PTC Product Lifecycle Stories eMagazine Winter 2014

Winter 2014

PRODUCT LIFECYCLE STORIES
INSIGHT ON PRODUCTS, MANUFACTURING, AND SERVICE

WHEN DAVID
MET GOLIATH:
Scrappy Design Company Shakes
Up Big Manufacturing
ALSO IN THIS ISSUE :
Redoing American Innovation,
Jugaad Style
Manufacturing in a Subscription
Economy
Smart Bike Wheel Offers a
Customized Ride
Rebuilding the Mona Lisa of
the Skies

Winter 2014—Table of Contents

Feature Article

WHEN DAVID MET GOLIATH:

Scrappy Design Company Shakes Up Big Manufacturing
Every week, New York City-based Quirky receives 2,000 new product ideas from its
online community of wannabe inventors. A handful of those ideas are given the
green light and thrown into development. At the end of the week those products
are ready to ship to stores around the country.

08

Redoing American Innovation, Jugaad Style
Many manufacturers in the West are struggling to stay ahead of rapidly changing
consumer needs. For auto giants Ford and Renault-Nissan, innovation is the key to
maintaining the competitive advantage, and they’ve found it in some unusual places.

12

Rebuilding the Mona Lisa of the Skies
Away from public view in a sealed-up hangar on a far corner of a municipal airport
in Maine, a project of unprecedented scale and expense is under way to re-engineer
this Lockheed Super Constellation 1649A so it can fly again.

16

Manufacturing in a Subscription Economy
The subscription-based relationship has been a staple in the media and software
industry for decades, and now it’s spreading to unlikely areas like manufacturing
where it’s creating fresh business models and new revenue opportunities.

20

Smart Bike Wheel Offers a Customized Ride
The Copenhagen Wheel gives a new spin on bike riding. The removable electric
wheel controlled by a smartphone recently hit the market to rave reviews.

22

Oil-Rich Alaska Struggles to Produce Engineers
While there will be thousands of STEM-related job openings in Alaska by 2018,
fewer than two percent of high school students in that state has access to a daily
STEM curriculum.

26

Lessons from Typhoon Haiyan: Why Disaster Plans are Essential in
Telecommunications
Restoring technology infrastructure has become an essential part of emergency
recovery, just as it has gotten more complicated and disasters seemingly more
frequent and destructive.

30

Practical Tips on Conflict Minerals Reporting
While discrete manufacturers work toward filing their first disclosures with the
SEC under the new conflict minerals ruling, there are some basic guidelines that
need to be followed.

Winter 2014—Letter from the Editor

LETTER FROM THE EDITOR: NANCY PARDO

Innovation—whether in the form of a new technology, a better product, or a fresh way of thinking and doing—is
essential to our economic growth and long-term productivity.
Today, across every industry, innovation is a powerful driver of competitive advantage. The most innovative companies can survive change, cease upon new opportunities, stay ahead of legislation, and attract top-caliber employees.
But while the majority of executives recognize that innovation is critical to their companies’ growth, it can be elusive.
R&D spending is a good way to measure the health of a business, and last year the industries that saw the
greatest gains in innovation—Internet and software, telecom, healthcare, and auto—also spend heavily on R&D.
But dollars-in doesn’t always correlate to innovation-out. Sometimes innovation is more about the people you
choose to hire, the work environment you cultivate, and the deep connection you form with customers.
The first two stories in this Winter Issue, “When David Met Goliath” and “Redoing American Innovation”, explore
how industry giants like Ford, Renault-Nissan, and GE are approaching innovation—from tech shops and
frugal design to diverse global engineering teams, crowdsourcing, and lighting-speed product development.
Each company has its own formula for enabling innovation, whether through technology, people, process, or
corporate culture.
Also in this edition, we look at how our changing values and social norms are shaping a new landscape for
manufacturers. In a subscription economy where ownership of the product itself is less important than the
convenience and experiences it offers, smart manufacturers are reshaping their business models and uncovering new revenue opportunities.
Finally, if you’re looking for a cool design story, read how Lufthansa’s 1950s luxury passenger aircraft, the
Super Constellation, is being re-engineered for modern flight.
Sincerely,
Nancy Pardo
Editor in Chief

WHEN DAVID
MET GOLIATH:
SCRAPPY DESIGN CO
SHAKES UP BIG MAN
BY NANCY PARDO Photos by Albert Ayzenberg

There’s no stopping 26-year-old Ben Kaufman.
Every week, his New York City-based company
receives 2,000 new product ideas from its online
community of wannabe inventors. A handful of those
ideas are given the green light and thrown into
development. At the end of the week, those products
are ready to ship to stores around the country.
Kaufman built Quirky—now a $50 million business—from the ground up in just five years. The
company handles everything from design concept to
manufacturing, and has brought more than 100 new
products to market so far, selling to big-box stores
like Target, Bed Bath & Beyond, and Best Buy. It has
attracted close to $100 million in investments, and
recently earned a contract with industry giant
General Electric.
But Kaufman’s not ready to sit back and enjoy the
spoils just yet. “I’m always learning,” he says.
“Invention is never finished.”
Quirky evolved out of Kaufman’s experiences with

