Innoboard: There is no consistent definition for innovation. Every industry and every department has their own definition. How do you define innovation at TE?
Monika Kuklok: First, innovation is the heart of TE Connectivity. For example, we received the Thomson Reuters Award for innovation but actually, it is much more than that. The award is just a reflection of what we do every day. Innovation is one of our core values. The first time you walk into TE you will see, that innovation is a top priorities.
So how do you define innovation for your team?
I think it is part of our culture. Recently, I had a team discussion on “How do we really put innovation into one clear sentence?“ and we came up with “Innovation is converting ideas into numbers“. So we keep in mind everything done by our department needs to be converted into revenue and margin for the company. For me it’s really important that we focus on how to innovate and sequentially how to bring a new customer need into a new solution. That is our focus.
One example of putting our concept of innovation into action is our new ARISO Contactless Connectivity where we started with the idea of “how do you connect without connecting?“. With this idea we started solving the problem from a different angle and we came up with the solution where you now can connect data, power and signal over a 7mm space. Now we enable our customers to connect sensors as well as other devices in the field, in the machinery at places where they’ve never connected before.
One of our key innovation advantages is TE Connectivity works in different industries for example consumer devices, appliances, automotive, air space defense and marine. Many times an idea comes up in one area, then transfers to other industries. TE is actually at the forefront of those ideas, because we are the ones that need to connect those ideas. If a car manufacturer wants to have cars Bluetooth enabled, we’ve known that years before they actually release the first car. That is something that we then can take to other industries and help our customers see their own innovations differently.
How do you see innovation changing industries?
My personal “aha!”-moment was three years ago at SPS Drives, a very important automation tradeshow. There were only a few tablets or consumer devices on the factory floor demonstrations. In discussing smart consumer technologies, people claimed there would never be a smartphone or a tablet in the factory. It’s not considered practical for industrial usage and unsafe. Now many factories actually use consumer devices in all aspects of factory and production. You can see that new technologies are coming from other areas to the industrial space. With the whole discussion about Internet of Things you can see how people are opening up to consider also different approaches.
It is the fourth year in a row, that Thomson Reuters award TE Connectivity the Global Innovator Award. What are the success factors therefor?
We at TE focus and heavily invest in innovation. We have around 7.500 engineers. We invest around five percent of our revenues into development. Each business unit defines how much to allocate into development engineering for ongoing products and how much into advanced development for the more innovative, disruptive and breakthrough innovations. 25 percent of our revenues come from products that have been introduced over the last three years.
To continue as market leaders in the long term, innovation keeps us there and help us keep customers first. It is not innovation for the sake of innovation, we really want to solve new problems for our customers. Sometimes even before they are anticipated. Starting with the sales team trying bring new solutions to our customers through the whole channel up to the development team, it is about dedication. Our success is innovation and our commitment to customers.
We have many collaborative projects with our customers and suppliers. For example the development of the ARISO technology, I mentioned before, is something we did with a startup in New Zealand. We are really looking at this globally to find the right technology partners to bring on board and connect them with our customers.
Which are the innovation barriers?
At TE we have the challenge of winning the innovator award. It easy to get complacent after being recognized by Thomson Reuters 4 years. We do not want to fall in that trap.
How do you avoid this trap?
One thing is that we host annually TE Connectivity TechCon – an annual internal one-week-event for the top 400 engineers to discuss new technologies and ideas within the company. The focus is on our engineers presenting their ideas. It is like an internal professional conference, highly valued by employees. The engineers can apply for this event by submitting their paper. We really create awareness and internal competition around this event and everybody wants to bring something in. The conference is hosted by our corporate CTO and is extremely successful.
Another activity is the “Innovator Game“. It is an online platform, where for our engineers can showcase their talent and expertise by sharing innovative ideas that can potentially be developed into new TE business opportunities. The idea ties to virtual startup that will go through four funding rounds. Virtual investors, mainly TE management, can decide, with their virtual money, how much they would put into the idea based business venture. The goal is to go through all four funding rounds. The top three teams will then get real money to develop their idea further for TE.
In addition, we have other competitions and games to get people engaged and thinking differently, like an annual robotics competition.
How do you react to disruptive trends like the Internet of Things?
We think differently as innovation within trends is actually a core task of my team. We challenge the organization to think beyond. We’re working with our sales teams, product management teams, field teams and operation teams to think about “how can we solve things differently?“. The Internet of things is a big topic, because we believe this is actually the largest opportunity overall. Although this whole trend Internet of Things started out from the consumer space, the potential is greater in the industrial environment. In the consumer space it is more about “everybody having a nice gadget”, while in the industrial environment, the potential of Internet of Things is about reach higher productivity and that’s associated with money. If you look at all the companies out there, everybody is struggling: “How do we get higher productivity?“, because of low-cost labor countries. “How do we actually make our sales more flexible?“, because of the trend that consumers want to have everything within a day, with a lot of different colors and different functions. It’s putting a lot of constraints on factory environments, because for a factory just to say “I’m going to do something else over night“ is a tough challenge. That is why we believe that Internet of Things is going to be the key enabler for the factory of the future.
TE Connectivity is at the most local level in any factory. We are at every single connection of those huge machines. The Internet of Things concept is that you want to have information as detailed as possible. The best way to get this data is directly out of the connectivity. Then you have the most granular data you can ever get. That is why we believe TE can be a key enabler for the Internet of Things. We have the capability to provide the whole internet communication and are leaders of communication in the factory environment.
Then also for our own products, it’s just a small step to make the components intelligent and able to communicate. For example, you have a component that will tell you “By the way, I’m going to be failing in two weeks from now. Can you please exchange me before it happens?“. There are critical safety examples in the industry where it makes sense. Also there are a lot examples where people exchange components just because of the regular maintenance schedule although the component could have stayed there a year or two longer.
There is a huge potential and that is why we are looking into this topic so deeply. You can integrate a lot locally. You can make components smarter and with making components smarter you make the machine smarter. I think the factories and buildings of the future will look very different than they do today.
What relevance has business model innovation at TE besides product and process innovation?
My team is organized in technology and business incubation. When we talk about Internet of Things we talk about “how factories will be changing?“. The key value that will be derived in the future is not from the components— it’s from what do you do with the data that comes out of it. When you talk about Internet of Things you don’t have the choice, you have to talk about process and business model innovation, because otherwise you’re not really changing anything. We’re having some pilot projects with smart components. The next level is “how do you connect those smart components?“, “how do you make the data available in an industrial cloud environment?“ and “what analytics can you do on top of that?“. Answering this questions can help derive new business models. Once you start looking into smart components there is no other choice than looking into process and business model innovation.
Why is innovation important for you personally?
I’ve been always in growth business. I feel passionate about it and I want to contribute to innovation. I think there are new ways of “how you can solve things in a better way?“. It is about “how do you make it a better world?“.
Monika Kuklok is Senior Manager Innovation Platforms & Ventures at the Industrial Business Unit at TE Connectivity. Previously, she led the Strategy & Product Management for the TE Connectivity Solar Business Unit. Before she came to TE Connectivity she worked at Schott in Business Development and Product Management and at the Monitor Group (today Deloitte) in the growth business. She holds a diploma in business administration with international experience in Asia.
ILI CONSULTING thanks Ms. Kuklok for the expert interview.