Winning Innovation

How Innovation Excellence Propels an Industry Icon Toward Sustained Prosperity

Norbert Majerus, George Taninecz

• Publisher: Productivity Press
• Year: 2022
• Print ISBN: 9781032139906
• eBook ISBN: 9781000546309
• Topic: Business
• Subtopic: Management
• Index: Business

Davanti Nella Gara, an Italian bicycle company, makes the best racing bikes in the world. But after decades of market dominance, competitors have brought the industry leader back to the Peloton. The company's second-generation owner longs for retirement, but a tired product lineup is pushing down profits and the firm's market value will never support his ride into the sunset. The flawed but beloved owner seeks out the counsel of an old friend and successful businessman, who steers him toward a fast and remarkable transformation, one fueled by a relentless focus on innovation excellence.

An engaging business novel, Winning Innovation dives into the art and science of innovation; the thrills of the European bike-racing circuit; the vibrant landscape and cuisine of Italy; and a cast of intriguing characters who work to put Davanti on the road to sustained prosperity. The company's leader isn't afraid to learn and apply new ideas to reenergize his company, and finds he cares more about his employees than he could ever imagine. A young innovator struggles to see a product idea to fruition as well as rise into management — and he falls in love along the way. A newly promoted R&D director brings teamwork and transparency to product development and aligns the entire company around innovation.

With the help of a seasoned and persistent change agent, in just a year, Davanti deploys a well-defined and -sequenced transformation — a complete and seamless process that can be replicated and scaled by most companies. The leader engages associates in pursuit of the right vision and strategy, candidly supporting them all as they unleash their creative sparks, work through personality conflicts, and take on real-world challenges faced by companies every day. They learn and apply traditional R&D principles in new ways (e.g., cost of delay, sprints, fail fast, late start) and successfully leverage emerging innovation and change-management principles (e.g., idea-creation events, knowledge management, workplace humility, visual management, lean project management). And an aligned, three-phase innovation process — from idea creation to technology development and product design — provides the innovation infrastructure the company needs for revenue creation and success beyond racing bikes.

From a top-heavy organization dominated by power struggles and finger-pointing emerges a new Davanti Nella Gara — a flattened, innovative company with:

• Clear vision and endorsed goals and strategy
• Speed, responsiveness, and agility
• Widespread, successful creativity
• Collaboration and teamwork
• Superior risk management
• Respect for people
• Unquestionable ethics
• Changed leadership and associate behaviors
• Project management excellence
• Rapid problem-solving and experimentation

Not just the story of an R&D transformation, Winning Innovation illustrates a companywide transformation of a magnitude that only superior R&D can make possible. It may well be the first book to chronologically introduce the principles for a complete innovation excellence transformation along with the parallel people transformation that is necessary for real change to occur. The end result for Davanti Nella Gara is a dominant new culture based on respect and humility, highly efficient processes that will deliver a wealth of innovations, sales, and profits for many years to come, and an owner who leaves a bright future for the people and company he's known and loved his entire life.

Chapter 1 Chain Reaction

DOI: 10.4324/9781003231837-1

If Fausto Davanti were alive and walked into the company he founded in 1960—Davanti Nella Gara—he wouldn’t notice much of a difference. And that was a problem.

Fausto Davanti was a two-time winner of the Tour de France in the 1950s as well as three Giri d’Italia, two Vueltas a España, and so many classics that he’d lost count. He had saved the money he made as a pro cyclist and invested it in a small bike shop. Fausto’s nickname on the racing circuit was “Davanti Nella Gara,” which means leader of the race or, literally, “ahead in the race,” a position that he often held. His nickname would be the beacon for his company. It soon followed that Fausto’s talents were not only in the bike saddle; he was an intelligent man with a great vision and excellent business sense. When he retired in 1995, he had built one of the world’s leading bicycle companies, supplying pros and amateur racers with the best bikes in the world. In addition to the business, Fausto Sr. also had created one of the best pro cycling teams, the pride of every employee in the company.

Through his tenure as owner and CEO, Fausto expanded the company into other bicycle markets, including touring and recreational bikes. These efforts met with moderate success, but enough to slightly boost revenues. Today the company has annual sales of nearly 500 million euro, albeit flat in recent years. Davanti Nella Gara now markets bikes in many countries around the world, selling through all the common channels, but relying heavily on bike stores and multibrand dealers. It assembles most of its bikes in a Davanti-owned, state-of-the-art plant in Taiwan that employs about 300 people. Davanti’s top-of-the-line frames are made in its own plants, other frames are sourced from a premier factory in Taiwan, and components are purchased from leading component manufacturers around the world.

