Published on March 5, 2014
Winter 2014 PRODUCT LIFECYCLE STORIES INSIGHT ON PRODUCTS, MANUFACTURING, AND SERVICE WHEN DAVID MET GOLIATH: Scrappy Design Company Shakes Up Big Manufacturing ALSO IN THIS ISSUE : Redoing American Innovation, Jugaad Style Manufacturing in a Subscription Economy Smart Bike Wheel Offers a Customized Ride Rebuilding the Mona Lisa of the Skies
Winter 2014—Table of Contents Feature Article WHEN DAVID MET GOLIATH: Scrappy Design Company Shakes Up Big Manufacturing Every week, New York City-based Quirky receives 2,000 new product ideas from its online community of wannabe inventors. A handful of those ideas are given the green light and thrown into development. At the end of the week those products are ready to ship to stores around the country. 08 Redoing American Innovation, Jugaad Style Many manufacturers in the West are struggling to stay ahead of rapidly changing consumer needs. For auto giants Ford and Renault-Nissan, innovation is the key to maintaining the competitive advantage, and they’ve found it in some unusual places. 12 Rebuilding the Mona Lisa of the Skies Away from public view in a sealed-up hangar on a far corner of a municipal airport in Maine, a project of unprecedented scale and expense is under way to re-engineer this Lockheed Super Constellation 1649A so it can fly again. 16 Manufacturing in a Subscription Economy The subscription-based relationship has been a staple in the media and software industry for decades, and now it’s spreading to unlikely areas like manufacturing where it’s creating fresh business models and new revenue opportunities. 20 Smart Bike Wheel Offers a Customized Ride The Copenhagen Wheel gives a new spin on bike riding. The removable electric wheel controlled by a smartphone recently hit the market to rave reviews. 22 Oil-Rich Alaska Struggles to Produce Engineers While there will be thousands of STEM-related job openings in Alaska by 2018, fewer than two percent of high school students in that state has access to a daily STEM curriculum. 26 Lessons from Typhoon Haiyan: Why Disaster Plans are Essential in Telecommunications Restoring technology infrastructure has become an essential part of emergency recovery, just as it has gotten more complicated and disasters seemingly more frequent and destructive. 30 Practical Tips on Conflict Minerals Reporting While discrete manufacturers work toward filing their first disclosures with the SEC under the new conflict minerals ruling, there are some basic guidelines that need to be followed.
Winter 2014—Letter from the Editor PRODUCT LIFECYCLE STORIES LETTER FROM THE EDITOR: NANCY PARDO Innovation—whether in the form of a new technology, a better product, or a fresh way of thinking and doing—is essential to our economic growth and long-term productivity. Today, across every industry, innovation is a powerful driver of competitive advantage. The most innovative companies can survive change, cease upon new opportunities, stay ahead of legislation, and attract top-caliber employees. But while the majority of executives recognize that innovation is critical to their companies’ growth, it can be elusive. R&D spending is a good way to measure the health of a business, and last year the industries that saw the greatest gains in innovation—Internet and software, telecom, healthcare, and auto—also spend heavily on R&D. But dollars-in doesn’t always correlate to innovation-out. Sometimes innovation is more about the people you choose to hire, the work environment you cultivate, and the deep connection you form with customers. The first two stories in this Winter Issue, “When David Met Goliath” and “Redoing American Innovation”, explore how industry giants like Ford, Renault-Nissan, and GE are approaching innovation—from tech shops and frugal design to diverse global engineering teams, crowdsourcing, and lighting-speed product development. Each company has its own formula for enabling innovation, whether through technology, people, process, or corporate culture. Also in this edition, we look at how our changing values and social norms are shaping a new landscape for manufacturers. In a subscription economy where ownership of the product itself is less important than the convenience and experiences it offers, smart manufacturers are reshaping their business models and uncovering new revenue opportunities. Finally, if you’re looking for a cool design story, read how Lufthansa’s 1950s luxury passenger aircraft, the Super Constellation, is being re-engineered for modern flight. Sincerely, Nancy Pardo Editor in Chief
WHEN DAVID MET GOLIATH: SCRAPPY DESIGN CO SHAKES UP BIG MAN BY NANCY PARDO Photos by Albert Ayzenberg There’s no stopping 26-year-old Ben Kaufman. Every week, his New York City-based company receives 2,000 new product ideas from its online community of wannabe inventors. A handful of those ideas are given the green light and thrown into development. At the end of the week, those products are ready to ship to stores around the country. Kaufman built Quirky—now a $50 million business—from the ground up in just five years. The company handles everything from design concept to manufacturing, and has brought more than 100 new products to market so far, selling to big-box stores like Target, Bed Bath & Beyond, and Best Buy. It has attracted close to $100 million in investments, and recently earned a contract with industry giant General Electric. But Kaufman’s not ready to sit back and enjoy the spoils just yet. “I’m always learning,” he says. “Invention is never finished.” Quirky evolved out of Kaufman’s experiences with
