Reaping the rewards of investment in R&D

From humble beginnings in Liechtenstein in 1941, Hilti has grown into a company with a presence in over 120 countries. CW spoke to Michael Hilti, chairman of the board of directors, about how Hilti maintains its competitive edge across the markets.

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By  Colin Foreman Published  June 18, 2005

Reaping the rewards of investment in R&D|~|Hilti200.jpg|~|Michael Hilti, chairman of Hilti’s board of directors.|~|Hilti invested US $110 million in R&D last year — how important is R&D to the business? R&D is crucial for Hilti. With our sales system and our engineers, we are in daily contact with our customers and end users. From this we can see the challenges and problems they face, and see how building methods and processes change. Today, 30% of our US $2.8 billion of sales come out of products that are less than three years old. How do you communicate to the R&D teams what customers from around the world need? Local offices are in close contact with customers, and they communicate with the regional offices and different business units. If an issue comes up that is an important one, then it is passed on to headquarters. We don’t differentiate between big and small markets. What types of product is Hilti investing heavily in at the moment? We have different kinds of products, building products, fastenings, fire-stop products and woodworking tools, and we try to move everything forward in terms of product development. Hilti promotes a strong corporate culture within the company. How easy is it for a firm based in Europe to develop cultural values across a company with a presence in countries that have vastly different social and cultural characteristics? In Liechtenstein, Hilti employs about 1600 people that represent 40 to 50 countries, so that in itself is a multi-cultural working atmosphere. I don’t think it’s a question of what we [the management] want; it’s more of a question of whether the worldwide team stands behind the same values, and I think we have achieved that. These same values are important to all people, and this is executed all over the world. This is something that helps to differentiate Hilti from other companies. The outcome is that we can now really prove that our employee satisfaction direction impacts on customer satisfaction, which directly impacts on the performance and profitability of the organisation. Does this develop a more long-term strategy instead of focusing simply on sales figures? As far as marketing is concerned, we always try to develop long-term partnerships with our customers. We don’t want to come in, make a quick dollar and get out — it has to be of benefit to both sides, and I think the same applies to employees. If you have a good culture within the company then the working atmosphere within the company is much easier. It sounds simple, but a lot of companies have not understood that. How do you quantify the success of the company culture? You can measure soft factors the same as you would measure hard factors, and every year we monitor employee satisfaction. We also conduct culture training, which is a very good tool to see how the organisation has progressed and which issues still need to be tackled. Culture has been pushed through the organisation for over 20 years now, so we no longer call it corporate culture; we call it a ‘culture journey’ because the work is never finished. But if we look back five or 10 years, then things have definitely moved forwards. Does a stakeholder culture help with innovation? It’s all about the working environment. It’s important for a company to allow people to try new things and even encourage them to take risks. If a lot of emphasis is put on teamwork — which involves challenging others but respecting the personality — then you are able to find the best solution. How do you feel the construction industry is fairing globally? Many say it is very positive at the moment. Not everywhere. There is slight growth worldwide, but it’s not an industry with massive growth. But there is still room for us to grow and there are other opportunities and fields that we can develop. Are there any markets that you have identified for growth? I think we’re sitting in one right now. There are a lot of opportunities in the Middle East, and when the opportunities are there, we go. We can achieve this because the company does not depend on anyone else — it’s completely self-sufficient. How significant do you think the Middle East is at the moment? There is no doubt that there is huge development going on here at the moment. The type of construction is very well suited to Hilti technology, because most of the buildings are built using modern methods which use concrete and steel to improve the speed of construction. Quality is another issue. If you compare this market with China, where there is also a tremendous amount of development going on, the quality is far superior. ||**||

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