OMPANY
NUFACTURING
his first business endeavor Mophie, which continues to make cool paraphernalia for Apple products.
Mophie won “Best in Show” at MacWorld 2006
when Kaufman was still a teenager. He sold the
business a year later to raise capital for Quirky.
Mophie is now worth over $100 million in revenue.
“Through Mophie I learned how difficult it is to
build a consumer product,” Kaufman says. “I went
through all this hard stuff to get that product out
there and I realized the best ideas in the world
aren’t actually in the world, they are locked in
people’s heads.”
You get the feeling Kaufman—who never attended
college—knows what it’s like to be in the trenches.
Through his own struggles as a young entrepreneur trying to sell his idea, he inadvertently stumbled across an untapped market and a source of
raw innovation.
“I thought, wouldn’t it be cool if there was a company
that took your good ideas and did all the hard stuff for

you, provided a platform or infrastructure, so you
didn’t have to worry about quitting your job or dropping out of college to get your product idea out there?”
Half a decade into Quirky’s journey and Kaufman
admits it has been a pretty crazy ride—something
that probably couldn’t have happened 10 or 20 years
ago. Posting your ideas online to be voted on and
commented on would have been a scary concept just
a generation ago, but things are changing rapidly.
“This generation understands the internet and it’s
comfortable around social media. It’s been a huge
shift and it has made Quirky something people can
wrap their heads around,” Kaufman says.
There’s something exhilarating and rebellious about
the Quirky model. It’s grassroots innovation at its
best. Taking power away from the Man and giving it
back to the people. The company has a thriving online
community of 500,000; regular folks with regular lives
who have great ideas they want to share.
“The best products aren’t born in the boardroom;

(Photo: Albert Ayzenberg)

they’re born in the living room. Quirky is in the living
room talking to real people with real ideas,”
Kaufman says.
Will this bottom-up approach, where the consumer
is both inventor and manufacturer, revolutionize
product development?
“Yes,” Kaufman smiles, as if the answer to this
question is already abundantly clear. “It will completely change the way consumer products exist and
come to be.”
Quirky’s products are for the most part just that,
quirky. But they’re also useful—ice scrapers,
kitchen utensils, and organizers that have proven
very popular with consumers. Quirky’s bestselling
item, the Pivot Power, is a flexible power strip that
can be manipulated into lots of different positions.
It retails for $30 and 665,000 of them have been
sold nationwide.
Quirky’s success is in large part due to its fast
turnaround. As soon as a new product idea is given
a “yes” vote by the community, it’s in production.
Time constraint is part of the Quirky culture and one
that’s worked to its advantage.
“At Quirky we take on impossible projects and build
great things, but we also work on crazy timelines
with limited resources and limited people,”

Kaufman says. “As we’ve grown, we’ve maintained
those constraints.”
Everyone at Quirky knows that the Empire State
Building was built in one year and 45 days and the
Lockheed P-80 Shooting Star fighter jet was built in
143 days. It’s Kaufman’s favorite mantra: Constraints give way to really great invention.
Kaufman looks over a product design with Quirky's
head of engineering John Jacobsen.
With a huge pool of community members, Quirky has
a unique insight into what consumers really want,
and its small team and nimble product development
process allows it to innovate faster than most “traditional” manufacturers. But Quirky’s bullish nature
and can-do attitude is really what brings innovation
to life here. And it’s this same bullishness that larger,
more established manufacturers often lack.
Asked why some companies struggle to innovate,
Kaufman responds without hesitation: “People are
afraid to make decisions. It’s that simple. They’re
afraid they’re going to be wrong. As soon as you
start embracing risk things start moving along.”
Forward-looking manufacturers can learn a lot from
Quirky. And the company has already generated
interest from major players like GE, which recently
partnered with Kaufman to build a line of smart
connected products for the home, available for

This generation understands the internet and it’s comfortable
around social media. It’s been a huge shift and it has made
Quirky something people can wrap their heads around.”
purchase in time for the holiday season.
“When I started Quirky, one of the few companies I
looked to for inspiration was GE,” Kaufman says.
“They figured out how to commercialize invention.”
At first glance the Quirky-GE partnership may seem
like an odd one. But while their products are quite
different in many respects, the two companies share
a core philosophy around innovation.
“We see a grown-up Quirky in GE and they see a
young GE in Quirky,” Kaufman says.
GE brings with it a rich history of innovation along
with myriad global research centers and scientists.
Quirky brings modern technology like 3D printing,
and an intimate knowledge of online communities
and crowdsourcing. More importantly, Quirky is not
afraid to take risks, and that, Kaufman believes, is
what got GE’s attention.
“We have a lot of mutual respect for one another,”
Kaufman says of the Quirky-GE relationship. “We
were talking together for maybe two or three years
about partnering, and when this category of connected products came up there was no stopping us.”
The Quirky + GE co-branded product line—for sale
at Home Depot and Best Buy—runs the gamut from
smart egg trays that notify you when you’re running
low on eggs or when your eggs go bad, to multipurpose sensors that monitor temperature, humidity,
light, sound, and motion within your home. All of the
products connect to smartphones with an app called
“WINK” so users can access information on the go.
“We’re very happy so far,” says Linda Boff, executive
director of global brand marketing at GE and part of
the team leading the Quirky + GE relationship.

