if the interface closely imitated real-life objects. Data flow is a better computational model than the control flow paradigm of popular text-based languages because it is inherently parallel. It allows designers to see the dependencies, parallelism, and complexity at a glance — instead of unravelling hundreds of lines of code. The
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graphical system design process also gives engineers a platformbased approach to innovation. Since the interface allows direct manipulation and meaningful testing before the entire design is completed, it makes iterations much faster. When you combine ease-of-use with high productivity, you have a popular product! Industry 2.0: How do you see Labview meeting future software challenges? The decision to adopt structured dataflow has stood us in good stead, because today Labview can handle multi-core processors and new generation technologies. Going forward, I see that Labview will have unique advantages for programming integrated systems that feature multiple, heterogeneous processing units such as CPUs, GPUs, and FPGAs. Each kind of processor is good at handling a specific category of problems. But, to harness the available power efficiently, designers will need tools that help them partition the problem, and direct
“Our customers inspire us to provide them with continuous improvements” it to the appropriate processor. I see Labview evolving to manage inter-target communications. However, we are not quite not there yet. I believe that Labview will need to provide greater levels of abstraction to enable designers handle multiple targets efficiently, and will need to integrate timing and computation for FPGA targets. We also need to have a better way to control and manage global variables for large, complex systems. What excites you about Labview? I find it hugely rewarding to see the ways in which our customers used Labview. From designing vehicle systems to medical devices and consumer products, the sheer ingenuity and inventiveness of designers never ceases to amaze me. Our customers inspire us to provide them with continuous
productivity improvements, and access to the latest technologies. I also see touchscreen computing devices like phones and tablets as a big disruption. If multitouch interfaces become the norm, a new vocabulary of gestures will be created — and we will need to incorporate them into the programming environment. Another area that I see becoming important is wireless and mobile technology. We will soon be able to deploy intelligent, sensor-rich devices over large areas. I envisage that next-generation networking technologies will support an enormous number of connected devices, and will be capable of acquiring and transferring huge amounts of data. We will need new tools to design and model such systems — and Labview is a natural fit.
supply chain & logistics
Of Grit, Shashi Kiran Shetty landed in Mumbai in 1978 — a young, bright-eyed teenager on the lookout for a job. His search led him to the Mumbai port where he fell in love with ships at the first sight. He worked patiently for the next four years, gleaning every aspect of the shipping business while nurturing a dream of owning his own fleet. In 1982, he started a small transportation company and eventually launched All Cargo Global Logistics. He’s found gold in the high seas since. All Cargo Global Logistics is now a 3,000-crore shipping giant
by dhiman chattopadhyay
I
grew up in a joint family in Bantwal, a village that is an hour’s drive from Mangalore. When you grow up in a large family like mine, you learn a lot of things like the value of teamwork, building relationships, interdependence and humility. Those were my earliest lessons in entrepreneurship, and pretty crucial ones. By the time I finished college with a degree in commerce, the family business of rice and
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oil mills was almost sinking. I knew I had to look for a job fast. I landed in Mumbai in 1978, hunting for work. Luckily, I got hired by this small shipping company called Intermodal Transport and Trading Systems. I knew nothing about ships but I worked hard to learn. From there, I moved on to Tata Group’s Forbes Gokak. I worked for four years in the Mumbai dockyards as an operations executive. I believe that to truly succeed in any business, you must first love doing what you do. I had never seen a ship till I went to Mumbai’s dockyards to look for a job. When I finally saw one, I fell in love. The huge vessels carrying shipments from one place to another fascinated me. I knew this was the business for me. But, I wanted to own ships and not just work in them. I’d already begun dreaming of the day when I would have my own fleet. I used my time as an employee productively, making friends and building networks in the industry. I met everybody — captains, managers, dockyard staff and truck owners who transported the cargo. Soon, I realised that many of those involved in the opera-
- technology management for decision-makers
