Mike Redenbaugh has made quite an impact at Bell in the 18 months since he became the company’s CEO. He moved in at something of a low point in the company’s fortunes, with an aging product line and the embarrassment of competitor Eurocopter claiming more than 50 percent of the domestic turbine market. The latest figures aren’t much better, to be frank, but does he now have a plan to rein in short-term losses and build a strong base for future growth? AIN rotorcraft editor Andrew Healey interviewed Redenbaugh last month at Bell’s headquarters in Fort Worth, Texas.
What were your thoughts when you arrived here in mid-2003?
I had to come up with a strategy to help us restore market share. During my first 60 days in office I visited a hundred customers–both international and domestic–and asked what their perception of Bell was and what they expected from us. I also carried out an internal assessment of the products and the services that we had, and the positives that I knew Bell was able to offer. I then contrasted that with what the customers were saying in the marketplace. As the process evolved, so did the strategy.
When I arrived, the company’s focus was very much on MAPL (modular affordable product line). While that is the right concept to satisfy the longer-term goal of bringing new capabilities to vertical-lift aircraft, our customers were more concerned about what we could do for them today, to make their helicopters work more effectively for them. That changed my view of the balance that we should strike between long-term goals to gain new customers, and “quick fix” enhancements, if you will, to keep the ones we already had.
So we developed a three-point strategy. In the short term we should improve the products we have today through retrofits, modifications and upgrades to current models. In the medium term, we must develop the next set of products that we can introduce to the marketplace. In the longer term, we must develop concepts that allow us to meet customer needs and desires more effectively. But the initial emphasis had to be on the short term.
One of these measures yielded instant results; we had 11 walk-up orders for the 427i at Heli-Expo in Las Vegas last March. These orders demonstrated the level of good will people retain for the Bell product. We announced orders for 40 aircraft at the show and 90 percent of those were signed there and then. We even sold 12 helicopters at NBAA, and I can tell you that doesn’t happen every year. So we’re pleased with the response to the changes we are making.
But didn’t the company also have to change the ways it did business? For example, I’ve been talking to customers about the 427i and they told me the changes you are making should have been done 10 years ago. At the time, they kept telling Bell they wanted a single-pilot IFR helicopter. Bell kept saying it was listening, but it wasn’t.
We did need to work on our culture. We saw that while Bell has this rich tradition, in order to become more attuned to customer requirements we needed to incorporate contemporary tools, techniques and methods. The original 427 decision is a case in point but it also made no sense, for example, for us to offer the U.S. Army a two-blade attack helicopter when it said it wanted a four-blade one. That’s not listening to your customer.
How do you go about changing a handicap like that?
There are three elements to this and the first one involves leadership. In my mind the key is to make everyone–customers, employees, dealers and suppliers–understand what you are trying to accomplish. Everyone in a position of leadership has to understand that and communicate it effectively. You have to keep the concepts simple, gain people’s trust and deliver results.
You also have to demonstrate that you are listening by delivering the short-term enhancements that your customers want. And we’ve done that. A 10-percent increase in the payload of the 206 is a big deal. We asked operators of the 412 what they needed and they want to fill all their seats, even when heavy. So we are increasing the helicopter’s useful load by 200 pounds, enabling operators to add capacity. We have made more than 50 product improvements to the 407, and of course there is the IFR capability for the 427.
Part two is to define what you want the vision and culture to become. We want to be the world’s number-one rotorcraft company again. In some areas–such as customer support–we already are, but there are clearly other areas that we need to work on. [Among manufacturers supporting both new and older turbine helicopters, Bell Helicopter achieved the top ranking in AIN’s most recent product support survey (August 2004, page 18).–Ed.]
What we’re trying to achieve is change. To be effective in business you have to be prepared to change, but the idea of changing culture is pretty abstract. You know when you see it but it’s a little hard to describe; however, it revolves around behaviors–a predictable set of reactions under known circumstances. So what you do is focus on those and establish a reward structure to help advance the culture you want to adopt. This is all part of the Textron Six Sigma philosophy that we have adopted.