In fact, just this week GE announced it will sink $30
million into Quirky and launch 30 new products with
it over the next five years. GE believes its partnership will help drive faster innovation and scale in
what will be a $25 billion connected devices market.
But is this partnership in some way selling out to
big corporations? Kaufman bristles at the notion.
“Not at all,” he rebuffs. “We are making invention
accessible, we are giving the community tools to get
its ideas out there and shape the future of the
consumer world.”
As part of the partnership, GE has also made its
existing patents available to the Quirky community
—an unusual move for such an industry heavyweight,
but one that could prove beneficial to both parties.
“It’s not like the Quirky community is going to try to
build a jet with this information,” Kaufman laughs.
“But the patents can be useful in other ways. It puts
patents back in their rightful place which is to act as
a source of inspiration for future inventors and not a
fenced-in source of corporate warfare.”
So what’s next for Quirky? We can expect a move
away from commodity products and more focus on
“provocative” electronics and technologies,
Kaufman says.
“We’re going deep into this connected world and
taking on a lot of fun projects. You’ll see a more
sophisticated Quirky going forward.”
Read an interview with Quirky’s head of engineering
John Jacobsen

Redoing American Inno
BY NANCY PARDO
Mansukh Prajapati was never much of a student. His father, struggling to make ends meet as a potter in the
northeastern state of Gujarat, India, sent Prajapati to school hoping some rigorous academics would pave
the way to a better life. But Prajapati failed in the classroom and returned home to take up the family trade.
Prajapati worked odd jobs as a potter and clay baker until 2001, when an earthquake devastated his
village. The quake destroyed homes and took out the electricity, leaving villagers unable to
preserve food.
Inspired by urgent need, Prajapati set about designing a robust earthen fridge
that uses water instead of electricity to cool food. Prajapati sold his fridge to
a few villagers and demand grew quickly.
He taught the women of his village how to build the fridge and
opened a factory.
Soon, Prajapati’s business took off internationally,
and a few years later Forbes named him one of the
most influential entrepreneurs of
rural India.
Prajapati is a prime example of “Jugaad” innovation—solving problems with limited resources,
especially in the wake of a crisis or challenge—and he’s part of a larger trend shaking
up industries across the West.
Jugaad—a Hindi term used in everyday Indian
life to describe on-the-fly MacGyver-style
fixes—is common in developing economies,
says Navi Radjou, co-author of the bestselling book
Jugaad Innovation, Think Frugal, Be Flexible, Generate
Breakthrough Growth, which tells the story of Mansukh
Prajapati.
Radjou, an innovation and leadership consultant based out of Silicon
Valley, works with the likes of GM, Hitachi, IBM, and Procter & Gamble, and
he’s noticing that industry leaders in the West are looking to emerging economies, not only as potential markets, but also as learning centers for how to develop
more innovative products.

ovation, Jugaad Style

Photo credits: Indranil Mukherjee / AFP / Getty Images / Dacia

“Emerging markets like Africa, India, and China
may not have big R&D programs and infrastructure, but they are very in tune with the market
need,” Radjou says. “They use that insight to come
up with a good-enough solution—no bells and
whistles, but it addresses all the fundamental
needs of local customers.”
The writing is on the wall, according to Booz &
Company. In 2010 alone, the world’s largest corporations—many of which are American firms—spent
more than half a trillion dollars in R&D, and yet still
struggle to churn out innovative products.
Coming up with solutions to meet today’s dynamic
and rapidly changing market needs requires a
combination of flexibility, nimbleness and courage
that Western industry often lacks.
“In the West we tend to have a Plan A, Plan B, and
Plan C, but Jugaad is about having the self-confidence to come up with a single plan when it’s
required,” Radjou says.

Emerging markets like Africa,
India, and China may not have
big R&D programs and
infrastructure, but they are very
in tune with the market need.”
Nowhere is the Jugaad approach more relevant and
well-suited than in today’s volatile and fast-paced
automotive industry, and Ford and Renault-Nissan,
Radjou says, are leading the charge.
Last week, Renault-Nissan Alliance announced
record sales of 8.3 million vehicles in 2013, putting
it behind top three automakers Toyota, General
Motors, and Volkswagen.
Renault-Nissan produces a value-for-money product that cost-conscious customers in both emerging
and developed economies can appreciate. Its combination of frugal design, low-cost manufacturing,

Carlos Ghosn tours Renault-Nissan manufacturing facility in Nashik,
India. (Photo credits: Indranil Mukherjee/AFP/Getty Images)

and a large pool of engineering talent has proved a
winning formula.
The Logan van and pickup, along with the similar
Dacia Duster SUV, are now Renault’s cash cows.
Renault began production of the Logan in Romania.
The vehicle had 50 percent fewer parts than a
typical Renault and a much simpler architecture.
Engineers designed symmetrical rear-view mirrors
that can be used on either side of the car. A
flatter-than-usual windshield cut down on cost, and
the dashboard was produced out of a single injection-molded piece. Engineers also limited the
number of electronic components, making the car
easier and cheaper to produce and repair. The
vehicle is over 90 percent recyclable.
After the success of the Logan, Renault-Nissan has
moved into India, setting up facilities in Chennai and
Mumbai. It’s designed a whole range of
ultra-low-cost vehicles from scratch, targeted at
first-time buyers in India, Latin America, Africa, and
perhaps in time Eastern Europe and beyond.
It’s a win-win for Renault-Nissan. India has the
lowest car penetration among emerging economies,
so there’s a ready market. But just as in Romania,
the car company benefits from the Jugaad mindset
of Indian engineering teams.
Renault-Nissan CEO Carlos Ghosn recently challenged his French, Japanese, and Indian engineer-

