Disruptive Innovation ft. Milwaukee Tool Group President Steve Richman

I'm doing great, glad to be here, glad to be with you.

Too. And the thing I'm most excited about is what you started with. You started with the people. The most important aspect of our business and what we do every day is really about our people and our culture, and that's really what makes a difference. So you saying that you miss seeing the people and being with the people and how impressed you were with the people, that makes us all real proud of Milwaukee Tool. Yeah, absolutely. It's just definitely one of my favorite things to attend every year, and looking forward to being able to do it again.

Well, you know, you talked about Clayton. So Clayton wrote a book called The Innovator's Dilemma many years ago, and the perspective was then and it is now that the world is moving so fast that if you are not in a position to disrupt yourself, you will be disrupted. You're going to become the next Blockbuster; that's who you will become. And that set the tone 14 years ago when we had a new team join Milwaukee Tool. We were this $450 million company trying to get our identity back, and what we really needed to say up front was how were we going to change the game. And we kind of took Clayton's mantra and said we were going to do that in all aspects of our business, and disruption was absolutely critical to our future success.

If you really think about this, everything Milwaukee does is really driven around that disruptive approach. And our first piece was 14 years ago: we said we're going to focus around MEP - mechanical, electrical, plumbing end users. And that was the beginning. Not too long after that, we started to say, you know, how are we going to change the game? And we partnered with Open Or, and we sat down with Open Or, their teams and our team sat down together and said, how could we make it easier for the user to be able to do their job from a productivity standpoint and a safety standpoint? And we changed that game in 2010 in a dramatic way with a first product really driving faster expansions and runtime, design new heads along the way, and we continue to innovate in that kind of approach along the way. And that's a great example of disruption: how are we really going to solve the problems? You know, if I fast forward to today, we've just launched the MX Fuels sewer drum machine, another great example, breakthrough in productivity and safety, best in class, really the first drain cleaner that can assist in deployment. And think about that for a second: these machines are over 200 pounds with cables, yes, and the ability to be able to have our Power Tread system get you in and out of hands up and down stairs, and then the execution of the plant from a drain cleaning with a best-in-class standpoint, that's what makes a difference. And those are two easy examples. Now I could go on, I could talk about the M18 Fuel pipe threader, I could talk about the Force Logic press with One-Key, you know, it goes on and on and on. I can talk about our new Nitrous Sawzall blade which is changing the game in terms of application speed, runtime, durability in terms of Sawzall blade technology. But that's clearly what we're all about. It's hard to depend here.

It's probably hard to think of just one product that you guys have created with this philosophy in mind. I'm sure, absolutely, no question about it, at least it is for me. I'm sure every one of our product managers and engineers, they have a little different perspective because their perspective is it's the one product they worked on, yes, or the first product they worked on, and that's the one they love so much. Yeah, and by the way, I did talk to one of your employees about the new Open Or expansion tool, and spoke also at the same interview with someone from as well. That'll be in our March issue. I actually just proofread the final pages of that yesterday, so it'll be out the door, it's out the door now, so it'll be posted online, I'm sure that March first. So yeah, take a look for that. That's a good thing. And he continued to innovate, that's the thing. It's not like you just come out with a tool in 2010 and then that's about it, so you're always, always thinking about new things. Well, that's the Milwaukee philosophy. We have dedicated R&D development resources for marketing people, and you know, Corey Dicker leading the team for the marketing and the business side, and Paige and the rest of that team to be able to drive it, and then an entire engineering team dedicated to it, and then of course our job site solutions team which is really partnering with the pros on the job sites, from training and development from the training centers to writing curriculum to working on curriculum to doing all those things together, and earning the right to really become a true partner to the trades.

Well, I think this comes back to a philosophy, right? So if we talk about the people that are listening today and we say, how do we drive productivity and safety on the job? How do we really become a solution provider? How do we really help change the game? And then we have advanced development teams and marketing teams that are really working on where that future generation, where that technology is going to be. So 14 years ago, we started with the first M12 and the first M18 product that we introduced in nine months, revolutionized the industry with lithium technology. And then those teams went forward and said, okay, how are we really going to change the game? And they spent time with the most sophisticated electronic component suppliers, the best in battery technology in terms of designing cold weather and hot weather performance, the latest in terms of where we could drive motor technology. And the viewpoint was, if we could leap forward, invest in the future in all of those aspects, then one day we could deliver a product that could truly eliminate the opportunity to be able to have a cord on a job site from a safety, productivity, and performance standpoint. And that became Fuel, that really became Fuel. And the endless hours and investment in technology and intellectual property that our teams pulled together, you know, the hours of Chain Maul and Paul Fry and Scott Anderson and the rest of the team at Milwaukee did in terms of development, just led us to launching the first range of product under the Fuel platform that really changed the game.

