‘Inside Dyson’: a distinctive company?Jill Shepherd, Segal Graduate School of Business, Simon Fraser University, Vancouver, Canada

Dyson is a private company, famous for its distinctivevacuum cleaners. It is not listed on a stock market andJames Dyson, its founder and master inventor, hasaccumulated a personal fortune of over £1bn (~a1.1bn;~$1.5bn). He is the sole owner of the company and isone of the few people to appear on Top Rich lists whohas made money from his own inventions.

In 2005 the profit of the company reached £100mdespite selling fewer vacuum cleaners than com-petitor Hoover. In terms of value rather than units sold,Dyson sells more in the US than Hoover, a company itsued for patent infringement winning around $5 (~a3.5)million. It is a global company, distributing its productsin 45 countries including competitive markets such as China, the USA and Japan, as well as in its home market of the UK.

The company is built upon innovative products thatare marketed as robust, presented well in bright coloursand often in advertisements featuring James Dysonhimself. From bag-less vacuum cleaners to energy-efficient and time-efficient hand-dryers for public places,to desk fans with no blades; all of the products are distinctive. His latest idea involves space saving kitchenappliances and even whole kitchens. All elements of the kitchens will be cubes with controls sliding into themain body so that the cubes fit and stack together intobigger cubes.

It hasn’t all been straightforward success though,Dyson was about to launch a vacuum that could pick up water and dust. Customers were suspicious thatsuch ‘3 in 1’ products would not work and were not at all positive about wetting their carpets no matter howattractive the product design. Similarly a purple and silver washing machine with two rotating drums did notsell well and was also withdrawn.

Sir James Dyson

Dyson promote a story of their own heritage that suggests that the way the company works today is afunction of the early career development path of its

leader. Dyson studied in art schools, rebelling againsthis family’s tradition of reading Classics at CambridgeUniversity. At art school he sought to apply engineeringto functional problems in a way that respected designas an art. His first commercially successful vacuumproduct used cyclone technology. But from the begin-ning, he had problems convincing manufacturers boththat the technology could be transferred to vacuumcleaners and could be patented. His confident answerwas to set up his own firm: adopting unconventionalroutes and taking risks are still embedded within theorganisational culture of Dyson.

Though, by 2010, the company was run by CEO MartinMcCourt, James Dyson’s own image and personal brandremained central to the firm’s promotion. Apart fromfeaturing in many of their adverts, he was highly visiblebeyond corporate boundaries. He appears to enjoy pro-moting engineering and design. He finances yearly design

CASEEXAMPLE

Source: Getty Images.

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awards, collaborated with fashion designer Issey Miyakein an engineering themed fashion show and attemptedto fund a Dyson School of Design Innovation. This latterendeavour was abandoned when the UK governmentput too many hurdles in its way thus limiting Dyson’sown independence.

Engineering and design

Investment in R&D at Dyson quadrupled between 2004and 2009. Dyson HQ is in a rural part of the west of Englandand is home to 350 engineers and scientists as well as the usual company personnel. It is also linked to 20specialist laboratories all close by. Their large testingfacility in Malaysia operates continually with over 120 test-ing stations. The operation in the UK employs 1200 variedpeople: some experienced, some freshly qualified, somewith ‘way out’ ideas. James Dyson has said:

‘We want people who are creative and courageous –unconditioned fresh-thinkers. We don’t strap peopleinto a suit and plonk them behind a desk, we like togive people the chance to make a difference.’

Success revolves around engineering ideas that are fine-tuned, not always on computer screens, but in the hands of engineers who make 100s, even 1000s of prototypes. Special computerised technology helps the engineers develop prototypes but they also useplasticine, cardboard or whatever material they wish to make prototypes in an almost child-like fashion. Theengineers will tell you that the journey from prototypeto prototype is an iterative journey of failures that creates new ideas. In walkabouts and feedbacks, they areencouraged to fiddle, to ‘take the road less travelled’ andto be ‘less than sensible’. The same engineers report that,whilst competitors may have good robust engineering,they are not as inventive in terms of initial ideas and donot have the persistence and patience to make wackyideas work in robust terms.

There is a clear corporate-level commitment to prod-uct development with half of all profit being channelledinto the creation of new ideas supported by their mantraof thinking, testing, breaking, questioning. It is productengineering that takes centre stage on the companywebsite and generally in all company communications.This company is obvious in its desire to promote the ideathat a Dyson product means new, different, a radicalchange: a Dyson product whether vacuum or washingmachine is an innovation and the bright colours help theseclever products stand out from the crowd. For example,

the Dyson air multiplier™ performs the same functionas a conventional air fan but in a radically different way.Conventional fans cause buffering of the air as the bladesinterrupt its flow. The multiplier™ ‘amplifies surroundingair, giving an uninterrupted stream of flow of smooth air’.When you look at its sleek design you wonder whetherit is a function of the innovation in engineering or designor the blurring of the two. Either way, design is deeplyembedded in engineering and of all the capabilities atDyson engineering is king.