ing teams to come up with a solution to the same
technical problem, Radjou says. The Indian solution
cost one-fifth of the French and Japanese solutions.
Through its partnership with TechShop, Ford is
tapping into the Jugaad vibe in a slightly different way.
TechShop provides communal workspace, tools, and
classes for inventors and tinkerers across the country.
In 2010, Ford partnered with TechShop as a way to
reach out to the community and crowdsource ideas.
But Ford also sponsors its own engineers to attend
TechShop, and this, says Radjou is a clever way to
encourage fearless innovation in your own employees.
Radjou says, “Ford employees are able to go and
play at TechShop in a very free environment. When
they get out of the structured workplace they
become creative.”
So creative in fact that since its partnership with
TechShop, Ford has increased its patent output by
50% while also reducing R&D spending, according
to TechShop CEO Mark Hatch.
“Google is known for providing its employees time
to innovate. But time is not enough, you need to
create space too,” Radjou says. “Ford has done a
better job than Google because TechShop engineers
mix with new people and find fresh way of thinking
about a problem.”
Offering the TechShop experience allows Ford
employees to leave the highly structured and

process-oriented workplace environment for a
while, to think outside of the box and then bring
fresh ideas back to the table. Radjou calls this a
“shadow track”—a way for engineers to step away
from the formal design and development process,
play around, and then step back in with new solutions.
“TechShop and places like it are where we’ll find the
innovators of the future. Gen Z is not interested in
sitting in a classroom and learning about STEM,”
Radjou says.
“We need to attract young people back into the
industrial sector and we need a new breed of innovator, someone who is highly skilled—a tinkerer.
There’s innovation led by thinkers—PhDs and
scientists—and then there’s innovation led by
tinkerers. They go hand-in-hand, but for too long
innovation has been dominated by the former,”
Radjou concludes.
Mansukh Prajapati might agree with that sentiment.
He joins a growing list of Jugaad innovators coming
out of rural India. The Honeybee Network, which
supports grassroots innovations in India and is part
of the National Innovation Foundation, has compiled
a database of 10,000 inventions pioneered by rural
entrepreneurs like Prajapati.
While “scaling up” is a stumbling block for many of
these entrepreneurs, Western interests are beginning to pay attention.

REBUILDING THE
MONA LISA OF THE SKIES
BY JON MARCUS

Shrouded in scaffolding and stripped to her rivets,
the “Super Star” is barely recognizable as an
airplane, let alone one of the last most glamorous
ever built.
Yet here, away from public view in a sealed-up
hangar on a far corner of a municipal airport in
Maine, a project of unprecedented scale and
expense is under way to re-engineer this Lockheed
Super Constellation 1649A so it can fly again.
Commissioned by Howard Hughes, the Constellation was the last and greatest of the long-range
piston-powered aircraft unceremoniously supplanted by the passenger jet.
With its distinctive “S”-curved fuselage and triple
tail, the Super Connie “represented the absolute
zenith” of piston-driven airliners, wrangling 3,400
horsepower out of each of its 3,350-cubic-inch
Curtis-Wright 18-cylinder, twin-row radial R-3350
engines, says Ralph Petterson,
an engineer and aviation
author and an aficionado
of the plane. “That was
phenomenal.”
And it was nothing compared
to what awaited pampered
passengers inside. On luxury
runs across the North
Atlantic, they relaxed in
onboard lounges, ate gourmet
food in separate dining cabins,
and dozed in railroad-style
sleeper seats.
“This was the age when flying
was an experience and there was

romance involved,” Petterson says. “People weren’t
crammed into these aircraft. They drank the finest
wines. They ate meals cooked on board from
scratch. Now you get a bag of peanuts and a soda if
you’re lucky.”
But the Constellation’s debut as an elegant passenger carrier was postponed by World War II, when it
was dressed in fatigues and pressed into service as
a military cargo plane. And then, after only 44 of the
ultimate Super Constellation passenger versions
had been built, it was edged out in the 1950s by the
faster jet.
In the decades since, the “Mona Lisa of the Skies”
has hauled cheap vacation charter groups, oil
workers, and even livestock before being scavenged
for components and abandoned to the elements
at far-flung airports.

it will be repainted in 1950s
Lufthansa livery, taken to Europe,
and, like the Junkers, made
available for what an airline
spokesman calls “very special
flight experiences for passengers, comparable to those in the
golden days of aviation.”
That will have come after a
re-engineering process as
ambitious as it is hidden away.
More than 100 engineers and
others, some of them retired
Lufthansa mechanics who
worked on the original Connies, are attached
to the $3 million, purpose-built project hangar at
the Auburn-Lewiston Municipal Airport, a former
Navy airbase.
That is, until Deutsche Lufthansa Berlin-Stiftung, or
DLBS, a nonprofit arm of the German airline
Lufthansa, bought three of the last remaining four
of them at auction in 2008 and set about transforming the “Super Star” to its original condition, using
the other two for parts.
While many vintage military aircraft and
some passenger planes have been
refurbished—including a 1936 Junkers
JU-52 also rebuilt by DLBS—none have
been this complicated.
“These planes had been sitting
outdoors for 25 years or more. There’s
a lot of corrosion,” says Gene Richardson, president of Maine Aero Services,
where hundreds of tiny parts, each
with paper identifying tags attached,
are being photographed, inspected,
cleaned, and in some cases refabricated. Among other things, 95 percent of
the skin of the 95-foot fuselage has
had to be replaced.
When the plane is finished—it’s now
slated for its first test flights next
year, more than four years later than
originally scheduled—

A second Constellation sits outside the hangar in
the snow, still looking regal despite a missing
rudder and empty sockets where its engines once
were; it will eventually be given to an as-yet-unnamed aviation museum.
Some of those engines are the among six, each with
about 14,000 individual parts, being overhauled in

Idaho. Six three-bladed Hamilton Standard propellers—the biggest ever used in civil aviation—are
being restored or reproduced in Toronto, the landing
gear assemblies in Frankfurt and Hamburg, and the
wheels in Akron.

