How Seagate Technology Re-invented The Company By Studying A Watchmaker

In 1999, Steve Luczo, CEO of Seagate Technology, “faced an epic crisis.”[1]He has already out-sourced large portions of the manufacturing of disc drives to low-labor-cost countries. Seagate was, at the time, the largest private employer in Thailand. But Luzco foresaw that as disc drives become miniaturized, there will come a day when such drives would be too difficult for human hands to assemble. He therefore launched a “factory of the future” initiative with the intent of manufacturing drives with virtually no touch of the human hands.

At the time, it was not clear exactly how such a factory can be designed and built. In the entire disc-drive industry, the paradigmatic manufacturing approach was based on dexterous human hands – it was believed that only humans can have the dexterity and smarts to accommodate disc drives of different sizes and designs.

A reasonable approach to solve this problem would be for Luczo to assign the problem to his research/engineering staff who might take years to develop a viable automation solution. Fortunately, the assignment went to an in-house engineer named Doug DeHaan.  DeHaan initiated a series of visits to different leading-edge factories in other industries. One of these was a factory belonging to Seiko, the Japanese watchmaker.

As described in G. Pascal Zachary’s article:

“There, DeHaan’s team saw something startling: Though Seagate’s manufacturing gurus liked to think a disc drive was too delicate for robots to handle, Seiko was making wristwatches–even more delicate–on automated lines. Convinced that full automation could work for Seagate, DeHaan showed top management a film of Seiko’s factory floor as part of his recommendation on how to proceed.

Luczo embraced the Seiko lesson and forged ahead with automation. Today, at Seagate’s factories in Asia, each assembly line pumps out about 20,000 iPod Mini-style drives a day. Five years ago the company’s factories required 600 people on 20 lines to produce that many drives. Now two material handlers and one technician can do the job. And with no humans touching drives as they’re built, there’s less chance for electrostatic shock, a primary cause of defects. Five years ago, out of every 1 million drives Seagate made, 10,000 arrived dead at customers’ doors. Today the dead rate is down to 200 per million. “

In hindsight, the borrowing of ideas from a watchmaker when your problem is how to make a miniature precision machine seems to be very obvious and intuitively simple; where else would one go? In practice, it is not as easy as it sounds. In this case, what allowed DeHaan to have this insight was mainly due to his decision to study how other industries solve such problems. He would not had the idea had he not first allow himself to be open to ideas from a totally different industry. His genius is in this crucial step, purposely going out of his way to study how other industries tackle such issues. For while the automation of the manufacturing of a miniature machine is a never-solved problem in the disc drive industry, it is an already digested problem in the watchmaking industry. The reason is pretty simple, necessity is the mother of invention. The watchmaking industry was forced by need to develop an automation line but the disc drive industry was not, that is, until now. So, what can be perceived as insurmountable difficulties in one industry can be standard practice in another. What is important in this case is the act DeHaan took in reaching out to study other industries.

To do this, he first has to become open to ideas from anywhere, then he has to make a real effort to go out and seek the information, a process that often has a low yield.  Finally, he has to accept that what works in another industry can also work in his and be daring enough to propose to his top management such an outlandish idea. But, because it has already been demonstrated to be working in the watchmaking industry, he should have had a much easier time proposing using the same idea for the disc drive industry.

Such is the advantage of using a structured analogy approach.

[1] “Invasion of the Gadget Snatchers”, by G. Pascal Zachary, Business 2.0, p. 49-51, May 2005.

This entry was posted on October 11, 2007 at 3:26 pm and is filed under innovation, Analogy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.