Badger Meter, headquartered in Milwaukee, Wisconsin, is a flow measurement company that generates 75 percent of its annual revenue from water applications for both residential and commercial use. “Badger Meter’s water applications help utilities charge the right amount to each customer, alert the utility companies to system malfunctions, and manage water conservation programs.”1
Badger Meter has been in business for more than 100 years and holds a 30 percent market share that is roughly in line with its top competitor, Neptune. Likewise, the company continually invests 2.5–3.0 percent of annual revenue on R&D to improve measurement accuracy and remote monitoring technology.
The domestic water metering industry, however, presents a challenge—utility customers have been slow to adopt smart, connected product technology. To illustrate, while radio meter monitoring technology (which allows utility companies to read meters remotely) has been available for 20 years, only one-third of installed water meters in the United States employ radio monitoring solutions. (Recently, Badger Meter also introduced a cloud-based solution.) Utility customers follow the procedure of replacing manual-read meters with the new technology when the useful life of the old meter is over. The U.S. Environmental Protection Agency forecasts that the cost of replacing the aging water infrastructure may well exceed $300 billion. So there is a long growth runway for Badger Meter.
1Todd Wenning, “Seeking Small-Cap Moats: Badger Meter,” Morningstar, Inc., January 22, 2014, p. 1, accessed at http://www.morningstar.com on February 25, 2015.
1.What product capabilities and features might be incorporated to better respond to the needs of utility customers?
2.What strategies could Badger Meter follow to speed the rate of adoption of smart, connected product solutions by utility customers?
Google, Inc. spends several billion dollars annually on R&D but the company has faced increasing questions about the payoff from such spending. To that end, Google is giving its mobile-focused research group, Advanced Technology and Projects, more funding and a new building but it is putting a time limit on most innovation projects. “Most projects are limited to two years, after which they are killed, moved into Google, spun off into independent firms, or licensed to others.”2
Executive Chairman, Eric Schmidt, says: “We like this model because it puts pressure on people to perform and do relevant things or stop. I’ve spent an awful lot of time on projects that never end and products that never ship.”3
The group is currently working on a number of projects including Ara, a smartphone with switchable components; Spotlight Stories; interactive animations; and short films for smaller phone screens; and Tango, a 3-D mapping technology that was recently moved into Google to support the firm’s augmented-reality gaming efforts.
1Alistair Barr, “Google Lab Puts a Time Limit on Innovations,” The Wall Street Journal, April 1, 2015, p. B6.
1. Critically evaluate the new policy that places a two-year limit on innovation projects and develop your position “for” or “against” the policy.
2. Is this a policy that other business-to-business firms might adopt to bring more discipline to the new product development process? Explain.