“They are going all out on this,” says Ray Anderson,
owner of Anderson Airmotive in Grangeville Idaho,
which is overhauling the engines. “There’s never
been anything like it and probably never will be
anything like it.”

The cost of all of this was originally estimated at $9
million to $12 million, but Petterson, who has been
allowed rare access to the project, says he’s told it
could reach $60 million. (Lufthansa disputes this,
but won’t disclose an amount.)

At Hope Aero in Toronto, a 96-year-old Hamilton
Standard retiree is supervising the work on the
propellers, that includes ultraviolet checks to find
any cracks or defects. The giant propeller assemblies used a complex system to synchronize their
rotation so passengers would have the smoothest
possible flight.

Since this machine is meant to fly, the paperwork
alone is legion. An Alabama engineering company
certifies that each part meets specifications. And in
a surrender to modern technology, the cockpit
instruments are being replaced with glass panel
displays, except at the flight engineer’s station,
where the old-fashioned gauges will remain.

That was one of the things that made the Constellations not only grand, but part of an era of “quantum
leaps” in aviation engineering, Petterson says.
And in luxury. The Connie’s star-studded first flight
began with a cocktail party in Los Angeles and
ended with nightclub-hopping in Manhattan for VIPs
including Cary Grant and Veronica Lake, who feasted in flight on Beluga caviar and baked Alaska
washed down with Dom Perignon.
“Everybody that works on this plane is enthusiastic
about it,” Richardson says. “They’re just waiting for
the day they see it fly—whenever that is. But when it
does fly, it’s going to be fun to say, ‘Hey, we worked
on that.’”

BY GARY WOLLENHAUPT

Photo credits: Zipcar

For more than a hundred years, makers of razors
have used a standard marketing model: Sell the
razor handle at a low price, and lock users into a
proprietary razor blade cartridge and a higher
margin.

Home appliances offer another great opportunity for
a subscription-based system. A monthly subscription
fee could cover maintenance and repairs, and replacement if necessary. After a certain time, consumers
could trade in their old noisy fridge for a new model.

Dollar Shave Club is challenging that model. This
scrappy web retailer uses viral video marketing to
disrupt the way razor blades are bought. It doesn’t
sell handles at all, but you can sign up for a razor
blade subscription service, with three tiers of
pricing, all at much lower cost that most Gillette
offerings.

This business model is expanding as companies
look for ways to grow market share and create a
predictable revenue stream.

The lowest tier is the one dollar per month deal,
for which you get four basic cartridges mailed to
your home. For six dollars you can upgrade to
four-blade razors, and nine dollars a month will
get you top-of-the-line six-blade razors. Having a
stack of cheap, fresh blades in the bathroom
drawer sure beats making an emergency run to
the pharmacy and suffering sticker shock.

Analyst firm Gartner predicts that by 2015, 35
percent of large global companies with non-media
digital products will generate incremental revenue
of five percent to 10 percent through subscription-based services and revenue models.
Subscription revenue streams can help to smooth
out seasonal revenue peaks, generate incremental
revenue from add-on services, and strengthen the
customer experience and customer loyalty, according to Gartner’s Building a Strategy for the Subscription Economy report.

During the economic downturn, subscriptions have been
a great way for vendors to keep demand up and
keep their operations running.”
The subscription-based relationship has been a staple
in the media and software industry for decades, and
it’s beginning to take hold in other industries too.
Let’s take automotive. Think about buying a car versus
subscribing to a transportation service. Zipcar—
introduced in Boston a decade ago and now an international success—offers access to short-term vehicle
use in major cities.
It’s a popular solution for people who don’t own a car
but need to travel where public transportation doesn’t
connect. Pay a membership fee to belong and buy only
the hours of transportation you need. Zipcar uses over
30 makes and models of vehicles, including BMWs,
Audis, and Prius hybrids.

A subscription model can also lower the upfront or
apparent cost of a purchase, according to Denis
Pombriant, principle consultant with Beagle
Research and author of The Subscription Economy:
How Subscriptions Improve Business.
“It creates a larger market to sell into and it creates
more demand,” Pombriant says. “During the
economic downturn, subscriptions have been a
great way for vendors to keep demand up and keep
their operations running.”
Subscription-style relationships show up in unlikely
places. For example, it’s common for aircraft manufacturers to provide “power by the hour” service for
business and commercial aircraft. For a fixed fee,

Photo credit: Andrew Harrer/Bloomberg via Getty Images

the engine manufacturer provides maintenance,
support, and even full engine replacement when it’s
needed. That way jet operators can forecast costs.
Capgemini Consulting’s Martin Putters notes that
the subscription economy also feeds the
cradle-to-cradle manufacturing movement. Rather
than disposing of products when they fail, a subscription service can ensure a milling machine or
industrial pump is automatically replaced at the end
of its life.
“There is a very clear connection between the
concepts of cradle-to-cradle and subscription
economy,” Putters says. “When thinking about
reverse logistics to realize reuse of materials, it is

easy to take the step of linking subscriptions to the
usage of certain products.”
Cradle-to-cradle could also be good for the environment. Desso, a Dutch Carpet manufacturer, boosted
its recycling efforts to use 100 percent recycled
materials by 2010.
“The most important thing is that we move from a
linear economy to a circular economy,” says Desso
CEO Stef Kranendijk.
Whether manufacturers choose to embrace the
subscription model or not, consumers will be more
likely to demand it moving forward.