The original shop that Fausto Sr. started in Fumane, Italy, north of Verona and near the foothills of the Alps, was converted into a plant for custom race bikes and bike tuning for the top racers in the world. Davanti has invested heavily in carbon fiber-reinforced bikes (commonly referred to as “carbon bikes”), a technology preferred by all bike racers because of their light weight and superior performance. The Fumane site also houses prototype and testing facilities with technical capabilities unsurpassed in the industry. It remains the company headquarters and R&D center, and employs about 200 people.

Since Fausto’s retirement, his son, Fausto Davanti Jr., has run the company. “Junior,” as he is called in the company, has spent most of his life walking or running (as a child) through the halls of the Fumane site. He shares his father’s love of bikes and business sense, although he never was a great bike racer and often questions his own leadership skills. Still fit and despite the many business demands he faces, Junior finds enough time to ride on a regular basis. He rarely misses the weekly company ride, where he joins 30 to 40 employees crowding the beautiful roads through the countryside.

On this day, Junior, his black hair streaked with gray, wishes he was out riding or, at the very least, enjoying the fruits of his own retirement. Instead he’s concerned that his own path from the company will never emerge, the wear easily visible on his face as he heads into a conference room for an R&D presentation.

* * *

Today is a big day for Maurice Pensatore. He will meet with Junior and the leadership team to present his business plan for a new idea that he believes will revolutionize the bicycle industry.

“Mo” was very lucky to land his dream job with Davanti Nella Gara, where he works in the research and development department. He and about 100 other engineers and technicians develop new model bicycles, which they prototype in the Fumane plant and test in its state-of-the-art lab and on the roads with pro and amateur racers and testers. Mo had submitted a bike concept through the company’s new idea submission system, believing it deserved his company’s attention and was surprised that this day has come. For a few weeks, he’d heard nothing about his proposal.

Due to stagnated sales at Davanti Nella Gara, the owner and CEO had challenged engineers and technicians to become more innovative. When introducing the idea submission system, Junior said, “My dad used to ride a bike 70 years ago that looked almost like what we produce today. We need to think outside the box and come up with some new ideas.” Since Junior’s announcement about six months ago, the organization had not produced anything significantly new in terms of ideas, a point that Junior made quite clear to his chief technical officer (CTO), Emilio Indiretto, at the latest leadership meeting. Emilio’s response was to storm back to his office, pull out a few ideas that he had personally discarded, and prove to Junior that his innovation system was a waste of time. Mo’s idea was one of the ideas temporarily resurrected.

Mo’s supervisor, Ricardo Capace, had immediately liked Mo’s idea when he saw it a few weeks ago: “Wow, that’s a unique way to eliminate one of the biggest problems affecting cyclists today,” he exclaimed when glancing through the proposal. Ricardo likes to focus on opportunities; he believes there is always time to address potential problems and likes to leave the details to those best equipped to deal with them. It’s one of the reasons he hires talented and enthusiastic engineers like Mo.

But when Emilio—Ricardo’s boss—initially reviewed Mo’s submission, he stopped reading after the first paragraph. Emilio figured it would take years of development and that he and Junior would be retired long before the idea could get to market—it would have virtually no impact on the company in the foreseeable future and no impact on his own status and compensation. Another reason for Emilio’s initial rejection is his preoccupation with his pet project—a new derailleur/chain combination dubbed “Darvin,” which most believed Davanti was developing jointly with Coppimechanica, the leading Italian bicycle component manufacturer. Darvin is shrouded in secrecy. Only Emilio and his inner-most circle seem to know what is going on, even though the project consumes a lot of engineering and testing resources.

Mo didn’t understand why his idea had sat idle, and no one explained the delay. He simply heard nothing and waited. From the moment the idea came to him weeks earlier, there was little else he thought of. Well, almost little else.