tions, especially those in charge of unloading and the Less than Container Load or LCL business didn’t really understand shipping. I saw this as an opportunity. The cargo business was the easiest to start with since it needed less capital and also because I’d been doing this for four years. But all I had was 25,000. I had to think of ways to get started so I asked a few truck owners I knew to give me trucks on hire. I also convinced shipping companies to pay me daily, not monthly. They took a chance on me. Finally, TransIndia Freight Services was born. We were mainly a transportation company catering to shipping liners. I invested every penny I earned to buy equipment. I also hired professionals and set up a strong financial system. I’d seen my family business suffer because no one had bothered to think about checks and balances. I wasn’t about to repeat those mistakes. By 1993, winds of liberalisation were blowing. It was the right time to move into the shipping business. All Cargo Global Logistics was launched to ship cargo overseas. I got to know of a Belgian firm,
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Picture courtesy: Jiten Gandhi
Passion and Luck
In ship-shape Shashi Kiran Shetty is smartly steering his company to a billiondollar turnover
supply chain & logistics called AMI International, which was looking to expand its LCL business to Indian shores. I became their franchisee in India. This helped me recruit more people at All Cargo. We grew phenomenally over the next five years. By 1998, we had 18 offices across India. AMI had moved out by then and we were scouting for a global partner. That’s when ECU Line, another Belgian company, but a much larger one, came into the picture. I worried though that ECU would use us to strengthen its India presence and then go on its own. So I proposed a joint office in Dubai. That diverted their at-
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tention away from India. We also set up joint ventures in Singapore, Mauritius and South Africa. It meant they had no time to focus on India, and we ran the show. In 2003, we set up our first Contained Freight Station (CFS). It was the final link in the chain and made us a complete shipping solutions firm. We knew there was no space left in the CIDCO dockyard in Mumbai, so we went to a neighbouring village seven kilometres away. It was a huge risk because we didn’t know if shipping companies would agree to dock so far from the main hub. But we got the land at a mere 10 per cent of the price I’d have to pay at the CIDCO dock. The first CFC was a big success. Another CFC followed. This stirred investor interest in All Cargo and in 2004, we got private equity funds. At the same time, ECU Line’s Belgian promoters were looking for an exit. Flush with funds, I knew it was the right time to increase our stake in the company. The Belgians were shocked when I offered to be a 33 per cent shareholder. They weren’t expecting this. We raised $12 mn by selling six per cent of All Cargo shares — we had become a listed firm by then — and coupled with the PE money, we sealed the deal in 2004. Thereafter, we insisted on running the show. I appointed a senior colleague, MP Bansal, as the CFO and sent him to Antwerp. My intention was to own 50 per cent of ECU by 2007. Within a year, the promoters of ECU Line, plagued with further financial trouble, decided to offload their entire stake. We had grown substantially by then and in 2007 we bought them over for approximately 150 crore. This has been my life’s biggest high. We were the first Indian shipping company to buy a foreign shipping firm.
- technology management for decision-makers
That made us proud. It also felt good to be running a large multinational shipping company and be listed on the stock exchange. I was living my dream of having a listed, public shipping company. It gives you a certain image, builds your credibility and helps attract talent. Ironically, the acquisition also led to complications and brief setbacks. We’d initially decided to retain the promoters of ECU Line as board members to maintain continuity. But, we found out that the main promoter had started another shipping and cargo business without even informing us. We had to fight a prolonged legal battle before the dust settled. The incident shook me up. But I haven’t stopped trusting people. You can’t do that just because some people let you down. There are enough good people around. What I did learn was the importance of protecting one’s interests. Luckily, we haven’t looked back since. The recession did hit us but it couldn’t cripple us. In fact, not only have we survived, we’ve also managed to increase our revenue and margins. That said, the LCL business was badly affected and the bottom line dropped by 40 per cent. The CFC business broke even. But because none of the committed projects were halted, our engineering business generated a lot of revenues. Around the same time, Blackstone pumped in around 350 crore in All Cargo. That helped us ride out the storm. My vision is to turn All Cargo into a billion-dollar company by 2014-2015. I also want to institutionalise the business so that it can be run by those who succeed me, whether they are family members or professional CEOs. Even after all these years, I still love what I do. Finally, that is what makes the difference.
