Headline Aug 07, 2015/ ''' FREE TO FAIL '''

''' FREE TO FAIL '''

IN THE LATE 1990S Steven Mckinley, a young engineer at BorgWarner, urged senior managers to back him on a hunch.

McKinley had seen how the growth of  electronic gizmos in cars had tapped out the standard  14-volt  vehicle electrical system. He figured that automotive industry would soon boost the voltage to 42.

So, crawling out on a limb, he asked BorgWarner's strategy board for funds so that he and small group of of engineers could begin work on a new turbocharging system that would draw its power from the supersize battery instead of the car's exhaust system.

''When you are so comfortable with a certain technology,'' he says, ''It's very difficult to be one of the voices in crowd saying, ''I think there might be a different way.' ''

BorgWarner approved the project and eventually gave him $2 million to play with. Two and half years later McKinley had to admit to the executives that he'd been wrong. 

The expected shift to  42-volt system never materialized; McKinley's research wasn't going to pay off. ''Those are very difficult words to get out to a group of senior executives,'' McKinley recalls.

His punishment McKinley and other engineers on the project received personal notes from the chief executive, thanking them for their risk-taking.

''If somebody's going to take out business, I'd just as soon it be BorgWarner,'' said Chief Executive Timothy M. Manganello, at the time, who was overseeing an internal venture capital fund that provided engineers with the seed money to chase their half-baked ideas.

BorgWarner specializes in technology that improves fuel economy, vehicle emissions  and stability  -all of which happen to be in great demand right now, a demand fuelled by tougher regulations.

And unlike most North American suppliers, whose fortunes are closely tied to struggling General Motors and Ford Motor, BorgWarner has a diverse worldwide customer base.

It was also a leader in technology for diesel engine, which are popular in Europe and growing quickly in markets like China and India.

The venture capital fund is an important part of its strategy. BorgWarner had set aside $10 million in seed money and 1998 and then solicited ideas at a series of companywide innovation summits. It now earmarks $10 million annualy for the VC fund -enough-

To get three or four research projects rolling a year, out of hundreds of ideas. It's only seed money, representing a fraction of 4% of revenue BorgWarner spends on research and development.

There are strings attached. Any idea must draw upon the capabilities of at least two of BorgWarner's four business units. The goal is to get specialists to think outside of their areas of expertise and to promote collaboration across what is a traditionally decentralized company.

An idea doesn't have to well developed to receive funding it merely has to show promise in the market. In the beginning, when the risk of failure is high, a project might receive a relatively modest amount  -say, $500,000- to research its feasibility.

Projects are reviewed atleast once a year by senior management and must clear various and financial hurdles to receive another year of funding. ''As the process matures, the standards get tougher because you're working toward a bona fide business case.'' 

Those frequent reviews also avoid nasty surprises for management. If a project needs to be killed,  ''It's not like falling off a cliff.''

Those that survive the cut are eligible for larger amounts of money, up to several million dollars, to develop a prototypes. Ideas that make it to the market are eventually financed through the company R&D budget.

If an idea fails, as McKinley's did, there's no need to pay back the seed money. But if it succeeds, that business unit must repay the investment, over time to fund new innovations.

The process has given birth to several successful products. In 1997 a team lead by the Chief Engineer at a BorgWarner transmission plant in Germany, came up a concept for a dual clutch transmission technology.

As for McKinley's 42 -volt turbo-charging system, Borg Warner decided  to shelve the idea for the time being.

''If you have one big winner every few years, that's fantastic,'' said the Chief Executive. Absolutely True!

With respectful dedication to all the Students, Professors and Teachers studying or teaching Business Operations. See Ya all on !WOW!  -the World Students Society Computers-Internet-Wireless:

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SAM Daily Times - the Voice of the Voiceless