Chapter 29

Make More of It

The pattern

In the Make More of It business model, a company’s know-how or other resources are offered to outside companies in addition to being used in-house. In this manner, ‘slack’ resources help to add revenue on top of the core value proposition’s returns. In effect, the know-how and resources are sold to third parties as a service (WHAT?, HOW?). Accumulated specialist knowledge and spare capacities can be monetised (VALUE?) and new expertise built up, all of which can be used to further improve internal processes and revitalise the core business (HOW?). A company known to be a Make More of It user is likely to be seen by others as an innovation leader – an image that will have a positive long-term effect on sales (VALUE?).

The origins

Founded in 1931 by an Austrian-born engineer, Porsche is a German manufacturer of cars affiliated with the Volkswagen Group, and best known for its sports cars. Porsche is recognised for the high quality of its research and development and the effective customer development strategies it employs. Via its subsidiary, Porsche Engineering Group, the company leverages these core competencies by contracting out its expertise to third parties. Porsche Engineering Group supports its customers throughout the process of car and component production, enabling them to benefit from Porsche’s many years of engineering experience and R&D facilities. The engineering know-how and facilities of Porsche Engineering Group serve to foster the company’s reputation as an innovative leader in the field, and thus attract business customers and increase revenue. Before Porsche was bought out by Volkswagen, the company did not have enough products to keep a continuous high level of research and development capacity utilised, and in times of low utilisation of this capacity the engineering capabilities were sold to third parties. Porsche has modernised Harley-Davidson and developed its leading machine, V-Rod, and has also developed drive modules for the elevator company Schindler. Today, Porsche Engineering sells 70 per cent of its services to companies outside the Volkswagen family.

The Swiss company Sulzer adopted a similar model when it started marketing its engineering knowledge and expertise through Sulzer Innotec. The company offers specialised know-how to outside customers in order to better finance its research and development activities. Another company, MTU, which develops turbines, follows a similar strategy through MTU Engineering.

The innovators

Automation specialist Festo Group applies the Make More of It pattern very effectively. Festo started to develop learning systems and training seminars in the field of automation products and processes as early as the 1970s. Customers appreciated these efforts, which led the company to establish its subsidiary, Festo Didactic – the industry’s premier technical educational institute and consulting services provider. Throughout the 1980s and 1990s, Festo Didactic trained future automation technicians, in particular in developing countries, supported in part by government funds. As a result, an entire generation of young engineers and technicians was trained with Festo products, later becoming future users and customers. This has had a sustained effect on sales in the company’s core business. Today, Festo Didactic is one of the world leaders in industrial training and continuing education. Approximately 42,000 specialists receive training from Festo Didactic every year, and 36,000 technical schools and universities employ products developed by Festo.

Make More of It: multiplying the core like Festo Didactic

BASF is a German company providing chemicals, plastics and other synthetic materials for industrial use. Production plants are intricately connected through BASF’s Verbund (network) sites, so that raw materials can be used efficiently and by-products from one stage integrated seamlessly into another stage. BASF frequently works with subsidiaries and occasionally also with external partners at its Verbund sites. These companies become natural customers for its by-products, thereby generating additional revenues for BASF.

Sennheiser Electronic GmbH & Co. KG (Sennheiser) is a German manufacturer of high-end audio products such as headphones, microphones and stereo receivers for private and commercial customers. The company saw Make More of It as a means of exploiting its enormous technical know-how in the field. Production of its high-quality audio products is complemented by the Sennheiser Sound Academy, which provides training and expert knowledge to employees, retailers and customers across a wide spectrum of audio technologies and processes. This enhances the company’s position as an authority in the audio technology field.

The inhouse consultancy unit of Siemens, Siemens Management Consulting (SMC), represents an additional example of the business model pattern Make More of It. With more than 450 experts on different career levels, SMC is a dedicated source of expertise that has been active within the Siemens ecosystem for several decades. With a broad knowledge in technology fields such as energy, manufacturing and healthcare, the consulting unit offers its services to external companies. Their expertise in automated manufacturing processes and IoT-related topics makes them a go-to address, as implementation is backed up by their implementation-focused engineers as well as their over 170-year-old Siemens heritage, with operational knowledge from various marketplaces all around the world.

When and how to apply Make More of It

The Make More of It pattern conceives of core competencies in a much more meaningful way than as a mere outsourcing mantra. You should see your core competencies as a gateway to new market opportunities. Unique, hard-to-imitate competencies pave the way to new markets. For example, high-precision machinery companies in the automotive sector have seized Make More of It opportunities by moving into the medical device sector. Before charting your course, identify which technologies, processes and skills contribute to your core competencies. Based on these assessments, you can examine markets where your core competencies can be applied in new and innovative ways.