Smithers CEO: Collaboration could add value

By Don Detore, Crain News Service

AKRON (Sept. 11, 2014) — Collaboration — when done wisely and with the proper entity — can be a vital tool in driving innovation in the tire industry, according to Michael Hochschwender, CEO and president of Smithers Group.

As research and development budgets stay flat, and demands from shareholders, customers and consumers increase, Mr. Hochschwender said collaboration could be an avenue to success for some companies.

“It's very important to understand what you collaborate and why and with whom,” Mr. Hochschwender said this week during his keynote address for the Tire Society meeting, held during the International Tire Exhibition & Conference (ITEC) in Akron.

“Collaboration simply to collaborate is cost without value,” he said. “Smaller collaborations driven and managed by frontline technical leaders can and typically are very effective.

“Innovation comes in many forms. A tire itself is without a doubt an innovation, but so is how we get the most out of our research and development and compliance budgets.”

Mr. Hochschwender, who has been CEO of Smithers since 1996, suggested three entities for collaboration, each of which, he said, offers advantages and disadvantages.

• Universities. He said universities are in the business to educate students while seeking ways to fund activities. They have access to grants as well as offer some tax advantages and other financial streams that typically aren't available to businesses. Yet universities must comply with rules and regulations that can be cumbersome, and restricting faculty can be a conflict when their interest is to be published, he said.

“Universities are in the right circumstance, a very attractive collaboration partner,” he said.

• Governmental agencies. The Smithers' executive said government agencies are driven to support their specific mission, be it consumer safety or economic development. They offer a deep talent pool as well as access to expensive, often underutilized equipment. They also have other sources of funding not available to most businesses. But the intellectual property side of the relationship is difficult at best, he said, particularly when an agency is subject to the Freedom of Information Act.

“Under the right circumstance, government agencies can be very a powerful collaborative partner,” he said.

• Competitors. The advantage for both parties, Hochschwender said, is evident: each understands the product and the industry, and the talent is broad. But, he said, the differences in core competencies might be subtlety different. The competitive advantage is compromised, at least with that competitor.

Mr. Hochschwender, who has been responsible for five acquisitions as well as two startup companies during his tenure at Smithers Group, said businesses must consider carefully whether collaboration is right for them.

“It's expensive to create collaboration,” he said. “It takes time. It's expensive to maintain. If there's not a fair amount of value achieved, why bother going through the effort?”

However, collaboration, he said, can be a very important tool in today's challenging business environment, where it's essential to meet shareholders' expectations.

“Know there are things that each of us is good at, and there are things that perhaps we're not so well-positioned to do,” he said. “Therefore the concept of collaboration makes intuitive sense.

“On a practical basis, it's not always that easy. Many collaboratives are destined for success or frankly destined for failure before they are even launched. What often sets the two apart is careful decision making about what whom to collaborate with and what to collaborate on.”

Collaboration, Mr. Hochschwender said, can lead to innovation.

“I have come to realize that innovation is not about the equipment that you have. It's not about the facilities that you own. It's about the spirit of the people and how they find a way to get it done and how they find a way to innovate regardless of the obstacles,” he said.

“The tire industry is filled with innovative people. I have no doubt that while it may take on different shapes and forms, the tire industry will continue to innovate.”

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This piece appeared originally on rubbernews.com, the website of Rubber & Plastics News.