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bookshelf Taking People With You
Inside Apple
by Adam Lashinsky Price: $26.99 Hardcover: 240 pages Publisher: Grand Central Publishing
by David Novak Price: $25.95 Hardcover: 256 pages Publisher: Portfolio
Novak learned long ago that you can’t lead a large organisation without getting your people aligned, enthusiastic, and focussed relentlessly on the mission. But how do you do that? Novak knows that managers don’t need leadership platitudes or business school theories. So he cuts right to the chase with a stepby-step guide to setting big goals, getting people to work together, blowing past your targets, and celebrating after you shock the sceptics. And then doing it again and again until consistent excellence becomes a core element of your culture. This book has specific tools at the end of each chapter that will challenge you to reflect on how you’re really doing on key aspects of leadership. And if you apply it, you’ll immediately start to improve.
Glock: The Rise of America’s Gun by Paul M. Barrett Price: $26.00 Hardcover: 304 pages Publisher: Crown Publishing Group
Based on 15 years of research, Glock is the riveting story of the weapon that has become known as American’s gun. Today the Glock pistol has been embraced by two-thirds of all US police departments, glamorised in countless Hollywood movies, and featured as a ubiquitous presence on prime-time TV. Created in 1982 by Gaston Glock, an obscure Austrian curtain-rod manufacturer, the Glock pistol, was quickly adopted by armies and police forces. Filled with corporate intrigue, political manoeuvering, Hollywood glitz, bloody shoot-outs and an attempt on Gaston Glock’s life by a former lieutenant — the book is at once the inside account of how Glock went about marketing its pistol to police agencies and later the public, as well as a compelling chronicle of the evolution of gun culture in America.
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This book reveals the secret systems, tactics and leadership strategies that allowed Steve Jobs and his company to churn out hit after hit and inspire a cult-like following. Based on numerous interviews, the book offers exclusive new information about how Apple innovates, deals with its suppliers and is handling the transition into the post-Jobs era. The author introduces readers to leadership and management concepts like the ‘DRI’ (Apple’s practice of assigning a Directly Responsible Individual to every task) and the Top 100 (an annual ritual in which 100 up-and-coming executives are tapped for a secret retreat with company founder). While Inside Apple is ostensibly a deep dive into one, unique company (its ecosystem of suppliers, investors, employees and competitors), the lessons about Jobs, leadership, product design and marketing are universal. They should appeal to anyone hoping to bring some of that Apple magic.
Thinking Small by Andrea Hiott Price: $26.00 Hardcover: 512 pages Publisher: Ballantine Books
Sometimes achieving big things requires the ability to think small. This simple concept was the driving force that propelled the Volkswagen Beetle to become an avatar of American-style freedom, a household brand, and a global icon. Hatched in an age of darkness, the Beetle emerged into the light of a new era as a symbol of individuality and personal mobility — a triumph not of the will but of the imagination. Journalist and cultural historian Andrea Hiott retraces the improbable journey of this little car that changed the world. Hiott’s wide-ranging narrative stretches from the factory floors of Weimar Germany to the executive suites of today’s automotive innovators, showing how a succession of artists and engineers shepherded the Beetle to market through periods of privation and war, reconstruction and recovery. It is a story about people, and Hiott introduces us to the men who believed in it, built it, and sold it: from Ferdinand Porsche, the visionary Austrian automobile designer; Heinrich Nordhoff, the forward-thinking German industrialist; to Bill Bernbach, the Jewish American advertising executive.
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bookshelf Building a Magnetic Culture
The Little Black Book of Innovation
by Kevin Sheridan Price: $28.00 Hardcover: 256 pages Publisher: McGraw-Hill
The perils of a disengaged workforce are well-known — low productivity, high employee turnover, and failure to meet organisation-wide goals. Less well known is what to do about it. How do you create a workforce that is always ready, able, and eager to take the organisation to the next level? As CEO of leading employee survey and HR consulting firm, Kevin Sheridan knows how it’s done — and in Building a Magnetic Culture, he shares all his secrets. The book explains what engages and motivates employees, and how to create an environment in which employees can thrive. Drawing on years of research and real-world examples from his consulting experience, Sheridan gives you the strategies and tactics you need to transform your company. Sheridian’s book outlines benchmarking and best practices, and features interviews with executives and HR professionals at companies that boast the highest levels of employee engagement.
