Leica Geosystems as Industry Innovator - Case Study Example

Leica Geosystems as industry innovator BY YOU YOUR SCHOOL DATA HERE HERE Leica Geosystems as innovator History of organisation Leica Geosystemsis the product of many different acquisitions and a split that occurred in 1998 from the entity that used to be Leica Cameras. Through third-party acquisitions and purchases made by the new Leica Group, this organisation now is equipped with the knowledge and technical expertise to expand into multiple software, machinery and technology markets. The company is now a division of Hexagon Group as a product of the many acquisitions in the organisation’s history (leica-geosystems.com, 2010). The company currently employs 3,500 people with representation in 28 different countries, including partnerships developed in over 120 countries as well (leica-geosystems.com, 2010). Description of organisation Leica Geosystems provides support and development products in construction, aerospace, and technology, providing solutions in areas of analysis and spatial needs. The most important products it develops include those which support construction and urban development, including Leica’s GPS systems, HDS laser scanners, locators and various machine controls (leica-geosystems.com, 2010). The business’ technological achievements are direct investments in producing tools for global surveying, positioning and mapping with the service network to support it (Quality, 2006). 3D technologies are produced for building and construction projects along with remote sensing products used for machinery (leica-geosystems.com, 2010). Internally, Leica has a developed management system based on the European Foundation for Quality Management model as a business excellence tool (leica-geosystems.com, 2010). This would be necessary in this type of industry to develop a management model when process and capacity issues need constant adjustment to meet new technological demands, implying a team focused environment with a series of control systems for contingent production efforts. Changes to processes will occur as a result of new product development, requiring a useful management model that outlines responsibilities and goal-attainment objectives. Competing industries Because of the many different products offered, with talent having been developed through ongoing acquisition, Leica competes in many different markets with multiple competitors. Competition in building and construction is intensive, with too many customers to research. It is a fair assumption to provide that it is a highly competitive industry requiring adaptability and flexibility, with quality control systems, in order to provide technology and support equal or better to competition. The types of projects involved have many smaller or larger competitors offering similar technologies with the same pricing issues as the consumer-based marketing mix. A recent project involved using Leica’s 3D machine guidance technology when laying concrete slabs at Heathrow Airport, with Leica’s technology providing increased productivity and no waste of concrete (leica-geosystems.com, 2010). As a publicly traded business (leica-geosystems.com, 2010), the organisation needs to bring shareholder value by producing ongoing innovations in multiple industries with growing global competition. The involvement of sales teams or technical teams will depend on the technology sold, such as aerospace support versus building support. In a project environment, competition varies based on scope or responsibility of the technology or support provider. SWOT Analysis Strengths are identified as process controls and ongoing product innovation delivery to different markets. Strengths are in processes and ability to hold market share through innovation. Weaknesses are identified as having a poor marketing focus, using only industry publications for promotion. Included is limited investor information about earnings to make investment decisions, thus an external risk. Opportunities include using more alliances to procure talent in marketing or through acquisitions of a third party marketing research firm; or outsourcing these talents. Threats include heavy competition, global regulation for new market entry, and heavy demand for higher support services on technological innovations. Market size Hexagon Group’s annual report did not provide the market share figures needed to determine exact hold on its many competitive markets. Similar information was outdated in this area with other secondary research. However, in 1998, Leica held 20 percent market share for instruments used in surveying. In 2006, 20 percent still represented the business’ market share (Quality, 2006). This offers evidence of a sustainable sales margin in these industries where Leica competes, rather than a large increase in growth. However, holding a 20 percent market share overall in 2006 suggests it rates well among intense competition. This would lend some support that it is a market filled with competition, with similar products, that generally hold their current market share unless producing a radically different product or service concept. Main competitive strategy Collaboration and acquisition are the two main competitive strategies, building up developed talent through continuous purchase of other companies. Similar burdens can be taken off the business by divesting low-performing units. Teague (2010) identifies a collaboration effort with Leica that blended procurement with product design, marketing and sales. Collaboration introduces new models of structuring the business internally to make it more quality-focused or recognise cost savings where appropriate. This might imply a lean environment for processes, however research cannot valid that assumption. This is competitive strategy in terms of designing a cross-functional team able to work on many different collaborative partners globally. Introduction of new talent helps assist in building a better human resources model that can minimise redundancies and use creative talent for innovation. Acquisition introduces new talent and technologies and helps in new market entry by offering more resources. Future challenges “Interest in early supplier integration in