As you prepare for 2018, you are going to have to make a choice. Do you want to lean in and be a disruptor in your industry, or are you satisfied with just keeping up? If you are interested in the former, here is a formula that works, drawn from a 130-year-old company that has transformed from keeping up to disrupting.
Founded in 1883 as Pittsburgh Plate Glass Company, PPG spent its first 100 years known simply as a producer of paint and glass. Today, it has transformed into one of the most innovative companies nobody has heard of and the largest coating company in the world. You cannot get through one day without touching one of their surfaces. They apply high-tech coatings on everything from airplane parts to tabletops. They make your car rust-resistant and your laptop keys immune to wear, and spread invisible layers across your smartphone screen to give it that silky, and scratch-resistant, feel you love.
What’s more, they are aggressively linking their technologies to fast-growing spaces. Their coatings can help keep autonomous vehicles from crashing, keep modern airplanes from overheating, and expand the uses of 3D printing.
The results are remarkable. Over the past five years, while most competitors have lost revenue, PPG has held strong. They have grown operating margins by 40%, making them one of the most profitable companies in their peer group. Investors now include PPG among lists of “disruptors” and “innovators.”
Now most corporate turnarounds tell the story of a brave CEO making bold bets on the future. IBM’s Lou Gerstner taught the “elephant to dance” by transforming the company from a hardware to services powerhouse. Microsoft’s Satya Nadella propelled the company beyond its old desktop-dominance model.
But the PPG story is different. Instead of driving innovation from the top, it has taken actions to unleash it from below: to liberate people in this 130-year-old corporation to spontaneously innovate from within. There are five lessons to draw. I’ll share the first three here today:
Step 1: Build your technology toolbox
Ed Rakiewicz, associate director of the Aerospace/Funded Initiatives Team at PPG, when explaining his company’s innovation approach, said, “As scientists at PPG, it is in our DNA to match opportunities and unmet needs with our technical toolbox.”
The more technology you have in your technology toolbox, the more likely you will find a way to solve a new customer need.
Encourage development from multiple teams
PPG continually grows its technology toolbox in several unique ways. For example, it operates 94 research labs throughout the globe. These labs, mostly acquired through M&A, would be more efficiently run were they consolidated into a few large innovation centers (as most companies do).
But David Bem, PPG’s CTO and VP for Science and Technology, who leads the company’s innovation efforts globally, points out that by maintaining so many labs, PPG is able to have multiple teams developing competing technologies simultaneously.
Embrace collaboration with others
To further build their technology toolbox, they collaborate with national labs, the Department of Defense, and universities. Bem sends his scientists to universities to give workshops but requires them to meet at least two new professors with each visit. Their goal is to develop relationships so faculty knows what PPG is working on. Then, when those professors come across a new technology that may be of use, they think to give PPG a call.
“We want to become a magnet” for ideas, Bem explains, so if a professor learns of students launching a startup that might fit PPG, that professor thinks to make an introduction.
Give people freedom to work on their own projects
To further expand their technology toolkit, PPG gives researchers 10-15% of their time to work on projects of their own choosing. Google and 3M are famous for doing the same.
The company does not limit their search to new coating technologies. They also look for process innovations. New ways to apply an electronic charge across an airplane part, say, so that coatings fill every nook and cranny.
All of these efforts help PPG build their technology toolbox – hopefully faster than their competition. But for the technology to be of use, one has to match it to a market need.
Step 2: Sense market needs
The company constantly follows new technologies – from artificial intelligence to 3D printing to autonomous vehicles to virtual reality – in order to identify new ways in which coatings might be used.
Autonomous vehicles, for example, are mounted with cameras that read road signs. The problem is those cameras have difficulty seeing the dark color of stop signs. So PPG researchers are exploring how new kinds of coating might enable a stop sign to look dark red to the human eye but reflect a strong signal back to sensors and cameras to improve its visibility.
It’s critical that the cameras mounted on Google’s autonomous cars stay clean. Could there be coating that keeps lenses free of dirt?
They study the growth of Zipcar-like bike services in China and ask how coatings could help such models work better. Since coatings cover every surface of every new invention, the possibilities are endless.
When the constant search for evolving needs meets technologies that could solve those needs, magic happens.
Step 3: Match technologies to needs
In a far-flung global company, it’s easy for one group seeking to solve a need to be ignorant to the fact that technology in another division could offer a solution. PPG has put several practices in place to avoid this.
For example, Crystal Morrison, a scientist that leads PPG’s Self-Cleaning Coatings effort, holds “innovation days” during which scientists and sales teams come together to share what they are working on. Often sales teams see a technology and think, “That could help us solve a problem our customers have been struggling with.”
The company helps mobile phone manufacturers coat their screens to meet specific characteristics. They will apply layers of coating to make the screen scratch-resistant, anti-fingerprint, or anti-glare, or give them a smooth feel. PPG actively asks, “Where else could these properties be helpful?” Would people want desks, car dashboards, or displays on industrial machinery to have similar characteristics? You could say PPG is seeking to maximize their ROIP – their return on intellectual property – by ensuring they maximize the value of their technology.
The company requires all researchers to run “test drills.” A small team picks a topic (e.g., how to make airplanes more energy efficient) and runs an intense, one- to two-month effort to find a solution. They search through the company’s technology toolbox, drawing on new innovations across the company, to search for a match.
Once you match a need with technology that can meet the need, you have a potentially viable innovation. This leads you to the next challenge – crossing the “valley of death,” as Bem calls it – which I will review, along with the fifth and final step, in next week’s blog.