The Great Recession last decade hit the construction industry early and hard, and USG was no exception. Orders collapsed, as did prices. Though the company had weathered its fair share of difficulties, the business outlook and employee morale were not good.
“We were innovating materials substitution and line extensions, but not funding big ideas,” said James Metcalf, Chairman, President & CEO, noting that the company had invented such products as drywall, steel studs, and acoustical ceilings.
“Our customers needed something new to take to their customers, and our people needed a platform that said there’s a future for us.”
Metcalf and Dominic Dannessa, USG’s EVP and Chief Operations and Innovation Officer, asked the company’s research scientists a simple question: What can we do that nobody else could do? The answer was to radically reimagine drywall, its core product, as a lighter, stronger, easier to use material that could be sold at a price premium.
“Jim brought them customer insights, and they raised their hands to talk about technology instead of cost reduction,” Dannessa remembered. “Then he told them to get it done in half the time they thought it would take.”
The project, code-named Avalanche, energized the company. Other projects were sidelined and took a backseat as faster, focused decision-making connected staff to meaningful outcomes. A new product, USG Sheetrock Brand UltraLight Panels, was ready in July, 2010.
“It was revolutionary for the built environment, because it was so light it improved installer productivity, lowered freight costs and performed better.”
“It even reduced our carbon footprint because it used far less water and energy,” Dannessa continued.
Home Depot was first to see that its customers would want the product, and capitalized on an exclusive launch deal to drive adoption by professional contractors and its DIY customers.
“After the first five or so stores carried our UltraLight Panels, we scheduled a party for employees who’d worked on it,” Metcalf said. “Over a hundred showed up, from just about every department. Everyone felt that they’d touched the project.”
Eventually, all Home Depot stores carried it, along with the rest of the channel. Avalanche technology now accounts for 95% of USG’s 1/2” drywall sales, and it’s the only manufacturer producing a full portfolio of lightweight panels for all interior applications.
Now, Metcalf has challenged the organization to institutionalize a burning platform approach that would seem right at home in a tech company.
Innovation projects are whittled down to a handful of big ideas, which are led by PMOs who report to an innovation board. Its main research center provides robust physical and virtualized testing services for each project, and an entire plant in East Chicago (renamed the Center for Manufacturing Excellence) is now a dedicated proving ground to test building technologies of the future.
Metcalf isn’t saying what a future Avalanche project might be, but there are at least three in development. Dannessa obliquely noted that environmental sustainability was an emergent topic, as was a systems approach to building materials and functionality.
“We’re motivated to keep a sense of urgency, and widen the moat,” Metcalf added.