The world’s expectations related to resource efficiency and sustainable design are changing fundamentally. Meeting these new expectations demands innovation and innovation is key to our growth and operational excellence strategies at Ingersoll Rand.
As chief technology officer, I am the leader responsible for building systems to stimulate innovation throughout the organization and energizing the whole company around them. Our goal is to use innovation to help Ingersoll Rand become a top organic growth company among our industrial peers.
The exciting part for me is the intersection between our business opportunities and the customer solutions that we can create, whether they are products or service offerings, and the technologies that enable them to happen. Particularly in a company like Ingersoll Rand, which has many different, diversified lines of business, to be able to help the teams create real value using a wide range of business models and technologies is what innovation oversight is all about.
The innovation challenges we face relate to the dynamic nature of our end markets. Customer expectations are changing faster than ever before – not only in mature economies around the world but in developing nations as well. Our key challenge is to help society address the issues of climate change and resource depletion at both the tip and base of the pyramid.
Our strategy is to capitalize on the diverse experiences and perspectives that teams bring to generate new ideas. In this way, we are responding to our market environment, improving our technical skills and customer understanding, and accelerating the pace of innovation across the company.
Our teams are sharpening their focus on the nexus between our market opportunities and the solutions Ingersoll Rand can create. Our customers clearly see value in these new solutions. Our “vitality index” – the percentage of sales generated from products or services introduced within the past three years – has increased from the mid-teens to the mid-twenties since 2010.
“The new ideas we create at Ingersoll Rand extend beyond our products and services – they are key to our operational excellence strategy and the way we run the business. We’ve invested significant human and financial capital in building a system to stimulate innovation and energize the whole company around it. ”
Internal processes aren’t necessarily the most exciting aspect of innovation, but if a team’s new ideas don’t translate into something commercially viable, they’re inventing for the sake of inventing. Discipline is essential to successful innovation, and the Ingersoll Rand business operating system provides tools that enable us to develop and commercialize new solutions with rigor and precision.
Using our business operating system to drive innovation ensures that we are continually weighing our new ideas against their ultimate value to our customers. Deploying its various elements, among them our product growth team approach, we’ve launched or improved more than 190 products over the past three years, accelerating our performance on key portfolio metrics. These include on-time delivery, product quality, revenue and share growth, margin expansion and sales from new products. We did this while improving safety, environmental performance and engaging our employees.
Since 2012, our ability to get high-quality products to market on time and within budget has improved 69 percent. The percentage of revenue that Ingersoll Rand generates from the more than 144 new offerings has improved 35 percent. More and more of our portfolio is migrating toward smart, connected solutions that are more reliable and energy efficient than in the past. Each one of our business units is executing on a connected strategy.
For example, we’ve introduced transport refrigeration units with truck telematics. Our Trane Intelligent Services combine sensors, data analytics and human expertise to optimize the performance of buildings. We’re pioneering home automation solutions with our Nexia platform. Our golf cars and utility vehicles feature industry-leading GPS-based telematics solutions with advanced functionalities such as performance monitoring, tracking and geo-fencing.
Heating, ventilation and air conditioning, transport and industrial platforms have been digitally connected for a decade or more, and new connectivity technologies will continue to emerge. We’re focused on the data analytics these innovations will enable. Next-generation analytics, driven by machine learning around structured and unstructured data, will provide us with greater insight into how we can add value in the marketplace – whether in our products, our manufacturing processes, or the experience we create for our customers.
We are also pursuing opportunities related to innovative materials and chemistry. For example, 60 percent of our product portfolio relies on refrigerants. We are committed to transitioning our refrigerant technology platform to new types of low-global-warming-potential chemicals. Replacing a wide range of legacy refrigerants is a difficult design challenge, and we are leading the industry in developing innovative solutions to this important global challenge.
Data analytics and new materials are directly beneficial and a result of our focus on sustainability and an increasingly crucial driver of customer value and growth for Ingersoll Rand. Our customers now demand products with fewer environmental impacts from initial design to end of life as well as quality and reliability. These demands are central to our product innovation and development processes.
We have a robust program aimed at identifying the key attributes that make a product environmentally superior throughout its life. We are deploying this knowledge in our innovation and product development processes across the organization to ensure that product lifecycle impacts are considered up front, and that tradeoffs are identified.
Innovation is core to our future success at Ingersoll Rand, and we remain committed to offering products and services with greater reliability and a smaller environmental footprint from ideation through end-of-life.
Paul A. Camuti Senior Vice President, Innovation and Chief Technology Officer