PuriNOx, sold in the United States, and Q White, sold in Italy by Kuwait Petroleum Italia SpA (KPIT), are the same product under a different name. Scientists at Lubrizol, a company based in Cleveland, Ohio, developed this innovation in diesel fuel. Since its founding in 1928, Lubrizol has invisibly and profitably provided solutions for the oil and transportation industry. Like BASF, it didn’t make the fuel; it made the fuel better. Its oil company customers came to Lubrizol with problems, and it provided solutions. It was a closed, profitable, and noncompetitive loop. Lubrizol did not have a marketing department; it did not need an ad agency or brand experts to name its products. Nor did it have to deal with competition for shelf space in a competitive point-of-purchase retail environment. It had a seamless partnership with oil companies and the transportation industry equipment manufacturers. Then, things started to change. The well started to dry up in the 1990s, and profit projections started to look like one long, continuous plateau. This was after decades of continual growth. The competition from companies that underbid its products and services and the slowing of the economy had turned a positive, predictable business into one that had a flat growth projection.
The management at Lubrizol was faced with two real options. One was to consider the safe status quo, a path that would limit growth. Or they could become a consumer-driven company built on innovation and organic growth, looking at the saturation of their current product line as an opportunity rather than as a problem.
Like many technology-oriented and successful companies, Lubrizol was fortunate enough to have resources in hand to drive organic growth. Some companies have grown by buying other companies, but utilizing existing resources offered an attractive strategic alternative and did not require the large investment needed for acquisitions. If Lubrizol was going to continue to grow, it would have to grow by becoming its own center of innovation. It could no longer rely on oil customers and the transportation industry to bring opportunities to its door. Moreover, Lubrizol recognized that it already had cutting-edge skills in an area with high growth potential, creating technology to reduce or eliminate the negative environmental impact of fossil fuels. It decided to pursue a course that would focus on bringing its technical expertise to bear on an environmental solution that would help it grow organically, from within.
Lubrizol looked back to its heritage, when the founders discovered an unmet need in the auto industry. The first product in 1928 was end – customer-driven and appeared in gas stations and auto stores all over the United States. It helped lubricate squeaky suspension systems and made lower-priced cars quieter to ride in. It was not until after World War II that the company distanced itself from the lubricant end consumer and earned its profits by supplying chemical additive solutions to the lubrication problems of the Big Three automakers, other equipment manufacturers, and the major oil companies.
Throughout the latter part of the twentieth century, Lubrizols rich base of highly educated and, at times, brilliant research staff was given the charge to invent new but relevant technologies. More recently, chemical engineer Deborah A. Langer and her colleagues became alchemists, inventing a technique to mix oil and water.
Although it wasn’t exactly gold from lead, it was significant because everyone knows that oil and water do not mix. This patented technology would provide the basis for many products that had previously been unable to take advantage of the moisturizing qualities of water. It was known that if water could be combined with fuel, it removed particulates and nitrous oxide (Nox) from the combustion process. The problem was, as Pete the bus driver knew, you cannot just pour water into an engine and hope it burns properly. Instead, it typically clogs and breaks down the engine. What Langer figured out was a process to shred and encapsulate the water molecules into the diesel fuel. When the diesel burned, it passed the water through as well, providing a clean burn while still producing sufficient BTU output. Nothing could be more innovative than developing a method for blending water and oil—the two things that are never supposed to mix. Nothing could be more valuable than reducing the output of Nox and particulates from internal-combustion diesel engines.
To take advantage of this new technology, the company put together a team whose mission was to transform the technology into a product. The team included Robert T. Graf, Ph. D., research manager; Daniel T. Daly, Ph. D., technology manager of fuels and two – cycle additives; John A. Mullay, Ph. D., principal research scientist; and Langer, principal engineer and project manager of emulsified fuel technology. What they would find out is that it takes more firepower than good chemists and engineers to meet the needs of this opportunity. It would take powers of different magnitude and scale to turn a habit of a century of diesel pollution into a neutral environmental impact.
