Dain Dunston

The Language of Leadership

Dain Dunston

Archive for December, 2014

Elegant Innovation Changes Derby’s Life

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I love stories like this: a dog born with two deformed front legs got around OK. But then this team of designers went to work and jacked him up seriously. (Grab a Kleenex!)

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Innovation in Desalination: Okeanos Technologies

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It’s not just those signs you see in neighborhoods alerting residents to restrictions on watering lawns. Water shortages are a critical problem around the world and the challenges are a lot worse than the fate of your Bermuda grass. In less than 15 years, half the world’s population will be living in areas where there isn’t enough fresh, safe water. And it’s not just about drinking: we need fresh water for nearly everything we do.

Over 97% of Earth’s water is salt water and there’s plenty of technology—some of it ancient—to help us desalinate that water. But the ancient technologies, like solar distillation, are slow and small. And the more recent technologies are so energy intensive and dirty that they’re possibly worse than the problem they’re designed to solve.

That’s why the desalination technology from OkeanosTechnologies, the 2014 winner of the Ocean Exchange Gulfstream Navigator Award, is such an exciting breakthrough. And it’s a breakthrough because it’s such an elegant solution.

Here’s how elegant: Imagine you’re paddling down a river with your friends. Some of you are in plastic canoes and some are in metal. Ahead of you, there’s a fork that diverts the flow into two channels: a main current and a side channel. And to your surprise, all the metal canoes get pulled into the side channel while you and your friends in the plastic canoes continue along with the main current. What happened? Well, imagine that right at the fork, there’s an eddy caused by a localized field that acts only on the metal boats, pulling them out of the current and into the eddy.

That’s the simple idea behind the Okeanos WaterChip technology. The WaterChip contains a microchannel with two branches. As saltwater molecules flow through the channel, an embedded electrode right at the branch acts on the chloride ions in the molecule, neutralizing them and pulling them to the side channel. It creates an “ion depletion zone,” essentially creating a local electric field strong enough to redirect the salt ions. The result is that only the desalinated water passes through the main channel.

What Okeanos is doing has attracted attention beyond The Ocean Exchange. Fast Company named the company to their 2014 list of The World’s Top 10 Most Innovative Companies in Energy, along with companies like GE, Phillips and Tesla. That’s exciting company for a start-up.

This technique, called electrochemically mediated seawater desalination, uses so little energy that the chip can be powered by a couple of AA batteries. And because the system doesn’t use membranes or filters, the channels keep flowing, with clean water coming out one side and chlorine out the other.

The technology was developed by chemists at The University of Texas at Austin and the University of Marburg in Germany. And Okeanos is developing the technology commercially. The idea is to create WaterChips that operate a little like computer chips: you link them together to desalinate as much—or as little—water as you need. That means, when fully developed, the system could be used to provide drinking water to an island or a city. A smaller system could provide water just for a hotel or even a single residence.

“Okeanos has even contemplated building a small system that would look like a Coke machine and would operate in a standalone fashion to produce enough water for a small village,” says Tony Frudakis, the founder and CEO of Okeanos, who presented at Ocean Exchange and accepted the Gulfstream Navigator Award. Such a device could also be used in disaster relief when flooding contaminates water supplies. And because the technology is so energy efficient, the developers hope the process can be powered by alternative energy sources, at least for small scale village applications.

I live in the hills outside Austin, Texas, where several neighbors capture rainwater from the roofs of their homes. Even in the recent droughts they never ran out. Contrast that with places like the artist colony of Todos Santos, on the Baja Peninsula, where most homes have to have water trucked in and where developers are trying to get the government to build a gigantic desalinization plant that is likely to damage the fragile marine and desert ecosystems. Imagine what they could do with this technology.

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Cadillac Takes Manhattan

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A couple of weeks ago, Cadillac surprised many people by announcing they were moving their corporate headquarters to a trendy building in lower Manhattan. But anyone following their recent moves might not have been so surprised. I certainly wasn’t.

The reason is that in September they announced that they had hired South African Johan de Nysschen to head the company. Never heard of him? He’s the guy who turned Audi USA around. And based on what he did there, we might be able to predict the future for Cadillac.

First, after leaving Audi to lead Nissan’s Infiniti brand, he oversaw the organization’s move to Hong Kong. Moving a Japanese car maker out of Japan so that they can be closer to their Chinese growth market is a big deal. So a headquarters move is something he understands.

