It's not that John McConnell didn't want to satisfy his new Japanese distributor right off the bat. He simply couldn't. The more he tried, the more flaws he seemed to uncover. Like lava spewing from a volcano, he says, "the problems were coming down the mountain, and suddenly I'd see one here, and here, and here." The rumbling started, naturally enough, in Labconco's engineering department. The Japanese couldn't help noticing that each Labconco freeze dryer looked slightly different from the next. Ordering five at a time -- which domestic dealers rarely did -- they'd behold five distinct philosophies of wiring, say, or insulation. McConnell found such technical inconsistencies unsettling.
From the start Labconco had been a marketing-driven company, but McConnell didn't realize just how modest the company's technical skills were until Japanese engineers came to town. And at meetings at which he tried to pinpoint problems -- investigating, for instance, why his engineers ordered parts separately for the console and bench-top models of the same laminator unit -- he found "there was too much finger pointing."
A stickler for results, McConnell replaced his vice-president of engineering, bringing in Kerm Dyer in 1980. Dyer, in turn, eventually recruited about 10 new (but experienced) engineers. "The Japanese had some legitimate concerns," Dyer admits.
He couldn't hope to address them quickly, but Dyer attempted to show good faith by making some cosmetic changes in the freeze dryer. He added harnesses, for example, to contain the unit's unsightly wire potbelly. Later Labconco completely redesigned all its product lines, emphasizing simplicity.
But new designs matter only if they are translated into better products. In attempting to ensure that, McConnell found himself uncomfortably aware of the overpopulated and undersupervised Labconco factory. He painfully calculated that sales per factory employee worked out to a flabby $59,000 (compared with $120,000 today) and that turnover hovered at about 50% a year (now 15%). Working with a consultant and an industrial psychologist, he hired a handful of new foremen -- changing the job title to "department manager" -- and enrolled the others in leadership training. Dipping into the benefits of Labconco's 15-year aversion to debt, McConnell earmarked some funds for more advanced tooling, a new model shop, and, most significantly, better testing equipment. "When a product fails in Japan," notes Rosewicz, "it gets real expensive to fix real fast."
Traditionally, Labconco's products weren't tested -- at least not as fully as the Japanese wanted. These days Labconco products endure a virtual boot camp. Some glove boxes or freeze dryers may be run for an entire week straight, with monitors tracking their vital signs. Every other week a diverse group of employees grabs a product out of finished-goods inventory and picks it apart. Is the printing on the carton legible? Are the nuts and bolts flush with the screws? What can we do about this cardboard dust?
Along with doing in-depth testing, Labconco has begun documenting all results. "We have a history of each unit," notes Rosewicz. That way, when a customer calls -- be it from Tokyo or Tempe -- a Labconco service rep can pull the dossier. You say your freeze dryer has a gauge problem? Well, our records indicate we already replaced the gauge while the unit was being built. So check for a loose wire or a bad terminal. "By improving our database of service knowledge, the Japanese made us better at service," says Paul Sullivan, international sales manager. "That information has been very valuable here at home."
It should go without saying, perhaps, that all customers benefit from redesigned products that perform better: a more flexible glassware washer, a quieter fume hood, a more reliable freeze dryer. And Labconco's improved shipping procedures -- using tight packing that doesn't rely on the recipient's understanding the word fragile -- have also shattered previous customer perceptions. "The Japanese broadened our level of frustration, but they also broadened our knowledge," says McConnell. "We've learned to look at our own products through the eyes of the toughest customer."
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2. Exporting Sharpens Your Competitive Skills
Your future competitors aren't hiding. Their wares are out in the open, ripe for inspection. And all you have to do, McConnell insists, is head toward that next international trade show. "It's a good source of product intelligence," he says.
Going head-to-head with foreign manufacturers on their own turf has provided Labconco with some crucial advantages at home. For one thing, it distracts the foreign companies from any U.S. plans they might harbor. For another, it enables Labconco to size up any product before it ships here, allowing the company's troops to sell against it effectively from day one.
Or even earlier. Back in 1985 Labconco executives happened upon a British company that was churning out lightweight fume hoods. By the time the new competitor washed up stateside, Labconco had fashioned a persuasive argument to convince distributors that the product didn't conform to U.S. safety codes. "We pointed it out subtly, of course," says Weber.
In many of its niches, Labconco competes against much smaller, dedicated companies that make only fume hoods, say, or freeze dryers. "It's hard for us to stay on top of all these lines," says McConnell. But as far back as 1974, he has been trekking to Europe and lugging back suitcases of literature. Why can't we do this? he'll ask, pointing to a specific feature. He and others have even shipped back specific products, such as Japanese freeze dryers, tearing them apart quickly because "our distributors were beating us up to make a more competitive product," he says. Labconco engineers have whiled away many an hour figuring out how the chambers drain on a certain model or mulling over the coil design.
And Labconco executives are always on the lookout for new features. Some, like digital readouts, interchangeable front panels, and rounded corners, have been incorporated into products. "These ideas keep us fresh," says McConnell.
Foreign distributors can also offer valuable advice. Last March 1, the company spent $12,000 or so to detour its European distributors -- they were heading to a Chicago trade show -- to Kansas City for a visit. Viewing one new product, all 12 distributors seemed to agree that the company ought to add a special safety feature. "It could be a big selling point for our domestic customers," says Julie Sperry, director of product development. "We like the idea. And we really like the fact that our competitors here don't have it."
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3. Exporting Brings You New Products
Foreign exposure has provided Labconco with more than just ideas for its own products. By pacing trade shows and hanging out with distributors, the company's executives have actually landed agreements to distribute foreign companies' products in the United States.
