The Axalta Way of Innovation

Anyone who owns their own car probably has such an experience: what motivated you to buy this car was not how powerful it was, how powerful the brand was, but just how powerful it was. Because its color is so pretty and just right to your liking.

If you bought a BMW, Mercedes-Benz, Audi or Ford and many other international brands, congratulations. The gorgeous color of your car, and the paint underneath it, is most likely made by a company called Axalta Paint Systems. You deserve congratulations because Axalta:

—is one of the preferred coatings suppliers to light vehicle manufacturers worldwide;

—is a heavy-duty truck and bus The world's largest supplier to manufacturers;

- the world's largest supplier of refinish coatings to the parts refinish and auto repair industries;

- in electrical insulation, powder coatings and industrial The electrophoretic paint market maintains its leading position.

Axalta celebrated 150 years in the coatings industry last month in Shanghai. In an exclusive interview with CEConline, Axalta's Chairman and CEO, Charles Shaver, uncovered the secrets of the systemic innovation of the global coatings industry leader.

A century and a half of innovation

Axalta's first coatings were created in Europe in 1866 for carriage bodies. As the automobile became the primary personal transportation vehicle in the 20th century, Axalta introduced a revolutionary, industry-first sprayable, fast-drying automotive coating that reduces drying time from days to hours while providing Customers offer a range of new color options.

Axalta has set many precedents in the coatings industry since the 20th century. The company developed the first tinting system that helped improve the quality, precision, and productivity of paint colors; its scientists developed color equations that became one of the cornerstones of modern color science; the company pioneered the use of electronic UV processes for electric motors , become an industry pioneer.

Entering the 21st century, Axalta pioneered the industry's first commercial primer-free paint system, successfully helping automakers reduce paint coatings; creating the industry's first use of vehicle Approval code to match the color system of the vehicle's livery. Facing the trend and requirements of sustainable development, this company has launched innovative sustainable product formulations and spraying processes, which can help customers improve efficiency and reduce costs, while saving their energy consumption and minimizing emissions that are not environmentally friendly gases and substances.

In Xie Ruisi's view, the key to Axalta's 150-year development lies in innovation, especially systematic innovation. “What makes Axalta really excel is that we are never afraid to take new steps forward and take risks with innovation. As the industry has changed, we are always It's being the first to try something new." He said, "Systematic innovation comes from the needs of our customers, or from our own people's insight and grasp of where the market is going, and our ability to meet the market in the best way. So we have a A fixed set of processes, a very systematic set of processes, to process all these inputs to address innovation questions such as: Does the market need a new paint? Is there a customer problem? Is it a demand problem or a cost problem? , or is it a market trend that even customers are a little confused about?”

In the coatings industry, the pace of innovation is faster than in many industries. In the mobile phone industry, for example, Apple only releases a new phone a year. In the paint industry, a new product appears almost every week, such as a new color, a new paint thinner, and so on. "In our company, innovation does not happen every month or every year, but every week. We have already announced some innovations, and we have kept them secret and low-key, and regard them as our competitive advantage." Xie Ruisi Say.

In fact, the role of innovation in the sustainable development of a company ultimately rests in the growth of the company. "I think the role of innovation in our 150-year development is to allow us to grow, because in many cases, we don't try to be a low-priced company, instead, we try to innovate to become a higher productivity, our customers are able to do more with our coatings,” said Ruisi Sherlock.

In 2015, Axalta achieved sales of US$4.113 billion amid the global economic downturn; The strong ability of its main business to generate cash flow is evident from this.

Breaking the Challenges of Systemic Innovation

When faced with the question "What do you think is the main challenge for a company to implement systemic innovation?" posed by CEConline, Xie Ruisi said: Answered:

"By definition, most of a company's activity is running a business. Year after year, you have to take care of your customers, you have to take care of your suppliers, you have to take care of the many things that have to be done in the company So in many cases, companies can become very inward closed, can become so focused on business operations, and ignore the fact that even if you have to do all these things, you have to do innovation. I think innovation The biggest risk in this is that leaders become completely introverted as they run the company. So we try to make sure that the bulk of our company, including my role, is innovation-focused.”

Xie Ruisi said this and did the same. As Axalta's chairman and CEO, in order to avoid the trap of introverted thinking and to promote the company's innovation, Xie Ruisi spends 75% of his work time on customers. He often discusses new products with clients and discusses new partnership agreements. Just a week before his interview with CEConline, he had a two-day meeting with GM's leadership team to understand where the customer was going with the sedan, what they were looking for, and how What role can Streak's coatings products play?

