Digitization - Opportunity & Challenge, Article in Innovation Management Magazine 2/2017
Deutsches Institut für Erfindungswesen (DIE) e. V., München
Wilo SE, Dortmund
Integration of product design and IP management at WILO
By Dr. Markus Beukenberg, Prof. Kurt Mehnert, Prof. Dr. Alexander J. Wurzer and Theo Grünewald
With its high-tech pumps, the innovation-driven company WILO is an important player in the global issues of energy and water consumption and supply. Investment pressure combined with the need for maximum efficiency and resource conservation are the drivers of the business. Pumps are increasingly becoming smart products, integrated into intelligent buildings. In addition to technology, consistent and sustainable brand management is important for WILO.
For the first time, innovation and IP management were integrated with product design in the development of the Stratos MAXO high-efficiency pump. The result is a unique product whose distinguishing features are also protected and thus exclusive in its competitive positioning. The industry's high level of attention, awards and market success prove the approach right.
As a pioneer of pump technology for central heating systems, WILO has not only written technical history, the Dortmund-based group has set itself ambitious goals in its industry: In the competitive environment of high-tech pumps, the challenges of the time should not only be solved first, but also as the best. Since 1872, WILO has been developing innovative solutions for pumps and pump systems for heating, cooling and air-conditioning technology, water supply and sewage disposal and treatment. WILO deals with everything that moves water: in building technology, water management and industry.
WILO lives and cultivates the pioneering spirit of tradition and success with innovation and an understanding of customer needs. According to our own understanding, progress is that which represents an improvement for our customers. This is not only the big innovation, but also the small detail, an accelerated process, a simplified handle or an easier decision for the customer. WILO products should be particularly user-friendly, efficient and of high quality. How fundamentally and progressively Wilo approaches the subject of innovation can also be seen from the fact that Wilo solutions have always been a role model for the market and have significantly influenced the design of guidelines.
Global trends and the pump industry
Due to its business activities and product range, WILO is affected by various long-term developments to which it must gear its strategy. These include Globalisation, urbanisation, water scarcity, energy scarcity, climate change and technological change. These developments influence society, the economy, ecology and technological reality today and in the future. Their effects must be reflected in WILO's strategic behaviour. Globalisation means that today's emerging economies are rapidly developing economically and are becoming industrialised nations in terms of production and resource consumption. This in turn leads to a further increase in global competition for raw materials and resources.
The simultaneous increase in urbanisation presents planners with enormous challenges. Not only households, but also industry and agriculture need more and more fresh water, which is becoming more and more precious as a vital and scarce resource. In addition to the basic problem of water scarcity, the energy supply problem is becoming increasingly urgent in view of climate change. These change processes provide WILO with the framework conditions for a positive growth scenario. Wherever investment pressure prevails, combined with the need for maximum efficiency and resource conservation, WILO is in a good supply position.
Positioning of building technology as part of the energy revolution
The energy efficiency of buildings is at the heart of trends in building technology. Due to urbanization, efficiency measures pay for themselves much faster, because three quarters of all energy is consumed in cities. Already today, 40% of global energy consumption is accounted for by existing buildings, only 32% by industry and 28% by transport and traffic. For buildings, on the other hand, the lion's share of efficiency gains is to be found in heating systems, because approx. 75% of all heating systems are not energy-efficient. On the other hand, residents are increasingly demanding greater comfort and security from their buildings. This explains the general demand trend for energy efficiency and (supply) security technology, as well as the networking of the various systems.
In general, it can be said that the more intelligent a building is - keyword Smart Building - the sooner it can meet the requirements mentioned above. From the point of view of building automation, complexity increases with functionality. This is responded to, for example, by investing much more in IT in the building infrastructure. The industry has agreed on a number of standards between products, actuators such as sensors and systems. However, the question of the interaction of the various components, such as between a pump network and the building management system, is still an open question that needs to be answered in terms of technology, market requirements and IP positions.
The brand WILO
WILO wants to be perceived as an innovative system partner for tailor-made solutions in water management projects, who develops and implements these solutions. This means that the system limits of Wilo's performance are much greater than would be the case, for example, if a pump were supplied as a machine. Wilo stands for innovation, reliability and system competence in all aspects of pumps. In brand positioning, the customer's needs are directly taken into consideration and a partnership-based, tailor-made solution is offered so that the customer can have uncomplicated processes and a high degree of planning security at his disposal. Pump intelligence plays a decisive role in brand positioning - as well as in Wilo's positioning in the value chain of the industry - in two respects: in the sense of WILO's intelligence and competence about the pump and in the sense that the pump itself should be as intelligent a product as possible. WILO attaches great importance to the fact that the intelligence of the product itself can be seen, i.e. that the claim to intelligence is also reflected in the communication through the external product design and that this is protected by IP. High efficiency pumps meet the highest demands in terms of innovation, technology, ergonomics and design. They are regarded as image carriers and are protected against imitation, especially plagiarism, by a comprehensive portfolio of brands and designs.