OMPANY NUFACTURING his first business endeavor Mophie, which continues to make cool paraphernalia for Apple products. Mophie won “Best in Show” at MacWorld 2006 when Kaufman was still a teenager. He sold the business a year later to raise capital for Quirky. Mophie is now worth over $100 million in revenue. “Through Mophie I learned how difficult it is to build a consumer product,” Kaufman says. “I went through all this hard stuff to get that product out there and I realized the best ideas in the world aren’t actually in the world, they are locked in people’s heads.” You get the feeling Kaufman—who never attended college—knows what it’s like to be in the trenches. Through his own struggles as a young entrepreneur trying to sell his idea, he inadvertently stumbled across an untapped market and a source of raw innovation. “I thought, wouldn’t it be cool if there was a company that took your good ideas and did all the hard stuff for you, provided a platform or infrastructure, so you didn’t have to worry about quitting your job or dropping out of college to get your product idea out there?” Half a decade into Quirky’s journey and Kaufman admits it has been a pretty crazy ride—something that probably couldn’t have happened 10 or 20 years ago. Posting your ideas online to be voted on and commented on would have been a scary concept just a generation ago, but things are changing rapidly. “This generation understands the internet and it’s comfortable around social media. It’s been a huge shift and it has made Quirky something people can wrap their heads around,” Kaufman says. There’s something exhilarating and rebellious about the Quirky model. It’s grassroots innovation at its best. Taking power away from the Man and giving it back to the people. The company has a thriving online community of 500,000; regular folks with regular lives who have great ideas they want to share. “The best products aren’t born in the boardroom;
(Photo: Albert Ayzenberg) they’re born in the living room. Quirky is in the living room talking to real people with real ideas,” Kaufman says. Will this bottom-up approach, where the consumer is both inventor and manufacturer, revolutionize product development? “Yes,” Kaufman smiles, as if the answer to this question is already abundantly clear. “It will completely change the way consumer products exist and come to be.” Quirky’s products are for the most part just that, quirky. But they’re also useful—ice scrapers, kitchen utensils, and organizers that have proven very popular with consumers. Quirky’s bestselling item, the Pivot Power, is a flexible power strip that can be manipulated into lots of different positions. It retails for $30 and 665,000 of them have been sold nationwide. Quirky’s success is in large part due to its fast turnaround. As soon as a new product idea is given a “yes” vote by the community, it’s in production. Time constraint is part of the Quirky culture and one that’s worked to its advantage. “At Quirky we take on impossible projects and build great things, but we also work on crazy timelines with limited resources and limited people,” Kaufman says. “As we’ve grown, we’ve maintained those constraints.” Everyone at Quirky knows that the Empire State Building was built in one year and 45 days and the Lockheed P-80 Shooting Star fighter jet was built in 143 days. It’s Kaufman’s favorite mantra: Constraints give way to really great invention. Kaufman looks over a product design with Quirky's head of engineering John Jacobsen. With a huge pool of community members, Quirky has a unique insight into what consumers really want, and its small team and nimble product development process allows it to innovate faster than most “traditional” manufacturers. But Quirky’s bullish nature and can-do attitude is really what brings innovation to life here. And it’s this same bullishness that larger, more established manufacturers often lack. Asked why some companies struggle to innovate, Kaufman responds without hesitation: “People are afraid to make decisions. It’s that simple. They’re afraid they’re going to be wrong. As soon as you start embracing risk things start moving along.” Forward-looking manufacturers can learn a lot from Quirky. And the company has already generated interest from major players like GE, which recently partnered with Kaufman to build a line of smart connected products for the home, available for
This generation understands the internet and it’s comfortable around social media. It’s been a huge shift and it has made Quirky something people can wrap their heads around.” purchase in time for the holiday season. “When I started Quirky, one of the few companies I looked to for inspiration was GE,” Kaufman says. “They figured out how to commercialize invention.” At first glance the Quirky-GE partnership may seem like an odd one. But while their products are quite different in many respects, the two companies share a core philosophy around innovation. “We see a grown-up Quirky in GE and they see a young GE in Quirky,” Kaufman says. GE brings with it a rich history of innovation along with myriad global research centers and scientists. Quirky brings modern technology like 3D printing, and an intimate knowledge of online communities and crowdsourcing. More importantly, Quirky is not afraid to take risks, and that, Kaufman believes, is what got GE’s attention. “We have a lot of mutual respect for one another,” Kaufman says of the Quirky-GE relationship. “We were talking together for maybe two or three years about partnering, and when this category of connected products came up there was no stopping us.” The Quirky + GE co-branded product line—for sale at Home Depot and Best Buy—runs the gamut from smart egg trays that notify you when you’re