Second, it’s no surprise Cadillac needs a big brand turnaround and has done for more than 50 years (remember the Cadillac Catera, “the Caddy that zigs?”). And one way to get there is to get out of Detroit and surround the executive staff—50% of whom are expected to be new hires—with people who understand global luxury brands.

Third, Cadillac has laid the foundation for a serious product line, with smaller sportier performance cars aimed squarely at BMW. But it’s only a foundation and after serious growth in 2013, their sales are down this year. While the luxury market is up 14 percent year on year, Cadillac is down 5%. That maybe just the market adjusting to the number of Cadillac buyers out there. Cadillac doesn’t have the product development clout that Mercedes or Audi’s VW Group have, even with General Motors behind them. But they do have sales in China (about 50,000 cars per year, currently) and with Chinese buyers having little brand affinity to the German brands, they have a chance of getting enough growth there to fund the kind of product development they’ll need. If they continue to refocus their products away from Escalades and toward Audi, BMW and Mercedes, they can play in the market.

Johan-de-Nysschen-Cadillac-ATS-V-550x358There are two reasons to be optimistic. That 22% sales leap a year ago was the market’s reaction to some of their vehicles, including a high performance sedan, the CTS-V, and some well-regarded smaller SUVs. So the market says it will respond if Cadillac comes out with cars younger drivers want to own. The other interesting news—and this part was surprising to me—is that Cadillac had the top ranked customer satisfaction ratings last year, according to J.D. Power. Audi (not surprising) was number two. Both companies had dislodged Lexus from their historic position. Many of the dealership organizations which prospered under de Nysschen’s time at Audi also own Cadillac dealership, so he may be able to get strong cooperation from the dealer organization.

Learning from his Audi experience.

It’s instructive to look at what de Nysschen did at Audi with the dealer body. When de Nysschen took over Audi, dealer satisfaction ranged from the high teens to the low 30% range. Although that sounds low, it tracks with industry standards. But within a year of the changes Audi initiated, engagement began to grow. Today, Audi dealers are among the most engaged and enthusiastic in the industry, regularly topping dealer organizations from BMW, Mercedes and Lexus.

What did Audi do to engage dealers? Besides dramatically improving their product line with exciting products (something de Nysschen had limited control over), they focused on three things in the dealer relationship.

They focused on Dedicated Dealerships.

Although many of their dealers own several dealerships and represent more than one brand, Audi convinced them of the value of investing in standalone Audi dealerships. The result was increased satisfaction in all directions: customers were more satisfied, employees were more engaged and dealers were making more money.

They focused on the Dealer Council.

Executives dramatically increased their involvement in the dealer council and successfully got their rank and file dealers to engage, as well. When they did, they were able to identify solutions for several key issues, fine tuning the performance of their dealer support organization and of the dealerships.

They got dealers engaged in the story.

I got involved when Audi called on my client Todd Street Productions to help dealers understand what Audi was doing, what the benefits of the changes were to them and how to partner with their regional dealer teams to increase their sales, reduce their costs and raise their margins.

ROE: the Return on Engagement

The investments Audi made in dealership design paid off in reduced dealer operating expenses and improved customer experiences. By 2010, five years into the program, Audi’s unit sales in the U.S. market topped 100,000 for the first time ever. Their sales for the first six months of 2014 exceed their entire 2009 sales. And they’re up 15% year-to-date, growing faster than either Mercedes-Benz or BMW. For the year, their sales will top the 200,000 mark; double their record-breaking sales of 2010.

What does this mean for Cadillac?

If de Nysschen can turn Cadillac into a global luxury brand with class-leading products; if he can gain a strong foothold in Asia to help fund that development; and if he can engage the dealers in creating a unique brand experience for customers, he may be able to establish them as a luxury brand in the U.S. and Europe.

The challenges are daunting. In the end, it’s always about the product, not about the marketing, and the competition is tough. GM and Cadillac have been so unstable for so long, an outsider may not be able to shift the corporate culture, even with a hip new HQ on the edge of Soho and Tribeca. And there’s one more worry: de Nysschen was hired on at Nissan in 2012 to turn the Infiniti brand around. He didn’t do it. Instead, after just two years, he leaves the brand in chaos. Here’s hoping he gets better t traction at Cadillac.

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