Photo credits: Zipcar

“It’s really a subscription culture, and even companies that don’t offer subscriptions have to deal with
customers who understand subscriptions and want
to know why they can’t get products and pricing and
service and support more attuned to their needs,”
Pombriant says.
The next big thing for subscription economy could
be surprising.

Manufacturers should think creatively, Pombriant
says. Ask how you can deliver your product as a
subscription, he says. “If you can answer that
question you probably have a new market.”

SMOFFERS A
RT
BIKE
CUSTOMIZED RIDE
BY MARIA K. REGAN

Photos courtesy of Max Tomasinelli,
MIT SENSEable City Lab

Many people resist using a bicycle for daily transport because they’re reluctant to arrive at work or a
social event sweating from the effort of getting
there. Electric bicycles are an option, but they tend
to be expensive, heavy, and inelegant.
Enter the Copenhagen Wheel, which lets riders
transform their standard bikes into electric hybrids
simply by swapping out the rear wheel.
The wheel was developed by students at MIT’s
SENSEable City Lab and has won multiple design
awards, including the James Dyson Award in 2010.
The wheel is being brought to market by Superpedestrian, a Cambridge, Mass. start-up that recently
received $2.1 million in funding from Spark Capital.
The Copenhagen Wheel’s distinctive red hub
contains a motor, a removable lithium battery pack,
and a gear system, as well as environmental and
location sensors that provide data for related
mobile applications.
The wheel captures energy when a rider brakes or
goes downhill and stores it in the integrated battery
pack. It returns the stored energy in the form of a
“push” when sensors detect that the rider is
pedaling harder, like when cycling uphill. Riders
looking for a workout can forgo the motor assist
altogether. Weighing in at 13 pounds, the wheel
provides a top speed of 20 mph and will go up to 31
miles on a charge.

Controlled by a smartphone (iOS or Android), the
wheel will initially offer an app that enables riders
to select a level of motor assistance, lock and
unlock the wheel, choose from a variety of customizable rides, and track personal usage statistics
including time, distance, calories burned, and
elevation climbed.
Through the Superpedestrian SDK, an open-source
platform, the company hopes developers will create
other practical and social apps for the wheel.
In addition to making cycling a more practical
option while enabling people to keep their existing
bikes, the developers hope the wheel’s data-collection capabilities will lead to the creation of urban
carbon-credits programs to further encourage
more riding and less driving.
The first 1,000 wheels are being made by hand in
Cambridge, Mass., and can be pre-ordered for $799
on the Superpedestrian website.

Photo by Max Tomasinelli

STRUGGLES TO PRODUCE ENGINEERS
BY JON MARCUS

The 4,200 residents of Barrow, Alaska, cheerfully call
it “the top of the world.” But it takes a very special
type of person to live there.
The high school in Barrow serves the entire North
Slope, but still has an enrollment of only 186 in its
four grades. That turns out to be enough to field the
nation’s northernmost football team, the Whalers,
which plays on blue artificial turf. Yet more than 40
percent of the students score below proficient on
standardized tests in science, and more than 35
percent score below proficient in math. Fewer than
two thirds of students graduate on time, compared to
the national average of 75 percent.
So when Victor Charoonsophonsak showed huge
promise in science and math, his parents decided to
pick up and move from Barrow to Anchorage. That’s
Alaska’s biggest city, with 300,000 people, but it also
has something rare among the remote towns and
villages of this beautiful but sparsely populated state:
High school engineering programs.
“A rural place like Barrow is basically a village, and you
know almost everybody,” Charoonsophonsak says. “It
didn’t seem like such a barren place to me, because I
was used to it. But you just don’t have the resources
there. The opportunities and the knowledge would not
have been equivalent to what I can do in Anchorage.”
Facing a looming gulf between the demand for engineers and their supply, Alaska is trying to improve
education in science, technology, engineering, and
math. And that’s a goal that makes similar efforts in
the Lower 48 look like easy sledding.
“Our challenge is geography,” says Todd Bergman,
director of the Alaska Process Industries Career
Consortium, or APICC. “It’s not just that we’re a big
state. We’re isolated from the rest of the country.”
There will be 8,100 STEM-related job openings in
Alaska by 2018, according to APICC, most at the oil,
gas, and mining companies that fuel the state’s
economy. Yet fewer than two percent of high school
students there have access to a daily STEM
curriculum. Only 14 Alaska schools are part of Project
Lead the Way, the preeminent STEM program, out of
5,200 nationwide.

“

It’s hard to tell a
middle-school student in
those places that if they
take these classes now
they can become an
electrical engineer
someday and make a lot
of money.”