running low on eggs or when your eggs go bad, to multipurpose sensors that monitor temperature, humidity, light, sound, and motion within your home. All of the products connect to smartphones with an app called “WINK” so users can access information on the go. “We’re very happy so far,” says Linda Boff, executive director of global brand marketing at GE and part of the team leading the Quirky + GE relationship. In fact, just this week GE announced it will sink $30 million into Quirky and launch 30 new products with it over the next five years. GE believes its partnership will help drive faster innovation and scale in what will be a $25 billion connected devices market. But is this partnership in some way selling out to big corporations? Kaufman bristles at the notion. “Not at all,” he rebuffs. “We are making invention accessible, we are giving the community tools to get its ideas out there and shape the future of the consumer world.” As part of the partnership, GE has also made its existing patents available to the Quirky community —an unusual move for such an industry heavyweight, but one that could prove beneficial to both parties. “It’s not like the Quirky community is going to try to build a jet with this information,” Kaufman laughs. “But the patents can be useful in other ways. It puts patents back in their rightful place which is to act as a source of inspiration for future inventors and not a fenced-in source of corporate warfare.” So what’s next for Quirky? We can expect a move away from commodity products and more focus on “provocative” electronics and technologies, Kaufman says. “We’re going deep into this connected world and taking on a lot of fun projects. You’ll see a more sophisticated Quirky going forward.” Read an interview with Quirky’s head of engineering John Jacobsen
Redoing American Inno BY NANCY PARDO Mansukh Prajapati was never much of a student. His father, struggling to make ends meet as a potter in the northeastern state of Gujarat, India, sent Prajapati to school hoping some rigorous academics would pave the way to a better life. But Prajapati failed in the classroom and returned home to take up the family trade. Prajapati worked odd jobs as a potter and clay baker until 2001, when an earthquake devastated his village. The quake destroyed homes and took out the electricity, leaving villagers unable to preserve food. Inspired by urgent need, Prajapati set about designing a robust earthen fridge that uses water instead of electricity to cool food. Prajapati sold his fridge to a few villagers and demand grew quickly. He taught the women of his village how to build the fridge and opened a factory. Soon, Prajapati’s business took off internationally, and a few years later Forbes named him one of the most influential entrepreneurs of rural India. Prajapati is a prime example of “Jugaad” innovation—solving problems with limited resources, especially in the wake of a crisis or challenge—and he’s part of a larger trend shaking up industries across the West. Jugaad—a Hindi term used in everyday Indian life to describe on-the-fly MacGyver-style fixes—is common in developing economies, says Navi Radjou, co-author of the bestselling book Jugaad Innovation, Think Frugal, Be Flexible, Generate Breakthrough Growth, which tells the story of Mansukh Prajapati. Radjou, an innovation and leadership consultant based out of Silicon Valley, works with the likes of GM, Hitachi, IBM, and Procter & Gamble, and he’s noticing that industry leaders in the West are looking to emerging economies, not only as potential markets, but also as learning centers for how to develop more innovative products.
ovation, Jugaad Style Photo credits: Indranil Mukherjee / AFP / Getty Images / Dacia
“Emerging markets like Africa, India, and China may not have big R&D programs and infrastructure, but they are very in tune with the market need,” Radjou says. “They use that insight to come up with a good-enough solution—no bells and whistles, but it addresses all the fundamental needs of local customers.” The writing is on the wall, according to Booz & Company. In 2010 alone, the world’s largest corporations—many of which are American firms—spent more than half a trillion dollars in R&D, and yet still struggle to churn out innovative products. Coming up with solutions to meet today’s dynamic and rapidly changing market needs requires a combination of flexibility, nimbleness and courage that Western industry often lacks. “In the West we tend to have a Plan A, Plan B, and Plan C, but Jugaad is about having the self-confidence to come up with a single plan when it’s required,” Radjou says. Emerging markets like Africa, India, and China may not have big R&D programs and infrastructure, but they are very in tune with the market need.” Nowhere is the Jugaad approach more relevant and well-suited than in today’s volatile and fast-paced automotive industry, and Ford and Renault-Nissan, Radjou says, are leading the charge. Last week, Renault-Nissan Alliance announced record sales of 8.3 million vehicles in 2013, putting it behind top three automakers Toyota, General Motors, and Volkswagen. Renault-Nissan produces a value-for-money product that cost-conscious customers in both emerging and developed economies can appreciate. Its combination of frugal design, low-cost manufacturing, Carlos Ghosn tours Renault-Nissan manufacturing facility in Nashik, India. (Photo credits: Indranil Mukherjee/AFP/Getty Images) and a large pool of engineering talent has proved a winning formula. The Logan van and pickup, along with the similar Dacia Duster SUV, are now Renault’s cash cows. Renault began production of the Logan in Romania. The