In this issue:
As Steve Richman describes it, changing the focus of Milwaukee Tool was the easy part.
In the mid-2000s, when Richman and other new leaders arrived not long after the Brookfield-based company was acquired by Hong Kong-based Techtronic Industries, Milwaukee Electric Tool Corp., as it was known, was often focused on making “me too” versions of new products.
“If you think about that, we didn’t really have a choice. It was innovate or die at that point in time,” said Richman, president of Milwaukee Tool. “It was easy for the teams to start adopting it, because we were this little player out in the marketplace that had rested on our laurels with this brand that meant something in the ‘50s that really didn’t mean anything to many users anymore.”
Milwaukee Tool had a history of innovation with products like Sawzall, but its revenue was measured in the hundreds of millions, it had just a few hundred employees in Brookfield and its local manufacturing had been moved to Mississippi in the early 2000s. Meanwhile, the company’s competitors were global and measured their sales in multiple billions of dollars.
What Richman and his team discovered was no competitor was singularly focused on users in the professional trades.
“They really didn’t understand what the user did and what the pain points of the users were,” Richman said. “It provided an opportunity for us to disrupt.”
Focusing on users in the professional trades has translated to a lot of disruption – with more than 1,000 patents issued to Milwaukee Tool since 2007 – and growth. The company now has 3,100 employees in Wisconsin and expansion projects in the works in Menomonee Falls, West Bend and downtown Milwaukee. Its annual revenue first crossed $2 billion in 2015 and has continually grown at more than 20% per year. Revenues were at least $5.6 billion in 2020.
Transitioning from corded to cordless tools; continual innovations in batteries, electronics and motors; new features to address user needs and expansion into new product categories have fueled the growth. By the end of 2020, the company had 216 products on its M18 battery platform, 130 on its subcompact M12 platform and another 10 on its MX Fuel platform, which is designed to compete with light equipment usually powered by gas engines.
And the company seems to have no intention of slowing down. When it reported results in March, TTI chief executive officer Joe Galli said the company planned to “continue to seize control of the global tool market” over the next five to 10 years, and Milwaukee Tool would continue to grow at least 20% annually.
“We intend to do that the right way by bringing the market a continuous stream of innovative, technologically advanced, demonstrably better products versus the competitive set that exists out there today,” Galli said. “We have so much new product on the way that if I told you everything that’s coming, first of all, I would need two days to do this review and, secondly, you would accuse me of exaggerating. We are investing like crazy in new product development.”
Richman said the challenge now isn’t having the dollars to invest, it is finding the right people. As of mid-May, the company had more open positions than ever before, he said.
Those openings come even after Milwaukee continued to grow its workforce during the pandemic. After an initial pause in March 2020, the company quickly decided to continue making investments, allowing it to meet elevated current demand, go after new areas and fill gaps in the business.
“One of the things we clearly found out was we had recruited all and talked to all of the talent that was in Wisconsin for a lot of the jobs, especially engineering and development, and we had to go outside of Wisconsin to be able to help accomplish that objective,” Richman said.[gallery columns="1" size="full" td_select_gallery_slide="slide" ids="527882,527881,527880,527879,527877,527876"]
Expanding into new areas
The MX Fuel system is an example of Milwaukee Tool’s efforts to push into new areas. The system’s tools include a concrete breaker, saws and drills that cut through reinforced concrete, a light tower, power supply and a concrete vibrator. The project’s origins date back a handful of years to a time just after the company had essentially doubled the capacity of its M18 batteries with the launch of a new model. A stronger battery meant more room for teams to develop products on that platform.
A team was assembled to address an important question: What’s next for Milwaukee Tool?
The team landed on the light equipment space after identifying hundreds of different issues on gas, air and hydraulic products, said Kevin Gee, director of project management for MX Fuel, noting many were related to indoor use, emissions and maintenance.
The new system launched in 2019, but only after thousands of hours of testing and research across 2,400 job sites globally.
“Developing any new system is incredibly challenging,” Gee said. “It is something that’s fluid and as you continue to work through one problem, something else presents itself.”
Gee pointed out that developing battery-powered tools that are traditionally powered by gasoline presents a remarkable challenge.
“Gas is highly inefficient, but super potent with the power it can put out there,” he said. “We would go back and forth and debate with the engineering teams what success looked like and challenge each other to understand what the user needed and what we could deliver.”