NPD has increased as an open innovation approach and has become more common in firms” (Schiele, 2010, p.124). With competitors adopting innovation models and total quality systems, the main challenge will be in areas of procurement and sales. Higher concentrations of technological competitors would have more flexibility and better systems to attempt to outperform the business’ innovations. Supplier integration might also give suppliers new customers and adopt the idea that they do not need to have a singular dedicated buyer because they now hold multiple contract accounts. This could be a competitive risk if Leica cannot get the supplier support needed to handle their changing supply needs. Giving a supplier too much control can cause problems with the entire value chain by one of their own five forces, especially if working in a quality-measured production system. Innovation at Leica Geosystems Process innovations are needed to assist in building competitive advantage (Baer & Frese, 2003). The very large line of products would require a flexible production system that looks toward process innovation. Currently, products and services are complex outcomes of processes that are reliant on many different levels of support technology (Jelinek & Bean, 2010). Process innovations would need to occur at the production level and inter-divisional between talent support systems to ensure communications and productivity. Most of these concepts are described in total quality management. Process innovation “provides the means for safeguarding and improving quality and also for saving costs” (Johne, 1999, p.6). Leica was recently nominated for receipt of the European Inventor Award (leicageosystems.com, 2010). Offers the organisation, “Our strategic vision of geomatics has led to the integration of companies with expertise in laser-scanning technology, 3D visualisation and software for remote sensing, building and construction, GIS applications and machine guidance” (leica-geosystems.com, 2010, p.1). Innovation comes from adapting and improving on existing products and using state-of-the-art processes to change many different industry practices. Process is clearly an innovation at Leica. Innovation is present in each product offered by Leica, built on talent acquisition, collaboration and quality focus. Another example of process innovation are the prototype models and validation testing procedures that occur when building complex products (Zakarian, 2010). There is a methodology of production and design, linked with development, that must be accomplished to produce a workable facsimile and evaluate its role for commercial customers. With the high product line availability related to sophisticated technology development, it is likely prototyping innovations occur at Leica though research did not identify specific internal organisational practices. Innovations at Leica In terms of innovations, one product Leica provides is the laser distancemeter – a hand-held device to improve speed for length, volume and squares (in distance measurements) with simple one-touch operation (leica-geosystems.com, 2010, p.1). This is a tool that enhances productivity and is designed to be user-friendly. A device like this would use laser lights to illustrate distances and also to show the volume of earth, as one example, available in an area considered for drilling or digging such as with a tunnelling project. Rather than using manual labour to perform the function of performing actual measurements, surveying can be done in a fraction of the time and at a better long-term cost. Since it can be estimated that maintaining a 20 percent market share over an eight year period can be the expected sustainability levels, life cycle for these products cannot be very long. With heavy competition, new innovations or adaptations would need to be developed quickly or their products reach maturity quickly. The laser distancemeter produced by the organisation would likely need upgrades in distance reach, functionality, or making it completely hands-free to remain a viable product in same markets for over five years. The pace of technological innovation globally supports that estimate and the growth margins provided in the previous sales analysis. It is more likely that the life cycle for this type of product would be expected at three to five years based on external forces and their own product development efforts. This would drive innovation forward in a technology organisation simply to stay competitive. Sales data was not available for Leica Geosystems therefore actual revenue creation for this single product was not available on the company. However, with such a wide product range available, including the aforementioned 3D software and machine guidance systems, its function provides segmented contribution that would give the organisation a good market reputation. This reputation for quality and sophistication, supported by award nominations, would give the business a competitive edge simply based on the product and its ability to outperform other competing products. The laser distancemeter simply links the larger Leica brand of products to a quality name that can potentially build further, future relationships for larger contracted work or expertise. “Collaboration among engineers, purchasers and suppliers can help influence the direction of a supplier’s technology” (Teague, 2010, p.49). With a collaboration-focused organisation and management model, Leica would be using this hand-held device when consulting about product viability or other software related issues during the course of larger-scale construction efforts. This is where the innovation gets its exposure to contribute to competitive edge by having a reliable piece of equipment in their hands when they attempt to demonstrate its value to project development. As a tool for further product sales in higher profit categories, this is the innovation’s contribution to comparative advantage. “It may seem counter-intuitive to invest during an economic downturn, but making targeted, strategic investments can actually reap big business rewards when the market improves” (Puri, 2009, ,p.40). This should be said even when it leaves a negative impression on the balance sheet (Puri). Creating technology support products with a quality-focused production system is a strategic investment into long-term problem-solving solutions. Investing in this one particular innovation and allowing it exposure in large-scale projects is a form of reliance on professional discussion of reputation. Recommendations There are many internal activities performed by Leica missing from any publicized information provided by the organisation about their innovations processes. Using reason speculation for support, the 20 percent market share span and the competitive nature of the technology industry might be an indication that the products produced are heavily protected by concerns over intellectual property. There is much information needed to identify the specific strategies being undertaken, since it is logical they are being masked because it might offer insight to competitors about the new product development actions ongoing at Leica. Sales data about the specific items was not identifiable nor was information about corporate expectations for per-product sales with specific market groups. In order to provide quality benefit to the company, the development of a sales or marketing strategy is necessary. Under the veil of secrecy about specific products and their contribution, their functionality and quality can be linked back to Leica in this manner. Even searches for information that suggested specific departmental activities was not readily available in any published format. The model for how management leads people was available only, with no research tours through facilities management and process developments. Development of a business to business on-air public relations campaign might take the emphasis away from support and put it back on the product by using other than industry-specific magazines or journals to highlight innovation and per-product contributions. It is not unlikely that such innovations could reach the high resource market group in independent households ready to make a purchasing decision based on its technology or availability to measure like the pros. Most of Leica’s accomplishments were found in industry publications that only explained the science in non-biased terminology. This is one reason why the laser distancemeter is not providing the type of sales contribution because it does not stretch, from a PR view, beyond this reading audience. There is evidence of a lack of marketing accomplishment that starts with publicizing internal activities while still keeping control over process issues, competition, or any other external force that provides concern to mask structural activities. Across the globe, upstart innovators are looking to procure products that they can use to launch their own research or development businesses and need someone who can provide them the support required. Industry magazines are going to help them get their interest rather than having a personal sales consultant available with on-air demonstrations or interesting quality-minded advertisement. This is a global company with only 3500 employees. Though this is by no means an under-accomplishment, it does not give the business a full range of support expertise to give global customers more value by choosing Leica products over competition. The television advertising campaign proposed can act as the salesperson to improve individual product contribution to sales. It would simply need to be filmed and then run with little investment in terms of supporting it. This recommendation gives the company’s product lines much more global visibility without adding significant demand on labour. Strategic partnerships are generally built on the idea that there is going to be some element of risk or concern about many different issues, from intellectual property protections to competitive innovations built on collaboration. Some of this organisation’s products were created through collaborative efforts which can remove competitive edge if both partners begin incorporating similar processes into their production models. Some of the products offered have a much larger contribution to the income statement and the company might want to look at issues at production exposure. Having collaborative partners touring facilities and being a part of new product development does not necessarily guarantee that certain concepts or systems are being privileged by partners or product collaborators. Though holding market share steady for a period of eight years is an accomplishment, to lose any potential long-term contracts because of improper strategic partnerships is far too risky. An audit of all strategic relationships, conducted informally but purposefully, might identify any individuals with something meaningful to provide. These audits are linked to a total quality management system and should be applied at the strategy and relationship levels as well to secure the interests of the innovations already produced and those not yet produced. References Baer, M. & Frese, M. (2003). 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(2010). Laser Distancemeter – Overview laser distancemeter. http://www.leica-geosystems.com/en/Laser-Distancemeter_5061.htm (accessed April 5, 2010). Leica-geosystems.com. (2010). Monitoring Systems – Product Overview Monitoring Systems. http://www.leica-geosystems.com/en/Monitoring-Systems_4211.htm (accessed April 6, 2010). Leica-geosystems.com. (2010). Quality Management – Our commitment to total customer satisfaction. http://www.leica-geosystems.com/en/Quality-Management_842.htm (accessed April 5, 2010). Leica-geosystems.com. (2010). Leica Geosystems Products. http://www.leica-geosystems.com/en/Products_885.htm (accessed April 7, 2010). Puri, K. (2009). Seven positive steps for negative times, Dealerscope, 51(2), p.40. Quality. (2006). Leica Geosystems Receives Market Leadership Award, 45(13), p.12. Schiele, H. (2010). Early supplier integration: the dual role of purchasing new product development, R&D Management, 40(2), p.124. Teague, P. (2010). Partners in product development, Purchasing, 139(3), p.49. Zakarian, A. (2010). A methodology for the performance analysis of product validation and test plans, International Journal of Product Development, 10(4), p.369. Read More