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October 16, 2012

Fail Fast, Fail Cheap

By rbergs October 16, 2012
Thomas Edison behind an image of a light bulb

Thomas Edison

Many of life’s failures are people who did not realize how close they were to success when they gave up.
- Thomas Edison

Ok, let’s first address the 800-pound gorilla in the room, the word FAIL.  Some people are actually afraid of the word fail…  But I contend – You haven’t failed if you learned something.

What is Fail-Fast-Fail-Cheap (FFFC)?
Stop spending time and money on developing new processes, products, or  marketing messages without trying (at least) pieces of it out.

TMAC, the U.S. Department of Commerce Manufacturing Extension Partnership affiliate for Texas worked with a company that wasn’t getting all they needed from their vacuum system, it was not removing debris from the material they were cutting.  They were ready to spend thousands to tens-of-thousands of dollars for a new solution.  After listening to their concerns and watching the process, we came up with, admittedly what seemed like a dumb idea, which was simply make the vacuum pull over a smaller area.
Back at TMAC HQ we cobbled together a crude prototype and tested it with a milling machine and sample material.  It seemed to work, so it was time to try it on the real machine.

Can you imagine walking into a company with a 2-liter bottle and a roll of duct-tape? As you can imagine they laughed – mercilessly. However, after a quick test our concept proved to be a rousing success. So much so that the customer didn’t want us to take back our prototype – it worked so much better than what they already had in place.  For a minimal investment of time and money, we were able to test the concept – fast and cheap.  If it didn’t work, back to the drawing board and no one was out much.  This time it DID work, so the company moved forward with the adjustment without purchasing an entirely new system. This example of cost avoidance directly benefits your bottom line!

Function, not form, is key when proving out a concept.

On a side note, it is very important to ensure that sufficient resources, in terms of time, money or both, are spent to truly test out a concept.  Many (including us) have encountered instances where there wasn’t enough time spent to test a concept, and when it failed, it was not clear whether it was the concept or the implementation.

Bottom line: The key to Fail Fast Fail Cheap is to spend minimum resources to get the concept off the paper and into the application so you can tell if it needs to be revised, killed, or finalized.

Do you have a proven system for testing your new ideas?

April 10, 2012

GE and Lean Innovation

By Esteban Pedraza April 10, 2012

The opening of GE’s new GeoSpring Hybrid Electric Water Heater plant in Kentucky isn’t just a great endorsement for American Manufacturing but an affirmation of Lean’s ability to help improve a company’s competitive edge in today’s global marketplace. The events that have taken place at GE and GE’s Appliance Park in Louisville read like a case study straight out of a Lean handbook.

In the 1980s America was in an industrial decline and when the GE facility could no longer compete with production costs in Asia, for reasons such as an increase in wages and a decrease in the selling price of products, GE began moving production to the Asian plants. As expected GE was able to reduce labor cost and save on materials, but over time the cost savings from outsourcing was outweighed by the negative impact on GE’s competitiveness. The following examples are just a few problems GE encountered:

  • A longer and more complex supply chain emerged; this slowed the information feedback loop and impaired the company’s ability to respond to problems and customer needs in a timely manner.
  • Cycle time was affected.
  • GE had to carry more inventory in the U.S. for products made in China.
  • A lack of communication due to functional departmentalization led to some loss of overall product knowledge (core competencies) by employees.

What did GE do to address these problems? They invested millions of dollars in Appliance Park.   In addition to the problems brought on by outsourcing, two major events helped initiate the investment. The first was the availability of job-creation incentives from the state and federal governments and the second was a competitive labor costs as a result of the 2009 Competitive Wage Agreement between GE and IUE-CWA Local 761. But according to GE the company had not invested in Appliance Park because the culture “wasn’t right to invest”. How did GE address the culture problem? They embarked on a lean initiative that “maximizes customer value while minimizing waste and identifies employees as the most valuable resource a company has”, said a GE spokesperson.

GE’s upper management is showing their commitment to changing the company’s manufacturing culture by investing not just in the building with a multimillion dollar renovation but in their people. Investment in the people has been done through lean training and employee empowerment. The empowerment has removed barriers that would keep any employee from taking positive action that would lead to better quality and/or performance.  According to GE’s Appliance Lean Leaders and employees, the way of thinking and the way things are done at Appliance Park have changed:

  • Everyone is involved in the manufacturing process setup from Engineering to sourcing to production. (cross functional approach)
  • We focus on removing non-value added work from the design process through production
  • One team with one goal mindset
  • Communication is essential (information boards, visual tools, etc.)
  • Everything is built around supporting the operator getting the product out the door
  • Focused on greater customer satisfaction
  • Renewed emphasis on quality and technology
  • We Learn by doing and leverage the power of collaboration
  • Operators take pride in what they do

Using lean practices and tools, GE has reported cutting cycle time by 50%, eliminated 20% of the parts included in the GeoSpring final assembly, and reduced equipment investment by 30%.  GE’s lean journey is demonstrating that Global competitiveness can be accomplished when the right tools are used in the right way.

