PM Profile: 'Disruptive Innovation' Helps Milwaukee Electric Tool Offer Jobsite Solutions
Plumbing & Mechanical recently interviewed Steve Richman, president of Milwaukee Electric Tool Corp., about trends in the tool industry and issues facing contractors who use the company’s products. Before being named president in 2007, Richman was president and CEO of Werner Co. and, prior to that, president and general manager of Skil and Bosch Power Tools. He started his career in 1982 with Black & Decker.
PM: What is the most significant develop-ment in power tools in the last five years?
SR: For Milwaukee, it has been the advancement of our entire lithium ecosystem, which includes the technologies for the battery, electronics and motor. When we look at what has happened from the time we launched our first patented lithium-ion product in 2005 to where we are today, we see products that are more compact, more ergonomic, last longer and perform better. They have more powerful and more efficient motors.
Milwaukee’s entire lithium ecosystem is dramatically changing the game. Products that once were hand tools are now power tools; corded tools are now cordless. It has allowed these products to become more affordable on different platforms and allowed the entry of the M12, M18 and M28 systems for us.
PM: What will be the “next big thing” in power tools?
SR: We think it still ties back to the lithium ecosystem and how you leverage it to provide tools that deliver solutions for plumbing and mechanical end users. Our next generation of high-performance cordless tools, M18 FUEL, is going to be game-changing in terms of the life of the tool, battery performance of the tool and performance of the tool overall.
PM: With all the choices contractors can make on power tools, what distinguishes Milwaukee Electric Tool?
SR: The first thing that distinguishes us is our strategy. We don’t view ourselves as a power tool manufacturer. We view ourselves as delivering solutions our core users need to aid them in their safety and productivity. Because of our roots, particularly post-World War II, plumbing and mechanical users are core to us as a company. We set our strategy to focus on them and invest in what they need to a different level than our competitors do.
Our competitors would never have sat down with Uponor, for example, and ask how we could deliver a solution that will aid contractors’ productivity and go from a hand tool that joins Uponor’s fittings and PEX tubing to a power tool like the PEX Expander, which operates on both a 12-volt and 18-volt platform.
All the time, energy and resources we spend talking with end users on the jobsite is because we try to partner with them to provide those kinds of solutions. They’re the experts, and their craftsmanship makes the tool better. The tool doesn’t make them better.
PM: Can you explain what you mean by “disruptive innovation”?
SR: A Harvard business professor named Clayton Christensen wrote books on innovation and he coined that term. The point with disruptive innovation is to solve users’ needs in a way that completely breaks away from what was done in the past. It’s what Apple did with its iPhone, iPad and iPod.
At our company, we use the phrase to describe how we solve our users’ needs by thinking about what they do from the time they wake up in the morning to the time they go to bed at night.
PM: Can contractors apply in their own business what Milwaukee Tool has learned about being competitive?
SR: Some of the contractors I’ve been with recently have taken the disruptive innovation approach. They ask themselves how they can find a way to over-delight their customers based on who their customers and competitors are. They try to change the game in a way that their customers want them more than anyone else and that their competition can’t replicate. Apple has done it, Starbucks has done it and we try to do it.
The other side of competition is to be paranoid. The first day we say we’re doing everything right is the day we lose to our competition. We are a paranoid group because we want to win. That’s part of our culture as a company.
PM: What was your strategy in entering the hand tool business?
SR: It started with our strategic focus for power tools, which is not to develop tools everyone else in the market has. When we first started looking at the hand tool business, we saw a lot of big-name tool companies that had been there for years. The more time we spent with end users and giving them prototypes, we found more opportunities than we thought there would be.
That has led us to a strategy that focuses on plumbing, mechanical and electric users. It also has led us to deliver innovation in every single product we’re launching, and we believe it is disruptive innovation. We started a separate group on hand tools 19 months ago and delivered our first hand tools nine months after that.
PM: Do you plan further diversification in your product portfolio?
SR: We’re not a power tool company. We’re a company that delivers solutions to our core users by understanding what they’re doing. As long as we can deliver solutions to them, there’s a potential business opportunity. But it’s got to be with our core end users. We believe there’s so much fruit in working with our core end users and delivering solutions, that’s where we will be staying for at least the next five years.
PM: How long will it take for the U.S. construction market to get back on its feet?
SR: We’re hopeful that we will see improvement over the next three years. However, our strategy is not based on the market improving significantly. Our strategy is based on delighting our end users, working with them and delivering solutions to them. We see significant growth for the company within that timeframe.
PM: How is Milwaukee Tool connecting with plumbing contractors these days?
SR: We believe we have to take a holistic view toward our end users. We want to partner with them from the time they’re an apprentice when we can help train them to the organizations we’re involved in, such as MCAA and PHCC at the local and national levels. This also involves our distribution partners and publications such as yours that communicate with them.
We’ll emphasize social media such as Twitter and Facebook more and more as the industry changes and younger people get involved. Connecting with our core end users is a company initiative across the board. Our Jobsite Solutions Team spends a significant amount of time on the jobsite and at training centers working with our end users.
PM: If you had only one message to give to plumbing contractors, what would it be?
SR: The best way I can sum it up is who we are as a company. We want to be about their productivity. Working with them to deliver solutions is our mission.