Case Study

Case
Study

Personal Manufacturing Station

Case Purpose

This case illustrates an entrepreneurial failure, which can possibly be attributed to management error. The company identified an innovative product with huge market potential, but something prevented the potential being realised. How could a management process have led to a more robust delivery?

The more innovative a product is, the more difficult it can be for the market to accept it. How can this type of problem be planned for?

Case Description

Introduction

This case study describes a situation with an almost unlimited economic potential that was allowed to fail. Start-up companies somehow have to trust their own judgment and be able to change course when it isn’t working. You will also be able to see the interplay of powerful personalities who were all putting their own money and careers on the line.

Let’s call the initial investor Robin, the software engineer David and the later investor Hamid.

Background: technology

Some engineers put their money into a start-up company that made an innovative cutting machine:

They built a suspension frame on geodesic principles so that it was extremely rigid
They controlled the movement of the cutting head by high-tech stepper motors that gave unprecedented accuracy
The suspension of the cutting head allowed eight degrees of freedom so that arbitrary shapes could be cut
A prototype was built of a size that could fit on a desk so that models could be cut right beside a designer working on a new product
The concept was marketed as a personal manufacturing station to mirror the concept of a personal computer

Background: market

The machine had a huge potential market. The company was approached by Ford to see if scaled-up frames could be used to suspend robots on the production lines in car factories. There was a huge pull to get product into the market and a market potential of upwards of a billion pounds.

At this point Robin joined the company to provide investment and entrepreneurial skills. He knew he had to focus the company on a particular opportunity rather than have it chase several and lose them all. He may not have convinced the founders of the company about this because they were so thrilled with the potential of what they had built.

To access the market the company needed to demonstrate a fully working system. What fully working meant depended on the application they were looking at. They decided that the machine needed to be shown working from stand CAD files and cutting an arbitrary shape. An example might be to produce a model of a new trainer (shoe) directly from the on-screen work of the designer.

The stumbling block

The company needed to complete the software control systems to allow CAD files to drive the cutting machine. This would be the basis for a full prototyping demonstration. The work went slowly and had to be refinanced to allow it to continue.

The work model

The physical cutting machine had been built by two wizard engineers. It looked beautiful and worked beautifully. In the minds of the engineers the job was all but done.

The software was implicitly being written using the same work model – a brilliant person working from first principles to custom-build something wonderful and new. Accordingly, the software was being written by one person, an experienced older man, David, who was highly intelligent and worked long hours developing the code. There was tension both with the engineers who had built the physical machine and with Robin who had been brought in (and had invested his own money) to get the product sold.

(Notice that there were other work models available that were not considered. The CAD software they need to interface to is of course the product of major software companies. An alternative might have been to do a deal with one of these companies to co-develop the driver software. This would have brought enormous expertise into the team in an area that was not central to their product but was critical to their success.)

The software model

In the mind of the software designer, the problem to be solved was static. There was a block to be cut which required taking the cutting head to every part of the volume of the block which was not part of the finished model. The difficulty was to work out which direction to approach the cutting from to avoid obstacles posed by the required finished model in 3D space.

When a review was carried out at the request of the investor, the review team posed the software problem differently. The cutting head moved at some velocity and in effect swooped across the surface of the material to be cut. To capitalise on the potential accuracy of the machine the cutting problem needed to be posed at designing "flight paths" for the cutting head that took into account the momentum of the travelling head.

The investment model

A major new private investor, Hamid, was brought in. This investor had many high technology investments and an eye for how to make serious money. His implicit model was that with more capital and some discipline he would impose the existing excellent work could be brought to fruition. The assurances and milestones he requested as a condition for his investment were not properly met and much energy went into just keeping the company going. In the end he simply withdrew funding.

The outcome

The company folded and all the investment was lost. The technical reason given for the failure was that the software was treating the movement of the cutting head as a static problem whereas actually it needed to be controlled via dynamic "flight paths".

Two experienced and intelligent entrepreneurs, taking risks with their own money, failed to realise the potential of the project. They seem to have missed something that was necessary to connect the undoubted potential of the machine with the needs of the market.

Your Task

Identify the key management decisions (choices). What other choices might have been available?

Analyse the failure. What other ways are there to describe the failure? What meanings can be found for the project and its failure?

Analyse the power relations. What are the design issues at stake?

Source

Case prepared by Aidan Ward, October 2002.

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