vehicle had 50 percent fewer parts than a typical Renault and a much simpler architecture. Engineers designed symmetrical rear-view mirrors that can be used on either side of the car. A flatter-than-usual windshield cut down on cost, and the dashboard was produced out of a single injection-molded piece. Engineers also limited the number of electronic components, making the car easier and cheaper to produce and repair. The vehicle is over 90 percent recyclable. After the success of the Logan, Renault-Nissan has moved into India, setting up facilities in Chennai and Mumbai. It’s designed a whole range of ultra-low-cost vehicles from scratch, targeted at first-time buyers in India, Latin America, Africa, and perhaps in time Eastern Europe and beyond. It’s a win-win for Renault-Nissan. India has the lowest car penetration among emerging economies, so there’s a ready market. But just as in Romania, the car company benefits from the Jugaad mindset of Indian engineering teams. Renault-Nissan CEO Carlos Ghosn recently challenged his French, Japanese, and Indian engineer-
ing teams to come up with a solution to the same technical problem, Radjou says. The Indian solution cost one-fifth of the French and Japanese solutions. Through its partnership with TechShop, Ford is tapping into the Jugaad vibe in a slightly different way. TechShop provides communal workspace, tools, and classes for inventors and tinkerers across the country. In 2010, Ford partnered with TechShop as a way to reach out to the community and crowdsource ideas. But Ford also sponsors its own engineers to attend TechShop, and this, says Radjou is a clever way to encourage fearless innovation in your own employees. Radjou says, “Ford employees are able to go and play at TechShop in a very free environment. When they get out of the structured workplace they become creative.” So creative in fact that since its partnership with TechShop, Ford has increased its patent output by 50% while also reducing R&D spending, according to TechShop CEO Mark Hatch. “Google is known for providing its employees time to innovate. But time is not enough, you need to create space too,” Radjou says. “Ford has done a better job than Google because TechShop engineers mix with new people and find fresh way of thinking about a problem.” Offering the TechShop experience allows Ford employees to leave the highly structured and process-oriented workplace environment for a while, to think outside of the box and then bring fresh ideas back to the table. Radjou calls this a “shadow track”—a way for engineers to step away from the formal design and development process, play around, and then step back in with new solutions. “TechShop and places like it are where we’ll find the innovators of the future. Gen Z is not interested in sitting in a classroom and learning about STEM,” Radjou says. “We need to attract young people back into the industrial sector and we need a new breed of innovator, someone who is highly skilled—a tinkerer. There’s innovation led by thinkers—PhDs and scientists—and then there’s innovation led by tinkerers. They go hand-in-hand, but for too long innovation has been dominated by the former,” Radjou concludes. Mansukh Prajapati might agree with that sentiment. He joins a growing list of Jugaad innovators coming out of rural India. The Honeybee Network, which supports grassroots innovations in India and is part of the National Innovation Foundation, has compiled a database of 10,000 inventions pioneered by rural entrepreneurs like Prajapati. While “scaling up” is a stumbling block for many of these entrepreneurs, Western interests are beginning to pay attention.
REBUILDING THE MONA LISA OF THE SKIES BY JON MARCUS Shrouded in scaffolding and stripped to her rivets, the “Super Star” is barely recognizable as an airplane, let alone one of the last most glamorous ever built. Yet here, away from public view in a sealed-up hangar on a far corner of a municipal airport in Maine, a project of unprecedented scale and expense is under way to re-engineer this Lockheed Super Constellation 1649A so it can fly again. Commissioned by Howard Hughes, the Constellation was the last and greatest of the long-range piston-powered aircraft unceremoniously supplanted by the passenger jet. With its distinctive “S”-curved fuselage and triple tail, the Super Connie “represented the absolute zenith” of piston-driven airliners, wrangling 3,400 horsepower out of each of its 3,350-cubic-inch Curtis-Wright 18-cylinder, twin-row radial R-3350 engines, says Ralph Petterson, an engineer and aviation author and an aficionado of the plane. “That was phenomenal.” And it was nothing compared to what awaited pampered passengers inside. On luxury runs across the North Atlantic, they relaxed in onboard lounges, ate gourmet food in separate dining cabins, and dozed in railroad-style sleeper seats. “This was the age when flying was an experience and there was romance involved,” Petterson says. “People weren’t crammed into these aircraft. They drank the finest wines. They ate meals cooked on board from scratch. Now you get a bag of peanuts and a soda if you’re lucky.” But the Constellation’s debut as an elegant passenger carrier was postponed by World War II, when it was dressed in fatigues and pressed into service as a military cargo plane. And then, after only 44 of the ultimate Super Constellation passenger versions had been built, it was edged out in the 1950s by the faster jet. In the decades since, the “Mona Lisa of the Skies” has hauled cheap vacation charter groups, oil workers, and even livestock before being scavenged for components and abandoned to the elements at far-flung airports.
