Scott Miller, President of Dragon Innovation, a consulting firm helps companies building products in China, and former VP of Engineering, New Product Development, and Asia Pacific at iRobot, talks about his Chinese experience, his insights of manufacturing in China, and issues around it.
Jackson: Could you give yourself a brief self-introduction?
Scott: So far, it’s been an incredible journey. I graduated from Dartmouth, where I gained a great foundation in engineering. I also had the opportunity to sail across the Atlantic on a 125 ft Staysail schooner through two hurricanes, which was a tremendous amount of fun. I then attended MIT for my Masters in Ocean Engineering, where we built a 48″ long swimming robotic tunafish which caught the attention of Walt Disney Imagineerning R&D. After graduating, I worked for Disney for three years on many robotic projects, including designing and building from the ground up a full sized walking robotic Triceratops, powered by a Corvette engine. After Disney, I joined iRobot and worked on a artificially intelligent robotic baby doll funded by Hasbro. This is where I gained my first Far East Manufacturing experience. As the baby was ramping down, Roomba was ramping up into pre-production. I joined the team as the Director of Engineering, and very quickly saw that if we were going to succeed, it was essential to have a team in Hong Kong and China. I moved to HK in 2003 and lived there for the next four years. During this time, we grew the HK team to ten people, China to ten people, and India to 34 people (for R&D). When I repatriated in 2007 at the VP of Asia Pacific, we were building approximately 1MM robots per year. In the US, I served as the VP of Engineering for the Consumer Robot division. In 2009, I decided to start my own company, and Dragon Innovation was born.
Jackson: Could you share with us three most important lessons you learned from doing business in mainland China and Hong Kong while you were holding several different positions in iRobot?
Scott: Every time I visit China, I learn something new, which is what makes it intellectually exciting. Here are my top three lessons:
- Everything is Possible: We have run into some really challenging engineering and schedule problems working on high volume consumer electronic products. Many CE product revenues are driven by primarily by Holiday Sales, and if you miss the ship date, the result can be devastating to the company. By working closely (and for very long hours) with the US and PRC teams, we were able to overcome many obstacles that threatened to derail the project.
- Quality is Essential: Given the ability to build high volumes in China, it is imperative that quality is designed into the product from the beginning, and not left as an after thought. The most frightening failure mode is one that happens after, say, 100 hours and affects 5% of the units, as this is very difficult to detect.
- Transparent Costing is Critical: To live up to a products potential, it is critically important to understand where the money is flowing in the Bill of Materials.
Scott: Yes. Dragon Innovation is focused on helping our clients build products that make them proud. We have over 200 years combined experience, with “feet on the ground” in the US, Hong Kong, and China. Our clients are typically VC funded start-ups with products ranging from Consumer Electronics to Home Health. We provide US-based Mechanical Engineering, Quality and Marketing services so we can engage with our clients early in their design cycle to insure the product will start off in the right direction. We then perform a Request for Quote (RFQ) with multiple Contract Manufacturers in China, during which time we introduce our clients to the potential CMs and receive information on costing, payment terms, capability, etc. Using this information, we work with our clients to select the final CM and begin negotiating the Manufacturing Service Agreement, handing over the technical package, and ramping up a Dragon Innovation PRC-based project manager, who works onsite at the CM. During the Pre-Production phase, we are embedded with the CM’s team and can “close the loop” very efficiently for our clients so they do not need to sit through late night phone conversations or get bogged down with email. We create a detailed Quality Plan and oversee it’s implementation. Once production begins, we actively monitor the process and perform the goods final inspection. As production continues, we work with our clients on sustaining engineering to reduce the COGS and increase the quality.
Our goal is to be an integral part of our clients team – effectively their Far East office, which would otherwise be very expensive and time consuming for them to setup from scratch. We are very transparent to our clients, and never will conceal contact or costing information.
As noted on our website, we do not accept jobs that involve transferring existing US-based production to China.
Jackson: What are the challenges of these two different jobs? How did you overcome them?
Scott: The work at Dragon Innovation is always intellectually challenging, as we have the opportunity to work with a variety of different clients in different technology and market spaces. There is always something new, but also many opportunities to apply our experience to help the clients reach a solution quickly and at lower cost than if they were not working with Dragon Innovation.
Jackson: Let’s say we have alumni whose company has a great product and they want to sell it in China. What should they do?
Scott: Selling in China is an exciting new frontier. We are beginning to explore this area, and can provide more details at a future date. To manufacturing in China, the foundation of success is finding a great CM. There is no substitute for visiting the factory and meeting the management and engineering team in person. Even if the alumni do not have deep experience manufacturing in China, based on their education at RPI, they will be prepared to do at least a high level evaluation of the CM.
Jackson: Is IP protection a real issue in China? Do you have any suggestions on protecting it?
Scott: Yes. Step 1 is finding a great CM. From there, work on a need to know basis. Keep in mind that Mechanical systems are easy to reverse engineer (3D laser scanner), Electrical a bit harder, and SW even more difficult if properly protected. For this reason, it is important to use some form of encryption.
Jackson: One strength of Dragon Innovation is to find good factories. Do you have any “test-paper” to identify good factories to bad ones?
Scott: Yes – please see attached.
Jackson: Some people relate Chinese manufacturing to lousy quality. There’s book actually called Poorly Made in China. According to your experience, what’s true image of Chinese manufacturing?
Scott: Manufacturing Quality in China covers the full range. We work with several factories that can produce FDA approved medical devices that would rival any US factory. There are many others (which we do not work with) that have incredibly low quality.
Jackson: Lot of voices are talking about Chinese bubble. Do you have faith in China?
Scott: The rate of growth is staggering. I can’t predict the future, but certainly there is a huge amount of momentum right now.
Acckonowledgement: Special thank goes to Mr. Kim Blair, VP of Business Development and Director of Sports Engineering Practice at Cooper Perkins, Inc., for his help introducing Mr. Miller to us. Mr. Blair met Jackson and Gary on a seminar at RPI.