According to a report by Boston Consulting Group (BCG), labor cost in China have risen dramatically and shipping and fuel costs have skyrocketed, this means China is not as cheap as it used to be and the United States is poised to bring back jobs from China. The report also points out that by 2015, it will only be about 10% cheaper to manufacture in China. If the BCG report is correct then the question for the United States will not be what company’s want the jobs but what companies have the capability (structure and culture) to compete in a global market.

With the freedom that a consumer has, in today’s global market, to go almost anyplace for a product that meets their quality and price requirements companies must be agile enough to meet consumers changing needs. As GE is showing us, the place can be the United States and the way to get it done can be through American Manufacturing.

October 25, 2011

The next big thing…

By rbergs October 25, 2011
Innovation

Image by MeoplesMagazine via Flickr

So, you have a new product idea that will revolutionize the world, now what?

I have been there many times myself, “Man, I wish there was something that does this…”.  Many believe that the next steps are prototyping, manufacturing, and ultimately a house in the Bahamas.  The problem is, just having an idea does not make it commercially successful, nor does it warrant the expense in time and money to bring the idea to the market.  I remember when I was 12 years old thinking how cool it would be if there was an interactive map in the car.  Fast forward many years, now you have GPS in cars, heck, even cell phones.  Really, the first step starts with pencil and paper.

Before you go too far, there are five simple questions to answer: If the answer to the last question is money, then stop here, as the money is at the end of a long painful road.  Answering these question will help to communicate the idea to others, as well as potential partners, investors, etc.

PROBLEM:  What caused you to have the idea?

My reasoning for the interactive map is that we used to drive from Michigan to Wisconsin once a year to visit my dad’s family.  He wouldn’t let anyone else drive; he wouldn’t tell anyone else the route, because we would get lost.  We came close to hitting a few ditches along the way, since he wouldn’t sleep, and we would make the trip at night after a long day of work.

PROMISE:  What is it that your solution will do? You do not have to have the technical schematics all figured out, but at a high level, how would this work, ‘A widget would cause X to do Y’ is fine, as long as you know what  Y, and it is going to take something that does X to do it.

I had no idea how to track the car, or how to take the data and figure out how to map it, but hey – satellites sounded cool! So, if a satellite could track the car, at least that part is sorted out.  And, well, if the car knew where we were going, and how to get there, it would cut down on the getting lost part, right?

CUSTOMER:  Who are people having the same problem?  Many people just assume that the customer will be a percentage of the population.  This is not correct, because out of those, you have the ones that just live with the problem, have their own way to deal with it, don’t care, and / or have never experienced the issue.  Essentially, think of your demographic, and rewrite the problem statement and promise in a way that would get you excited.  Don’t worry about the number of people at this point because if you can get them excited, they will come.

In my example, I figured there was probably a lot of families with someone who did not want to stop for directions, nor let someone else drive because they ‘knew the way’.  Notice, the problem and promise are written so that someone growing up in the US and went on family road trips can relate.

PROOF:  Why will your solution work / why should I believe you? This you can essentially make up, but use yourself, family and friends as a sounding board:  what would make you and others believe it works?  Maybe there is a test, testimonial, standard, etc. that can be used to give the idea credibility.

In my example, many movies show the military tracking the bad guy, so I figured a cool testimonial would be the FBI’s most wanted tracked down by the use of this device.  If the FBI trusts it, shouldn’t you?  Tests could be done where someone is given a challenge, drive from point A to point B without a map, only using this device, and vice-versa:  who gets there first, less frazzled, etc.  The classic example of this is the blind taste tests ran by Coke and Pepsi, 4 out of 5 prefer X.

WHY DO YOU LOVE THE IDEA:  Why do you want to see this in the market?  If money is the only reason, you might as well stop, because that will not happen for a while.  I was once told by some doctors that part of the residency program is to weed out those there for a paycheck versus those there for the patients.  Those for the paycheck will not stay around because of the long hours and little pay.  There will be long, thankless hours involved with taking a product from idea to commercialization.

In my example, I would have loved to have this so that my mother could drive for part of the trip, so that those not driving could rest, as well as know where the heck we were at 2 am.  Those trips were long because it was hard to sleep when the car would make sudden jerks when my dad woke back up.  However, this love was not strong enough for me to do all the leg work to fully develop the idea.  Trust me, I kick myself every day, but it goes to show the point, you really have to want to see your idea commercialized, otherwise, it will be the anecdote to a blog post.

