Managing Innovation at Nypro, Inc. (A) Dongyuan Zhu Xingxing Liu Ye Wang

Agenda Company overview Perceived management problems/issues Alternatives Recommendation Discussion questions Reference 2

Company Overview The fifth largest custom injection molder in the world, and the largest non-automotive molder. Three divisions: Healthcare Electronics/communications Customer/industrial Strategically aligned with customers base Building plants near customers in vital markets Striving for uniform world-class technology at all plants. Highly decentralized organization -Gordon Lankton, president and major owner of Nypro, followed a strategy of developing superior technology by focusing on large-scale molding jobs with demanding , technologically progressive customers.--- at the beginning he adopted a sustaining innovations. Manufacturing strategy: building plants near customers in vital markets. The manufacturing strategy focused on commitment to customer service. -The challenge of decentralized location strategy 1. All the separate little units all over the world is to be responsive, entrepreneurial, and internally independent, but to be viewed by the outside world as one company. 2. When the company encourage people to innovate, the company has a challenge to lose the consistency across plants all over the world. 3

Perceived management problems/issues Company facing a shifting basis of competition which was speed and variety in the future. Lankton perceived a new market for Nypro, and was considering how and where to disseminate the revolutionary molding machine, NovaPlast, across the company. Company having the challenge of being innovative while keeping consistent across plants. -Point 1: The company has been able capitalize on its current market by being innovative and achieving strong alliances with its customer base. Competitors have been able to duplicate processes to a point of being competitive. The new changing market is focusing not only on quality and innovation but now it is demanding speed. For example, Nypro has to short the delivery time inorder to capture business. A new market for low-volume, high-mix, quick-turnaround business. -Point 2: explain a little about NovaPlast. The current equipment that Nypro has does not have the necessary flexibility demanded by the marketplace. It does not allow for rapid prototyping. Nypro has to decide how to effectively deploy the new technology to meet the changing demands of the marketplace. So Nypro decide to adopt a new molding machine called NovaPlst—a small machine in size and capacity, new technology which allowed for faster tooling up -see the 3rd slide. 4

The alternatives of adopting NovaPlast Alternative 1: building a new plant Strengths Most popular with senior management Engineering efficiency Centralizing development would facilitate personal oversight of project Being done rather quickly Weaknesses Transportation costs Against current philosophy of being decentralized No successful experience  Build a new plant that would employ only Novaplast machines 5

The alternatives of adopting NovaPlast Alternative2: scatter across the network Strengths Close-to-customer manufacturing particularly important in the market segment Allows for the pontential to capture more market share Puts more engineers and marketers to work on exploiting the NovaPlast Better technology would emerge Weaknesses Against economy of scale philosophy Unproven technology and no clear indication of its feasibility  Install 2 or 3 machines in each of Nypro’s plants 6

The alternatives of adopting NovaPlast Alternative3: apply internal market effect, focus on making it successful at a single plant. Strengths Could be implemented rather quickly Allow for engineering/efficiency to be gathered Could evaluate how resource planning systems interoperate Use “internal market” for innovation Weaknesses Time consuming to deploy if research shows that the flexibility is required in other international markets  Not to roll Novaplast out across the country at all but to focus on making it successful at a single plant 7

The alternatives of adopting NovaPlast Alternative4: not use NovaPlast Strengths The niche market identified and capability allows company to compete in market Weakness Avoids taking advantage of the strengths, innovation Not dealing with problem of the changing market and competition  Do not apply the new technology 8

Recommendation Go with making NovaPlast successful at a single plant. -Less weakness -Allows flexibility towards others Short term -Continue with evaluation -Continue pursuing orders -Gather data relating to effectives and efficiency Long term - Decide on long term deployment strategy 9

Discussion questions Is NovaPlast a disruptive or sustaining innovation for Nypro? A new-market disruption What is Nypro’s process to implement new innovations? Following four steps Nypro had a good process for exploiting sustaining innovation but not for the disruptions? CEO needs to stand astride the interface between mainstream business units and new disruptive growth businesses.  3: Nypro provides central research and development services to its largely independent business units. But its governance procedures are in crucial ways less formal and effective. Nypro uses periodic meetings among unit managers to spread ideas and develop a cooperative culture despite their rivalry for the headquarters’ approval. In addition the CEO keeps close touch of innovations that diffuse among several units, and requires that the most successful of these be incorporated into the firm’s standard operating procedures. However there are no systematic incentives to analyze present practices for clues about new markets. According to Christensen, the processes and values was designed to shape every investment to help the company make money in the way it was structured to make money. The organization cannot disrupt itself. It can only implement technologies in ways that sustain its profit or business model. The consequence for Nypro had the company missed the chance to create a major new disruptive growth business. 10

Process of implementing innovations Find the actually occurred process innovations. Select the most important innovations which can implement in other plants. Find the ways to transfer the innovation from the original team to other teams and plants. Nypro sets up the new rules of the innovation. This refers to the second point in the last slide. 11

Reference Clayton M. Christensen, Michael Overdorf. Meeting the Challenge of Disruptive Change. Harvard Business Review Article. Mar 1, 2000. 12

Thank you! Questions? Dongyuan, Xingxing & Ye, March 10, 2008.