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Regarding the cost of research and development for small businesses, an article in the Harvard Business Review said it best, “Small companies have to swing for the fences to attract market share from large companies, and home runs attract attention. The problem with swinging for the fences, however, is that the probability of hitting a home run is extremely low.”
Nevertheless, small businesses keep swinging and driving innovation to stay relevant. That challenge is amplified for those located in rural areas that are pushing automation initiatives due to a lack of skilled labor and low unemployment rates. Integrating another element into the business, sustainability can seem like a daunting task. However, WCCO Belting, based in Wahpeton, ND, proves its achievable and has tips for how others can improve their batting average with the addition of a sustainability strategy.
WCCO Belting is a global business that manufactures rubber conveyor belting for agricultural and light industrial equipment. The 64-year-old company was founded by a high school dropout, war veteran, and shoe cobbler turned manufacturing entrepreneur. His lack of a formal education and financial resources forced problem solving using unconventional measures, which resulted in a culture built on thinking outside the box.
The company’s latest discovery took it down a road less traveled in the synthetic rubber product industry – renewable resources. On March 19, 2018, WCCO Belting announced the launch of a patented rubber technology made with soybean oil, the first innovation in its new TerraTech™ line of belting products made with sustainable materials. This technology uses soybean oil instead of aromatic (petroleum) oil in a rubber compound formula that can be used in many product applications.
Why Sustainability Needs to be a Strategy
In 2013, a brainstorming session turned the company on to the concept of a rubber technology made with soybean oil. The opportunity immediately seemed to have the “home run effect” small businesses need to justify significant research and development costs.
The company could offer its customers more environmentally-friendly product options. The use of soybean oil in belting would directly benefit U.S. soybean farmers who are end-users of the company’s draper and conveyor belting products. Soybeans were lower than oil in commodity market pricing, which could reduce input costs. Last but not least, WCCO Belting was hopeful for performance benefits after the report of positive results of soy oil use in rubber tires.
At this point, the company could have sanctioned resources to the project based on the assumptions above, let its engineers loose, and considered the addition to its tool box a success. However, WCCO Belting leadership recognized this move towards sustainability deserved more than a “tick-the-box” approach.
By turning sustainability into a strategic initiative, WCCO Belting not only has a product line, TerraTech™, dedicated to the use of renewable resources, but also has improved production floor efficiency. It has implemented over 1,200 employee suggestions for process improvements since 2014 and is now manufacturing 20 percent more product with 20 percent fewer employees.
Determine What Your Customers Value
Capitalizing on sustainability efforts requires a strategy that creates value for the customer. Conversations with buyers, engineers, and end-users on how they value sustainability can help direct a business to what practices will make the biggest impacts to their bottom line.
Is the customer’s decision-making cost driven, performance driven, or can it be emotionally driven? What deliverables does the business have to accomplish to earn customer buy-in? This research should determine the sustainability strategy and product plan, not the other way around.
For WCCO Belting, the launch of a patented rubber technology made with soybean oil initially achieved all of its customer requirements. Using soybean oil improved performance in the form of a 20 percent increase to abrasion resistance and there was an emotional benefit for its end-users (farmers) to use a rubber product made with the materials they harvest (soybeans), Today, the cost of the oil input is fluctuating due to current economic conditions but the company deemed market volatility an acceptable risk because of the other benefits.
Research Product Improvement Before Product Development
A business does not have to invent a new product or technology to accomplish sustainable outcomes. For starters, analyze what new features could be added to a product and how existing specifications could be improved upon. There could be meaningful product changes involving the use of sustainable materials or updated processes that could increase benefits recognized by customers.
With the goal of being first-to-market, WCCO Belting made the strategic decision to take a small-step, product improvement approach. It researched the substitution of an ingredient in its current rubber formula that has endured decades of field testing. This decision both increased the soybean oil project’s probability of success and reduced its timeline.
Supplement Development Costs
Acquiring grant funding should be top of mind for small businesses driving innovation. Because soybeans are a large commodity for North Dakota and the U.S., WCCO Belting received grant funding from two sources driving the use of agricultural products, the North Dakota Agricultural Products Utilization Committee (APUC) and the United Soybean Board (USB). The mission of the USB is to maximize profit opportunities for U.S. soybean farmers by investing and leveraging soybean checkoff resources, and a strategic objective involves supporting research of U.S. soybean oil.
A manufacturer does not achieve success without strong vendor partnerships and loyal brand ambassadors. Businesses should take into consideration the support their suppliers can offer. For example, WCCO Belting’s rubber compound supplier provided in-kind raw material testing during the product development stage. A business can also engage customers and end-users for testing. As a component supplier for equipment, WCCO Belting works with customers on data accumulation and input on fit, form, and function.
Manage Projects with a Phase-Gate Process
WCCO Belting uses a phase-gate process to manage numerous projects related to innovation including product improvement, product development, and expanding manufacturing capabilities. The concept separates projects into various phases of its life cycle, and between phases there are “gates” or critical decision-making points. At each of those points, a team decides whether the project should continue based on the information available at that time, which can include market research, product design, risk assessment, capital expenditure requirements, and other variables.
A phase-gate process doesn’t need to be complicated, and the internet is riddled with examples that can easily be customized per a business’s unique needs. It’s protection against overzealous spending and provides better visibility into long-term product planning, promotes cross-functional communication and buy-in, and increases employee motivation. Most importantly, it allows a business to recognize every opportunity to add value throughout the development process.
With increasing global competition, small companies can’t afford to stop swinging for the fences. Creating and implementing a sustainability strategy could introduce renewable materials into new and existing product lines and bring fresh eyes to non-value added business and manufacturing processes. For WCCO Belting, resources dedicated to sustainability resulted in a patented technology and new line of rubber products – TerraTech™, solidified a reputation as the value innovator in the belting industry, improved operational efficiencies and generated a healthier bottom line.
To learn more about WCCO Belting, visit www.wccobelt.com.
About the Author
Jean Voorhees is the Vice President of Business Development for WCCO Belting, Inc. She has extensive experience in the development, innovation, and marketing of industrial and agricultural products and developing distribution around the world.