* * *

Mo had been out riding on a beautiful early March weekend near Fumane, the chill of spring replaced by blooms of pansies and primrose and radiant new green shoots everywhere. In the lowlands, all remnants of an unseasonably cold winter had finally disappeared, allowing Mo to get in his first, good mountain ride of the spring. Having just turned 30, Mo still rode his bike to work often and, if he had enough time to train, he would love to participate in races again, especially if the circuit included high altitude roads through his favorite Alps. He never made it to the professional racing level; that was more of a dream than a goal. He had put his engineering career ahead of sport, and his best racing days were past him. Mo graduated with a degree in mechanical engineering from the University of Turin and followed up with an MBA from Politecnico di Milano. His studies and then work left him little time for training and local weekend races, but Mo was OK with that and prouder of his engineering accomplishments than his racing career. He had combined his passion for bikes with his professional goals, and he was thrilled to work for the best bike manufacturer in the world.

As Mo reached the higher altitudes, he could still see banks of snow and, in the distance, skiers on the slopes. Mo put on a warmer jacket after he had climbed the first hill and whiffed down the slope toward the valley. The cool spring air felt great, and he was ready for another climb, which he executed in the same fashion; he looked forward to the last descent that would bring him home. He was riding with his head so pointed to the ground that he almost did not see her as she called out: “Hey, champ, can you help me?” He came to a stop, turned around, and saw the young female rider who was grounded. He unclipped both pedals and shuffled back toward her. “I just upgraded to the most expensive chain—can you believe this?” she spewed, holding up a greasy, broken chain. “It lasted less than 1,000 kilometers!”

Mo just shook his head, took off his gloves, and started dumping the contents of his saddle pouch. He was surprised that the last piece to fall from the pouch was his chain repair kit, which actually would work for the bike in front of him.¹ Within minutes, Mo had repaired the chain and earned the woman’s respect. “Wow, that was fast. If you hadn’t shown up, I don’t know how I would have gotten back. I really should have my own repair kit for this type of ride. By the way, I’m Marie,” she said, extending her greasy hand and shaking Mo’s greasy hand. “How did you get so good at this stuff?”

“It’s Mo,” and he explained what he did for a living and his job at Davanti. Marie was impressed. Mo wiped his hands on his pants—already permanently stained—and the two riders put their gloves back on.

“Thank you,” said Marie, shaking hands once more—glove on glove. Marie explained that she was registered for bike races in the coming weeks, so she was training on those circuits as her work schedule and locale allowed.

“Good luck in the races. I hope to see you again,” said Mo sincerely as he got back on his bike and pedaled away. Marie took her time to get ready and eventually pedaled in the same direction as Mo, who was out of sight, but not for long. She soon spotted him, quickly gained ground, and was one loopback away. “Thanks again! See you soon!” she yelled as she passed Mo, who was surprised and upset that she had overtaken him so quickly. Due to the long winter, he was more out of shape than he’d thought.

As he watched Marie speed away from him, he believed he would see her again. He also thought about her broken chain. There had to be a better means to transfer power from the rider to the wheels. As most bike riders, Mo was sick of chain and derailleur problems. There is nothing messier than a bike chain, and the derailleur must have been invented for no other reason than to trouble riders. Mo knew that a lot of bike innovation in the last 30 years was aimed at improving the chain drivetrain, but little had been done to replace it. Bikes had gone from three gears to 33, and the switching mechanism went from cable to electric and hydraulic—all still dependent upon the annoying chain and the derailleur.

As Mo peddled into town, he thought of other more progressive machines, which are similar to bikes but not reliant on a chain. Sure, he thought, even motor bikes are driven by chains, but many consumer-market machines use a direct-drive mechanism. Those applications face weight challenges just like bikes, and they rely on sophisticated new materials to solve such issues—many even using carbon fibers, just like bicycles. The hand tools Mo often used had gears and direct-drive mechanisms as well. There might be something to this. As he entered Fumane, he passed his friend Marco Marrone on the street, waved, and raced home to document his thoughts.

* * *

Mo had spent nearly a week preparing a detailed technical presentation for his idea, including a business plan, finally using some of the skills learned in his MBA studies. He made assumptions about the newer mechanisms he was suggesting to use. His buddy Marco, who worked in the Davanti marketing department, provided sales and revenue projections, but Mo was not convinced that Marco’s numbers were based on anything realistic. Mo’s biggest problem was the folks in finance and accounting: They gave him little help. They said that Mo had failed to provide solid financial input data, and, because of that, they would not put their “good name” on what they believed to be an ill-fated financial study. So Mo did his own financial assessment based on what he learned at school, but he wasn’t optimistic he’d ever get accounting’s endorsement.