Situations Matter
by Scott D. Anthony Price: $25.00 Hardcover: 304 pages Publisher: Harvard Business Review Press
Innovation is the hottest topic today — in business circles and beyond. And for good reason. Innovation transforms companies and markets. It is the key to solving vexing social problems. It makes or breaks professional careers. For all the enthusiasm the topic inspires, however, the practice of innovation remains stubbornly impenetrable. In The Little Black Book of Innovation, Scott D Anthony draws on stories from his work with companies like Procter & Gamble to demystify innovation. In his trademark conversational and lively style, Anthony presents a simple definition of innovation, breaks down the essential differences between types of innovation, and illuminates innovation’s vital role in organisational success and personal growth. With its wealth of illustrative case studies and vignettes from a range of companies around the globe, this engaging and potent handbook is an essential read for anyone seeking to turn themselves or their companies into true innovation powerhouses.
by Sam Sommers Price: $25.95 Hardcover: 304 pages Publisher: Penguin Group
Every day, and in all walks of life, we overlook the enormous power of situations, of context in our lives. That is a mistake, says Sam Sommers in his provocative new book. Just as a museum visitor neglects to notice the frames around paintings, so do people miss the influence of ordinary situations on the way they think and act. But frames and situations do matter. Your experience viewing the paintings would not be the same without them. The same is true for human nature. In Situations Matter, Sommers argues that by understanding the powerful influence that context has in our lives and using this knowledge to rethink how we see the world, we can be more effective at work, at home, and in daily interactions with others. He describes the pitfalls to avoid and offers insights into making better decisions and smarter observations about the world around us.
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This is Service Design Thinking by Marc Stickdorn & Jakob Schneider Price: $34.95 Hardcover: 384 pages Publisher: John Wiley & Sons
Service design thinking is the designing and marketing of services that improve the customer experience, and the interactions between service providers and the customers. This book combines the knowledge of 23 international authors and online contributors from the global service design community to provide insight into the five basic principles of service design, tools and methods for service design thinking, and real-life case studies. A one-page ‘Customer Journey Canvas’ enables readers to quickly sketch any service on a single sheet of paper — and analyse different stakeholder concerns.
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product update Polyurethane Adhesive
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enkel has developed a new polyurethane adhesive that prevents crack propagation on wind blades, and delivers long-term structural integrity to turbine assemblies. The adhesive, Macroplast UK 1340 cures rapidly at room temperature, and has a demonstrated tensile shear strength exceeding 20 MPa at -40 to +80°C. The product is a two-part adhesive consisting of a resin and a hardener. When mixed, the adhesive cures in just 60 to 80 minutes at low reaction temperatures up to 75°C. The adhesive’s cure speed can be adjusted to meet manufacturing needs for faster blade production and greater yield per mould. Henkel Tel:+1-860-5715100 Website: www.henkelna.com/industrial
High Frequency Oscillator
T
he DRO Series of high performance oscillators is designed for up/down converter systems requiring ultra-low phase noise (-110 dBc/Hz @ 10 kHz offset). The device’s electrical tuning enables ±3 MHz of frequency control. An electrical tuning option for the version operating at 10 GHz has control range of 0-12 Vdc, permitting ultra-fine tuning. Z-Communications, Inc Tel:+1-858-6212700 Website: www.zcomm.com
Piezo Accelerometer
Punch Tooling
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he Type 8781A50 PiezoStar piezoelectric accelerometer features centre hole mounting, and is designed to provide vibration measurements across three orthogonal axes. It is suitable for aerospace and automotive NVH, and similar testing environments characterised by rapid temperature fluctuations. The product features a 50g measurement range and 100 mV/g sensitivity. The design incorporates shear element crystal technology, along with high-gain integral hybrid microelectronics. The transducer that offers a broad frequency response and extremely low sensitivity variation over an operating temperature range of -54 to +120°C.
