What do you see in your rearview mirror? Next time you look, I trust you’ll see more than the reflection of the road behind you. You’ll see an example of how a company can succeed in the most trying circumstances if it unlocks incredible rates of unmatchable innovation.
Read the headlines, and you would think USA manufacturing is dead. USA auto parts suppliers are coming apart at the seams. The only way to compete, some think, is to pursue low labor and material costs in one developing economy after another, moving on to yet a more distant, more impoverished place when everyone else drives up the prices of land, labor, and materials that were once cheap and are now dear.
Gentex, a Michigan based maker of rearview mirrors, defies that conventional wisdom. How? They relentlessly innovate, keeping ahead of their rivals by the shear force of their creative energy.
Rearview mirrors, you might say, sound boring. Well, these aren’t your dad’s rearview mirrors, silver backed glass, fixtured in a metal frame and glued to the windshield. No, sandwiched inside these Gentex mirrors is a high-tech gel that darkens depending on how much current is run through it. Gentex had to invent that gel. How much current runs through the rigid gel depends on a whole host of signals—light-sensors in the mirror measuring light from front and back and processors inside the mirror determining what the sensors are saying: Is that glare from the sun, the high beams of a tractor trailer on an otherwise dark road? Depending on the calculation, the mirror darkens appropriately to maximize your vision. Gentex has to invent the algorithms to do those calculations.
It goes beyond that. Once you’ve started miniaturizing electronics and incorporating functionality in the mirror, there is no end to what else you can do. Add heating coils to the exterior mirrors so they don’t fog or ice up. Put sensors in the rear fenders, so if someone is in your blind spot, the mirror will flash a warning to look over your left shoulder or right. Add a camera to the back of the car and run an image inset into interior rear view mirror so you can see things far behind your vehicle and close up to. Sure, that used to be in the navigation system, but that meant taking your eyes away from looking out the rear and down at the console. Bad human factors design. No more.
With some engineering and manufacturing dexterity, you continue the technological magic. Microphones so your cell is hands free. (It is overkill to even mention the remote control garage door openers!). Since you already own the real estate dead center on the windshield glass, why not add a forward looking camera so you can get active control of your headlights, adjusting automatically and with great precision depending on whether you’re driving on a dark highway, following a car at close distance, or approaching a vehicle coming in the other direction. Can active cruise control be far off, so that car not only maintains a set speed, but slows to avoid tail gating when necessary?
Achieving this technological marvel is hardly easy. To pull it off, Gentex is hugely integrated for a company that also does the final assembly of its product, making on its own the rigid gel—a complex, patented mixture of electrochemical compounds, a solvent, and numerous additives, and even making what some of us would assume is a bulk purchase commodity—a complex epoxy sealant that keeps all the layers in place. Add to that circuit board design and fabrication–try to get so much electronic functionality into such little volume, you have to do the configuration yourself so its just right.
How does Gentex pull it off? It starts by realizing that what it is buying from people is not just their time–the prejudice of Tayloristic scientific management, but the creativity they can generate in the time you take from them. It scans colleges, universities, and technical schools for curious, intellectually energetic, well trained people and puts them to work to invent, innovate, and improve their way to product greatness and process greatness.
The result? Gentex has few if any challengers–providing these great devices to manufacturers all across the board–American, European, and Japanese makers in the mid market and luxury segments. Customers are so eager to have Gentex mirrors on board, that year to year, Gentex’s sales were flat when the industry as a whole was off by a third.
Consider instead the companies that don’t see innovation as the source of their competitive advantage and define their competitiveness and that of their suppliers based on the price for single transactions, not value delivered, and certainly not the potential to deliver ever more value. They don’t take a Gentex approach. Boy, it must look expensive to them. Instead, it is outsourcing and off shoring, always chasing ethereal advantages to reduce cost.
Not incorporated into those behaviors are certain considerations. What if, when you move overseas you’re not buying commodities? What if, instead, you need proximity to your customers to fine tune what you are providing to them and to your suppliers to fine tune how you deliver the products and services for which you are being rewarded? What if, by having materials generated and delivered in bulk oversea–and consequently hence over long times, you lose a significant degree of agility and responsiveness. What if? Well, we see the wreckage resulting from that thinking littering the industrial highway.