Why Bill Beane Believes that Commercial Thinking Drives Invention

As it celebrates its centennial, Parker Hannifin creates a new vision for addressing the needs of customers in markets around the world

When Arthur L. Parker founded the Parker Appliance Company in a loft in Cleveland one hundred years ago, the organization bore very little similarity to what has since grown into Parker Hannifin—a world leader in engineering and manufacturing motion and control technologies with billions in annual sales. Back then, the company was developing a pneumatic braking system for trucks and buses. Today, the company is active in a variety of industries, ranging from aerospace and climate control to filtration and hydraulics, to name just a few.

For a number of years, Parker grew through numerous acquisitions, but the company’s senior management recognized the need to develop strategies to leverage growth from existing assets and resources. That’s when Bill Beane joined the company.

Before joining the Parker team, Beane—senior director, corporate technology ventures and innovations systems—had been working in Silicon Valley, practically light-years away from Parker’s business and markets. However, the company wanted to evolve to provide innovative solutions, not supply individual commodities. It was the perfect time for someone like Beane, with a background in a highly innovative industry, to join the company.

First, Beane helped shift the company’s definition of innovation. Instead of changing existing products, Parker began focusing on how effective its products were at addressing its customers’ desired outcomes and priorities.

“The strategic part is asking, ‘What are we doing to support the outcomes customers want?’ and then providing products and systems that help shape evolving markets,” Beane says. “Just being new and different isn’t enough; you must offer compelling solutions to specific problems.”

That philosophy also helped identify areas of organic growth. As an alternative to the risks of entering unfamiliar markets, Beane encouraged teams to look for untapped opportunities in existing markets. For example, when the oil and gas sector experienced a widespread slowdown in drilling and production, Parker recognized the continued value in providing distribution systems for oil and gas products. That led the company to develop a family of fluid transfer pumps.

But the process didn’t stop there. The company also created products to complement pump sales, which included offering the electric motors to drive the pumps (with thermal protection and overpressure protection), along with fittings, valves, filtration, and other components to integrate with customers’ existing systems.

“By understanding customer operations and focusing on meaningful benefits and outcomes, we naturally evolve into systems discussions,” Beane says. “That leverages the full spectrum of our capabilities and presents a much more comprehensive picture of what we can do in any market.”

With that in mind, Beane looked to change the company’s internal processes. For example, Parker was strongly invested in the Stage-Gate process, but when Beane arrived, he recognized that the company had often lost sight of desired outcomes. In other words, many teams were following prescribed steps and procedures, but they weren’t producing true innovation or, Beane believed, really addressing the right problems.

Required Reading

Disciplined Entrepreneurship

By Bill Aulet

“MIT has a phenomenal track record for turning out successful entrepreneurs, and this book does a great job of showing exactly how entrepreneurship can be resolved into discrete behaviors and processes that can be taught, measured, and improved upon. It drives home the importance of commercialization as a critical element of successful innovation, and it also emphasizes that innovation can range across a whole gamut of elements and activities as you define the product and lay out the business model. Bill Aulet provides high-value insights in a very engaging style and format. His structure of twenty-four steps organized into six major themes has resonated well with our development teams. The steps are helpful in the details of execution, whereas the themes ensure that we do not lose sight of the forest for the trees.”
—Bill Beane, Parker Hannifin

In response, he emphasized the commercialization of innovation—a concept from Bill Aulet’s book Disciplined Entrepreneurship—with a formula: innovation=invention × commercialization. With all of the company’s talent for inventing, it was essential to introduce more commercial thinking into the company’s innovation efforts.

“We can’t just push invention,” he says. “We have to know where and how we’ll market a new product or application, how it fits with customers’ needs, and why it’s better than what they already have. Those questions are critically important to successful innovation.”

Parker’s fluid transfer pump is, once again, a prime example of this new approach. A business developer worked in partnership with the project’s chief engineer to ensure its commercial appeal. “There is nothing in the pump that doesn’t tie to a commercial benefit, and the needs of the market are reflected in every element of its design,” Beane says.

To ensure all development initiatives adhere to these new priorities, company leaders launched a portfolio review that ultimately reduced the number of ongoing projects by 25 percent. Along with improving resource allocation, streamlining the innovation pipeline also boosted the company’s projected revenue by 50 percent.

To help fuel its innovations, Parker works with numerous universities around the world. In addition to creating opportunities for students to participate in the development of cutting-edge technologies, this also offers Parker access to top young technology and engineering talent. Many current employees were interns for several years before graduating and joining the company full-time.

As part of its career development initiatives, Parker offers select high-potential recent graduates the Engineering Leadership Development Trainee Program. The company also supports numerous other programs that provide additional training and networking opportunities throughout individuals’ careers.

Beane welcomes new employees’ facility for navigating digital resources and communication channels. He thinks that they are less constrained by existing processes and that they will learn in due time. “We want fresh perspectives and feedback from new staff on how we can evolve and combine our existing processes with the best tools available,” he says.

The advent of the Internet of Things and Parker’s new vision of innovation will certainly help drive the company’s continued success. “With our vast range of products, experience, and expertise,” Beane says, “there’s no one better than Parker to bring the benefits of digital communication and connectivity to the industrial space.”