Part three revolves around teamwork. Bell had a great variety of capabilities but the collective teamwork was not up to the standard that a premier company should strive to attain. So we have kept a keen focus on our organizational structure, and the roles and responsibilities within that.
Explain a little bit about the Six Sigma process.
The Textron philosophy has three elements. Number one is to mold manufacturing processes around efficiency and growth. Two is to work on variation reduction and the third is waste elimination. Variation reduction involves things such as the amount of time it takes to respond to a customer service call. Some types of response take longer than others and we want to make them consistently low across the board. Our goal is variation reduction in the tolerances on gearboxes, say, or how effectively and quickly we fill staff positions.
Within those categories lies a whole array of tools, and lean manufacturing is one of them. The greatest change we have made in this category is here at Fort Worth, at our machining center. It has a greater infusion of Six Sigma tools–especially in the waste-reduction sector–than anywhere else and we have seen some fabulous results. The manufacturing process of V-22 gearbox housings used to involve moves totaling 11,000 feet on 31 different machines and lasting 180 days. Lean manufacturing principles reduced the moves to less than 1,000 feet, five machines and 45 days. That’s one example of hundreds. Cycle times relate directly to money and add to effectiveness, meaning you can increase capacity as demand grows.
Did you drive the change yourself? How did you go about it?
As in any process of change, you have first to work on the models and behaviors that you want everyone to absorb. My senior staff and I created the top-level bullets and their definitions that would become known as the five Bell Behaviors:
1. Walk the talk
2. Meet our commitments
3. Act with velocity
4. Take on risk
5. Love the business
We then introduced the behaviors to the next level of leadership in Bell and from there rolled it out to the whole workforce, with the goal that the behaviors would become institutionalized as every employee took ownership of the goals. Everybody who works for Bell Helicopter now gets a copy: they can find them online and on the back of their name-badges.
The upshot of it is that, if a customer–whether from the commercial sector or department of defense sector–asks any of the people on the shop floor what their overall mission is, they can answer, ‘To be the premier vertical-lift-aircraft company in the world.’ They also know how they are contributing to that mission.
You don’t see immediate results from this type of approach. It takes time to build the internal behaviors that you want to see and, most important, to demonstrate to the customers that it is not just a cosmetic exercise. Are they seeing a Bell difference? I hold regular ‘town hall’ meetings with groups from the workforce and we show them how we compare with the competition, using 12 different parameters such as overall profitability, where we stand on innovation and new products, customer support ratings and so on. Those comparisons are passed on at every town hall and in quarterly and annual communications.
Explain these town hall meetings a bit further.
They are a communications tool and each of them lasts about an hour. I and sometimes others on the leadership team talk for about 20 minutes, giving an overview of what we are doing and how we are progressing toward our critical goals. Then I spend the last 40 minutes fielding questions–what’s on people’s minds and so on. We do them every month at different facilities and they involve everyone who works in a particular building or facility. Every few weeks I also put out ‘messages from Red’ to tell them about specific priorities, accomplishments and so on. [Later on the day of this interview, Redenbaugh led a town hall debate in the cafeteria at Bell’s X-Worx plant. The room was packed and his audience stayed until the end, even those forced into the corridors by the numbers who wanted to hear what he had to say.–Ed.]
How do you measure results?
We look at how the business is doing. All these efforts are aimed at driving
the business: how we are doing with efficiency and productivity; whether we are accomplishing objectives on time; shortening product cycle times; and so on. I also get customer feedback and can tell by just walking around, too, talking to Bell people and finding out what they think. We use other formal tools as well but of course it’s the bottom line that matters most.
This is a three-year journey and the results may not be evident for four or five. We are setting Bell up for the next several decades, and changing culture and implementing new techniques takes time. In some areas we are a half or two-thirds of the way along the process, but in others it’s no more than 20 percent. If I aggregate it all, I’d say we’re about a third of the way along.
Meanwhile, you have to deal with Eurocopter.
The trick is to understand what is critical to the customers. They are interested not so much in when the product was introduced, but rather what it can do for them and how you can react to their demands. That’s where I think we still have the edge.