W
ilson Tool’s EXP punch series features standard holders and punches for thick turret presses. The design enables use of same holder with multiple punches. Available in round and special shapes, the products are manufactured from premium tool steel for high wear resistance, and are fully compatible with all current guide assemblies.The punch holders are designed to fit all styles of A and B station thick turret assemblies. Wilson Tool International Inc Tel:+1-651-4261384 Website: www.wilsontool.com
Kistler Instrument Corp Tel +41-52-2241111 Website: www.kistler.com
Surge Protector
W
eidmuller has developed a streamlined solution to protect control panel equipment from damage due to local lightning strikes. The DIN rail-mounted Varitector VSPC series has 60+ models comprising pluggable, replaceable, single and multichannel modular surge protection devices (SPDs). The products provide combination of wire-to-ground and wire-to-wire protection using a combination of gas discharge tubes, varistors, and suppression diodes. The solution is suitable for signal circuits in control and instrumentation applications.
Baffling Balls
Weidmuller Inc Tel: +1-800-8499343 Website: www.weidmuller.com
Force America Tel: +1-952-7071300 Website: www.forceamerica.com
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T
ank Tamers are 15-inch, polyethylene baffling balls that virtually eliminate liquid surges when a tanker truck starts, stops, or corners. Compatible with a variety of liquids, except dairy and petroleum-based products, the units consume 1.5 per cent of overall tank holding capacity. The baffling balls do not have any ferrous inserts or metal components that could corrode or break, eliminating concern over load contamination that can cause pump and plumbing failure.
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product update Camouflage Spotlight
Wireless Network
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A
he 15 million candlepower HUL-18-HID-RED-C HID spotlight is waterproof and produces 3,200 lumens of light. The 35W HID bulb produces a beam capable of reaching up to 2500 ft. Included red lenses add versatility and allow users to quickly and easily convert this spotlight for hunting applications requiring a red spotlight beam. The spotlight is constructed of heavy-duty materials including nylon housing, polycarbonate handle, and borosilicate hardened glass lens. An included 16 foot coil cord with cigarette plug allows easy connection to most vehicles and ATVs equipped with cigarette lighter sockets, and the highly efficient HID lamp provides high output while reducing the drain on a vehicle’s electrical system. The adhesive backed red lens covers are constructed of high strength polymer and are simply pressed into place over the original glass lens.
new radio from Banner Engineering merges a wireless transceiver, power supply and I/O circuits in single compact housing. Model DX80DR MultiHop Radio connects sensors directly to the network, eliminating the need for data loggers, power supplies, PLCs or HMIs at the sensor location. The product is compatible with all industrial signals, and with specific instruments including moisture sensors, strain gauges, water quality indicators, flow counter, irrigation valves, and temperature transmitters. Banner Engineering Corp Tel: +1-763-5443164 Website: www.bannerengineering.com
Larson Electronics Tel: +1-903-4983363 Website: www.magnalight.com
Connector System
Metal Coating System
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T
he SST Series EP Cold Spray system enables users to spray metal coatings at operating pressures between 7 to 35 bars (100 to 500 psi). Material choices include aluminum and aluminum alloys, Inconel, Invar, MCrAIY, nickel and nickel alloys, stainless steel, titanium, and titanium alloys. The system comes complete with a portable cabinet, HMI controls, pressurised feeder, and a robotic style spray gun. This system is suitable for applications requiring high coating deposition rates, high deposition efficiency and greater bond strengths.
E Connectivity has introduced a new industrial Ethernet connector system that allows data rates up to 10 Gbps. Consisting of various cable assembly and PCB header types in standard industrial circular formats, the system employs an 8-contact system for high-speed data and power-plusEthernet applications. Typical applications include industrial automation, machine vision, and industrial control. TE Connectivity Tel: +1-610-8939800 Website: www.tycoelectronics.com
Centerline (Windsor) Ltd Tel: +1-519-7348464 Website: www.cntrline.com
Spreader Beam
Photoelectric Sensor
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A
utomation Systems Interconnect has introduced a new line of miniature photoelectric sensors available in diffuse proximity, fixed focus proximity, polarised retroreflex, retroreflex for transparent and through beam. The S8 series is a suitable for the food and beverage industry, electronic plants, packaging lines, test and assembling machines and automotive. Laser models, offered in coaxial polarised retoreflex and background suppression versions, feature focussed spot below 1 mm, and switching frequencies reaching 10 kHz. Automation Systems Interconnect Inc Tel: +1-877-6505160 Website: www.asi-ez.com
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escraft has introduced a new spreader beam for stone handlers that makes moving large slabs or heavy bundles around the yard or fabrication shop easier. The unit features fork-access slots that enable secure engagement and lifting of the beam with a forklift. Made of heavy-duty steel, the beam measures 96x11.25 inches, and has maximum load capacity of 10,000 lb. The unit accommodates slings or straps up to five inches wide, which can be positioned and secured on bar in one of multiple slot positions. The product is also suitable for lifting with an overhead crane. The beam has reinforced 1.25-inch thick swivel hook attachment point at the peak of the bar.