it will be repainted in 1950s Lufthansa livery, taken to Europe, and, like the Junkers, made available for what an airline spokesman calls “very special flight experiences for passengers, comparable to those in the golden days of aviation.” That will have come after a re-engineering process as ambitious as it is hidden away. More than 100 engineers and others, some of them retired Lufthansa mechanics who worked on the original Connies, are attached to the $3 million, purpose-built project hangar at the Auburn-Lewiston Municipal Airport, a former Navy airbase. That is, until Deutsche Lufthansa Berlin-Stiftung, or DLBS, a nonprofit arm of the German airline Lufthansa, bought three of the last remaining four of them at auction in 2008 and set about transforming the “Super Star” to its original condition, using the other two for parts. While many vintage military aircraft and some passenger planes have been refurbished—including a 1936 Junkers JU-52 also rebuilt by DLBS—none have been this complicated. “These planes had been sitting outdoors for 25 years or more. There’s a lot of corrosion,” says Gene Richardson, president of Maine Aero Services, where hundreds of tiny parts, each with paper identifying tags attached, are being photographed, inspected, cleaned, and in some cases refabricated. Among other things, 95 percent of the skin of the 95-foot fuselage has had to be replaced. When the plane is finished—it’s now slated for its first test flights next year, more than four years later than originally scheduled— A second Constellation sits outside the hangar in the snow, still looking regal despite a missing rudder and empty sockets where its engines once were; it will eventually be given to an as-yet-unnamed aviation museum. Some of those engines are the among six, each with about 14,000 individual parts, being overhauled in
Idaho. Six three-bladed Hamilton Standard propellers—the biggest ever used in civil aviation—are being restored or reproduced in Toronto, the landing gear assemblies in Frankfurt and Hamburg, and the wheels in Akron. “They are going all out on this,” says Ray Anderson, owner of Anderson Airmotive in Grangeville Idaho, which is overhauling the engines. “There’s never been anything like it and probably never will be anything like it.” The cost of all of this was originally estimated at $9 million to $12 million, but Petterson, who has been allowed rare access to the project, says he’s told it could reach $60 million. (Lufthansa disputes this, but won’t disclose an amount.) At Hope Aero in Toronto, a 96-year-old Hamilton Standard retiree is supervising the work on the propellers, that includes ultraviolet checks to find any cracks or defects. The giant propeller assemblies used a complex system to synchronize their rotation so passengers would have the smoothest possible flight. Since this machine is meant to fly, the paperwork alone is legion. An Alabama engineering company certifies that each part meets specifications. And in a surrender to modern technology, the cockpit instruments are being replaced with glass panel displays, except at the flight engineer’s station, where the old-fashioned gauges will remain. That was one of the things that made the Constellations not only grand, but part of an era of “quantum leaps” in aviation engineering, Petterson says. And in luxury. The Connie’s star-studded first flight began with a cocktail party in Los Angeles and ended with nightclub-hopping in Manhattan for VIPs including Cary Grant and Veronica Lake, who feasted in flight on Beluga caviar and baked Alaska washed down with Dom Perignon. “Everybody that works on this plane is enthusiastic about it,” Richardson says. “They’re just waiting for the day they see it fly—whenever that is. But when it does fly, it’s going to be fun to say, ‘Hey, we worked on that.’”
BY GARY WOLLENHAUPT Photo credits: Zipcar
For more than a hundred years, makers of razors have used a standard marketing model: Sell the razor handle at a low price, and lock users into a proprietary razor blade cartridge and a higher margin. Home appliances offer another great opportunity for a subscription-based system. A monthly subscription fee could cover maintenance and repairs, and replacement if necessary. After a certain time, consumers could trade in their old noisy fridge for a new model. Dollar Shave Club is challenging that model. This scrappy web retailer uses viral video marketing to disrupt the way razor blades are bought. It doesn’t sell handles at all, but you can sign up for a razor blade subscription service, with three tiers of pricing, all at much lower cost that most Gillette offerings. This business model is expanding as companies look for ways to grow market share and create a predictable revenue stream. The lowest tier is the one dollar per month deal, for which you get four basic cartridges mailed to your home. For six dollars you can upgrade to four-blade razors, and nine dollars a month will get you top-of-the-line six-blade razors. Having a stack of cheap, fresh blades in the bathroom drawer sure beats making an emergency run to the pharmacy and suffering sticker shock. Analyst firm Gartner predicts that by 2015, 35 percent of large global companies with non-media digital products will generate incremental revenue of five percent to 10 percent through subscription-based services and revenue models. Subscription revenue streams can help to smooth out seasonal revenue peaks, generate incremental revenue from add-on services, and strengthen the customer experience and customer loyalty, according to Gartner’s Building a Strategy for the Subscription Economy report. During the economic downturn, subscriptions have been a great way for vendors to keep demand up and keep their operations running.” The subscription-based relationship has been a staple in the media and software industry for decades, and it’s beginning to take hold in other industries too. Let’s take automotive. Think about buying a car versus subscribing to a transportation service. Zipcar— introduced in Boston a decade ago and now an international success—offers access to short-term vehicle use in major cities. It’s a popular solution for people who don’t own a car but need to travel where public transportation doesn’t connect. Pay a membership fee to belong and buy only the hours of transportation you need. Zipcar uses over 30 makes and models of vehicles, including BMWs, Audis, and Prius hybrids. A subscription model can also lower the upfront or apparent cost of a purchase, according to Denis Pombriant, principle consultant with Beagle Research and author of The Subscription Economy: How Subscriptions Improve Business. “It creates a larger market to sell into and it creates more demand,” Pombriant says. “During the economic downturn, subscriptions have been a great way for vendors to keep demand up and keep their operations running.” Subscription-style relationships show up in unlikely places. For example, it’s common for aircraft manufacturers to provide “power by the hour” service for business and commercial aircraft. For a fixed fee,
Photo credit: Andrew Harrer/Bloomberg via Getty Images the engine manufacturer provides maintenance, support, and even full engine replacement when it’s needed. That way jet operators can forecast costs. Capgemini Consulting’s Martin Putters notes that the subscription economy also feeds the cradle-to-cradle manufacturing movement. Rather than disposing of products when they fail, a subscription service can ensure a milling machine or industrial pump is automatically replaced at the end of its life. “There is a very clear connection between the concepts of cradle-to-cradle and subscription economy,” Putters says. “When thinking about reverse logistics to realize reuse of materials, it is easy to take the step of linking subscriptions to the usage of certain products.” Cradle-to-cradle could also be good for the environment. Desso, a Dutch Carpet manufacturer, boosted its recycling efforts to use 100 percent recycled materials by 2010. “The most important thing is that we move from a linear economy to a circular economy,” says Desso CEO Stef Kranendijk. Whether manufacturers choose to embrace the subscription model or not, consumers will be more likely to demand it moving forward.