Unlike Apple, another design great, who designs then subcontracts all manufacturing, Dyson believe the combination of design engineering and manufac-turing is crucial in developing the most inimitable competences that can be protected through patents. Dyson believes in patents to protect its differentiatedproducts, but this does not mean competitors do not tryto imitate. Within Dyson’s vacuums there is ‘patentedBall technology for improved manoeuvrability’. The Mieleequivalent has ‘unique swivel head technology’. HooverUSA has Wind Tunnel vacuums available in ‘fresh colours’.Dyson’s colours are usually bright and it does launchexclusive editions based on novel colours. Dyson’shand-blade hand dryer wipes water off your hands inseconds using less energy rather than evaporating wateras in standard hand dryers. The competitor productfrom US specialists in hand drying, the Xlerator, alsoclaims to dry hands in seconds and with far less energy than standard hand dryers. The Dyson desk fanhas 11 patent separate applications and involved everydiscipline within the company.

Global working

James Dyson was heavily criticised in the UK press for taking the managerial decision to place the manu-facturing part of his vacuum value chain in Malaysia and later that of his hand dryers in Nanjing in China. He needed, he said, to follow competitors to lower cost manufacturing as margins were being eaten away. One hundred jobs were lost in the UK in the first moveand several hundred in the second. Later, with manu-facturing costs down and profits up, more engineerswere hired in the UK. James Dyson says the decision tomove to Malaysia was not an easy one for him. It was notsolely based on cost but also his belief that he neededto have a testing facility nearer to suppliers and thosewere all in the East. In contrast, Miele and Excel DryerCorporation keep their manufacturing in their homecountries.

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Dyson claims to be helping national competitive-ness by pulling the UK up the value chain as global competition heats up. China claims contracts like Dyson’shelp pull China up the manufacturing value chain tootowards ever more complex products of the highestquality. Dyson himself appears to view China as a majormarket. He has made choices to reflect that, such aslaunching his hand dryers there by offering them free to the Sofitel Hotel in Nanjing. As the costs of makingthings seem to be an ever decreasing part of the price aconsumer pays, perhaps design and development arethe future.

Dyson’s secrecy of success

Undoubtedly a success story, it is a firm that prefers to keep its secret of success just that – secret. So muchis evident, for example in their UK HQ. Access to thebuilding and then subsequent areas is via thumb printand even then some areas are out of bounds. They have

even developed their own sound-absorbing panels toensure that conversations can be kept secret.

Postscript: In March 2010 James Dyson stood down as chairman,although he maintained his role as ‘chief inventor’.

Dyson and its competitorsCompany

Dyson

Electrolux

Hoover (Techtronic Floor Care Technology Limited)

Hoover Limited

Miele

Excel Dryer Corporation

Location of headquarters

UK

Sweden

USA and Hong Kong for (TTI)

UK (Italy)

Germany

USA

Product range

Vacuums, fan, hand dryers,moving into integrated kitchensand robotic vacuums followingthe success of iRobots

Range of vacuums, washingmachines, fridges and ovensand a robotic vacuum

Vacuums and for TTI FloorCare power tools, outdoorpower equipment, floor careappliances, solar-poweredlighting and electronicmeasuring products

In USA Hoover range includespatented and trade-marked‘Wind Tunnel’ with no loss ofsuction

Vacuums and a wide range ofdomestic appliances

Domestic appliances frommicrowaves to wine storage

A range of hand dryers

Manufacturing locations

Asia

Not known

Not known,possibly variousaround Asia

Germany (‘90% ofvalue creationwithin Germany’)

USA (products very muchadvertised as‘Made in USA’)

Relative companysize (1 largest, 5smallest) basedon approximateglobal turnover

4

2

1

3

5

Distribution

Own online andthrough retail outlets

Retail outlets

Vacuums sold throughretail outlets and ownonline shop in the USA

Hoovers sold in retailoutlets and onlineaccessories only

Only through storesincluding Miele stores,Miele specialists andMiele studios

Online stores also

Can be bought director through licenseddistributors

Sees end users (e.g. restaurants),distributors, architectsand government ascustomers

Distinctive capabilities?

Engineering design

Emphasis on energy-saving products

Brand licensing of over 50 brands

Possibly the sheer scaleof its global operationsrather than any particularcapability gives it theedge?

Engineering that resultsin highly reliable androbust products

Transformation possibly,given the choice by new owner in 1997 tocollaborate with a partner– Invent Resources – thatproduced the Xleratorproduct and changed thefinancial profile of thecompany

Questions1 Using frameworks from the chapter, analyse

the strategic capabilities of Dyson.

2 To what extent do you think any of thecapabilities can be imitated by competitors?

3 Which of Dyson’s distinctive capabilities may,over time, become threshold capabilities?

4 Bearing in mind your answers to questions 1and 2, how crucial is Sir James Dyson to thefuture of of the company? What might be theeffect of his completely leaving or selling the company?

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