There are, for example, design guides for the electrical connection module, the user interface with the display unit (Companel), the operating elements, the motor housing, the nameplate holder, the hydraulic housing, the insulation and damping as well as the use and application of the company logo. Wilo attaches great importance to brand consistency, especially between communication (awareness, familiarity, consideration) and fulfilling the brand promise at all points of contact (purchase, recommendation, preference). To ensure this, comprehensive analyses of the WILO brand value proposition are carried out, based on market research and customer satisfaction analyses. The strategic benefit promise is derived from this. The aim is to align the WILO brand with customer needs in order to be even more preferred and to ensure clear differentiation in the competitive environment. Rational sales arguments for high-efficiency pumps are based on the following aspects: Premium quality, German engineering, technology, sustainability, high efficiency and, in summary, the offer of solutions to problems for the customer. The emotional sales argumentation runs along the following aspects: Ultimate comfort, initiative, activity, orientation towards trustworthy solutions. The rational and emotional argumentation together results in the perceived customer benefit.
Differentiation through product design
The core of Wilo's differentiation strategy, however, is pump intelligence. This must be immediately recognisable and intuitively perceptible for the customer in the context of his product use. For this reason, WILO attaches particular importance in the development of products to an expressive, clearly recognisable product design that supports use - whereby this design is not limited to the design of shapes, colours and surfaces of the product. Rather, the different scenarios of product use are examined by the customer and optimised for his needs.
The new development of the Stratos MAXO high-efficiency pump also focused on product design. It was important that the design not only allows comfortable, intuitive and simple operation, but also allows the brand to be experienced. The core of the new design was therefore a new user interface that offers maximum ergonomics, user-friendliness and comprehensible information transfer. The monitor, the new human-centered interface, now also determines the visual presence of the Stratos MAXO.
It becomes active according to demand and thus becomes the individual stage of the user. Here, the entire intelligence of the product can be experienced and controlled for optimum use. At the same time, the new colour concept conveys a comprehensive brand experience to the user: The central control unit and the motor in "WiloGrün" suggest to the user a visual "grasp" through the product and thus make the connections intuitively understandable. The design concepts newly developed for the Stratos MAXO will in future be transferred to the entire product portfolio in terms of content and form, not least to ensure a uniform brand appearance and maximum recognition.
In March 2017, the Stratos MAXO received the "Design Plus powered by ISH" award from the renowned German Design Council for its innovative design and efficient technology. Assessment criteria included design quality, overall concept, innovative content, choice of materials and technical and ecological aspects.
Securing the differentiation features through IP
From the point of view of TOP management, IP's strategic focus was to support this differentiation strategy. As part of the new product development and product launch of the Stratos MAXO high-efficiency pump, an IP strategy had to be developed and implemented as an example. At WILO, as a traditionally technologically driven company, IP was primarily seen as an instrument to protect the company's own inventions that arose in the course of the original development work. The actual IP strategy consisted of protecting one's own inventions and avoiding the infringement of third-party property rights. As part of the product development of Stratos MAXO, this passive-reactive course was abandoned and an active IP strategy was developed that was geared to market and competitive conditions. In addition to brand positioning, the starting point was the company's technological competence.
Within the framework of the development projects, it was also necessary to convey to the project staff an understanding of a modern IP strategy: Intellectual property is not a byproduct of one's own marketing, design and development work, which falls off as a natural return on one's own creative efforts and, due to its protective effect, immediately makes a positive contribution to value. It was clear to the board that due to the complexity of the products, the intensity of competition, the global value chains and the enormous challenges facing the industry, such a traditional image of IP had no answers for the future. In order to establish the IP culture at WILO, four focus areas were initially distinguished, from which the project objectives were then derived:
Focus I: IP Culture - Defining the goals of IP
In the past, WILO had registered prohibition rights rather accidentally and without specific targets. Dealing with IP was not anchored in the corporate culture beyond the patent and development department. Only in individual cases was IP included in corporate strategy considerations and to optimise returns.
Focus II: Competition effect of IP
Es galt zu klären, welche Möglichkeiten bestehen, Exklusivitätssphären um innovative Ideen herum zu gestalten, um eine nachhaltige, rechtlich verteidigungsfähige Unique Selling Proposition zu gestalten. IP soll gezielt über seine Exklusivitätswirkung zur Gestaltung des Marktes und bei Kundenentscheidungen eingesetzt werden.
