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Dyson’s chief is not standing in the eponymous inventor’s shadow

August 4, 2013 2:53 pm

Enough limelight for both bosses

By Andy Sharman

images (28)article-2100152-11B3AD95000005DC-328_468x405Dyson070912_2331798bjames-dyson1

The ‘other’ of invention: Max Conze with a Dyson cordless vacuum cleaner

Aplain white room in a warehouse in rural Wiltshire. Futuristic vacuum cleaners and bladeless fans are stood on plinths. Empty shelves line the wall. And a 6ft 2in former German army lieutenant is pirouetting around the room, vacuuming up detritus. It’s a fantastical scenario worthy of the mind of Sir James Dyson, the inspiredinventor, eponymous overlord and chief engineer of the UK manufacturing group behind bagless vacuum cleaners, towel-less hand dryers and bladeless fans. However, the star of today’s show is not Sir James, but Max Conze, the Dyson chief executive who is demonstrating the company’s latest innovation – the curiously named Dyson Hard, a cordless vacuum-mop hybrid. “If you work for Dyson,” he says, “you have to have fun with vacuum cleaners.”We’re not in Mr Conze’s office but “the box”, a serene white space in Dyson’s Malmesbury headquarters where retailers are schooled in how to display the company’s wares.

It is all part of the founder’s vision. The 66-year-old Sir James still looms large at the company he founded in 1993. He stepped down as chairman briefly in 2010 but has since returned to the post. The family owns 100 per cent of the shares. His two sons are now on the board. Signs of succession planning, perhaps? “No, not at all,” says Mr Conze. “I saw James on Friday, he looked damn fit to me, so . . . ”

Mr Conze is not Dyson’s first chief executive. He took over from low-profile predecessor Martin McCourt 18 months ago, having joined Dyson to run the US operations. He was, he says, “always inspired by James’s story”. The two now operate “hand in hand”. How does that work? “Very harmoniously,” he says, quickly. Then, choosing his words carefully, he adds: “Everything James does is born out of his huge passion for technology, for engineering, for inventions, for everything that Dyson is about, no? And I wake up every day with the same passion, which is ‘how can we help the engineers bring those ideas alive? How can I make sure that those ideas materialise in more places around the world?’ And I find that if you operate off that base of passion, then your emotional state is very aligned, no? Because you’re really after the same thing. And then it’s actually quite easy.”

The CV

● Born: November 1969 in Bielefeld, Germany
● Education: After two years in the German army, completes a business administration degree at Columbus State University in Georgia, US
● Career: 1993 Begins in business at Procter & Gamble in a number of brand management roles in Germany and the UK
● 2000 Becomes marketing director of global skincare in Cincinnati, US
● 2002 Moves to Geneva, Switzerland, to become marketing director for personal beauty care
● 2004 Managing director for skincare in Guangzhou, China
● 2007 General manager, beauty care, based in Germany
● 2010 Appointed president of Dyson USA
● 2012 Takes over as Dyson chief executive
● Family: Married; two children
● Interests: horse riding, skiing, sailing

So who is the most important person at Dyson? “Well, James. I think secondly all the young engineers we have.”

And the CEO, the boss of the company? He laughs. “It’s a question I don’t think about because it looks to provide some value as to how important certain individuals are and, frankly, neither James nor I think that way.”

The eldest of four siblings, Mr Conze is no doubt used to sharing the limelight. But does he feel like a CEO in the shadows? “No, not at all. No. It’s pretty bright in this room and I find the world is pretty bright.”

It is certainly looking bright for Dyson. Mr Conze runs a group with more than 4,400 employees across its three sites: the UK head office; a Malaysian factory where the bulk of production is carried out and a new motor facility in Singapore. Revenues in 2011 – the most recently available figures – were more than £1bn, and operating profit roughly £300m. Sales have been growing about 20 per cent annually. Spending on res­earch and development has continued to grow at the same rate, reaching £70m last year.

