Industries across the globe are feeling the effects of COVID-19. It is important to quickly adapt to the new environment and find opportunities in this challenging time.
We were honored to host Charles Vaillant, CTO & COO of MANN+HUMMEL, along with Saeed Amidi, CEO and founder of Plug and Play, for a conversation on COVID-19 on April 14. Charles is an expert in corporate strategy, business growth, innovation management, corporate ventures, and digital transformation. He has been with MANN+HUMMEL for the past 20 years in different roles and has been leading initiatives with Plug and Play since 2016.
To watch the full fireside chat, click here.
Embracing the open innovation model
Even in the current state, it is important to keep innovating.
Charles notes that there needs to be a shift in working. In the past, large corporations have considered intellectual property (IP) as one of the most important aspects of a company.
“The way we’ve been working is in an isolated, introverted way, cautious with who we collaborate with.”
For open innovation to take place, companies must be willing to collaborate together. With technology improving at such a fast state, speed to market is far more important than protecting IPs. Now, it’s much quicker to spin out product solutions than it takes to file for a patent. By the time the patent is filed, the technology is already obsolete.
You must have the courage to work with other people and share technologies with other companies.
“You must have the courage to work with other people and share technologies with other companies. The speed to market is what you’re looking for. Take the risk to collaborate.”
The ones who do this well will be quite successful, while the ones who don’t will suffer in the long run.
Saeed observes that “you need to combine the speed and agility of entrepreneurs with engineering and scaling power [of OEMs]...together you can create value faster, better, and cheaper than working alone.”
Biggest challenges and biggest opportunities
The biggest challenge and opportunity for MANN+HUMMEL is the same: its size.
As the market leader in their product lines, MANN+HUMMEL’s success can be contributed to the way they’ve been running their business for the past 70+ years. However, this also poses a challenge and risk for the future, because if they don’t convert to the new world, to digitalization, and adapt to the new dynamic in the market, they have a lot to lose.
“We are at the point now where we have to relearn our business, protect the assets that we have, and build new skillsets on top of that for the future,” says Charles.
The question is: how can we combine the speed and agility of a startup with the assets and confidence of a large corporation, including the brand presence, the volume, and purchasing power?
How COVID-19 has contributed to innovation
As Charles says, It’s amazing how creative and resourceful humans can be in dire need of finding solutions.
In response to COVID-19, MANN+HUMMEL agreed to work with a large OEM to produce materials needed to fight the pandemic. Speed was essential. Here is the timeline from start to market in under 15 days total:
Wednesday - Receives a request from a large OEM looking to source HEPA filters, which MANN+HUMMEL specializes in.
Saturday - The OEM gives a green light to go ahead with production.
Monday - 540 pieces are air freighted to Detroit for healthcare workers.
Normally, this process would take years. Typically for an automotive project, from conceptualization to market, would be 2-3 years.
How has the challenges in the automotive industry from recent years been affected by COVID-19
Was shutting down the automotive factories the right decision?
For MANN+HUMMEL, their automotive OE (original equipment) factories are not currently running, only aftermarket factories. The OE factories are currently down -95% as of April 2020. In 2008-2009 during the Great Recession, that number was only -75%.
The OE factories are currently down -95% as of April 2020. In 2008-2009 during the Great Recession, that number was only -75%.
At the time of the Great Recession, every company was worried about cash reservation. Supply chains dried up as a majority of factories began shutting down. However, as soon as the economy restarted, everyone had completely depleted their supply chains. There were no more raw materials.
Today in the COVID-19 crisis, MANN+HUMMEL is much more concerned about the ramp up versus preserving cash and keeping teams in order. Charles predicts there will be a huge drastic shock that this ramp up will have on the economy. History has never seen so many factories shut down at the same time. When they all open up again, there will be huge challenges with supply chains and machines.
Looking to China to predict production in post-COVID-19
China is ramping back up - 90% of teams are back in the office and production plants are working.
Using China as an example, it is clear that the way teams work across the globe will change after the pandemic is over. Offices that are currently open require employees to wear a face mask at all times. In open spaces or cafeterias, people are not allowed to sit next to each other anymore. Charles predicts that social distancing will still be in effect for some time to come.
Countries need to be prepared for this.
Some Tier 1 suppliers are already preparing for how to run a factory in a post-COVID-19 environment. It is important to be prepared in ramping up in a smart way and prepare for any potential issues that may arise.
In fact, Qlair, our first startup from Incube & Plug and Play, is now providing a unique solution to help prepare for the safe reopening of the building. They offer a special package of air quality monitor, hospital-grade air purifier, and AI to monitor the office space.
What does this mean for the future?
The crisis is very deep. Charles notes that we need to protect our employees and business, but must also remember that things will return to normal eventually. The most important thing is to prepare and invest for the ramp-up.
“I like to be carefully optimistic. This pandemic is one of a kind.”
It’s important to find the balance between preserving today and creating tomorrow.
We have launched a global COVID-19 accelerator dedicated to scaling the world’s most promising startups who can help address the coronavirus pandemic. Join the platform today.