When working with clients, Sherlock typically asks them three questions: "How are we doing compared to our competitors? How is your business doing? In order to launch the next generation of innovative products, we How can we work together?" "One of my main jobs as chairman and CEO is to drive the company's innovation agenda," he said.

In many companies, what to innovate and how to innovate are decided by business leaders. The dangers of doing so are obvious. Axalta stands in stark contrast to these companies. First, as a company leader, Xie Ruisi led his core team to spend a lot of high-quality time with customers to ensure that his and the company's decisions have a reliable market basis; second, "customer first" has become an Axalta enterprise Culture, these four characters can be seen everywhere at the 150th anniversary celebrations and exhibition halls; thirdly, Axalta has carried out corresponding system construction to provide effective support for corporate decision-making.

Axalta, for example, has established a set of criteria for measuring what customers are valued and worth investing in to the company. Such criteria include: Are the two parties a good match in corporate culture? Are the two parties a good match on the company system? Is this client interested in innovation and growth? and so on.

Customers who just want to do one-shot deals are not what Axalta considers valuable customers. For such customers, Axalta does not refuse to sell products to them, but it will never invest in them. In contrast, Axalta does not hesitate to invest heavily in value customers.

Axalta recently invested $5 million in a customer's quest for the best possible color by deploying robotic equipment to test new paint products. "Frankly, maybe it's going to take us a couple of years to be profitable with this client. So we're evaluating this client against a whole set of criteria, and people are talking, 'Is this a client that we really want to invest $5 million in? Is it a customer we think is going to be successful?'" Sherlock said, "Frankly, we're investing in their innovation."

The operation system keeps innovation alive

In this paint company, there is an operation system called "Axalta Way", which provides strong support for its systematic innovation . It's a system that's implemented company-wide, especially for those technologies that are critical to innovation.

Axalta refers to its approach to meeting evolving customer expectations as "Technology for Innovation." It consists of three pillars:

The first is new and optimized product technology. These technologies leverage patented products and leading formulation capabilities to provide durable and environmentally friendly coating products while meeting customer expectations in terms of aesthetics and protective functionality.

The second is process technology. This technology will create greater operational efficiency and higher productivity, both of which are metrics of performance at Axalta's manufacturing centers around the world.

The last is technology in the usual sense. This type of technology must be applied from research and development to customers, providing them with excellent after-sales service. These include: evolving color formulations, application tools, direct service in customers' factories, in-person and online training resources. All of this is done to ensure that customers get the most from Axalta's products.

Why are these three technologies so important to Axalta's innovation? Xie Ruisi explained that this is related to the products made by Axalta. All types of coating products of this company must be in line with the needs of customers, and its products must be able to make customers' products better and more durable. "So we have to focus on our customers and what they do to help them improve their product lines and productivity."

Axalta has invested heavily in these three "pillars" of technology . For example, this company invests about 4% of its sales revenue in technology research and development every year, and its research and development amount has exceeded 165 million US dollars in 2015. In order to highlight and give play to the importance of China and even the Asia-Pacific region, in early 2015, Axalta announced that one of its four global technology centers, the Asia-Pacific Technology Center, will be located in Shanghai.

The Axalta Way operating system safeguards these investments. In fact, Axalta built this system to help companies achieve "continuous improvement" in various areas, including continuous system innovation. “We wake up every day knowing that the Axalta Way isn't just about cutting unnecessary costs, it's about changing the way we work and the way we serve our customers," says Sherlock.

This operating system is personally managed by Xie Ruisi and his core leadership team. Each quarter, they focus on three full-day meetings, dedicated to reviewing the work of the entire company, reviewing the company's operational activities, reviewing the degree to which the "continuous improvement" goal has been achieved, and the problems that exist. The Axalta Way isn't one big project or one big investment, she explained, it actually includes thousands of projects, and everyone in the company has their own improvement goals to achieve. "Whether you work in a factory, a business unit, or a function, the purpose of the Axalta Way is to measure how you can improve your performance."

To any one For enterprises, one of the most ideal goals of systematic innovation is to make the innovation of enterprises unstoppable. It's not an overnight goal, but Axalta is already ahead of the industry on this path with multiple support systems behind its innovations.