Dyson has been on a big recruitment drive and now has 1,500 engineers with an average age of 27. Mr Conze, 43, shares this belief in youth, something he puts down to his days as a paratrooper. “I was a 21-year-old guy suddenly finding myself responsible for 20 people, which I thought was scary as hell,” he says. “It has instilled in me a sense that the best you can do is hire a lot of smart young people, give them a lot of responsibility and they’re going to grow on it.”

Dyson last year took on 220 engineers in the UK, 70 of them from British universities. It aims to take on another 350 this year. Is that easy in a country where, according to a 2010 report by Sir James, people “struggle to define what it means to be an engineer”?

“No, not at all,” says Mr Conze – but not for the reason one might think. “Very encouragingly, there has been a bit of a renaissance across the spectrum of British technology-based companies. We’ve been expanding, Jaguar Land Rover has been expanding, BAE has been expanding . . . So there’s a lot of competition for great talent, which in some ways is wonderfully encouraging, but it means we’re going to have to work very hard to bring in the best and enough of the best.”

After two years in the German army and a business administration degree at Columbus State University in the US, Mr Conze joined Procter & Gamble. He spent 17 years at the personal and household products group in a variety of marketing and general management roles in the US, Europe and China. This experience, he says, taught him the importance of innovation and geographic breadth.

That global ambition is what def­ines Mr Conze’s role at Dyson. The company has bought land surrounding the HQ, removing a previous barrier to growth – the local government authorities had blocked an extension – though the company is silent on what its plans for the land are.

Further afield, having achieved secure footholds in the US and Japan – now its two biggest markets, with the UK its third – the company is eyeing Latin America and launched in China in November. It now makes 85 per cent of its sales outside the UK. “We’re going to be in 50-60 cities in China by the end of this year. Every store that we’re opening, it’s this level of quality,” he says, gesturing to the surrounding pristine white. “The Chinese are ready and love technology.”

With its push into China, Dyson is entering the lair where the most transgressions of its 3,000 patents have originated. Mr Conze, rep­eating a favoured phrase, speaks of a “battle of ideas and inventions” that some competitors are shying away from by copying. The fakes either fall into a “red zone” of patent infringement that can be pursued through the courts, or a “grey zone” of legal imitation.

“By having a presence in China it actually gives us a better ability to see where copycatting or counterfeiting or whatever you want to call it may be going on,” he says. “At the end of the day, engaging is a better strategy than staying away. But it is a very, very big concern of ours.”

Dyson last year spent £3.2m defending the Air Multiplier technology used in its fans and heaters. These are the products it now has most difficulty defending. Counterfeit versions copy details down to the box and manual.

Given such legal battles, Dyson is understandably fiercely protective of its product development. Bits and pieces slip out in conversation though. Mr Conze proudly displays on his iPad some footage of a recent engineering challenge, when employees were asked to design an aircraft to navigate an obstacle course. “Nothing to do with current products,” he says.

But could Dyson be working on a drone that will independently vacuum your house top to bottom? “If I tell you I can’t let you out of this room.”

Interview Dyson CEO Max Conze: ‘Our lifeblood is inventing. That is where we spend all of our money.’

New Dyson CEO Max Conze explains how the firm aims to keep ahead of rivals by recruiting the brightest graduates.

Max Conze says expansion at Dyson will come from developing markets in new territories and launching new products. Photo: Eddie Mulholland

By Kamal Ahmed, Sunday Telegraph Business Editor

9:30PM GMT 11 Feb 2012

Max Conze used to jump out of planes for a living as a member of the German army parachute regiment. Then he developed a business inside Procter and Gamble selling hand creams (“A big difference from being in the army,” he laughs).

Now he is the new chief executive of the British engineering success story – Dyson.

Conze, German by birth, is no stranger to big career changes. After the army and a business administration course at Colombus State University, Georgia, USA, he was at P&G for 18 years, working in Europe, China and America.

