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Karthik Arumugham (1311299)

Managing Innovation at Nypro, Inc.

1. How does Nypros market for innovation function? How is it managed?
Distinct sectors, independent work: The internal market for innovation at Nypro is based on separate
distinct sectors which work independently to establish themselves as the companys best manufacturing
plant. Nypro wanted its workers to harness their innovative spirits and improve the companys overall
Incentives: Each independent plant, motivated by company offered stock options, seeks to improve
productivity, efficiency and innovation in the work area on a continual basis. The employees of each
plant wanted to be the best so they could receive the offered stock options.
Internal competition: Through the creation of an internal competition between plants, Nypro
management helped to eliminate complacency and stagnation. The plants compete against each other
for the top ranking. By constantly improving their systems, the plants improve the company as a whole.
Creating an internal competition, which is driven by money, is good way to stir both innovation and
encourage employee loyalty.
Employee satisfaction: By encouraging employees to be successful, the company in turn was rewarded
with a happy staff that was continually looking for ways to better improve the company. The continued
profitability of Nypro was furthered out of a competitive attitude and desire to be the best.
Four Steps:
o Find the actual occurrences of process innovations.
o Select the most important innovations which can be implemented in other plants.
o Find the ways to transfer the innovation from the original team to other teams and plants.
o Nypro sets up the new rules of the innovation.

2. What is Lanktons mental model (way of thinking)?
Lanktons managing process at Nypro followed five specific guidelines/strategies:
Developing superior technology: Focus on large-scale molding jobs with demanding, technologically
progressive customers. Nypro was able to become the fifth largest plastic molder in the United States
under this approach.
The standardizing of processes and offerings: Any potential customer, regardless of Nypros location in
the world, would have the same opportunities and offerings to product creation that another customer
might have in a different location. This process was achieved by the individual organizations reporting
their successes and failures in the production process, so other organizations around the world would
know how to handle a similar situation if it arises.
Creating a proactive and innovative environment: Clearly Nypros different locations around the world
would have customers that want different products. So while differentiation is difficult to achieve, the
different Nypro locations were able to share their thoughts, processes, and innovative applications, which
helped the organization to overcome this challenge.
Rewarding employee performance: Proactive and innovative people were encouraged to stay at Nypro,
allowing the organization to maintain those components/employees which made them successful. This
process was accomplished by installing an incentive-based reward system, which provided employees
with stock options based on years of service, pay level, and performance ratings. These employees (who
became stockholders) would be responsible for selecting the board of directors.
Customer-oriented operations: Focus on managing their customer relationships by establishing teams
that focused on the product development and process improvement issues for each customer-specific
project. These teams were comprised of individuals from various disciplines, as well as different
organizations made-up of the customers organization and Nypro personnel. Teams were then created to
focus on different aspects of the development and production processes.
Development Team for each project
o Engineering Program Manager
o Variety on Team
o Customers Engineers
o Responsible for product idea and process innovation
Karthik Arumugham (1311299)
CIT (Continuous improvement) Team
o Manufacturing, Quality Control, Materials procurement, Marketing
o Customer reps & suppliers
o Responsible for continuous improvement as long as product is under production
These teams allowed for innovative steps and processes to be continually developed during all aspects of
the product/process creation and production, while focusing on improving each step. If teams became
stagnant in their innovative process, Nypro management would change some of their people to offer a
different perspective and possibly stimulate advances in the processes.
Organization structure conducive for innovation: Each plant is a company with board of directors
composed of managers from other facilities. Board supports General Manager of Plant. Sales is
centralized reporting to headquarters with dotted line reporting to GM of each plant.
o Innovation Centric Formal structure
Plant managers or departments approach management
Management reviews and makes decision
If approved the idea spreads across company
E.g. Visual Factory, MRP2 system, reduced tooling supplier lead time
o Informal Structure (Bottom Up)
Plant Managers have the authority to implement ideas
If successfully idea spreads across company
E.g. clean room manufacturing
Benchmarking: Lankton would judge performance results of all divisions throughout the company by
making comparisons of the teams/units and not the individuals. Quarterly plant performance reports were
analyzed at annual management meetings.