Ryan Jipp, vice president of engineering for power tool technology, said simultaneously developing a battery, a charger and a suite of tools only added to the challenge and having many project teams working together required a focus on keeping everyone aligned.
Richman said if Milwaukee Tool were looking only for a short-term return on its investments, products like MX Fuel or some of its other innovations wouldn’t get made.
“But if you believe the entire equipment business will eventually go cordless, then you say, this is what’s going to make the company $2 billion in five years, 10 years, 15 years, 20 years down the road. … It’s not a question of if, it’s just a question of when are we going to double down and invest in those areas,” he said.
“If you’re not willing to invest in where technology is going, then you’re going to be disrupted by somebody else,” he added. “If you’re playing the short-term game of ‘I’m going to drive revenue through lower cost items that are there today and I’m going to be very excited that my SG&A is low and my development costs are low and I’m not investing because I can drive some short-term sales’ … but you’re not looking at what’s needed for the future and how you’re developing people and recruiting people that can make that happen, then you’re going to lose.”
People and culture
Having the capability to deliver on a challenge like MX Fuel is a result of the culture the company has developed over more than a decade.
Kris Ropella, dean of the Opus College of Engineering at Marquette University, said Milwaukee Tool has recognized that innovation is about people and culture, adding the company attracts people with an innovation mindset.
“People who have great curiosity and people who are hungry for making change that creates value,” she said.
Marquette and Milwaukee Tool have worked together over the years, with students completing internships and co-ops at the company, leaders and engineers serving as guest speakers in classes, and contributing equipment and expertise to engineering labs.
“I think they’re creating a culture where people can be innovative, they’re safe to be innovative. I think they have a culture where people are comfortable to experiment and fail and to do so in a smart way,” Ropella said. “Many places don’t necessarily do that.”
Switching the focus of the company to innovation may have been the easy part, but developing and sustaining the right culture has been anything but, Richman said. He is excited to get his teams together in the coming months to celebrate the company’s success despite the COVID-19 pandemic, but company culture comes from more than having a beer together.
Richman pointed to recruiting the right people, onboarding well, empowering people, communicating, getting candid feedback, focusing on users and distribution partners, and mentoring and growing people as some of the required culture work.
“Everybody wants to make all this simplistic,” Richman said. “There’s not an easy button that you can hit and all of the sudden it turns on and the culture is going great. If you’re not paranoid as hell, you’re going to have some drop-offs in the culture.”
He acknowledged parts of the organization’s culture have suffered during the pandemic and the company is working to rebuild those.
“Our growth has been off the charts and keeping up with that growth is not easy,” he said. “It’s stressful for a lot of people, but the people that want to be part of it, it’s a great thing for them and for their careers and the opportunities to move forward.”
Solving user problems
Both Gee and Jipp have been with Milwaukee Tool for more than a decade and have had chances to work around the world for the company. Their work covers two parts of the innovation process that has fueled the company’s growth in recent years.
The process starts with the work of Gee’s team and other ones like it. They are on the marketing side of the equation and are tasked with understanding the needs or challenges of the user and then communicating them to engineering teams like Jipp’s.
Gee said the marketing teams will identify what qualities a product needs to have and identify which ones are most important for a user.
“Then we get the fun, challenging part of making sure we can deliver it and making sure that we can do it on the right schedule, the right cost, hitting the right performance,” Gee said as Jipp started to smile. “That’s where we start to get to the good level of healthy tension between marketing and engineering and making sure we’re delivering the best-in-class product.”
Jipp said marketing teams are good about providing reasonable specifications that are achievable while also pushing engineering teams to think outside the box.
“We don’t just want to make something in red,” Jipp said. “We want to make something that’s better and provides a more productive experience, a safer experience for our user.”
When marketing teams showed engineers videos of workers being thrown from ladders when traditional core drills seized up, Jipp and his colleagues knew it was something they needed to address as they worked on an MX Fuel powered drill. The result is an auto stop feature that helps keep users safe.
Of course, taking the time and resources to invest in smart electronics or other features that take a product to a new level could drive the price of the product up. It would seem there is a natural tension between adding innovation and maintaining a competitively priced product.
“We value driving safety and productivity over a price point,” Gee said. “We know that if we can create something that is going to be the right solution, we can leverage that into the future and ultimately get to the right price point and the right cost position overall.”
He pointed to the auto stop technology on the core drill as an example.