He became president of Dyson North America in autumn 2010 and will now replace Martin McCourt who has been CEO of Dyson for 10 years.

“Yes, I used to jump out of planes and I spent a bit of time in the army,” Conze says, admitting that he likes things with “a bit of excitement”.

The change to leading a company which has just broken through the £1bn turnover a year barrier, will put Conze in a spotlight of a different type – ensuring that Dyson’s growth trajectory of 30pc expansion year-on-year continues.

“It is quite a milestone because we have crossed the £1bn net-revenue mark for 2011,” Conze says. “It is an exciting moment and a high on which Martin leaves. It signifies how far we have come.”

In 2005, turnover at Dyson was £470m, creating an operating profit of £97m. In 2010, turnover was £887m and operating profit was £206m. If the same margins are maintained, profits could be expected to hit £230m for 2011, although Dyson will not be revealing that number until later in the year.

“If you go a few years back we really were a one product company, albeit an iconic product, the cyclonic vacuum cleaner,” Conze says. “We are now much more a technology company.”

To vacuum cleaners, Dyson has added the Airblade hand dryer and the Air Multiplier range of fans and heaters. Its digital motor technology, which took 10 years to develop, means that its cordless vacuum cleaners are now smaller and more powerful, creating a new class of cleaning product, the Holy Grail of retail businesses.

Expansion will come, Conze says, from developing markets in new territories and launching new products. More than 80pc of Dyson’s business is now outside the UK.

“In Asia, Japan is very successful and is now our number two market [behind the US]. Beyond that we do have some presence but it is mostly small. We need to go to China and onward. Latin America is a big opportunity.”

Conze says that when he visited Florida he was struck by the number of holiday-makers from Latin America who would be loading up on Dyson products.

Ever since 2002, when Dyson announced that it was moving its manufacturing to Malaysia from the UK there has been a nervousness about whether Dyson is wholly committed to maintaining a large part of its workforce in Britain. At present, 1,450 of Dyson’s 3,600 global employees are based here.

Conze says that, far from the UK being under any sort of threat, he wants to expand in Britain, building on McCourt’s project to hire hundreds more engineers in the UK. Rather than worry about losing jobs, Conze lieutenants have a different concern – how can they create more room in the car park?

Conze is well aware of the British heritage of Dyson and its heart-beat, the headquarters in Malmesbury, Wiltshire. In this his first interview on becoming CEO, he refers regularly to how much he loves it in the Cotswolds and that his family – he is married and has two daughters – enjoys horse-riding.

“I love that we are running this iconic British engineering company out of the oldest borough in England,” he says. “We are very committed to Malmesbury – Dyson grew up there and I think we will always be there.

“Today we have 1,450 people on the site of which 700 are engineers. It was sad that we had to close our manufacturing operation but we now employ more people here than we have ever before – and at a higher qualification and higher skill level.”

Although he says it would be difficult to envisage bringing manufacturing back to the UK – the supplier base is located in Asia – Conze reveals that he expects to be employing 2,000 people in the UK over the next few years.

“We put on 200 engineers in the UK last year,” he says. “In 2012 we are looking for about another 200. We will continue to aggressively bring in bright young engineering talent.”

Conze also wants to add to other parts of the business such as sales, finance, accounting and marketing. “Fundamentally we think we can keep or accelerate the rate of growth we have.”

Dyson prides itself on its recruitment strategy, hiring graduates straight from university. Mark Zuckerberg once said that his biggest worry about Facebook’s rapid growth was losing its start-up DNA and failing to innovate. Dyson, as it expands rapidly into a global player, faces similar issues.

“P&G passionately believes in bringing in people young from university and not from other businesses to get the best and the brightest minds and then to train and develop them,” he says.

“That is something we at Dyson – James [Sir James Dyson, the founder] and I – are very passionate about. That way you get the best and you get them before they are indoctrinated in the wrong way, where their minds are still open, when people are ready to take risks. They don’t know what is wrong and that is good. They are not conventional and we do not want them to become conventional.”

