Related Resources:
- Find out how teams have pivoted during the COVID-19 pandemic to meet new challenges in this podcast episode.
- Get a recap of InnoLead’s original research, and all the data you need to get ahead in 2021.
Chad Manuell’s Reading Recommendations:
- Fail Until You Don’t: Fight Grind Repeat by Bobby Bones
- The Right Stuff by Tom Wolfe
- The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg
- The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results by Gary Keller
- Turn the Ship Around!: A True Story of Turning Followers into Leaders by L. David Marquet
- Chief Engineer: Washington Roebling, The Man Who Built the Brooklyn Bridge by Erica Wagner
Transcript
Kaitlin Milliken: Hey, you’re listening to a bonus episode of Innovation Answered, the podcast for corporate innovators. I’m Kaitlin Milliken from InnoLead.
The sudden onset of the COVID-19 pandemic led to noticeable shortages. You might remember stocking up on toilet paper, or going to the supermarket to find all the bags of flour were sold out. But one shortage might surprise you: bicycles.
The pandemic has changed the way people get around. Instead of public transportation, cycling has become a preferred mode of mobility for many urbanites. Biking has also become a safe outdoor hobby for exercise enthusiasts. In fact, market research firm NPD reported an 81 percent year-over-year increase in bike sales from April to July of 2020.
A spike in demand might seem like a clear win for bike makers. But, more sales means greater stress on supply chains, longer wait times, and potentially more customer frustration.
To find out how the bike sector is dealing with the unexpected surge of interest, we talked to Chad Manuell, Director of Engineering at Trek Bicycle. A privately held company with a 2,000 person team, Trek manufactures and distributes bikes — both at Trek shops and outside retailers. Chad leads the team that develops new products for the company.
During our conversation, Chad also discussed how the company approaches early innovation. That includes managing ideas, creating the right portfolio, and deciding what to move forward. We’ll be back with Chad after this break.
[AD JINGLE]
This year is wrapping up, which means it’s finally time to say goodbye to 2020. And while this year was defined by unprecedented challenges — we know it has also been full of wins. Our first event is dedicated to celebrating those victories. So join us for Success Stories on January 28 through 29 of 2021. We’ll take a deep dive into case studies of successful products and offerings. We’ll explore the obstacles along the way. And this event will also have our first ever totally-anonymous, cameras-off session where you can talk about failures and projects that were killed — and how you managed through it. To learn more and get a ticket, visit innovationleader.com/success2021. See you there.
[MUSIC]
Kaitlin Milliken: And we’re back with Chad Manuell, Director of Engineering at Trek Bikes. Chad has been at the Wisconsin-based company for 20 years. During that time, he’s worked as a composite materials engineer and in project management roles. Today, he leads the bike and aftermarket product development teams. Aftermarket products for bikes include replaceable parts and accessories, like seats.
Thanks, Chad, for joining us today.
Chad Manuell: You bet. Thank you for inviting me.
Kaitlin Milliken: So just to kick us off, can you talk a little bit about the team that you lead for Trek, and what role innovation plays into that work?
Chad Manuell: Our team does all new product development for the Trek products. That consists of all of the early innovation, early R&D, the engineering, the work that’s required to bring a product all the way to market — so working with our vendors and suppliers to collaborate and develop and test the products to make sure they’re ready to go into market. We have a prototype lab. We have a composites lab. We have an engineering teams in all the offices that I mentioned earlier.
We have our largest offices in Waterloo, Wisconsin, which is just between Madison and Milwaukee. We have a very large development team in Asia spread throughout the three different offices near Shenzhen, Shanghai and Taichung, Taiwan. A smaller team in the Holland office that really specializes on European bike models. And then we feed a very large factory. I think this is important. We have a large assembly factory in Germany and have somewhere around 350,000 bikes assembled there a year and that’s growing quickly. So we do a lot of work helping to develop the assembly processes as well.
Kaitlin Milliken: And I do want to dive into how you create new products and talk a lot about that process. But first, due to the pandemic, I’m sure a lot of folks across cities and in different geographies around the world may not be taking public transportation, or maybe they’re looking for more open air activities, of which biking would be one. Have you seen a change in customer appetite for bikes in 2020?
Chad Manuell: Yeah, it’s been insane. We came into that February, March timeframe thinking, “Oh, my gosh, we could have a really, really tough year.” And to our surprise, it was a really tough year, but not for the reasons we thought it was going to be. Our stores started selling out. It started with some of the lower-end models, and it’s moved up a model. And our inventories are an all time low.