Focus III: Configuration of the IP portfolio
In the future, the IP portfolio will be constantly reviewed and, if necessary, adapted to changes in the business model, the competitive situation and changes in the value chain (e.g. along developments in industry 4.0). As with all other production factors, WILO will optimally align the IP acquired and used by the company with the business model.
Focus IV: Value creation through IP
The costs and benefits of IP should be continuously monitored and the IP portfolio adjusted accordingly. Thus, the costs for IP should remain within reasonable limits compared to the benefits achieved. In the Big Circulators division, a separate project was initiated which was to serve for IP alignment. The project was classified as a top priority by the Board of Management in order to make clear to all participants the importance of setting the course for modern IP management. WILO is in competition to differentiate itself. For this reason, the management variables of the IP strategy must be geared to the strategic usage promise, but at the same time also have a technical implementation in the product. Four reference variables were identified, each representing a spectrum of customer benefits.
WILO attaches great importance to reliability and service in a wide range of applications. Many individual properties and individual customer benefits contribute to the quality, such as smooth running, availability, longevity and coverage of a wide range of special applications.
In Wilo's self-image as a technology leader in high-efficiency pumps, energy efficiency, i.e. the optimised ratio between performance and energy input, is of central importance. These include the characteristics of automatic control, the sustainability of the solution for the customer and the low operating costs associated with low energy consumption.
Pumps are a "low involvement" product that the customer expects to be as easy to operate as possible. From the customer's point of view, this simple operation should be applied throughout the entire life cycle of the pump, from installation, commissioning and continuous control to simple replacement.
Surprise element - operation that inspires ("Joy of use")
The brand promise "Caring every day to make your life easier" also means that customers should be enthusiastic about the product and the intelligence that has gone into it to make their lives easier. Such elements are the human-machine-interface, the design, the avoidance of operating errors or the high level of system integration. The linking characteristic behind these reference variables is the pump intelligence. Intelligence in this context means that the product is reliable, efficient and designed to be easy to use. If the intelligence is so great that it surprises the customer, then the enthusiasm element is also realized. The task of IP must be to achieve the greatest possible exclusivity in the perception of the customer for these reference variables. It must be borne in mind that WILO is faced with a highly complex decision-making structure for its products. WILO pumps are installed in the products of other companies without the end customer knowing that the WILO pump exists in the end device. For strategic reasons, it is not possible to implement a "reach-through" mechanism here (as is known from "Intel Inside", for example).
The decision and benefit structure along the product life cycle is used to differentiate between the planning phase, installation, operation, replacement, update, upgrade and service case. Decision-makers and influencers are wholesalers, facility managers, planners, investors, installers and end customers or users. In this respect, WILO must formulate a strategic benefit promise that is as clear as possible, which is perceived positively by the various decision-makers and influencers and communicates sufficient individual benefit. The exclusive use of IP for customer benefit and the creation of a unique communication position thus serve to influence decision-makers in favour of WILO products.
Along these parameters of the IP strategy, it was then necessary to question IP in the competition between high-efficiency pumps and to determine the need for IP from this analysis. After discussing the IP strategy and the resulting IP requirements with top management, the exemplary implementation and systematic implementation was decided and started.
The realization and organizational implementation of the IP strategy in five steps
Step 1: Integrate the company's market intelligence into the IP design
The conventional IP activities of risk avoidance through the creation of Freedom To operas and the suppression of imitations are complemented by strategic prohibition. Imitation suppression is based on the existing technical solution of a technical problem and prevents the imitation of this technical solution through patent protection. If necessary, alternatives to the technical solution, so-called workarounds, are also applied for. The strategic prohibition involving market intelligence has a different starting point: customer benefit. Strategic prohibition does not necessarily involve a technical solution of one's own, but rather the will of the company to be exclusive to a customer benefit offer. The prohibitive effect of the patents to be designed then refers to the ability of the competition to offer these customer benefits. In order to precisely define the customer benefit to be exclusive and to precisely define the implementation possibilities, the integration of developers, product management and marketing in multidisciplinary teams is necessary. The participation of product designers in such an approach is also of essential importance, as they optimize usage scenarios from the customer's point of view and thus make the customer's benefit recognizable and tangible. Through the appropriate interaction of product designers and IP experts, it is possible to ensure a clear and sustainable differentiation of competitive offers at an early stage in the development process. At the same time, such cooperation is not a one-way street: in many cases, recognizing the necessity of certain exclusivity positions also leads to the design of new product features.