3. What are the alternatives before Nypro regarding adopting Novoplast? What should they do?
The three options that Gordon Lankton (CEO) had for building a profitable business with Novaplast to
produce a wide variety of products in smaller volumes are,
1) Build a new plant with Novaplast machines whose sole business would be to pursue the sort of high-
variety, low-volume-per-part business for which the machine was designed.
2) Install two or three Novaplast machines in each plant in the Nypro system. Assign several engineers
and salespeople to work on the job of figuring out how the machine could be exploited most
3) Assigning one plant to build a business around the Novaplast and then to learn from that plants
experience to roll out the machine across the company.
4) Dont adopt Novaplast.
Strengths Weaknesses
Most popular with senior management
Engineering efficiency
Centralizing development would facilitate
personal oversight of project
Quick execution
Transportation costs
Against current philosophy of being
No successful experience
Strengths Weaknesses
Close-to-customer manufacturing particularly
important in the market segment
Allows for the pontential to capture more
market share
Puts more engineers and marketers to work on
exploiting the NovaPlast
Against economy of scale philosophy
Unproven technology and no clear indication
of its feasibility
Karthik Arumugham (1311299)
Better technology would emerge
Strengths Weaknesses
Could be implemented rather quickly
Allow for engineering/efficiency to be
Could evaluate how resource planning systems
Use internal market for innovation
Time consuming to deploy if research shows
that the flexibility is required in other
international markets
Strengths Weaknesses
The niche market identified and capability
allows company to compete in market
Avoids taking advantage of the strengths,
Not dealing with problem of the changing
market and competition
The recommendation would be to go for a partial option #2, of installing two or three Novaplast machines
in a few of the most innovative plants. This is to ensure that consistency is not lost across plants due to
innovation. The roll out has to be done almost immediately as they need to quote shorter delivery times to
capture market and do away with time involved in non-value added activities such as changing molds, etc. If
successful then the new machines can be rolled out to the other plants.
Lanktons belief: This solution would be in line with Lanktons belief that no one in the company could
foresee which process innovations to be adopted companywide. This would allow him to explore more on
where, whether and how the machine would help Nypro before making large commitments to the
Compatibility: The smaller injection molds would be able to work along with the larger injection molds,
by downsizing some of the production parts/processes. So the new machines neednt wait for new
customer orders, but can actually co-exist in the Nypro ecosystem by contributing to the existing capacity.
Test Bench/Rapid Prototyping: Moreover these new machines would also act a test bench or for Rapid
Prototyping for the plant managers to experiment, if they didnt need to commit to a new type of
equipment before their customers accepted.
Machine Characteristics: As per Exhibit #4: Characteristics of shorter lead time, just in time deliveries,
cost effectiveness, ramp-up to high volume production, 24x7 operations, etc would lead to creating new
market segments in the low volume and high variety products business. As per Exhibit #5, the capital and
operational costs of Novaplast are significantly lower which would enable them to deliver parts to their
customers at competitive prices and at shorter notice.
Diversification into new products and markets: By installing two or three Novaplast machines in few
of the most innovative plants would give them access to a wide and diverse customer base such as in
healthcare, electronics, telecommunications, automotive, consumer and industrial products. They can also
experiment with existing products to see if they can improve the performance or receive new orders from
customers for low volume and high variety products. This would enable the growth needed to sustain and
also retain the engineers.
Performance Metrics: If the individual plants are measured based on metrics such as ROA, depreciation,
etc, then the corporate office could take the asset ownership and in turn rent out the new machines to the
plants, thereby not interfering with the performance metrics of the plants. But in the other cases the new
machines would be an asset and affect the performance metrics.
Flexibility: In adverse cases of the new machines not contributing to margins or unable to find suitable
customers in a specific region, the managers could return/send the machines to the other locations which
requires additional capacity, thereby serving as a risk cover.