Ingersoll Rand Puts Customers First in Drive for Innovation

March 10, 2010
A disciplined approach to innovation is paying benefits in new products and new business opportunities.

To the casual observer, Ingersoll Rand's new R-Series rotary screw air compressors and C-Series centrifugal air compressors seem typical of new product introductions. A list of attributes includes improved reliability, efficiency and productivity. But in fact, these products mark a new chapter in product development for the company's Industrial Technologies Sector as it applies Outcome-Driven Innovation to develop products that help solve customers' needs.

As Manlio Valdes, vice president, Global Product Management for IR's Industrial Technologies Sector, notes, it is easy for a company such as Ingersoll Rand to say it is innovative but more difficult to determine "what it means to us and how do we do it."

"There is still a lot of what I call 'magic' out there," said Valdes of how some companies are approaching innovation. "People think they can jump in, read a couple articles, run some software, conduct one survey and you become the company at the cutting edge. Frankly, I don't think it works that way. There is a lot of hard work and discipline that needs to go into transforming yourself, not just with what you know but the culture inside to make it work."

In the case of these new compressors, Ingersoll Rand surveyed 2,500 customers in the United States, United Kingdom, Germany and China. Respondents were surveyed in 13 different industries and ranged from small business owners to plant managers to engineers. Using a methodology called Outcome-Driven Innovation, the company's research team sought to understand not just what feature set in a new product customers would like, but what jobs they were doing, what their pain points were and what particular features customers would actually value.

The Real Magic

While the new products were based on customer desires for energy efficiency, reliability and improved productivity, Valdes said the "real magic" becomes trying to understand "the nuances in a new product design in order to really determine where you should invest and spend money to create value and where it is just adding cost for you and your customer."

James Bolch, president of the Industrial Technologies Sector, wryly commented, "You can have the best new products in the world, the most innovative, but if customers don't buy them, it's strictly interesting, it's not business." Bolch said the challenge for Ingersoll Rand was to uncover customers' "unmet needs -- what is the problem they are trying to solve, not necessarily what kind of air compressor they want or what kind of tool they want." Pursuing that knowledge, he said, has been a "revelation."

As an example, Bolch points to an experience with Club Car, Ingersoll Rand's golf cart and utility vehicle unit. GPS units had been introduced in golf carts as a convenience. Golfers could use them, for example, to calculate the distance to the pin. "It was interesting technology but the problem was, it didn't bring value to the people that owned the golf course," Bolch observed. Course owners wanted a way to reduce their costs or increase revenue. By integrating GPS technology with the drive system of the golf cart, Club Car and its partner GPS Industries were able to do just that. Carts could be configured so that they could be driven only after the pro shop remotely enabled them, preventing golfers from driving off without paying. And by laying out electronic parameters for the carts, golfers could be prevented from driving them off the course, out of bounds or at an unsafe speed down a steep slope.

"We are not creating basic materials or doing fundamental research. We go out and try to find the best technology and apply it to solve customer problems," said Bolch. "That is a great definition of innovation."

Bolch and Valdes warn that creating a culture that welcomes and supports a rigorous approach to innovation is not without challenges. Companies with long legacies in a product line have plenty of employees who believe they know these products better than anyone else. "The first meeting that you have and you present any degree of research that is not in alignment with what the tribal knowledge is, if you aren't careful, it can very easily get discounted," said Valdes, recalling some of the reaction he had heard. "'Oh, that can't be true.' We talked to 2,500 customers. 'Well, you didn't talk to the right ones.'"

Along with the customer research, noted Bolch, Ingersoll Rand did extensive competitive benchmarking, taking other companies' products apart and carefully analyzing and testing them. He said that helped break down barriers to acceptance of new design ideas. The company also put a team of employees from its Advanced Development Program, a two-year training program for young employees earmarked for leadership positions, on an assignment to benchmark companies known for innovation. "Not all of what they came back with was useful but they came back with some real nuggets," said Bolch, adding, "It is one thing to have great legacy knowledge and people who worked in air compressors forever, but sometimes they can know too much. If you can blend those people with some people who have those skill sets but not necessarily the domain knowledge, they can come in, ask what might be considered stupid questions and sometimes come up with new answers."

New Portfolio, New Opportunities

In recent years, Ingersoll Rand has diversified its business and strengthened its global presence. The company sold its construction brands in 2007 and purchased air conditioning giant Trane in 2008. Since then, the company has been exploring the synergies of its businesses. For example, it recently added the ability to control certain Trane home thermostats with its Schlage LINK remote home management system. Using their computer or smartphone, homeowners can lock and unlock doors, monitor live camera feeds, and control temperature and lighting.

Whether it involves refrigeration, air compressors or golf carts, energy efficiency is a common theme that resonates with Ingersoll Rand's customers, Bolch noted, and is playing into product development across its brands. For example, Trane has a team of more than 200 energy engineers who go into customers' facilities, assess energy usage in HVAC, lighting, controls and other systems as well as factors such as building construction, and develop guaranteed plans for energy savings.

One key finding from Ingersoll Rand's research is that customers' needs go well beyond the purchase of their products and involve the need for a variety of services to ensure that products -- and the systems and environments they operate in -- are running optimally. For example, Valdes said customers may purchase as efficient an air compressor as possible, but when Ingersoll Rand later performs an audit, they find that the system has a number of leaks that are sapping its abilities. He estimated that in as many as a third of customer calls for new, more powerful air compressors, the answer is really to optimize the systems they already own, services that Ingersoll Rand offers them.

As is true of other aspects of continuous improvement, Ingersoll Rand officials speak of the pursuit of innovation as a journey. Coming from an engineering culture, they first associated innovation with hardware but they have broadened their outlook to recognize that innovation is at least equally important in terms of their services and their business model. Said Valdes, "We have made tremendous progress over the last three to four years but we recognize we have a long way to go."

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