Jentjens Machinetechniek BV Transforming from an industrial to a knowledge-based enterprise Daniel Andriessen Professor of Intellectual Capital INHOLLAND University of professional education Amsterdam, The Netherlands

2/27 Using case studies 1.Have you ever used case studies before? 2.What are case studies: Snapshot of history of a company Story of a company Actor Reader sees a business dilemma 3.What is a business dilemma? Relive the situation Business decision to choose between option No good /bad decisions Apply theory Discuss options within the group Both lecturer and student learn

3/27 Brief History of Jentjens ’50s – ’70s:from ship repair to steel construction ’70 – ‘80s:from steel construction to machine manufacturing ’90s:from machine manufacturing to engineering ’00s:from engineering to Oriented Handling® ’04:becoming an Original Equipment Manufacturer Investing in Intellectual Capital

4/27 Teaching Purposes 1.Adding value in a knowledge-based economy and the position of companies in the industrial value chain 2.Intellectual capital resources of the firm 3.Making R&D decisions

5/27 Climbing the value ladder Jobber Subcontractor who manufactures single parts. Company that sells products under their own brand name and that often uses subcontractors. Original Equipment Manufacturer Subcontractor that offers complete product modules that always include sub-subcontracting. System supplier Subcontractor that offers also assemblies that include some sub-subcontracting. Component supplier Subcontractor that produces parts or offers special production phases. The amount of assembly is limited. Part supplier Subcontractor used when extra capacity is needed. Capacity subcontractor

6/27 Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational CapitalRelational Capital Intellectual Capital is the driver of value

7/27 Explicit knowledge Implicit knowledge TNO has knowledge Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational CapitalRelational Capital

8/27 Implicit knowledge SkillsAttitudeReputation McKinsey has skilled workers Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational CapitalRelational Capital

9/27 Implicit knowledge SkillsAttitude Explicit knowledge Philips has intellectual property Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational CapitalRelational Capital

10/27 Explicit knowledge Implicit knowledge SkillsAttitude ProcessesReputation McDonalds has processes Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational capitalRelational capital

11/27 Explicit knowledge Processes Implicit knowledge SkillsAttitude Culture GE has pride and ambition Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational capitalRelational capital

12/27 Explicit knowledge Processes Culture Implicit knowledge SkillsAttitude ReputationNetworks Nike does not manufacture shoes Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational capitalRelational capital

13/27 Explicit knowledge ProcessesCultureReputationNetworks Implicit knowledgeSkillsAttitude Customer capital Rabobank has involved customers Companies Intellectual capital Financial capital Tangible capital Human CapitalOrganizational capitalRelational capital

14/27 Structure of the case Part 1: To cut or not to cut, that is the question (2001) Meeting with four growers of pot roses. The growers wanted to automate the striking of cuttings from pot roses. What was needed was a robotised solution Has never been done before All technology in-house except for vision technology No experience in horticulture market Shall he pick up the challenge? Part 2: Robots to conquer the world (2006)

15/27 History 1.How do you account for Jentjens' remarkable transformation from a ship repair shop to a producer of intelligent machines? 2.How would you describe George Jentjen's master plan behind the transformations that took place since he took over in 1982?

Value creating model What does the company actually sell (created value)? Core competence: Oriented handling of objects Products: machines and robots that intelligently handle objects How is this value produced (main business processes)? 16/27 Client intake Engineering Manufacturing Assembly Installation Maintenance

Business strategy External business environment: Outsourcing of labour intensive processes to other countries Increase of sophistication in production and of repetitive but complicated production processes in healthcare, automotive, electronics and horticulture Competition in high tech products from other countries Main strategic objectives: Leader in robotics Solving problems others can’t solve Focus on market sectors healthcare, automotive, electronics and horticulture Business success: Profitability Sustainability Image / customer loyalty 17/27

Jentjens’ Intellectual Capital What are in 2001 the most important intellectual capital resources of Jentjens? Can you divide them into human capital, organizational capital, and relational capital resources? 18/27 Intellectual Capital HumanOrganizationalRelational Engineering knowledge Attitude Engineering process Production process Brand & reputation Component manufacturers Customers SuppliersMaintenance knowledge Leadership

Jentjens’ IC Monitor Human CapitalOrganizational capital Relational capital Investments Days for vocational training Recruitment expenses # of internships # of hours spend on quality management # of hours spend on R&D # of hours sales manager # of hours account manager Investments in promotion and fairs Assets # of employees with bachelor degree # of employees with master degree # employees with PhD # of specialists in core technologies Enterprise resource management system ISO certification CAD/CAM software # of suppliers with ISO rating # relationships with universities # customers Effects Image at schools Employee satisfaction # of customer complaints # of maintenance assignments per product # of new products # lines of new software code # new clients Client satisfaction Image in marketplace # of publications 19/27

To cut or nor to cut… If Jentjens were to decide to develop the cutting robot, what additional intellectual capital resources would it need to have access to? Should George Jentjens decide to develop the cutting robot? Why / why not? If your answer is yes, what recommendations would you make to George concerning the implementation of the decision to develop the robot? 20/27

21/27 Dilemma’s Getting access to vision technology Option 1: hire a vision technology experts and develop the technology from scratch Option 2: partner with a company specialized in vision technology Option 3: try to find if the technology is for sale and licensing-in this (probably patented) technology 2.Getting access to the horticulture market 3.Funding the development costs and managing the risks

22/27 Dilemma’s Getting access to vision technology 2.Getting access to the horticulture market Option 1: hire a sales expert and put together a dedicated sales team to conquer this new market Option 2: partner with a company specialized in selling equipment to this market Option 3: partner with the four growers who know their market well 3.Funding the development costs and managing the risks

23/27 Dilemma’s Getting access to vision technology 2.Getting access to the horticulture market 3.Funding the development costs and managing the risks Option 1: fund the development from his current cash flow and taking the costs as expenses, and maybe find some additional subsidies from the local or European government Option 2: fund the development from his current cash flow and activate the costs as investments on the balance sheet. Under Dutch law it is allowed to activate certain R&D costs on the balance sheet Option 3: have the four growers pay for the development and treat this opportunity like a regular, one time project with no sharing in future profits. Option 4: Have the four growers pay for the majority of the development and set up a licensing scheme in which the growers own the technology and Jentjens has the sole right to produce the machines. Jentjens would then share in future revenues of every product sold.

24/27 Classroom discussion 4.What happened in the case? 5.What do you think is the issue? 6.How do you think the company did business before 2001? 7.How would you rate the performance of manager George Jentjens? 8.What do you suggest he should do? Explore the options Pro & cons of the options Who votes for option A? B? Explore further 9.How should George implement the decision? 10.Should the company implement any changes? 11.What really happened

25/27 Part 2: situation in 2006

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