Technology & Innovation Management

11/2/2010        Technology & Innovation Management        Hadj Khantouch

        Teleflex Canada Case        

1. Which types of innovation are carried out at Teleflex Canada?

“Teleflex Canada innovation focused on product and market development that solved customer problems or created new markets. Much of Teleflex Canada’s success has come about because a demand was identified for new products in niche markets”.

Then we can reasonably think that this company follow a New market/High end disruptive strategy. Teleflex executives summarize it quite well :“we are looking for few areas where we can use electro-hydraulic applications. There are other markets where this technology could work...These are markets tat will pay a premium for a customer-built system using hydraulics”.

Teleflex Inc. acquired Capilano Engineering to expand into new boat markets leveraging on its industrial hydraulic systems expertise; Syten product was “the world's first low-cost hydraulic system for the mass pleasure boat market”. This is a kind of radical innovation through the shift from mechanical to hydraulic technology used in boat steering systems. Teleflex brings “lower” product performance, at least in the near term as it seems to be difficult to apply initially in traditional markets. But this low-cost approach to compete with low-priced mechanical steering systems was quite risky. Burgelman & al depict also this difficulty to tune correctly a radical innovation during first stage:“When a major product innovation appears, performance criteria are typically vague and little understood” (Burgelman&al p.254).

Teleflex introduced in 1984 the SeaStar model, “a much more sophisticated and rugged all-metal system”.This company, as a new entrant, focused on product performance first and established the dominant design using a new technology that competition (followers) would not easily imitate.”As time went on, the performance gap narrowed .But because, we built scale economies through our size and innovated in manufacturing, we have the lower cost”.Here we notice how Teleflex took the lead over the competition and consolidated its dominant position through process innovation in the early phase of market maturity. Disruptiveness is expressed here in the fact that Teleflex as a new entrant on boat markets introduced its premium business model to fend off traditional competitors which were limited to lowering price as mechanical systems were more and more commoditized.

The way Teleflex got into the heaters market proved how much this company moved to new markets while enhancing its competencies.”Teleflex Canada was successful in applying its boat-base technology to the needs of other markets”.They got into heaters by acquiring Cummins Engine just to get “our foot in the door...We did the deal anyway because it got us into a new market that we thought we could serve better with new products”.This company proved to be relevant in the truck heater market and then took it to the “transit bus market...These were not huge leaps and to us they seemed very obvious”.They gained a lot of expertise in combustion technology and developed also systems for US Army proving how good they are in application's engineering:”Our engineers improved the inventor's design and made it manufacturable and safer”.We notice here how Teleflex spread a product innovation in different niches by learning rapidly in a proven technology to develop new applications.

1. Why has Teleflex Canada been so successful in launching new products?

“Much of the company’s success has come from an approach to innovation that emphasizes several key factors:

1. a focus on product development using existing and proven technologies:

these people are not early enthusiatic adopters of a new technology; they are not ready to cross the chasm with a new technology but they are champions at developing new applications in niche markets. They are really good in anticipating on potential interest of hydraulic or combustion technologies to use them where others don't see the interest. They capitalize on their core competencies and knowledge of specific technologies that have proved to be relevant in some markets to use them in new ones. As explained by a Teleflex Canada executive: “We are a company that has been innovative in application engineering”.

1. the development of products for ends users that can then be “pulled” through channels as opposed to pushed:

Teleflex Canada product development is driven by end-users needs:”Our philosophy is not to sell to the boat builders; we want them to buy it from us” because “the customers demands it”.This company tries also “to be a few steps ahead of (its) customers”.

What Teleflex people strive for: “how do we make our product better and easier for our customers to use. Since our competitors are followers they cannot think like this”.

Speed and flexibility are also two major factors to explain the success of this company:

“It is not how big you are that makes you successful – it is how fast you are to market...Our goal is to provide a customer with a conceptual design in 7 days and a prototype within 30 days”.This flexibility allows also many interactions with a customer experiencing the product and taking part to the innovative process. It is an opinion shared by many observers such as M.Schrage from MIT  Sloan Schools who supports that most great innovations can't come without customers willing to adopt them [2]. It seems that Teleflex care really about its end-users and that these ones feel it strongly:”All of our customers could sense the enthusiasm”. R.Burgelman and al. would say that: “Innovations that facilitate speed to market and the ability to customize features and functions in response to the needs of customers in ever-small market niches become the trajectories of improvement that customers reward with premium prices.” ([1] - p.369)

1. the creation of a corporate culture that encourages creativity, risk-taking, and tolerance for failure:

“Right from the beginning, there was a nucleus of very good people in Teleflex Canada in terms of inventive creativity and willingness to solve problems and make things happen”.Culture is embedded in processes but also in people from the bottom to the top; Harold Copping defines accurately the culture of this company and this executive is right when he says: “I cared a lot about people enjoying their work and doing interesting jobs. Actually, he got an MBA with a thesis on “job enrichment”: he seems to be sensitive to this aspect of the management. He did also his maximum to protect its people and act as a real “fence” in front of the corporate management: Teleflex Canada was really an autonomous business unit and this may explain how they were able to adapt so quickly to the different markets they addressed. People involved in product development were moved out of the buildings in many projects: all their attention was on innovation. The risk-taking attitude is totally embedded in the “entrepreneurial thinking” ingrained in Teleflex Canada identity.

1. an atmosphere that tries to foster sharing and teamwork:

'That is easier when you are a small company”.Within Teleflex, everyone was allowed to question everything and then people share their opinions. Indeed, all the people tried to keep at the same 'level' to really be part of a community with a common goal. Convince people that they won't be punished or humiliated if they speak up or make mistakes: anyone could guess that it is not easy to get such results in every organization.

1. What are threats to continued innovation and growth at Teleflex Canada?

How could they be addressed?

Teleflex Canada may be classified as an autonomous business unit (see Annex – fig.1Burgelman&al p.163) within the larger Teleflex Inc. H.Copping liked the fact that the teams he managed  “were small enough and far enough away from corporate that nobody cared what (they) did...Nobody restricted me - freedom was a big factor.”

Here two issues concerns Canadian subsidiary:

First of all, Teleflex Canada don't want to loose its entrepreneurial spirit as too much centralization will slower processes in many fields that are critical for Teleflex. It will be difficult then to get prompt intellectual property in order to capture value on early stage of development or make it difficult to keep talented engineers within the company if “corporate edicts about raises”. Teleflex Canada approach seems to be pragmatic, adaptable and try to respond quickly to such issues. So the right path would be to keep decision process at the right level and, for sure, not concentrated at corporate level.