Luckily, Trek had just an amazing forecasting group that saw this trend coming ahead of the rest of the industry, which allowed us to start buying really early. We’re buying product now out into calendar year 2022. So normally, we just provide a forecast for a couple quarters out. But at this point, we’re placing firm orders way out into the future to hold our place in line. Obviously, there are a lot of companies like Shimano and Bosch that provide the entire bicycle industry with componentry. And we have to get in line with those companies like all the other companies and for our forecasting group to understand and see some of the signs really early on has been amazing. For us, it’s obviously we have to do a lot of additional work to get bike models ready early. So you’re balancing innovation and balancing the current product development in locations where all those products are going to be manufactured.
Obviously, we have to increase the number of bikes that we can provide customers as well at the same time. So if we’re going to our current factories and new factories and trying to understand what additional capacity we can get, or if we need to bring up a new brand new factory online. At the same time, we don’t want to get caught with too much inventory at the end. So that forecasting group is looking, watching really hard for signs that the bike boom may come to a quick end.
Kaitlin Milliken: So in addition to an increased demand, have the things that customers want from bikes or their needs related to bikes changed at all?
Chad Manuell: There’s been just an incredibly incredible increase in demand for bike service. So all of our shops provide service as well on the bikes to make sure they’re ready to ride for people. So people that maybe haven’t written their bikes for years are bringing them out, or since last year at the beginning of this thing, bring them in for service and trying to get it back in riding shape.
And then all the accessories and things that go along with using a bike both for transportation, and for fun or fitness, are selling really quickly as well. So it’s not just the bikes themselves, but vendors, things that you might need to ride while you’re in the rain or new bicycle clothing, or bags and racks and things like that, that you might be using for taking your bike to work instead of the bus or the train.
Kaitlin Milliken: Right, I did have the experience of attempting to buy a bike helmet in, I want to say June? And I think I got the last one at Target because they were all sold out. I do want to talk about new product development, which your team focuses on. Can you talk about how your team chooses what types of projects to work on? And where ideas come from?
Chad Manuell: Yeah, it’s a crazy mix at Trek. The company’s broke down into a bunch of business units. So mountain bikes is a business unit and rode bikes is a business unit, and helmets, and shoes. And so each of these categories has a business leader — so basically a president of that business unit. And that person, that product manager is looking out and saying, “Hey, in the next three to five years, I need these products.” So what the engineering and industrial design and the rest of the development team does for each one of those business units, is they look at that need for the next three to five years. And they try to fill that in with here’s the innovation that is going to be needed to pull off some of those projects. Or here’s the innovation that we see the marketplace demanding and that type of product going forward and trying to create their own separate innovation or R&D development board, so that we are ready and have production, have the innovation ready to go. So we’re not developing the R&D in the development cycle.
Kaitlin Milliken: In terms of the types of things that you’re working on. I think it would be really helpful for folks if you could provide maybe some examples of innovation that has passed through your team.
Chad Manuell: Yeah, I don’t know if everyone’s familiar with the wave cell helmet that we released last year. But instead of just UPS foam inside the helmet, there’s a honeycomb looking structure that basically, as a person’s head if you’re in a crash hits the ground, there’s a rotational component to the force and the impact. And what this does is it allows the helmet to glide on your head and your head takes less of that rotational impact. And it’s an amazing technology.
And that’s not something we came up with overnight. That’s something we worked with an outside company, saw technology, thought, “Hey, this has an application and helmets,” and an engineer spent a ton of time and a team spent a ton of time looking at how do we build that into a helmet. Because we still needed the traditional foam in the helmet as well. But we also needed this new technology. As your body deals with this rotational force, how do we prove that this technology is actually a better situation than some of the other technologies that are already out there, because we use a lot of traditional technologies in our helmets, as well. And our main interest is the safety of the customer.
So that took about four years of development ahead of anyone seeing it in the marketplace. So when we released that we were really excited, and we came up with a big splash on that one. And as we bring out new helmets much of that technology continues to be a great seller.
Kaitlin Milliken: Great, thanks for that example. I do want to talk a little bit about the front end of innovation. You mentioned that ideas are coming from different departments throughout the organization. How do you manage that front end idea collecting and management type of work?