Step 2: Adjust the IP process
The patent process at WILO had to be adapted in order to enable the desired prohibition rights to be designed to benefit the customer. From the point of view of the patent department, the classic patent process begins with the receipt of an invention disclosure. This invention disclosure was preceded by the inventor's process of discovering that he had made an invention. The starting point of the classical patent process is therefore the invention. In IP design, the starting point of the patent process is not the invention disclosure, but the needs analysis as described above. The needs analysis is based on the assumption that the company is in a position to offer a unique position with a customer benefit. Around this unique position, i.e. the strategic benefit promise, IP creates a sphere of exclusivity that is legally defensible and sustainable against competition. After clarification of the need, the desired prohibition right is formed with the tool of the synthetic invention. This procedure corresponds to a reverse line of thought to the classical patent process. The IP design comes from the desired result and then shapes the prohibition claims, while the classic patent process begins with the invention and hopes for the future that the resulting patent claims will actually cover the offered customer benefit. The starting point for the desired result is not only the creation of patent positions. In the course of designing the Stratos MAXO, various designs for product and interface design were also evaluated from an IP perspective. Particular attention was paid to the extent and effectiveness with which the design features can be protected by IP. The corresponding information then flowed into the decision process about the product design.
Step 3: Designing the prohibition rights along the customer benefit of Wilo services through synthetic invention
In the case of synthetic invention, patent efforts are focused on an area for which no finished R&D results are initially available in-house. The patents to be designed in this way cannot therefore be derived "incidentally" from the R&D work to be carried out anyway, but are rather specifically produced assets. In this sense, we speak of a synthetic invention process. Using tools from product design, the technical considerations are concretized to such an extent that changes compared to the state of the art are created. The procedure itself uses the usual tools for systematic invention (also known as "Invention on Demand"). The starting point is decisive. As shown in the following figure, the necessary technical system elements are compared along a reference variable, such as the "simplicity of operation", in order to gain clarity about the technical implementation. The desire to be able to serve a certain customer benefit as exclusively as possible results in the search for the set of all technical solutions that can generate this customer benefit. In particular, it is important to find inventive solutions that go beyond one's own implementation and are relevant to competition. For the actual inventive step there is a multitude of invention methods. At its core, a contradiction formulation is used to characterize the inventive task by the fact that two generally contradictory requirements have to be fulfilled. The result is an overview of possible solutions to the technical problem which must be compared with the state of the art.
Step 4: WILO is able to design prohibition rights very early and very late in the innovation process
WILO plans to develop its products and services long before the actual development work begins. The competition often works in close temporal proximity on solutions that deliver similar benefits from the customer's point of view and/or are argued to the customer along analogous benefit promises. Competitive conditions in the field of high-efficiency pumps have become so intense that patents from the industry can hinder the implementation of ideas. In order to avoid this systematically, patent work at WILO is shifted to the early conceptual phases of the innovation process in order to secure extensive spheres of exclusivity. The existing exclusivity is also reviewed in line with the market and, if necessary, further prohibition rights are added to the company's own IP portfolio. Both the very early and the very late application for intellectual property rights require specific skills in IP design, which WILO successively builds up within the project teams.
Step 5: Use the impact data to continuously improve the IP design
IP controlling creates transparency for WILO as to whether the targets set have been achieved and enables active management of the portfolio. IP controlling establishes a link between market success and the IP portfolio and thus makes relevant information available and interpretable. The formulation of concrete goals within the IP strategy and the prioritisation of certain exclusivity areas lead to a benefit-oriented development of the IP portfolio. In this way, it is ensured that the necessary resources are used sensibly. The formulation of concrete objectives and the monitoring of the achievement of objectives lead to the targeted integration of IP into the business model, thus unfolding its maximum benefit. The continuous monitoring of IP-related costs and benefits, their documentation and analysis enables WILO to design and optimise the IP portfolio on the basis of effectiveness criteria and the necessary budgets.
WILO has taken a new approach to the development of the new Stratos MAXO high-efficiency pump and implemented an integrated IP strategy, product design and innovation management. In accordance with the design thinking approach, various scenarios of product use were analysed, the product and user guidance were optimised accordingly and the differentiating features were incorporated into the IP design. The IP process was switched from a reactive approach that reacts to inventions from R&D to an active approach that is driven by exclusivity and market needs. The IP culture at WILO was also changed in this way: Away from collecting inventions to actively shaping market positions through prohibition rights. In this way, an IP portfolio was created that pays tribute to the core message of the WILO - Pump Intelligence brand and makes it exclusive in customer perception and against the competition.