ITW

By Stacy Ward
Editor in Chief
stacy@feda.com

There’s an interesting story behind the branding of ITW’s customer-back innovation and, like many compelling narratives, it starts with a conundrum and ends with meaningful change. Lei Schlitz, now the executive vice president of the Food Equipment segment, was there in 2012 when the Glenview, Ill.-based, manufacturer began the hard work of repositioning itself after the passing of its CEO David Speer. Part of that process included shedding slower-growing companies and grappling with how far into the future R&D should go to pursue technological innovation. Even more important was determining how to reconcile that pursuit with customers’ immediate needs.

Schlitz recalls the details well, having begun her career at the ITW Technology Center, where she worked closely with Speer’s predecessor, CEO Scott Santi. “Scott and his leadership team were starting the journey to transition ITW from growth by acquisition to its current enterprise strategy of focusing on a winning portfolio of business segments,” she says. The goal of the technology center was to create futuristic technology for the entire company that would hopefully be adopted.

An extended stretch of more misses than hits, however, raised concerns and exposed an internal fissure. “The low adoption rates were creating negative feelings between the business units and the technology center,” explains Schlitz. “Our salespeople and others closer to the customer were saying, ‘You’ve got all these engineers here and you’re not addressing our problems. You’re just addressing technology and innovation for technology’s sake.’”

That’s when the wheels began to turn for Santi, who challenged both R&D and the company’s business units by questioning if ITW could go “half way.” Meaning, instead of insisting customers follow it into the future, was there a better way to address their current problems and, at the same time, identify solutions for future needs?

Now, the manufacturer divides its resources, mobilizing sales to strengthen ties and keep its ear to the ground, while marketing and engineers from R&D engage in user panels, market research and audits to observe how their equipment performs in a foodservice environment. Then the two groups synthesize their findings and tease out future trends, trends that are prepped but not dispatched until sales determines there is a need. “We do a lot of targeted market research and what we’ve found is that if you want to identify pain points and emerging trends, it’s not about what customers are telling you, it’s about what you’re seeing,” says Schlitz.

Letting the Customer Lead
More than anything, customer-back innovation is about focus. ITW targets the top 20 percent of its base that generates 80 percent of its sales, funneling its investments into developing a deep understanding of those customers’ needs and pain points. Schlitz says trust in the company’s decentralization model is key in acquiring this knowledge. Meaning, ITW relies on the expertise of individual brands to best serve its unique markets.

“We can’t be all things to all people,” says the segment head, “so we want to know the customer segments that will benefit the most from our differentiation. And, we want to identify the ideal organizational structure required to maintain that closeness with the customer but also have speed to market.

“Our engineers create innovations that are close to the ground and solve customer’s unmet needs, so our solutions are probably never going to be groundbreaking or sexy. We want our innovations to solve customers’ current problems and future problems.”

Santi calls it being good at “combining known technology to create clever and robust solutions.” Based on what ITW Food Equipment Group is seeing and hearing, their customers’ pain points fall under four categories: “Quality and Performance,” “Food Safety,” “Total Cost of Ownership” and “Sustainability.” ITW’s goal is to out-perform its competition in all four but, currently, it sees the greatest opportunity to deliver the most value in helping customers reduce their operational costs over the entire life cycle of their equipment. The logic is part of its long-term strategy to create sustainable customer value and dovetails into how most of the larger chains and institutional customers quantify value, says Schlitz.

“Product cost is only one element, but we need to understand customer’s long-term thinking and value,” she says. “When we talk to a CFO of a large chain customer, they want to talk about utility costs, labor, maintenance. Does our product break a lot? What can we do to help them with their productivity and increase profits over the long term?”

She rattles off two standouts from Hobart that delivers the kind of ROI that chains covet. According to customer feedback, the HS9 Slicer has saved retailers and others anywhere from $1,500 to $3,000 per slicer/per year by reducing food loss and improving efficiency. “Because of our CleanCut™ Knife technology, our slicers have fewer shavings, allowing our customers to generate more meat,” says Schlitz, touching on operators’ growing desire to reduce food waste.

Foodservice operators that invest in Hobart’s Ventless FT1000 Advansys flight type dishwasher can recoup the cost for the dish machine in a little over a year. Its ventless technology and Automatic Soil Removal (ASR) system offers savings of more than $40,000 a year. 

Circling back to an earlier conversation about straddling the divide between current and future innovation, Schlitz points to the rollout of the ASR as an example of how ITW introduces its brand of problem-solving to the market. “Once we identify a future customer trend, we test concepts with a global customer base and get them to an almost-ready state. Then, it’s up to the local marketing and sales team to say now we have a need,” she says.

The Europeans were the first to adopt the technology. Two years later, the ASR system was absorbed into the American market after a few small adaptations, namely increasing the size of the strainer and upgrading the material from plastic to stainless steel. Those two small changes—responsible for trapping gunk that hampers performance—account for a chunk of the more than $40,000 operators can save annually. To get there, ITW’s team had to spend a lot of hours being a fly on the wall.

“It was interesting,” says Schlitz, a mechanical engineer by trade who enjoys wading through the processes to sift out the non-value adds, and then pinpointing the areas in which their equipment is contributing to the bottlenecks.

“We spend a lot of time watching those videos, trying to see how we can save our operators time and money,” adds Schlitz. “You are supposed to prewash heavily-soiled dishes before putting them in the dishwasher but what we observed was that during peak hours, there’s no time to prewash. So, the kitchen staff would load the dishwasher with lots of gunky dishes. A normal dishwasher can’t handle that. It gets clogged, requires multiple cleanings and eventually affects performance.”

The interesting part was the reaction from engineers, who noted that the equipment was not being used properly. Schlitz’s response: “We had to get over that hump,” she says. “Our customer’s environment is their environment and our dishwasher was not going to solve their problems. So, we had to go back to the table, brainstorm, and generate ideas for a new generation of machines that would. Our purpose is to provide innovation that our customers will value.” ■ 

“If you want to identify emerging pain points and trends, it’s not about what customers are telling you, it’s about what you’re seeing.”
— Lei Schlitz