“If we owned a steel mill, what happens if our engineers want to make things in plastic, or with 3D printing?” asked Ronnie Leten, President and CEO of Atlas Copco, the Stockholm-based industrial equipment and services giant.
“My mill guy is going to be worried.”
The idea of being nimble, versus simply agile, is at the core of Atlas Copco’s approach to innovation, which focuses its engineers on improving its clients’ processes, and then leverages the capabilities of its partners to get products to market faster than its competition.
“I’m a big believer in open innovation,” Leten said.
Often, this means acquiring companies that add specialized capabilities to the company’s portfolio. Founded in 1873, Atlas Copco has ramped up acquisitions in recent years, buying more than 100 companies since 2000. Its purchase of Henrob in 2014 is illustrative of its approach.
“We saw the trend toward lighter, more environmentally-responsible cars made out of aluminum or composites, which would require methods for attaching parts other than the welding that works for steel,” Leten explained.
“Henrob had developed a technology for riveting a few years earlier, and proven it in a relationship with Jaguar Land Rover.”
Once the deal closed, Atlas Copco followed a 3-step strategy: First, it left Henrob’s leadership, processes, and 400 people in place, to show respect because, as Leten told it, “They must have been doing something right, and we’ve learned through years of acquisitions how not to do it right.”
Second, it did everything to support a quick win, which in this case was a high-visibility project on Ford’s first all-aluminum F-150 truck. The third step was to leverage Henrob’s tech with its own products, and quickly roll it out to its many automotive customers worldwide. The total time from acquisition to selling an integrated new offering was about half a year.
The company is already innovating the next generation toolset based on that tech. “The day after we come up with a new product, we’re always asking if there’s a better way,” Leten said, noting that a large sign at the company’s HQ reads “There’s always a better way,” and that he had nothing to do with it (directly, that is).
Its nimble approach is also evident in how quickly it identifies and acts on net-new opportunities.
“Five or six years ago, we weren’t selling much to the aerospace industry, but we identified a small, three- to four-person company just north of Paris that had an intriguing technology,” Leten explained. “We bought it, accelerated the development with our own engineers and expertise, and now approximately 90% of all the airplane wings in the world are made with Atlas Copco tools.”
“We’re now coming up with the next generation of that technology, too.”
Buying talent and not just IP is reminiscent of a skills acquisition approach more often seen in Silicon Valley than at an industrial conglomerate. Atlas Copco also evidences a startup approach to disruptive innovation.
“We have gurus looking for quantum leaps in our core products, like can we make compressors work continuously, or shift pneumatics to hydraulics,” Leten said, though refusing to provide any more detail. “Our teams are working on disruptive changes that could be five years out, or only six months away.”
“My job is to create sustainable, profitable growth, which means having a passion to stand out in the categories in which we compete.”