Chad Manuell: Monthly we hold an R&D or innovation review meeting. We have an innovation board, which consists of the VPs of the product departments, both the aftermarket side, and the bike side, and then several other key people from marketing operations and other groups across the company. Every category presents four times a year. And they’re on alternating months. And what we’re looking at is that portfolio of innovation efforts that they have going in their categories. And try we’re trying to understand if any of those technologies are applicable in other categories, we’re usually not ever trying to shut them down and say, “Hey, that’s never gonna work.” We’re really interested in seeing where the team goes with those things.
So no matter how rough it is, we want it to be a safe environment for the teams to come show what they’re working on. And those can be materials, they can be manufacturing processes, they can be efforts with outside companies that are doing some cool stuff that we’d like to work into bikes. And so that group is getting to see all of those things. And also the other categories are sitting in on those meetings to see the technologies and they are definitely pulling them in and out of different categories.
And then we have groups like our analysis and ride test teams that also present in those meetings. And so we’re seeing some of the cool technologies and analysis techniques and maybe the different prototyping methods that we’re using. And the groups are able to pull those things from each other and help each other out as they build on top of what each of the groups are doing. So while a lot of it’s coming from within business units, it’s also very important that there’s a central place where all that stuff’s coming together, and people are able to collaborate and work together and understand what else is going on in the company.
Kaitlin Milliken: So you mentioned that the business units are working on some things. Other things end up being a part of your team and the innovation process. How do you decide what gets to be a part of your group? Is it those longer term projects like the four-year-long bike helmet type of thing? Is it some other way?
Chad Manuell: It’s sort of like a matrix within our organization. So the business units have control over the business category and the profitability and the sales targets within those business units. But then the group’s like industrial design and engineering. We’re seeing those projects through from the very beginning of the innovation process all the way through the product development cycle, and then also helping with some of the CI on some of those things. So if we see, right, hey, we came up with an innovation over here in this category, and we’d like to move that into another product line. We have the freedom to do that. There isn’t really a handoff anywhere within that system. It’s a lot of times we’ll even keep an engineer who started the R&D or the innovation on a technology, all the way through to the model launch as
Kaitlin Milliken: You were mentioning the prototyping process and building out ideas. How does your team typically approach prototyping and has that process changed at all this year?
Chad Manuell: Yeah, so we have a great prototype lab within our facility, lots of both additive and CNC equipment and a lot of other technologies that we’re able to use and leverage. That group and the way it works hasn’t changed that much. They have continued to work on site through much of the whole situation that we’ve been going through. Obviously, we’ve got a lot of protocols that we follow to make sure that they’re safe. And when they don’t have to be in the building, they’ll do safe programming from home for the rapid prototype machines or the CNC machines. We’ve kept almost the rest of that development team out of the office.
The density of people in the office makes it a much easier situation for some people to be in there and follow all the best social distancing practices, and they’re wearing masks and we’re doing temperature checks, as people come into the building. We’re doing random COVID tests. Otherwise, the prototyping process, the only thing that’s really changed is instead of someone dropping the thing off at someone’s desk, we’re either mailing it to their home, or we’re sending it outside the door, and someone’s coming and picking it up.
Kaitlin Milliken: So when it comes to those prototypes, at what stage or what level of readiness, do you test them with people? And how are you choosing who to test with?
Chad Manuell: We’re trying to test really, really early. We work with a group, Eureka! Ranch out of Cincinnati, and they have a program called Innovation Engineering. I hope a lot of people are familiar with that. I recently completed my black belt certification and one of the big things they believe in is prototyping early and often. Fail fast, fail cheap. We’re trying to get that prototype out in front of people as soon as we possibly can. We’re trying to use surveys with maybe a PowerPoint mock up of what that thing might look like in the future. To ask some real quick questions about what to get the insight from people who might be potential customers.
One of the things that we run into, a lot of the people that we work with every day are avid cyclists. So it’s hard to understand what a more novice user might be feeling or thinking. So we’re trying to use other groups that we have access to, to get early feedback. That can be difficult at times, though, because a lot of times we don’t want to let technologies like the wave cell helmet, we weren’t going to show that to anyone before we released it.
Things like that get kept pretty silent. And we may be going out and asking a dealer or consumers coming in and out of a dealer, a retailer store some questions to help us understand what they might be open to, what they’re looking for maybe in a helmet or safety that they expect from a helmet that’s going on their child. A lot of times it’s just done through surveys or in-person interviews at retailers.
Kaitlin Milliken: And are those in person-interviews at retailers still happening? Or is that also gone completely online?