Long-disjointed efforts by government, industry, the
University of Alaska, and other groups are now beginning to coalesce into a coordinated policy to change
this. Twenty Alaska high schools have been designated
“engineering academies,” offering electives including
automation, robotics, and digital electronics, and
connecting students with engineering internships and
mentors.
But progress has been glacial. Just training teachers
in these subjects requires flying them to California,
North Carolina, or Washington State. Then, when they
leave—and teacher turnover in Alaska is high—the
process has to start again.
“A lot of these villages are cut off from major population centers and the winters are very long,” says
Zachary Mannix, APICC’s coordinator of the Alaska
engineering academies. While teachers in other states
can go to the local hardware store to pick up PVC
tubes for a class project, many in Alaska can’t.
Also, Mannix says, school resources “are going to a lot
of other things—the cost of transportation, heating
fuel. Some of the schools don’t have broadband
Internet. It’s hard to tell a middle-school student in
those places that if they take these classes now they
can become an electrical engineer someday and make
a lot of money.”

Photo courtesy of Wade Roach, Dimond High School

But the emphasis on engineering education in Alaska
is making some strides. Robotics competitions, for
example, are attracting students to the subject. So is
teaching that uses real-world problems. Mannix tells
of visiting a classroom in which students were learning how to lengthen their smartphone charging cords.

Out of 160 students who are in his school’s engineering program at any given time, 15 will make it all the
way to graduation, Roach says.

“The sample size is small, but there are absolutely
kids you know are going to be very, very successful,”
he says. “You see it when you go in at the end of a day
and students are staying after school to work on their
projects.”

As for Victor Charoonsophonsak, he got a scholarship
to Washington State University in Pullman, where he’s
studying mechanical engineering.

The University of Alaska in Anchorage is negotiating
with Project Lead the Way to provide in-state teacher
training. And teachers who have gone off to be
trained somewhere else are attacking the problem
with enthusiasm.
Wade Roach, who teaches at Dimond High School in
Anchorage, designed his classroom to look like Tony
Stark’s lab in the Iron Man comic books, with
remote-controlled blinds, glass partitions, a 3D
printer, and other cool stuff.

That’s still a drop in the bucket. But, he says, “Every
little bit helps.”

He says he misses Alaska, but he is thinking of
becoming an aeronautical engineer, for which there
isn’t much demand at home.
Still, says Charoonsophonsak, “There are a lot of
students who went through the same exact course
that I did, and a lot of them are staying in Anchorage
and going to school there. And that’s a great sign
for Alaska.”

LES

T YP

Why Disa

Photo credits: Dondi Tawatao/Getty Images

SSONS FROM

PHOON HAI YAN:

aster Plans are Essential in Telecommunications
BY JON MARCUS

Photo credits: Noel Celis/AFP/Getty Images

Days after Typhoon Haiyan ripped across the eastern
Philippines, the most immediate needs for water,
medicine, and shelter were hampered by a lack of
information.
The scale of the storm and the geography of a nation
spread across 7,107 islands made gathering important data and gauging the magnitude of the disaster
close to impossible for emergency officials.
Restoring technology infrastructure has become an
essential part of emergency recovery, just as it has
gotten more complicated—and disasters seemingly
more frequent and destructive.
But avoiding having sometimes-fragile technology go
down in the first place takes foresight, says Ben
Tartaglia, executive director of the International
Disaster Research Association, or IDRA.
“The best way to do it is pre-planning and preparing
your infrastructure for recovery,” Tartaglia says.
That doesn’t always happen with IT and communications. A World Bank and U.S. Geological Survey study
estimates that $40 billion invested in emergency
preparedness would have saved $280 billion during
the 1990s, the latest period studied. Despite this, a
survey by the IDRA found that only one in four telecommunications departments have disaster plans.

So while there is nothing good in massive natural
disasters like the Philippines typhoon, it at least
focuses attention on the need to be prepared.
Disaster lessons have often been surprising.
Cellphones, for example, have incontrovertibly become
lifelines in disasters, and one of the first things officials
need restored. That’s particularly true in places like the
Philippines, where there are 114 cell phones per 100
people—a greater density than the US Census Bureau
says exists in the United States—according to the
consulting firm BuddeComm.
Even in normal times, Filipinos send two billion SMS
messages per day, among the most in the world.
Meanwhile, only half of Philippines towns and cities
even have wired telephone service, and the proportion
is declining.
Of course, the fact that cellphones transmit wirelessly
gives them built-in resilience. It’s the base stations
that are vulnerable in disasters. The towers themselves may be well-engineered, but there is often too
little fuel to sustain them, too many people trying to
make calls, and towers are often built on unstable
structures that collapse.
The 2011 earthquake and tsunami in Japan immediately disabled 8,000 base stations, but within 24 hours that
number had doubled when most of the rest lost power.

“

Days after Typhoon Haiyan ripped across the eastern Philippines,
the most immediate needs for water, medicine, and shelter were
hampered by a lack of information.”
After the Haiti earthquake, none of the cellphone towers
built on solid ground went down. The ones that did fail
were on the roofs of the many buildings that collapsed.
Spikes in demand can do almost as much damage as
a natural disaster. After the Japanese tsunami, call
volume was 60 times more than normal, and
systems crashed.
In the wake of Typhoon Haiyan, cellphone companies
flew in so-called “cell sites on wheels”, known by the
abbreviation COWs and familiar from large events
where they’re used to increase calling capacity.
Equipped with their own generators, they can restore
service in emergencies.
“If you get enough of those connecting to each other,
you can re-create the wireless infrastructure,” says
Paul Kirvan, a telecommunications consultant. “But it
takes hundreds of them to do that. And the generators need fuel, and the supply chain for all of that
starts to get extensive.”
Nor is it a permanent solution. But it is made easier
by the fact that growing reliance on cellphones has
also spurred investment in undersea cables and more
redundancy so that service can be routed around
switching offices where service has been cut.
These changes “have been made to improve throughput,” Kirvan says. “But it also increases resiliency
and survivability.”
More enduring ideas are being tried, too.
The Japanese are building 100 super-strong
cell-phone base stations. And GSMA—an international
association of mobile operators and related companies—is urging providers to join an international bank
of COWs so they can be shared in an emergency.

