The Innovator's Solution

Seagate's research chief, Mark Kryder, forces many of his 160 researchers to focus on the harder but more valuable middle zone, the kind of ideas that could lead to remarkable breakthroughs many product cycles down the road. When he took office in 1998, Kryder ordered his researchers to devise ways that Seagate could manufacture disk drives capable of storing 100 gigabits of information per square inch. Their research resulted in a 30-fold improvement over the best drives on the market at the time.

Do something like that, Kryder says, "and it's impossible for researchers to simply squeeze more efficiency out of ideas that have been around for years. If we're really going to add value in research, we need to take a fresh look at basic technologies and materials and see if we can find the next big ideas."

Kryder feels that his approach works better, and he points to stunning success from his 1998 initiative to make his case. The 100-gigabits-per-square-inch aerial density drive is going into production within the next 12 to 18 months -- far ahead of the competition. Some of the challenges that looked daunting in early 1998 turned out to be easier to solve than expected, once scientists and engineers got cracking.

Now Kryder has given his researchers a new challenge: Produce drives with a density of one terabit (or one trillion bits) of information per inch.

If you really want to be fast, fix your supply chain. Five years ago, Seagate president Bill Watkins walked into a meeting and pulled apart the company's two leading models. "I said, 'Out of 200 components in these systems, we've got only 3 that are the same. We've got different screws holding the same things together, for goodness sake! If I had told you to make them as different as possible, I bet you would have used more parts in common, just to piss me off.' "

That sort of absurd overspecialization was jacking up Seagate's manufacturing costs and making it difficult to achieve economies of scale. Even worse, every new-product rollout was a one-of-a-kind adventure that was prone to delays and manufacturing bottlenecks. As a result, Seagate was becoming known as a "fast follower" rather than a true innovator.

Watkins insisted that Seagate develop basic manufacturing platforms that could allow the company to make a variety of disk drives within a single plant without having to retool the entire production line. He also courted the company's key suppliers. Instead of squeezing them for the deepest discounts, Watkins created incentive contracts that let suppliers earn more if they could help Seagate get to market faster with drives that surpassed what its competitors were able to do.

Although fixing the supply chain may be unglamorous, it saves crucial weeks or even months in getting new products to market, says Luczo. That time savings is vital in an industry where it can take one and a half years to develop a new product -- a product that can then be sold profitably for only six to nine months before new breakthroughs and price cuts doom it to obsolescence.

"I think of this industry as an extreme sport," Luczo says. "We've got the fastest product cycles, the shortest selling seasons, and the most-relentless price cuts. First to market matters tremendously. But first to volume matters even more. Once you start production, you'd better be able to ramp up your volume from 100,000 a week to 1 million a week in almost no time. Otherwise, you're foregoing sales that you'll never get back."

Seagate's overhaul of its supply chain paid off richly last summer, as it raced to bring the Barracuda IV drive to market. The device was meant to be a mainstay of high-end PCs -- a market that Seagate once dominated but had largely lost in the late 1990s. But in late-stage developmental work, the company realized that a crucial part of the disk was overheating, causing errors when the disk drive tried to write data. The best hope of fixing it involved encasing the key part of the drive in a more heat-diffusing material that Seagate hadn't used before.

"We spent more than $1 million to help our supplier fabricate that material in high enough volume," Barracuda IV project leader Emil Yappert recalls. "But we cut the amount of time needed to get that part by one-third. In the old days, it would have taken us eight weeks. We got it done in five weeks. On a project like this one, each day that we save -- or lose -- means about $500,000 to the bottom line. So it's worth it."

Constantly build teams that can cut across old lines of command. Are you in sales? Research? Manufacturing? Development? At Seagate, if you're smart, you view your job more broadly than any of those classic categories. Engineers get on the road and meet with customers. Plant managers come into the R&D centers and discuss the best ways to build new disk drives. Expertise becomes something to share rather than something to hoard.