Conze’s experience in America and Japan – where many UK retail businesses have launched and foundered due to a lack of understanding of the market – holds lessons for many businesses looking to grow through exports.

In America, differentiation is the key, Conze says. In a sea of mundane “white goods”, Dyson has built itself as the sassy interloper, the brand that brings a bit of product magic to a sector that would not comfortably live with the epitaph “exciting”. Best Buy and Target are not exactly Disneyland.

“Twelve white fridges isn’t incredibly exciting. So, we can add a lot of value to the retailer by acting as a focal point and drawing traffic.”

Apple was built on a similar philosophy – we may not be the cheapest but, boy, are we the best and we look pretty good as well.

In Japan, the breakthrough for Dyson came with the digital motor that allowed for compact machines better able to fit in smaller Japanese homes. The heating and fan products (which the business calls “environmental control”) also fitted well in a country where homes are often heated one room at a time to conserve energy. Power supply has also been rationed following the 2011 earthquake, making efficient household appliances more attractive.

As with any start-up business which grows to become a market leader, there have been bumps along the road. The most notable was the dual-drum washing machine, launched in 2000, which struggled under a weighty price tag of £1,000, when the average price of a washing machine was below £300. It was discontinued when sales volumes were not high-enough to justify the expensive production line.

Speaking to McCourt, who became CEO after the product was launched, there is a clear opinion in Dyson that learning from mistakes is much smarter than pretending a company never makes any.

“Why wasn’t it a commercial sucess?” McCourt says. “What it boiled down to is that it was an expensive consumer device. In our best year we sold 25,000. But the scale of through-put to sustain a manufacturing plant for a washing machine is considerably above that. So, net-net, every time we sold one we were losing money.

“I can’t remember how much but I know it was too much. Losing money hurts. We hate that and we have become particularly good at avoiding that scenario.”

As McCourt says, failures have been rare and the greater problem has been meeting supply demand as the new Dyson products have hit the shelves. John Lewis has recently struggled to satisfy customer orders for the air multiplier.

“When you bring [a product] to market you cannot pore over financial sales results and then extrapolate,” McCourt says. “You have to take a bit of a punt at it. We have been genuinely staggered on the take up of the air multiplier and the cordless vacuum cleaner and I’m absolutely certain we could have sold a great deal more.”

Being an “inventing business” brings other challenges, the protection of intellectual copyright being one of the most serious. In China there are a multitude of Dyson copycat products easily available.

Sir James says that the British Government has been supportive on the issue and has sent an official to the British embassy in Beijing to be an expert troubleshooter.

“Our lifeblood is inventing,” Conze said. “That is where we spend all of our money, that is where we take all of our entrepreneurial risk.

“When we invent things, we believe those things ought to be IP protected so that we have the ability to realise the fruits of that hard labour. It does make us angry that isn’t always the case.

“We have been lobbying for IP protection to strengthen particularly in places like China, which happens to be the place where most of the infringements originate.

“We would love to be able to re-dedicate the energy we commit today – which is significant in terms of money and people – to go after everybody that is infringing us and put that energy into inventing machines.”

At a time when many companies complain of an “anti-business” tone to much of the debate in the UK, Dyson is seen by many as a ray of sunshine in an otherwise economically gloomy forecast.

Expanding, hiring new people and moving into new markets, it is just the sort of business that David Cameron, and maybe even Ed Miliband, can applaud.

“We are looking at expanding all areas of our business,” Conze says. Which is not something that could be repeated by many UK CEOs in the first half of 2012.

Max Conze: CV

Age 42

Education: Bachelor of Business Administration, Columbus State University, Georgia, US

Career: Procter and Gamble 1993-2010; Dyson 2010-12

Not a lot of people know… that Max was in the Germany army parachute regiment

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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