Yeah, you know, I think you have to think about it in this manner. When we first launched M12, when we first launched M18, where was that focus going to be and how were we going to drive the technology to another level? And the teams have done an amazing job across Milwaukee Tool to be able to do that. But we went from there and our mantra is how do we disrupt ourselves. That's why, as you said, you know, the original first product that we launched with Open Or, we've disrupted ourselves since that time frame. The first Sawzall has been disrupted with the latest generation of Sawzall, our Zozo blades, the Nitrous Carbide blade has disrupted where we were. The Pack Out storage system has disrupted transportation in a van, on the job site, off the job site. You know, larger Pack Out products that we are launching right now with a deep organizer specifically for the trades. And we have technology groups working on batteries and motors and electronics. I was on calls last week with all of our key team talking to the most advanced electronic manufacturers in the world and suppliers in the world, and that really did one heck of a job in terms of driving what we needed to drive and allowed us to be able to win along the way. It keeps going and going.

Well, that's it, that is it. You know, it is our job and it's earning the right, it's really the earning the right to become a partner, to become a solution provider. And it's everything that we need to do to be able to make that happen, and it's absolutely over the top in terms of what we need to accomplish and what we need to do in a significant way. What does that mean? That means we really have to have everything from our job site solution team in the training facilities, it means our product marketing team understanding what is happening today and our technology teams understanding where the changes will occur in the future. And as we keep on doing that, we win. And if we do that, we continue to earn the right. Now, MX is a great example. You know, MX is the opportunity to be able to take and change the game in a significant way on each and every job site, and take gas power and turn it into cordless technology in a significant way. And that's our viewpoint. It never ends, absolutely never ends. Same reason why we just have hired over a thousand new engineers to Milwaukee Tool in the past six months, because our continued investment for R&D has to be there. Right? Not just employees, but you know, again, it's been a couple years since I was up to see you guys, but you continue to add on to your building there in Milwaukee and elsewhere too for facilities in Wisconsin and wherever. Absolutely, there's no end to our investment. We have plants all around Mississippi, multiple plants in Wisconsin, global R&D center in Wisconsin that we've had multiple buildings, multiple sites that we continue to add on to. And then we're building a brand new hand tool manufacturing facility in West Bend that will be a completely vertically integrated Milwaukee hand tools made in the USA across the board. And those are the kinds of investments we continue to do.

You know, I think you have to go back to where we were in 2007 and 2008. We were the small little company that had to go back to our roots post-World War II when we really were the solution provider towards MEP overall. And with that, then we started saying, how are we gonna earn the right to really start developing the right products? And what we created from that was an entire team dedicated to what we needed to do to be able to win, focused on the trade. And that's from our sales team, our JSS team, brand marketing team, everybody across the board to be able to do it. And that led to innovation across the board and investment, engineering investment, inventory investment, investment in the training in facilities. You know, we're not the kind of company that puts our name on a billboard at Dodger Stadium or Wrigley. That's not who we are. We'd rather invest in the training facilities, we would rather invest in the other things that we need to do to be able to win in a significant way.

Well, first of all, if you really believe that the bookends to success of any company are people and culture, then you're going to invest in your people. Yeah, and at Milwaukee Tool, we clearly believe. You know, I'm fortunate, I'm extremely fortunate today that I get to be able to be in a business where our executive team, our key leaders throughout the company, our senior leaders have been together for 10, 14, and 15 years. I'm fortunate that our leadership team is aligned on the culture. I'm very fortunate that our team, all of us, believe that people are our biggest asset. So what does that mean? That means we need to train and develop those people. We need investment from an engineering standpoint or from a marketing development standpoint or from our job site solutions team at making them understand every single aspect of the trade that they're focused in. And training and development to us in all different aspects is absolutely essential for our success of today and our success in the future. And that leads us to having the right kind of people that really understand, and understand first and foremost that if we don't understand the user, then we're not going to be able to develop solutions that are going to change the game from productivity and safety on the job any single day.