Mo was surprised to find out, however, that when exploring patentability, Davanti’s contracted legal services liked his idea. “Mo, there may be potential patents linked to this project; we’ll begin exploring the patent applications,” exclaimed Federico Ricco, the owner of the firm, factoring in his mind the billable hours he would accumulate and genuinely pleased there would be some patents coming out of his biggest client. “I’m happy that you’re happy,” countered Mo. “Wish me luck.”

Today, riding his race bike into work, Mo mentally rehearses his project’s 40 PowerPoint slides. He had seen them so often, he’d memorized every single word. He parks his bike in the bike lot, which is nearly twice as large as the Davanti lot for autos. Most bikes are left unlocked: who would steal a bike from the parking lot of a bike company?

Mo grabs a coffee in the cafeteria and then heads to his desk, partitioned in an office with five other engineers. He exchanges greetings with his colleagues and at 10:00 am, after several pit stops, heads to the conference room, where Junior has scheduled his customary Monday morning executive meeting. Mo is the first to arrive, and while setting up his computer, executives begin to come in. Busy and engaged in their own discussions or smartphones, most do not notice Mo. Occasionally he catches someone’s eye and nods or says, “Hello,” but, for the most part, he is invisible. Eventually Junior arrives and everybody gets quiet.

“Well, Mo, I’m really excited to hear your story,” Junior says. “It is about time that we launch some real innovation again, ideas that would even make my dad proud.”

Mo kicks offhis presentation with an in-depth technical overview of a direct-drive mechanism and its application to a bicycle. He speaks as though he’s talking to a room of engineers and shows detailed cutaways of direct-drive gear mechanisms found in hand tools and other machines, such as ski lifts he rode during the winter. He also shows drawings of how he would connect the pedals to the gear box—a key part of Mo’s concept is the solid-drive shaft that connects the gear box to the rear bike wheel. Mo has spent significant time on the engineering drawings of the proposed mechanism and explains each in great detail to the executive team.

Finally, glancing up from his computer, he looks toward the executives and pauses. “Any questions?” No one says anything, instead nodding as if they see this every day. Mo wonders if they even understood what he had just described—a direct-drive bike.

“OK, I’m going to run through some of the market projections for the new drivetrain,” Mo says to break the silence. Now the executive team perks up, clearly hearing language they are more likely to understand, and a lively discussion ensues. Mo wonders if anybody really grasped the benefits of his proposal because they’re skeptical about the marketability of the innovation. But he also knows that even projections for conventional bikes meet the same kind of resistance. Time to push on.

Mo begins to click through the PowerPoint slides that describe the financial aspects of the project; he’s proud he could complete this area on his own—thanks to his MBA—and bel...

Table of contents

• Cover
• Endorsements
• Half Title
• Title
• Copyright
• Contents
• Foreword
• Acknowledgments
• Authors
• Introduction
• 1 Chain Reaction
• 2 Junior’s Sicilian Dream
• 3 From Mind to Lab
• 4 Riding an Idea
• 5 Innovation Excellence Begins
• 6 100 Ideas
• 7 Challenging Changes and Chains
• 8 Lost in the Shadows
• 9 Seeing Is Believing
• 10 New Way of Working
• 11 A New Organization
• 12 New R&D Culture Emerges
• 13 New Organization, New Goals, New Direction
• 14 A New Approach to R&D
• 15 New Davanti and R&D Strategies
• 16 Transformation Metrics
• 17 New R&D Function Takes Shape
• 18 Bikes without Wheels
• 19 Davanti at the Tour
• 20 The Product Creation Process
• 21 Davanti Ramps Back Up
• 22 Transparency Comes to Davanti
• 23 New Ideas and New Revenues
• 24 New Ways of Leading and Managing
• 25 Davanti Starts to Look Lean
• 26 Davanti Innovations Pick Up Speed
• 27 R&D Strategy, Metrics, and Huddles
• 28 Results to Celebrate
• 29 New Year for a New Davanti
• 30 Calling 118
• 31 Do the Right Thing
• 32 Features of Failure
• 33 Mo, Marie, and Leonardo
• 34 Davanti for Sale
• 35 Ever After
• Index