I wish I could take credit for the above, but I cannot.  The above is a small portion of what is called a Jump Start (shameless plug: offered by TMAC) developed by Doug Hall at Eureka Ranch.  This is a one day idea generation, filtration, and communication workshop, followed by 30 days of follow-on coaching. The goal of a Jump Start is to determine significant hurdles that would keep an idea from being viable, or conversely prove the idea is worth pursuing, with facts, not just gut instincts.  This process works best for companies that want to bring something meaningfully unique to the market, which customers are willing to pay for.   I am not talking a tweak, or a me-too, but something totally new for your company and / or market.

So, when is the last time you introduced a new product to the market?    When you did it, did you look at the above questions?   Tell us about your new product / service experience.

September 23, 2011

The $6 million PowerPoint presentation

By tpryor September 23, 2011

21st Century entrepreneurs and business owners are writing smaller business plans but doing more business planning. Verbs are becoming more important than nouns.

The founder of a new company recently received $6 million venture capital without providing investors the traditional 40-page business plan document. She instead used a 12-slide PowerPoint to communicate the case for her venture followed by a Q&A where she very capably answered all of the investor’s questions to their satisfaction. PowerPoint Presentation

She had no plan (noun), but she had done the planning (verb).

Rhonda Abrams, who shared this story with me, has sold more than a million books on business planning. On September 7, 2011, she shared what has and has not changed in business planning.

What has changed?

Rhonda said, “Writing is no longer as important as the planning process and activities.” Very few people take time to read a 35-page business plan. Instead, they read the 1-page executive summary.

What has stayed the same?

  1. Investors expect in-depth preparation by the business leader, e.g., what is your niche, who is your customer, how big is the market, what is the make-up of the management team? Leaders must know their stuff, inside and out.
  2. Business leaders must have financial acumen. They must be able to explain Financial projections for their P&L, Balance Sheet and Cash Flow report. Numbers are how we keep score.
  3. SWOT analysis … strengths, weaknesses, opportunities and threats is still neede
    d. Plans must include inside and outside perspectives about the organization.

What’s new?

  1. Feasibility analysis is something new in Rhonda’s books. Do a feasibility analysis BEFORE developing a business plan. TMAC calls this step “Fail Fast, Fail Cheap, Get Smart”.
  2. Think globally. The internet now makes it much easier for a manufacturer to sell product internationally. TMAC and Small  Business Development Centers have specialist who help American companies import and export product.
  3. Do more marketing and less sales. Peter Drucker said “Salesmen are a crutch for a poor marketing plan.” Every company should be using social media to market their products and services.
  4. Be socially responsible. B Corporations are replacing LLC’s and C-corps. B-Corps focus on the Triple-Bottom Line of People, Profit and Planet. For info go to www.BCorporation.net .
  5. Faster business plan presentations are best practice. No more than 12 critical slides and expectations of 5-year or less ROI’s for projects and investments.

What improvements have you implemented to your organization’s business planning process?

July 11, 2011

Have the next great “green” product idea?

By Jennifer Wilson July 11, 2011

Greenovation Logo

If you do, then enter a Greenovation Contest, a competition that encourages companies to pursue the development of green product concepts. This Greenovation Contest offers DFW area companies an opportunity to win a grand prize package of services that will help winners take a green product idea and turn it into a real product.

More information about the contest visit http://greenovationcontest.com/.

Dates and prize package information coming soon!  Stay tuned!

March 24, 2011

Riches in Niches

By tpryor March 24, 2011

Great things are NOT often achieved by the well-rounded.

A new or existing business that attempts to be everything to everyone will not be successful. A machine shop that advertises itself as a provider of close tolerance milling is no longer unique. A restaurant with a sign out front saying “Good Food” is not unique. As a result, they have to be “cheap”.

niche photo

Image via Flickr By focsipara

The most successful businesses in the 21st century define and implement a niche strategy. A niche is a need or want not currently provided in the marketplace. Southwest Airlines started as a geographical niche. Bag-less leaf removal is a green lifestyle niche. Wine for Lawyers is an example of an Age/Stage niche.

Good niches have seven characteristics:

  1. Products that sell anytime.
  2. Independent of the economy.
  3. High profit margin.
  4. Location independent.
  5. Flexible hours.
  6. Founder owns intellectual property.
  7. Unique. Dramatic difference.

Master inventor Doug Hall says “If you’re not unique, you’d better be cheap.” Cheap is not a niche.

Does your business have a niche?

January 11, 2011

Spreading Holiday Cheer at Neiman Marcus

By Jennifer Wilson January 11, 2011

Dr. Raul Fernandez and his TMAC team were invited to collaborate with the Neiman Marcus’ downtown Dallas Flagship visual display team for the 2010 Holiday Windows.  Located at the Automation & Robotics Research Institute at UT Arlington, the team worked on the interactive parts of the display. In 2007, the main display window featured UT Arlington robots in a futuristic display.

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