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From Local to Global

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Contents

Acknowledgments......................................................viiIntroduction.........................................................ixChapter 1: New-Product Development...................................1Chapter 2: Strategic Growth..........................................18Chapter 3: People: Building a Great Organization.....................31Chapter 4: Climbing the Ladder.......................................44Chapter 5: International Partnerships................................61Chapter 6: Marketing: Romancing the Hose!............................73Chapter 7: Customers.................................................88Chapter 8: Supply-Chain Management...................................101Chapter 9: International Market Access...............................113Chapter 10: Selling the Business.....................................127

Chapter One

New products are engines to growth and profitability. Exceptional performance in Product Development is the result of a disciplined, systematic approach based on best practices. —Robert G. Cooper

New products are often a critical part of a company's success. For Dormont, it was the invention of the stainless steel gas-appliance connector that fundamentally changed the future direction of our business. This innovation dramatically changed how gas appliances are installed in two industries—residential plumbing and commercial food service. In many ways, these inventions impact all of us—whether it is through the use of gas appliances in our homes or whenever we eat in a restaurant. As I embarked on my leadership role at Dormont, my challenge was twofold. First, we needed to capitalize on our potential for significant growth in the gas-connector market. Second, we needed to build a new-product-development team that could create innovative new products that would help support the future growth of the company.

I began by studying new-product-development processes that were being successfully used by industry leaders. After a thorough review, we decided to focus on a concept called a stage-gate process. In its basic form, a stage-gate system is a conceptual and operational plan for moving a new-product project from idea to launch. Stage-gate divides the process into distinct stages separated by management-decision gates. The company sets up cross-functional teams that need to successfully complete a set of related activities in each stage prior to receiving management approval to proceed to the next stage of product development. (If you are interested in learning more, in the appendix there is a list of references about stage-gate and other business processes mentioned throughout the book.)

Another important tool that we used to support our new-product development was voice of the customer (VOC), a term used to describe the process of capturing a customer's requirements. It typically consists of both qualitative and quantitative research steps. Our team would work with our customers to produce a detailed set of customer wants and needs and then prioritize them in terms of relative importance and satisfaction with current alternatives. These were used as the key input for new-product definition and the setting of detailed design specifications.

We began building our NPD team by successfully hiring a group of talented engineering and marketing professionals who brought a great deal of knowledge, ideas, and enthusiasm. We were most successful when it involved an extension of our current products and other product extensions developed collaboratively with our supply chain.

The Invention of the Stainless Steel Gas Connector

Dormont was selling a line of flexible metal connectors that were used to attach residential gas appliances. These were flexible metal tubes that were made from brass in small sizes (three-eighths inch and one-half inch diameter) and in lengths ranging from twelve inches through seventy-two inches. It was easier to install a gas appliance with a flexible line (vs. hard pipe) as the connection could be attached to the gas supply at the wall and then the appliance could be pushed back into the space. The best examples would be a gas range in a kitchen or a gas dryer in a laundry room. Dormont began to purchase gas connectors and valves and sold them with our line of small Crescent water heaters. This arrangement generated additional sales and commissions, which made the Dormont line more attractive to manufacturers' reps.

After a few years, the number of brass gas connector returns that Dormont sold began to increase. These products were used in residential kitchens and laundry rooms, areas where household cleaners containing ammonia were stored. The brass tubing was susceptible to corrosion from the ammonia, and this created pinholes in the thin-walled tubing. Eventually, the brass gas-connector manufacturers began to coat the flexible lines with a gray epoxy coating to protect against the corrosion.

As a result of the issues with the brass gas connectors, my father (Jerry) began to think about a better solution. Was there a superior product that couldperformthesamefunctionalityandnotbeatriskbecauseofcorrosion? From the many custom pipe fabrication jobs that Dormont produced, Jerry had learned a great deal about metals that were effective in corrosive conditions. He wanted to design a product that would integrate a metal that was malleable enough to be fabricated into a corrugated, thin-wall tube and could also withstand the attack of corrosive chemicals found in the home. He knew that stainless steel would be an ideal option. Building on the current product designs, he worked with one of our strategic suppliers to design and develop the first stainless steel gas-appliance connector.

In addition to the product design, he had to address issues related to American National Standard (ANSI Z21.24) for residential gas connectors. This was a national standard that was adopted under the auspices of the American National Standards Institute. ANSI had delegated the creation and administration of standards related to gas appliances and accessories to the Z21 Committee. This committee in turn created the Gas Appliance Connector Subcommittee, whose members included brass gas-appliance connector manufacturers, code officials, and individuals from various gas utilities. In addition to performance tests, the standard included a design restriction in the materials section that allowed for only brass or aluminum as metals that could be used in the design of a gas connector. Put another way, it limited the ability of innovative people to create a superior product that might use a different metal. In fact, the existing manufacturers had a vested interest in maintaining the status quo.

After Jerry joined the subcommittee, he submitted proposed amendments that would allow stainless steel to be used in the design of a gas connector. These proposals met great resistance, and numerous objections were raised. These manufacturers had been required to coat their brass gas connectors and were concerned that a stainless steel gas connector might negatively impact their market share. Jerry hired several technical experts, including metallurgists and chemical engineers, to prove the ability of stainless steel to be safe in the conditions found in a residential environment. They developed several performance tests...