Chad Manuell: Most of that’s gone online at this point. We are still doing some test riding and the test riding has definitely changed as well. Instead of having 10 people meet in Arizona to ride a bike, up and down a mountain. We may be mailing bikes around the country to have different people ride them in places that we want to see them ridden, or by riders that we value their feedback. So yes, some of that’s taking longer, but at the same time, we’re trying to… All right, instead of having to spend multiple weeks doing this test writing shipping things around and all the logistics involved with that, we’ll buy more bikes, and we’ll send five of them to five different riders instead of you know, in the past week, we had one or two bikes it was getting written and looked at for a certain feature.
Kaitlin Milliken: I do want to talk about metrics. And I’m sure that they do vary based on project for example, like a type of bike meant to go faster and a helmet, two very different types of things you might be measuring. But what are some metrics that you typically look at? And how do you decide with that data whether to move a project forward or to stop and kill a project?
Chad Manuell: What I’ve settled on and what we as a team have settled on looking at. It’s definitely changed over the years, we’re looking at how meaningfully unique the product, or the feature or the technology is that we’re developing. We’re looking at the progress that the teams made on that technology from the last R&D update to the current R&D update. And we’re looking at the number of prototypes that the team’s producing. Are they showing good evidence of prototyping, whether it be physical or virtual prototypes? We want to see progress.
That’s showing us that there’s a passion for that technology. That’s showing us that the person working on it understands and is learning and is taking steps to solve any death threats. If you’re familiar with the Innovation Engineering process, death threats are the things that are getting that could stop you from being able to take that technology forward or to market. We feel by looking at the meaningful uniqueness of a product, we understand how well people are going to like it, whether it’s unique in the world, and whether it’s meaningful, like people are going to buy it and find a good use for it. In addition to all of that, we’re trying to understand that whole portfolio of innovation projects and trying to understand what the top 10 or so are that we’re trying to push forward at Trek, so that we can have other black belts, myself and other black belts, coach these things forward, make sure we’re moving obstacles out of the way for our teammates.
Kaitlin Milliken: What advice do you have for teams that are working on longer term projects, where maybe it’s going to take them three or four years to get something to market, especially right now, when there’s a huge emphasis on getting quick wins and revenue boosting wins in the short term?
Chad Manuell: Yeah, luckily, we’re a private company. So we don’t have as much of the short term. Well, there’s obviously short-term pressure. Everyone’s always got short term pressure. But I feel like our leadership gives us more opportunity to look long term and act long term. My biggest advice is to really get to know that customer, get to understand what the business is going to need five to 10 years from now, because a lot of these things we’re developing, if you’re trying to win in the next year, you’re definitely not playing the infinite game. You’re not looking forward. And you’re not being patient enough to be able to develop some of these things that really take time to develop.
So if you’re just constantly chasing competitor A or B, who just came out with the latest product, it’s going to be a really miserable development process for the team. I think if the better the whole team can work together and get to know the customer, and then show the customer what you’re thinking about developing and just iterate on their needs. It’s all about understanding the needs of that customer. And by the way, they use the product, not necessarily what they’re telling you. It’s how you see them using the product and what may be difficult for them, versus what’s you know, really easy. And to kind of go off of those signs and those keys as to where you think those trends are heading.
And then also, really looking at other industries around you and what the trends are in those industries. How are people using their cars? What are their buying trends? And how are they using mopeds and motorcycles in different parts of the world?
Kaitlin Milliken: And my final question, is there any other last piece of advice or last things you want to leave with folks who are tasked with making new products and bringing them into reality?
Chad Manuell: Our president always says, “Leaders are readers.” My biggest advice is to read and listen to anything you possibly can get a hold of. There are so many lessons that can be learned from reading books of all sorts. And you know, not just innovation books, or not just engineering books, or not just R&D books, but books about great leaders that this country has had or historical figures throughout the world and some of the things that they’ve done to be successful within their career. You can never pick up a book and read it without taking some lesson away. If you’ve read a book and haven’t taken a lesson, you maybe didn’t read it closely enough. There’s always a lesson.
Kaitlin Milliken: Thank you so much, Chad, for taking the time out to chat.
Chad Manuell: You’re very welcome. Thank you for having me.
[ACKNOWLEDGMENTS]
Kaitlin Milliken: You’ve been listening to Innovation Answered. This episode was written and edited by me, Kaitlin Milliken. Special thanks to Chad Manuel for being on our show. We’ll be back with something really special in 2021, so you’ll definitely want to subscribe. You can find our show anywhere you listen to podcasts. You can also get bonus content on our website: innovationleader.com/podcast. Thanks so much for listening, and we’ll see you soon.