“It was complicated to develop, it was expensive to develop, but over time, that’s going to pay itself off and that’s what’s going to set us apart from the competitors in the industry,” Gee said.
The teams working on products at Milwaukee Tool are generally cross-functional and team members are working on focused, fast projects, Jipp said. A team might have a project leader and representatives from marketing, mechanical and electrical engineering, motors, industrial design and safety.
“As an engineer, you’re actually pretty empowered to control your own destiny,” Jipp said. “If you look at a car company, you have hundreds of engineers working on one product. Here, we have really small, tight-knit teams that are really close working together and really focused on that one end goal of making a really good product.”
The actual process of developing the product can also be quite iterative, Jipp said, with engineers creating prototypes, handing them over to marketing to get feedback from the field and repeating the cycle to make the product better.
“Having those multiple touch points back and forth is really powerful for us,” Jipp said, noting sometimes the ideas engineers have are not actually close to what a user needs.
Once the product is in a good place, Milwaukee Tool’s manufacturing teams get involved and the teams work toward producing a small volume of the new tool. Then the testing really begins as the products get pushed to the brink to identify potential points of failure.
When the company was developing the MX Fuel concrete breaker, the teams went through three warehouses’ worth of concrete testing the product.
“We literally would just go through entire buildings of concrete,” Jipp said, later adding that one of the challenges is that issues don’t always pop up with every tool in a test.
“You test maybe 20 tools and one of them failed and you don’t understand why, so it’s really trying to repeat that to figure out what’s happening,” Jipp said.
At the end of a project, the engineering team steps back and hands the work off to a quality team that double checks what engineering has done and performs more reliability testing.
“They’re the ultimate gatekeepers to make sure we make a robust and quality product at the end of the day,” Jipp said.
Willingness to fail
Sometimes an idea must wait for the technology to catch up. That was the case for the backpack concrete vibrator that launched on the MX Fuel system. Gee said the idea was shelved when it was originally developed because Milwaukee’s battery systems couldn’t deliver the needed run time or performance until MX Fuel was developed.
“We look at things and dream big and come back and sometimes scare engineering with some grandiose ideas, but ultimately that is what’s going to set us apart from our competitors is looking to the future and not looking at the here and now,” Gee said.
Jipp pointed out that the cost of components typically comes down over time and things that seemed impossible become industry standards. That was the case with the brushless motors in many of Milwaukee Tool’s products; the company couldn’t find a partner to work with so it pushed ahead on its own.
“The nice thing about having that fearless ambition is we’re able to get there first, we’re able to get the IP around different areas of it, we’re there to provide the productive benefits, which gives us market share and ultimately a better solution for the user at the end of the day,” Jipp said.
Innovation doesn’t just happen on its own. It takes investment in facilities and people, and while it seems those could be limited resources, Gee and Jipp said the answer from management is typically “yes, tell me what you need and how can we go faster.”
Richman said the company’s approach is to first deliver results and then use those funds to invest in new innovations. For some products or processes, the idea might be first to do a small test and then act according to the results, which is what happened in Milwaukee’s hand tool business. The category grew from a small test to a larger group to the point where the company is now building a dedicated facility in West Bend.
In other areas like motors, electronics, batteries or artificial intelligence, there isn’t even a question of whether the company will invest, Richman said.
“We’re going to spend whatever money we need to spend to become at the forefront of the world in terms of technology,” he added. “We understand where the priorities are, where the focus is, where the new business opportunities are, to be able to invest and take enough calculated risk.”
Gee pointed to the concrete vibrator as a case where leadership challenged him to justify it. When he first presented it, the product had nothing to do with Milwaukee’s core trades of mechanical, electrical and plumbing, but the project helped the company get an understanding of new user groups like self-performing general contractors and concrete contractors.
“It’s about having the foresight, with the leadership team,” Gee said. “They’re going to challenge us at every turn to justify what we’re doing, and luckily we hit more home runs than foul balls, but we learn from everything that we do.”
He also said the company benefits from a culture focused on achieving first-to-world innovation and a willingness to be candid about what worked and what didn’t.
It is also OK if not every idea works out, Jipp added.
“If everything we do is successful, we’re not trying hard enough,” he said. “We should be failing, we should take really wild swings, try to get these pretty complicated, futuristic, innovative features to throw into our tools, and really try to push those paradigms.” ϖ