Photo credits: Zipcar “It’s really a subscription culture, and even companies that don’t offer subscriptions have to deal with customers who understand subscriptions and want to know why they can’t get products and pricing and service and support more attuned to their needs,” Pombriant says. The next big thing for subscription economy could be surprising. Manufacturers should think creatively, Pombriant says. Ask how you can deliver your product as a subscription, he says. “If you can answer that question you probably have a new market.”
SMOFFERS A RT BIKE CUSTOMIZED RIDE BY MARIA K. REGAN Photos courtesy of Max Tomasinelli, MIT SENSEable City Lab
Many people resist using a bicycle for daily transport because they’re reluctant to arrive at work or a social event sweating from the effort of getting there. Electric bicycles are an option, but they tend to be expensive, heavy, and inelegant. Enter the Copenhagen Wheel, which lets riders transform their standard bikes into electric hybrids simply by swapping out the rear wheel. The wheel was developed by students at MIT’s SENSEable City Lab and has won multiple design awards, including the James Dyson Award in 2010. The wheel is being brought to market by Superpedestrian, a Cambridge, Mass. start-up that recently received $2.1 million in funding from Spark Capital. The Copenhagen Wheel’s distinctive red hub contains a motor, a removable lithium battery pack, and a gear system, as well as environmental and location sensors that provide data for related mobile applications. The wheel captures energy when a rider brakes or goes downhill and stores it in the integrated battery pack. It returns the stored energy in the form of a “push” when sensors detect that the rider is pedaling harder, like when cycling uphill. Riders looking for a workout can forgo the motor assist altogether. Weighing in at 13 pounds, the wheel provides a top speed of 20 mph and will go up to 31 miles on a charge. Controlled by a smartphone (iOS or Android), the wheel will initially offer an app that enables riders to select a level of motor assistance, lock and unlock the wheel, choose from a variety of customizable rides, and track personal usage statistics including time, distance, calories burned, and elevation climbed. Through the Superpedestrian SDK, an open-source platform, the company hopes developers will create other practical and social apps for the wheel. In addition to making cycling a more practical option while enabling people to keep their existing bikes, the developers hope the wheel’s data-collection capabilities will lead to the creation of urban carbon-credits programs to further encourage more riding and less driving. The first 1,000 wheels are being made by hand in Cambridge, Mass., and can be pre-ordered for $799 on the Superpedestrian website. Photo by Max Tomasinelli
STRUGGLES TO PRODUCE ENGINEERS BY JON MARCUS
The 4,200 residents of Barrow, Alaska, cheerfully call it “the top of the world.” But it takes a very special type of person to live there. The high school in Barrow serves the entire North Slope, but still has an enrollment of only 186 in its four grades. That turns out to be enough to field the nation’s northernmost football team, the Whalers, which plays on blue artificial turf. Yet more than 40 percent of the students score below proficient on standardized tests in science, and more than 35 percent score below proficient in math. Fewer than two thirds of students graduate on time, compared to the national average of 75 percent. So when Victor Charoonsophonsak showed huge promise in science and math, his parents decided to pick up and move from Barrow to Anchorage. That’s Alaska’s biggest city, with 300,000 people, but it also has something rare among the remote towns and villages of this beautiful but sparsely populated state: High school engineering programs. “A rural place like Barrow is basically a village, and you know almost everybody,” Charoonsophonsak says. “It didn’t seem like such a barren place to me, because I was used to it. But you just don’t have the resources there. The opportunities and the knowledge would not have been equivalent to what I can do in Anchorage.” Facing a looming gulf between the demand for engineers and their supply, Alaska is trying to improve education in science, technology, engineering, and math. And that’s a goal that makes similar efforts in the Lower 48 look like easy sledding. “Our challenge is geography,” says Todd Bergman, director of the Alaska Process Industries Career Consortium, or APICC. “It’s not just that we’re a big state. We’re isolated from the rest of the country.” There will be 8,100 STEM-related job openings in Alaska by 2018, according to APICC, most at the oil, gas, and mining companies that fuel the state’s economy. Yet fewer than two percent of high school students there have access to a daily STEM curriculum. Only 14 Alaska schools are part of Project Lead the Way, the preeminent STEM program, out of 5,200 nationwide. “ It’s hard to tell a middle-school student in those places that if they take these classes now they can become an electrical engineer someday and make a lot of money.” Long-disjointed efforts by government, industry, the University of Alaska, and other groups are now beginning to coalesce into a coordinated policy to change this. Twenty Alaska high schools have been designated “engineering academies,” offering electives including automation, robotics, and digital electronics, and connecting students with engineering internships and mentors. But progress has been glacial. Just training teachers in these subjects requires flying them to California, North Carolina, or Washington State. Then, when they leave—and teacher turnover in Alaska is high—the process has to start again. “A lot of these villages are cut off from major population centers and the winters are very long,” says Zachary Mannix, APICC’s coordinator of the Alaska engineering academies. While teachers in other states can go to the local hardware store to pick up PVC tubes for a class project, many in Alaska can’t. Also, Mannix says, school resources “are going to a lot of other things—the cost of transportation, heating fuel. Some of the schools don’t have broadband Internet. It’s hard to tell a middle-school student in those places that if they take these classes now they can become an electrical engineer someday and make a lot of money.”