Photo: Typhoon survivors charge their mobile phones on a roadside
charging stations. (Photo credits: Noel Celis/AFP/Getty Images)

After callers clogged systems during Hurricane Katrina
and the London subway bombings, some cellphone
companies created a way for fire, police, and ambulance calls to get the highest priority, and encourage
other users to send lower-bandwidth text messages.
There will doubtless be more tests like Typhoon
Haiyan. The Intergovernmental Panel on Climate
Change (IPCC) says the number of natural disasters is
likely to increase as a consequence of global warming.
Some projects even seek to use such things as
cellphone networks to help predict the worst. One
network signed a deal with its national weather
bureau to locate monitoring instruments at
cell-phone towers.
The country where this happened? The Philippines.

PRACTICAL TIPS ON
CONFLICT MINERALS
REPORTING
BY JASON ALBERTI

Discrete manufacturers are grappling with many
different challenges as they work toward the May,
2014 deadline to file their first disclosures with the
SEC under the new conflict minerals ruling.

In that context, the idea of filing similar information
with the SEC and publishing it on the company website has to feel a little bit like wearing a “kick me”
sign for organizations effected by this law.

While the requirements of the law itself seem to be
generally understood, the great unknown has been
the baseline expectations of NGOs and socially
conscious consumers watching this issue.

So, how can a manufacturer confidently publish their
conflict minerals findings without fear of a public
relations nightmare, or worse?

For roughly 6,000 companies, the exercise of probing
their supply chain for minerals tainted by the armed
conflict in Central Africa will potentially represent a
significant brand risk.

Practical recommendations for reporting
and compliance
In September 2013, the Responsible Sourcing
Network and the Enough Project helped to answer
this question by jointly publishing a detailed set of
recommendations and measurements to guide
manufacturers as they develop their conflict minerals
filings for 2014.
Both of these groups are thought leaders in the field
of responsible sourcing, and their paper aims to
achieve the maximum positive impact in the region by
urging companies to comply with the letter AND the
spirit of the law.
Download the full paper, Expectations for Companies’
Conflict Minerals Reporting, for free on the Enough
Project site.

In June 2013, Nintendo was singled out via an online
campaign by the anti-slavery group Walk Free, for
using conflict minerals in its products and for being
unresponsive to petitions asking it to undertake more
responsible sourcing. This campaign was based on
investigative research carried out by Walk Free and
other organizations.

The paper stresses the importance of developing and
disseminating policies and supply chain strategies
which support responsible sourcing from the DRC
region. As the authors remind their readers, the goal
of the Dodd-Frank legislation is “to ensure a
conflict-free Congo, not a Congo-free product.” Some
of the key metrics include:

∙ % of products/product categories containing 3TG
∙ % of surveyed 3TG products
∙ % of responding suppliers
∙ % of products with indeterminate 3TG status
∙ % of 3TG products with smelters identified
∙ % of suppliers using material from CFS smelters
∙ % of staff that are aware and educated on the
company’s conflict-free sourcing policies
∙ % of suppliers that have received a copy of the
company’s policies
Among the best practices outlined, here are
several highlights:
∙ The company’s policy should be included in
supplier contracts, and the company should
source conflict-free 3TG materials from the region
∙ The company should publicly list all 3TG smelters
and list the country of origin for all 3TG minerals
in its supply chain
∙ The company should also support the establishment of a responsible/conflict-free supply chain in
the effected region, or alternative-livelihood
initiatives for miners and smelters by working with
NGOs and other groups in the region

Although there will always be room for interpretation,
and this paper by no means represents the position of
all of the stakeholders in this issue, it nonetheless
provides the closest thing to a roadmap for manufacturers that are approaching the conflict minerals issue
with the caution it deserves.
The key message: Demonstrate that your company is
making a conscientious effort to establish a
conflict-free supply chain, with sourcing policies that
will be consistently communicated and enforced
among your suppliers.
Even if you find conflict minerals within your current
supply chain, a public filing which honestly discloses
that fact and outlines a remediation plan to achieve
conflict-free status will be looked upon much more
favorably than those organizations that choose to file
as “undeterminable” while that loophole exists.
Visit the Conflict Minerals Compliance Resource
Center to learn more about the conflict minerals
regulation, compliance solutions, and emerging best
practices from leading organizations.
This article was originally authored by Christopher L.
Harden, CHMM, and will also appear in the November
issue of AIAG’s Corporate Responsibility newsletter. To
learn more, or to subscribe, visit AIAG online.

Winter 2014

INSIGHT ON PRODUCTS, MANUFACTURING, AND SERVICE
PTC Product Lifecycle Stories brings you the latest
news and trends in design innovation and manufacturing. Subscribe to PTC Product Lifecycle Stories for
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