VIEWPOINT | INNOVATION AT MAGNA

The global auto industry's search for more efficient vehicles and lower production costs presents huge opportunities for global suppliers. The challenge is to identify megatrends affecting the industry, look at the business opportunities they present and determine which ones align with the company's competencies and market goals.

For Magna International Inc., this assessment process begins by looking at where trends are likely to take the auto industry over the next 10 years. Then it considers the implications for all its business units, including body and chassis, powertrain, exteriors, interiors and more. When a trend touches multiple areas simultaneously, as most do, the next step is to decide how each Magna unit will respond.

Leading this continuing effort at Magna is Executive Vice President and Chief Technology Officer Swamy Kotagiri. He describes the process and the company's objectives.

What is Magna's philosophy of R&D?

We are small "r" and big "d." Everything is either incremental or game-changer. Our focus is on innovations that are smarter cleaner, safer and lighter. About 20%-30% of Magna's R&D is devoted to game-changer technologies, and the rest goes to incremental improvements. An incremental advance is eliminating several hundred pounds of weight from a vehicle. A game-changer would be something like an electric car that can be charged in an hour and drive 400 miles.

How do you categorize opportunities?

First, we look at the big trends shaping the global automobile industry. We put everything on a time scale, which helps tells us when demand will shift and markets will emerge.

Who does the evaluating?

Some people are really creative, others are implementation oriented and still others are very detail oriented. You need a mix of all three. We try to get people from the shop floor who truly understand manufacturing. We get engineers. We get marketing people. We start with a team of 6-8 people to initially screen new ideas. Any more and you get too much discussion and not enough decisiveness.

We've always done this at Magna, which is a large organization made up of highly independent units. We've been working to be more synergistic in our approach by making sure we involve multiple parts of the company.

What process do your teams follow to find the best ideas?

Innovation is a combination of two things: invention and commercialization. An invention that isn't commercialized is not an innovation. So our goal is to find good ideas and decide as quickly as possible whether they can be put into production.

Magna uses a four-step filter we call the Innovation Development Process. The first level accepts about 80% of the ideas presented. The goal here is to determine if something is truly possible. This is where we ask, Why are we doing this? What are the advantages? We may do some virtual design work to determine basic feasibility. This step is generally handled by engineering and R&D people.

If the idea moves to the second level, we'll look at prototype hardware. Then we'll test it physically, so we have data. This is where we begin to look at the manufacturing process and what the cost would be at various production rates. The first two stages are very similar regardless of the nature of the idea.

The third level is where we build a production line and verify that we can really do what we think we can do. Manufacturing people become involved. This is where the most debate occurs. If the idea still looks good, we'll show a vehicle manufacturer what we have. Together we will identify a vehicle platform for it. There's co-development at this point, and the investment becomes significant. We won't move through this step unless we believe there is at least one potential customer.

The final level is production. We don't just develop something, throw it over the wall to the customer and call it done. We stay with it. Our R&D team gets together every day with the customer's manufacturing people for 90 days beyond the start of actual production.

How do you keep people engaged about ideas that could take years to implement?

You have enable people to "own" the idea. A big part of it is making the goal tangible and specific. Just saying, "We need a stronger material" doesn't do it. But if we describe it in terms of formability, strength and weldability, now they see what we're going after.

How do you determine whether the process is successful?

Magna has a great reputation for implementing and launching things. From my perspective as CTO, invention is great, but implementing it well is even more important, and that is what I call true innovation.

A key measure of success for us is this: For every dollar we spend to pursue an idea, how many dollars will we get back when it goes into production? This question doesn't come into play until an idea reaches the third or fourth level of our Innovation Development Process. If we tried to apply it earlier, people would be discouraged from suggesting anything new.

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