Product developers often focus on the aspect of the product closest to their comfort zone. Technologists tend to focus on the technology alone, and technology-driven companies often believe that “if you build it, they will come.” Here was a situation where the products benefits were clear. Burn this new fuel mixture in your system, and you reduce pollutants. There is no need to modify your engine to use it, so what could be the downside? Companies often fail to take into account all the different views and requirements of all the stakeholders who are impacted by their product. They fail to consider the potential difficulties in gaining market acceptance. They do not realize that end users like Pete can cause an otherwise successful product to fail in practice just because he has been taught that water in diesel is bad. They also fail to take advantage of other stakeholders like Antoinette and her enthusiasm for the product and her potential role in encouraging its adoption to protect her children. Knowing how to identify all relevant stakeholders and take into account and leverage their needs, wants, and desires is the lesson of this chapter and is illustrated by this particular Lubrizol innovation.
The Lubrizol research team developed PuriNOx, a new diesel fuel for buses and other on-highway diesel fleets. The team soon learned that despite being a great technical innovation, PuriNOx did not sell itself. sometimes, the most removed stakeholder with the least perceived power can have significant impact on a product’s success. Historically Lubrizol did not need to worry about end users. They were considered more remote stakeholders. The company had only two stakeholders that mattered: the oil companies, and the auto companies and other transportation-equipment manufacturers. The oil companies worked with Lubrizol and paid the company to invent additives to maximize performance in engines, transmissions, axles, and other power units. The auto companies and other transportation equipment manufacturers supplied hardware systems through new vehicles. Lubrizol additive products were practically invisible to end customers, distributors, and society in general. The challenge now was to redirect the team, to inspire them to become customer-driven in a new way, and to start seeing the end consumer as a key customer.
Commercialization of PuriNOx came with three challenges; two were anticipated, and the other was not. The first anticipated problem was the need to use 1.2 gallons of PuriNOx for every gallon of diesel. This reduced the range that vehicles could travel between fillups because they would have to obtain fuel from a central location.
The benefits of PuriNOx seemed like a fair trade-off for the reduced range, but this disadvantage made the new fuel less attractive to potential customers. The second anticipated problem was cost. There was an added price for mixing water with oil, for reducing pollutants and helping the environment. It cost 25 percent more per equivalent gallon, taking into account the greater volume of PuriNOx to diesel. But with increased pressures on companies to improve the environment and the government providing tax benefits for those who use technology to reduce pollutants, the additional cost seemed to be justified. The third problem was unforeseen—the problem of Pete’s reaction and those of other end users. Although Lubrizol chemical engineers did not mind that the water-oil mixture created a white liquid instead of one with the familiar diesel color, the drivers and maintenance staff did. when these workers, many in the union, were told that there was water in the milky white substance, it elicited a strong and unexpected reaction. There was no way they should be using this fuel! They were told pretty much from birth that water has the potential to foul up an internal-combustion engine. In one test city, several bus drivers were so annoyed at being told to “put water in their tank” that they protested by urinating in the tanks! It took the evidence that the engines actually ran cleaner with PuriNox to finally calm down these union men. They had to see it with their own eyes. Lubrizol had jumped into the world of complete product solutions, into the world where a vast number of stakeholders really did matter.
The issues at Pete’s company were not ones that Lubrizol traditionally considered. Having to address the union problems and dealing with the unexpected reaction of the drivers almost ruined its product launch. Lubrizol could have minimized these issues if only it had identified them in the first place. Lubrizol could have educated Pete and other drivers on the difference between this fuel and the one he was used to. Lubrizol could have explained why the water performs differently with this technology and how using this product would improve the environment at no cost to them. Fortunately, this problem was seen early in the launch of this product, and the company was able to communicate with and educate the end users. In the end, the company succeeded in introducing this innovation into U. S. communities such as Houston, Texas, and Los Angeles and Sacramento, California. Internationally, PuriNOx was also successfully introduced into London, England, as well as Milan, Genoa, and Sicily in Italy.