Jescraft Tel: +1-800-5241142 Website: www.jescraft.com
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Bag Filling System
Rocker Power Switch
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C
he dual bulk bag filling system from Flexicon integrates two swing-down fillers with a pallet dispenser and powered roller conveyors to enable high capacity filling of bulk bags. Programmable controls allow the fillers to operate separately or simultaneously, filling bags of the same size or two different sizes. The system components are available to suit industrial, food, dairy and pharmaceutical standards.
W Industries, a manufacturer of switches, connectors and custom components, has developed a new miniature rocker power switch rated at 8A/250 VAC. The series GRS-4021 switches are made of heavy-duty nylon, and equipped with copper alloy terminals and a male 0.187 inch-wide quick connect terminal. The switch can be mounted in a 0.756x0.508 inch panel opening, without screws or fasteners. Available in DPST construction, the device complies with 850°C Glow-Wire Test for insulating material used in construction. It is suitable for main power disconnecting in appliance, lawn and garden equipment, floor care and medical markets.
Flexicon Corp Tel: +1-888-3539426 Website: www.flexicon.com
CW Industries Tel: +1-215-3557080 Website: www.cwind.com
Weld Gas Analyser
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he Ar-Gone Weld Gas Analyser measures oxygen levels down to 0.1 per cent, while the hermetically sealed Argo-Naught Weld Gas Analyser measures oxygen down to 0.01 per cent. Both units feature replaceable batteries and oxygen sensors. Supplied in nylon case, analysers include 6.5 foot rubber hose with stainless steel probes, rubber aspirator bulb, carrying strap, and an operator manual. The products are suitable for welding applications where avoiding oxidation is critical. Sumner Mfg Co Tel: +1-888-9996910 Website: www.sumner.com
Hydraulic Pump
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auer-Danfoss has developed new 20 cubic cm direct displacement control pump, for transmissions on mobile equipment. The DDC20, is 183.5 mm long, enabling installation in space-constrained, light-duty OEM equipment. A male slipper design minimises friction on both the piston and the bore of cylinder block, optimising fuel efficiency and extending oil life. The valve plate design reduces noise to 78.5 dBa while operating at 200 bar and 2,000 rpm. With optional loop flushing and bypass valves, the machine or load can be moved without rotating the pump shaft or the engine.
Dock Safety System
Sauer-Danfoss Tel: +1- 515-2396000 Website: www.sauer-danfoss.com
O
mron Scientific Technologies has developed the DSS Trapped Key loading dock safety system to protect workers by enforcing a safe sequence of actions. The system employs a trapped key concept, so that the loading dock door cannot be opened until the trailer brakes are locked. This control solution utilises the braking system of the trailer as the restraint. When air is released from the trailer’s brake line, the mechanical brakes automatically engage. The system keeps the brakes locked until loading or unloading is complete. The trapped key system ensures that the proper safe sequence is followed every time. This solution works with all vehicle types, and can interlock with other existing dock safety products.
Mobile Gantry Crane
Omron Scientific Technologies Inc Tel: +1-800-4793658 Website: www.sti.com
Shuttlelift Tel: +1-920-7438650 website: www.shuttlelift.com
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S
huttlelift is offering a new series of double-beam mobile gantry cranes in 60,000 to 400,000 lb capacities. The rubber-tired DB series is suitable for long-term, heavy-duty cycle work in moderate terrain environments. Loads are suspended beneath the frame, and hoists are mounted to lower beam. Together the with cantilever wheel frame, the planetary direct drives promote precision control during travel. The cranes include a cab equipped with 180° indexed seat position, all wheel electronic steering, and a hydraulic oil cooler.
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