Photo courtesy of Wade Roach, Dimond High School But the emphasis on engineering education in Alaska is making some strides. Robotics competitions, for example, are attracting students to the subject. So is teaching that uses real-world problems. Mannix tells of visiting a classroom in which students were learning how to lengthen their smartphone charging cords. Out of 160 students who are in his school’s engineering program at any given time, 15 will make it all the way to graduation, Roach says. “The sample size is small, but there are absolutely kids you know are going to be very, very successful,” he says. “You see it when you go in at the end of a day and students are staying after school to work on their projects.” As for Victor Charoonsophonsak, he got a scholarship to Washington State University in Pullman, where he’s studying mechanical engineering. The University of Alaska in Anchorage is negotiating with Project Lead the Way to provide in-state teacher training. And teachers who have gone off to be trained somewhere else are attacking the problem with enthusiasm. Wade Roach, who teaches at Dimond High School in Anchorage, designed his classroom to look like Tony Stark’s lab in the Iron Man comic books, with remote-controlled blinds, glass partitions, a 3D printer, and other cool stuff. That’s still a drop in the bucket. But, he says, “Every little bit helps.” He says he misses Alaska, but he is thinking of becoming an aeronautical engineer, for which there isn’t much demand at home. Still, says Charoonsophonsak, “There are a lot of students who went through the same exact course that I did, and a lot of them are staying in Anchorage and going to school there. And that’s a great sign for Alaska.”
LES T YP Why Disa Photo credits: Dondi Tawatao/Getty Images
SSONS FROM PHOON HAI YAN: aster Plans are Essential in Telecommunications BY JON MARCUS
Photo credits: Noel Celis/AFP/Getty Images Days after Typhoon Haiyan ripped across the eastern Philippines, the most immediate needs for water, medicine, and shelter were hampered by a lack of information. The scale of the storm and the geography of a nation spread across 7,107 islands made gathering important data and gauging the magnitude of the disaster close to impossible for emergency officials. Restoring technology infrastructure has become an essential part of emergency recovery, just as it has gotten more complicated—and disasters seemingly more frequent and destructive. But avoiding having sometimes-fragile technology go down in the first place takes foresight, says Ben Tartaglia, executive director of the International Disaster Research Association, or IDRA. “The best way to do it is pre-planning and preparing your infrastructure for recovery,” Tartaglia says. That doesn’t always happen with IT and communications. A World Bank and U.S. Geological Survey study estimates that $40 billion invested in emergency preparedness would have saved $280 billion during the 1990s, the latest period studied. Despite this, a survey by the IDRA found that only one in four telecommunications departments have disaster plans. So while there is nothing good in massive natural disasters like the Philippines typhoon, it at least focuses attention on the need to be prepared. Disaster lessons have often been surprising. Cellphones, for example, have incontrovertibly become lifelines in disasters, and one of the first things officials need restored. That’s particularly true in places like the Philippines, where there are 114 cell phones per 100 people—a greater density than the US Census Bureau says exists in the United States—according to the consulting firm BuddeComm. Even in normal times, Filipinos send two billion SMS messages per day, among the most in the world. Meanwhile, only half of Philippines towns and cities even have wired telephone service, and the proportion is declining. Of course, the fact that cellphones transmit wirelessly gives them built-in resilience. It’s the base stations that are vulnerable in disasters. The towers themselves may be well-engineered, but there is often too little fuel to sustain them, too many people trying to make calls, and towers are often built on unstable structures that collapse. The 2011 earthquake and tsunami in Japan immediately disabled 8,000 base stations, but within 24 hours that number had doubled when most of the rest lost power.
“ Days after Typhoon Haiyan ripped across the eastern Philippines, the most immediate needs for water, medicine, and shelter were hampered by a lack of information.” After the Haiti earthquake, none of the cellphone towers built on solid ground went down. The ones that did fail were on the roofs of the many buildings that collapsed. Spikes in demand can do almost as much damage as a natural disaster. After the Japanese tsunami, call volume was 60 times more than normal, and systems crashed. In the wake of Typhoon Haiyan, cellphone companies flew in so-called “cell sites on wheels”, known by the abbreviation COWs and familiar from large events where they’re used to increase calling capacity. Equipped with their own generators, they can restore service in emergencies. “If you get enough of those connecting to each other, you can re-create the wireless infrastructure,” says Paul Kirvan, a telecommunications consultant. “But it takes hundreds of them to do that. And the generators need fuel, and the supply chain for all of that starts to get extensive.” Nor is it a permanent solution. But it is made easier by the fact that growing reliance on cellphones has also spurred investment in undersea cables and more redundancy so that service can be routed around switching offices where service has been cut. These changes “have been made to improve throughput,” Kirvan says. “But it also increases resiliency and survivability.” More enduring ideas are being tried, too. The Japanese are building 100 super-strong cell-phone base stations. And GSMA—an international association of mobile operators and related companies—is urging providers to join an international bank of COWs so they can be shared in an emergency. Photo: Typhoon survivors charge their mobile phones on a roadside charging stations. (Photo credits: Noel Celis/AFP/Getty Images) After callers clogged systems during Hurricane Katrina and the London subway bombings, some cellphone companies created a way for fire, police, and ambulance calls to get the highest priority, and encourage other users to send lower-bandwidth text messages. There will doubtless be more tests like Typhoon Haiyan. The Intergovernmental Panel on Climate Change (IPCC) says the number of natural disasters is likely to increase as a consequence of global warming. Some projects even seek to use such things as cellphone networks to help predict the worst. One network signed a deal with its national weather bureau to locate monitoring instruments at cell-phone towers. The country where this happened? The Philippines.
