Jentjens Machinetechniek BV

Transforming from an industrial to a knowledge-based enterprise

Daniel AndriessenProfessor of Intellectual CapitalINHOLLAND University of professional educationAmsterdam, The Netherlands

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Using case studies

1. Have you ever used case studies before?

2. What are case studies:

• Snapshot of history of a company

• Story of a company

• Actor

• Reader sees a business dilemma

3. What is a business dilemma?

• Relive the situation

• Business decision to choose between option

• No good /bad decisions

• Apply theory

• Discuss options within the group

• Both lecturer and student learn

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Brief History of Jentjens

• ’50s – ’70s: from ship repair to steel construction

• ’70 – ‘80s: from steel construction to machine manufacturing

• ’90s: from machine manufacturing to engineering

• ’00s: from engineering to Oriented Handling®

• ’04: becoming an Original Equipment Manufacturer

Investing in Intellectual

Capital

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Teaching Purposes

1. Adding value in a knowledge-based economy and the position of

companies in the industrial value chain

2. Intellectual capital resources of the firm

3. Making R&D decisions

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Climbing the value ladder

JobberSubcontractor who manufactures single parts.

Company that sells products under their own brand name and that often uses subcontractors.

Original Equipment

Manufacturer

Subcontractor that offers complete product modules that always include sub-subcontracting.

System supplier

Subcontractor that offers also assemblies that include some sub-subcontracting.

Component supplier

Subcontractor that produces parts or offers special production phases. The amount of assembly is limited.

Part supplier

Subcontractor used when extra capacity is needed.Capacity

subcontractor

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Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational Capital Relational Capital

Intellectual Capital is the driver of value

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Explicit knowledge

Implicit knowledge

TNO has knowledge

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational Capital Relational Capital

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Implicit knowledge Skills Attitude Reputation

McKinsey has skilled workers

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational Capital Relational Capital

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Implicit knowledge Skills Attitude Explicit

knowledge

Philips has intellectual property

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational Capital Relational Capital

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Explicit knowledge

Implicit knowledge Skills Attitude Processes Reputation

McDonalds has processes

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational capital Relational capital

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Explicit knowledge ProcessesImplicit

knowledge Skills Attitude Culture

GE has pride and ambition

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational capital Relational capital

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Explicit knowledge Processes CultureImplicit

knowledge Skills Attitude ReputationNetworks

Nike does not manufacture shoes

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational capital Relational capital

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Explicit knowledge Processes Culture ReputationNetworks

Implicit knowledge Skills Attitude Customer

capital

Rabobank has involved customers

Companies

Intellectualcapital

Financialcapital

Tangible capital

Human Capital Organizational capital Relational capital

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Structure of the case

• Part 1: To cut or not to cut, that is the question (2001)

• Meeting with four growers of pot roses.

• The growers wanted to automate the striking of cuttings from pot

roses.

• What was needed was a robotised solution

• Has never been done before

• All technology in-house except for vision technology

• No experience in horticulture market

• Shall he pick up the challenge?

• Part 2: Robots to conquer the world (2006)

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History

1. How do you account for Jentjens' remarkable

transformation from a ship repair shop to a

producer of intelligent machines?

2. How would you describe George Jentjen's master

plan behind the transformations that took place

since he took over in 1982?

Value creating model

• What does the company actually sell (created value)?

• Core competence: Oriented handling of objects

• Products: machines and robots that intelligently handle objects

• How is this value produced (main business processes)?

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Client intakeClient intake EngineeringEngineering ManufacturingManufacturing AssemblyAssembly InstallationInstallation MaintenanceMaintenance

Business strategy

• External business environment:• Outsourcing of labour intensive processes to other countries• Increase of sophistication in production and of repetitive but

complicated production processes in healthcare, automotive, electronics and horticulture

• Competition in high tech products from other countries

• Main strategic objectives:• Leader in robotics• Solving problems others can’t solve• Focus on market sectors healthcare, automotive, electronics and

horticulture

• Business success:• Profitability • Sustainability• Image / customer loyalty

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Jentjens’ Intellectual Capital

• What are in 2001 the most important intellectual capital resources of

Jentjens?

• Can you divide them into human capital, organizational capital, and

relational capital resources?

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Intellectual Capital

Human Organizational Relational

Engineering knowledge

Attitude

Engineering process

Production process

Brand & reputation

Component manufacturers

Customers

SuppliersMaintenance knowledge

Leadership

Jentjens’ IC Monitor

Human Capital Organizational capital

Relational capital

Investments • Days for vocational training

• Recruitment expenses• # of internships

• # of hours spend on quality management

• # of hours spend on R&D

• # of hours sales manager

• # of hours account manager

• Investments in promotion and fairs

Assets • # of employees with bachelor degree

• # of employees with master degree

• # employees with PhD• # of specialists in core

technologies

• Enterprise resource management system

• ISO certification• CAD/CAM software

• # of suppliers with ISO rating

• # relationships with universities

• # customers

Effects • Image at schools• Employee satisfaction

• # of customer complaints

• # of maintenance assignments per product

• # of new products• # lines of new

software code

• # new clients• Client satisfaction• Image in marketplace• # of publications

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To cut or nor to cut…

• If Jentjens were to decide to develop the cutting robot, what

additional intellectual capital resources would it need to have access

to?

• Should George Jentjens decide to develop the cutting robot? Why /

why not?

• If your answer is yes, what recommendations would you make to

George concerning the implementation of the decision to develop the

robot?

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Dilemma’s 2001

1. Getting access to vision technology

• Option 1: hire a vision technology experts and develop the

technology from scratch

• Option 2: partner with a company specialized in vision

technology

• Option 3: try to find if the technology is for sale and licensing-in

this (probably patented) technology

2. Getting access to the horticulture market

3. Funding the development costs and managing the risks

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Dilemma’s 2001

1. Getting access to vision technology

2. Getting access to the horticulture market

• Option 1: hire a sales expert and put together a dedicated sales

team to conquer this new market

• Option 2: partner with a company specialized in selling

equipment to this market

• Option 3: partner with the four growers who know their market

well

3. Funding the development costs and managing the risks

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Dilemma’s 2001

1. Getting access to vision technology

2. Getting access to the horticulture market

3. Funding the development costs and managing the risks

• Option 1: fund the development from his current cash flow and taking the

costs as expenses, and maybe find some additional subsidies from the

local or European government

• Option 2: fund the development from his current cash flow and activate

the costs as investments on the balance sheet. Under Dutch law it is

allowed to activate certain R&D costs on the balance sheet

• Option 3: have the four growers pay for the development and treat this

opportunity like a regular, one time project with no sharing in future

profits.

• Option 4: Have the four growers pay for the majority of the development

and set up a licensing scheme in which the growers own the technology

and Jentjens has the sole right to produce the machines. Jentjens would

then share in future revenues of every product sold.

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Classroom discussion

4. What happened in the case?

5. What do you think is the issue?

6. How do you think the company did business before 2001?

7. How would you rate the performance of manager George Jentjens?

8. What do you suggest he should do?

• Explore the options

• Pro & cons of the options

• Who votes for option A? B?

• Explore further

9. How should George implement the decision?

10.Should the company implement any changes?

11.What really happened

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Part 2: situation in 2006

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