You know, I'll be the first to say that COVID has made it challenging for all of us right across the board. And we saw that in March, April, May, and June. And number one, all of our senior leaders throughout the company, you know, our leaders like Scott Keysen or Kirby or the people that deal with our sales and JSS team, Bill Hughes and Daryl Hendricks and Jamie Christian and all of them, they were relentless with our sales organization, our JSS teams, and our service teams making sure that the communication every single day. So we go from broad the senior leaders in the company all the way to the various teams that are out on the field. And we do the same thing in the engineering front, the marketing front, across the board. At the same time, the most difficult challenge is clearly as you're hiring as many people as we've hired since July when we decided to attack the market again and hire hundreds and thousands of people. And what that meant is that the level of onboarding that we had to do had to go to the next level. And that meant teams calls galore. We do a big goal meeting. Every new employee that joins Milwaukee Tool that is non-hourly goes through this big goal meeting, and we talk about where we were, where we are today, what makes a company go bad, and what our strategy is, and why our users are the most important element for our success not only today but for the future. And that the two bookends of success are really people and culture. And that's the philosophy that all the leaders throughout the company have, and that's clearly what makes a difference.

You know, from day one, we put in the approach that safety first for our employees was number one, our team members number one. That was it. So proper social distancing, masks, all of that had to occur. Our Brookfield campus is filled with people today, not as many as they usually are, and our other campuses as well because of the social distancing that is required. But there's certain aspects of the business, especially new product development, that is there. At the same time, our JSS team and our sales team is engaging on a consistent basis out in the field with the right kind of protocol in place. Yeah, and we're hiring to a level that quite frankly we have never hired before, as business continues to flourish and we continue to drive innovation and solutions in the marketplace.

Well, you know, there's a lot of products that are new, a lot more coming that we haven't introduced yet that I can't talk about right now. But I'll tell you that there's hundreds of new products that we'll be introducing throughout the rest of this year, and our teams are engaged in them. But no question, you know, the products like the M18 Force Logic press with One-Key, you know, that kind of product is really going to drive success and really satisfy the user in a significant way, providing the security and tracking for the individual plumber, heating pros, since you're such an expensive investment. And at the same time, drive calibration, service intervals, understanding of what those are with such clarity that has never been done before. The M18 Fuel pipe threader, you know, at one time that was viewed as out of reach in terms of technology, would it ever be able to be done? And that's clearly changing the game in a significant way. And these, you know, as the competitive set is called, these are really going to change the game in terms of the technology that we can put in the product. We already talked about the sewer drum machine. We also have some other new areas. You know, we have a comprehensive line of aluminum cheater pipe wrenches, so that will change the game. And we're excited about what that will do, as we'll disrupt the entire current steel market and allow the user to be able to use our product very easily. Construction helmets, we'll be launching an entire array of construction helmets made in the USA in our Mukwonago factory in Wisconsin, all vertically integrated, latest technology, best in class performance, part of our array of being the leader in safety overall but also safety products. And the list goes on and on. Yeah, yeah, you know, we're committed in the accessory part of our business, in the core power tool part of our business, through the hydraulics like press part of our business, as well as in storage such as Pack Out, in our hand tool categories, and in our safety categories to be best in class.

You know, we all have life lessons, no question. You learn from people who do things exceptionally well, and then you also learn from where you have seen problems, either caused by yourself as a leader or caused by other people. God knows I've seen a lot caused by myself as a leader. So I kind of break it down in a couple of different areas. Focus number one: how are you going to make sure you have your teams that have responsibility, accountability, and understand where their focus is? And the toughest thing to do is not to say what you are going to do, but it's to say what you're not going to do. And that focus on those priorities and ensuring you're going to drive those priorities with speed and agility and passion is absolutely essential. So that's clearly one, no question about it. Two: as a leader, really understanding the communication side. You know, one of our big mistakes, we had a not too many years ago in 2017, we had a big issue with a new computer integration, new ERP system. And what we learned in that situation was that everybody in our distribution center understood that we had a problem, and we weren't really talking enough to the people that were doing the work. And that led us to a perspective that was real clear: make sure you're having the conversation, dialogue with all of the team members, not just some, skip level meetings, whatever kind of conversation, and letting them tell you what the problems are, what the issues are, and what the concerns are to be able to make sure it's done correctly. And we learned a great deal from that and have continued it since that day. So those are two real significant ones. And the last goes back to the beginning: it's disrupt. If you're not willing to disrupt yourself, if you're not really willing to look at your business and understand what you have to do to change, to look for the next five years and the next ten years down the road, somebody else is going to disrupt you. And how do you make sure that that doesn't happen? For us, that's absolutely imperative. And our philosophy is clear: we have to earn the right, it's not given to you. We have to earn the right to become partners of everybody that's on this podcast with us today. And the day that we stop earning it is the date that everyone will look for other choices and other options and other alternatives. And that viewpoint makes it so that you're never settling and always improving, which is a key aspect of our culture, really surviving around the people and the culture of the business and of the company.

Us too. We can't wait to do it. Talk to you soon. Thanks for the time today. Bye-bye. Thank you. Bye now.