PRACTICAL TIPS ON CONFLICT MINERALS REPORTING BY JASON ALBERTI Discrete manufacturers are grappling with many different challenges as they work toward the May, 2014 deadline to file their first disclosures with the SEC under the new conflict minerals ruling. In that context, the idea of filing similar information with the SEC and publishing it on the company website has to feel a little bit like wearing a “kick me” sign for organizations effected by this law. While the requirements of the law itself seem to be generally understood, the great unknown has been the baseline expectations of NGOs and socially conscious consumers watching this issue. So, how can a manufacturer confidently publish their conflict minerals findings without fear of a public relations nightmare, or worse? For roughly 6,000 companies, the exercise of probing their supply chain for minerals tainted by the armed conflict in Central Africa will potentially represent a significant brand risk. Practical recommendations for reporting and compliance In September 2013, the Responsible Sourcing Network and the Enough Project helped to answer this question by jointly publishing a detailed set of recommendations and measurements to guide manufacturers as they develop their conflict minerals filings for 2014. Both of these groups are thought leaders in the field of responsible sourcing, and their paper aims to achieve the maximum positive impact in the region by urging companies to comply with the letter AND the spirit of the law. Download the full paper, Expectations for Companies’ Conflict Minerals Reporting, for free on the Enough Project site. In June 2013, Nintendo was singled out via an online campaign by the anti-slavery group Walk Free, for using conflict minerals in its products and for being unresponsive to petitions asking it to undertake more responsible sourcing. This campaign was based on investigative research carried out by Walk Free and other organizations. The paper stresses the importance of developing and disseminating policies and supply chain strategies which support responsible sourcing from the DRC region. As the authors remind their readers, the goal of the Dodd-Frank legislation is “to ensure a conflict-free Congo, not a Congo-free product.” Some of the key metrics include:
∙ % of products/product categories containing 3TG ∙ % of surveyed 3TG products ∙ % of responding suppliers ∙ % of products with indeterminate 3TG status ∙ % of 3TG products with smelters identified ∙ % of suppliers using material from CFS smelters ∙ % of staff that are aware and educated on the company’s conflict-free sourcing policies ∙ % of suppliers that have received a copy of the company’s policies Among the best practices outlined, here are several highlights: ∙ The company’s policy should be included in supplier contracts, and the company should source conflict-free 3TG materials from the region ∙ The company should publicly list all 3TG smelters and list the country of origin for all 3TG minerals in its supply chain ∙ The company should also support the establishment of a responsible/conflict-free supply chain in the effected region, or alternative-livelihood initiatives for miners and smelters by working with NGOs and other groups in the region Although there will always be room for interpretation, and this paper by no means represents the position of all of the stakeholders in this issue, it nonetheless provides the closest thing to a roadmap for manufacturers that are approaching the conflict minerals issue with the caution it deserves. The key message: Demonstrate that your company is making a conscientious effort to establish a conflict-free supply chain, with sourcing policies that will be consistently communicated and enforced among your suppliers. Even if you find conflict minerals within your current supply chain, a public filing which honestly discloses that fact and outlines a remediation plan to achieve conflict-free status will be looked upon much more favorably than those organizations that choose to file as “undeterminable” while that loophole exists. Visit the Conflict Minerals Compliance Resource Center to learn more about the conflict minerals regulation, compliance solutions, and emerging best practices from leading organizations. This article was originally authored by Christopher L. Harden, CHMM, and will also appear in the November issue of AIAG’s Corporate Responsibility newsletter. To learn more, or to subscribe, visit AIAG online.
Winter 2014 PRODUCT LIFECYCLE STORIES INSIGHT ON PRODUCTS, MANUFACTURING, AND SERVICE PTC Product Lifecycle Stories brings you the latest news and trends in design innovation and manufacturing. Subscribe to PTC Product Lifecycle Stories for daily updates. http: //blogs.ptc.com Share this eMagazine © 2014, PTC Inc. (PTC). All rights reserved. Information described herein is furnished for informational use only, is subject to change without notice, and should not be construed as a guarantee, commitment, condition or offer by PTC. PTC, the PTC Logo, PTC Creo, PTC Mathcad, PTC Windchill, PTC Windchill PDMLink and all PTC product names and logos are trademarks or registered trademarks of PTC and/or its subsidiaries in the United States and in other countries. All other product or company names are property of their respective owners. The timing of any product release, including any features or functionality, is subject to change at PTC’s discretion. J3144–PLS-Winter-2014-ePub–EN–0214
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