AB Bahco Tools: The Development of a Design Strategy at a ......4 AB Bahco Tools: The Development of...

DESIGNMANAGEMENT

INSTITUTE

CASE STUDYAB Bahco Tools:

The Development of aDesign Strategy at a Tool

Company

9-991-028

2

This case study came from the CaseStudy Research and Development Pro-gram at the Design ManagementInstitute’s Center for Research. The Cen-ter conducts research and develops educa-tional materials on the role of design anddesign management in business success.Case studies, the Design Management Jour-nal, reprints from the Journal, and othereducational materials are available fromthe Design Management Institute Press.

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Acknowledgments:Many thanks to all the people at AB BahcoVerktyg whose generous participation made thiscase study possible; to Karen Freeze of theDesign Management Institute, whose ideas,insights, and editing enriched the case in crucialways; to Earl Powell, Director of the DesignManagement Institute, whose ideas andencouragement contributed to the development;to Christer Kedström of Lund University whoread and critiqued the early drafts; and to KarlUlrich and Steven Eppinger of the Massachu-setts Institute of Technology, who first taught thecase and critiqued it carefully.

Lisbeth Svengren, MscBAUniversity of Lund

This case was partially funded by theDepartment of Business Administration,Lund University, and the Design ArtsProgram of the National Endowment forthe Arts.

© Copyright 1991December 1991. Version 1The Design Management InstituteAll rights reserved. No part of this publi-cation may be reproduced without writ-ten permission.

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Design Management Institute Case Study

AB Bahco Tools:The Development of a

Design Strategy at aTool Company

■ This case was prepared by LisbethSvengren of the University of Lund,Sweden, for the Design ManagementInstitute as a basis for classdiscussion rather than to illustrateeither effective or ineffective handlingof an administrative situation.

Bengt Carlsson, the new managing director of Bahco Tools,

was very enthusiastic about the Swedish company’s new, ergonomically

designed screwdriver. Very different from Bahco’s old screwdrivers, the

Ergo screwdriver had been launched in October 1982 and had just re-

turned from a major success at the annual spring Hardware Exhibition in

Cologne, West Germany. It was now the last week in March 1983.

Carlsson and two of Bahco’s managers were discussing the next steps the

company should take in view of the Ergo’s success.

“We can’t let the Ergo Screwdriver remain just an ordinary new prod-

uct. We have to carefully consider how we can utilize its concept not only

for a stronger market position, but also to reposition Bahco as a special

tool company in the future. So far we haven’t been very successful with

our low-price tools. They hurt our reputation more than we realize—in

fact, I have just received a report from an American researcher, Mr.

Armstrong, about the damage to the user caused by poorly-designed tools.

I believe the Ergo screwdriver is the answer to that.”

Claes Claesgård, head of the Scandinavian Sales Department for many

years and now marketing director, was somewhat worried about the

company’s situation. The market was stagnating, the cheap imports were

getting stronger, and Bahco’s low-priced tools were not reaching budget.

4

AB Bahco Tools: The Development of a Design Strategy at a Tool Company

“One of the facts we have to recognize isthat our old screwdrivers and other handtools are regarded as commodity products.We have to think about our future market-ing strategies.” Claesgård had been instru-mental in supporting the Ergo project butwondered whether its full potential for thecompany would be exploited effectively.

Roine Erkenståhl, communicationsmanager, was concerned that the Ergo ad-vertising campaign and its brochureswouldn’t be enough support for the newproduct. “If we are going to charge 25%more for the Ergo screwdrivers, we mayhave to find other ways to show why theyare so much better.”

“But the new screwdriver is much bet-ter,” Bengt Carlsson declared. “You knowthat. We have to tell people that this is notan ordinary screwdriver. When they dis-cover that, they will regard it differentlythan they do their ordinary tools.” RoineErkenståhl and Claes Claesgård, who hadbeen selling and advertising hand tools forover ten years, looked at each other withsome skepticism.

“We have to discuss not only our mar-keting strategies,” Claesgård reminded hiscolleagues, “but also our product develop-ment strategies. You remember the manu-facturing problems we’ve had with thenew screwdrivers. To start with, we haveto look at how to coordinate design withproduction before we can make grand pre-dictions about the Ergo line saving thecompany.”

THE COMPANY

AB Bahco Tools (AB Bahco Verktyg, inSwedish) was one of the oldest manufac-turers of tools in Scandinavia. It had its be-ginning in 1888 with J. P. Johansson, theowner of “Enköpings MekaniskaVerkstad,” a small mechanical workshop inEnköping, a small town about 80 kilome-ters from Stockholm. As part of his serviceto farmers in the surrounding area,Johansson repaired their equipment. Be-cause both tools and fittings were hand-made, with virtually no standardization, heused a large assortment of wrenches of dif-ferent dimensions. As the number (andsheer weight) of his tools grew, Johanssonbegan to work out designs for a newtool—the universal pipe wrench—that

would solve his problem. This first inven-tion was so successful that he soon appliedthe same principle to develop the adjust-able wrench.1

B.A. Hjort was a Stockholm business-man who owned a tool and machine com-pany in the late nineteenth century. Rec-ognizing the potential in Johansson’sinventions, Hjort obtained sales rights andbegan a worldwide marketing effort, basedprimarily in Scandinavia and Europe,through his company B. A. Hjort & Co.The products were sold under the brandname Bahco, derived from Hjort’s initials.In 1916 he bought Johansson’s workshopand in 1954, when it was introduced at thestock exchange, the company was renamedBahco Verktyg (Bahco Tools).

In the course of the next century, espe-cially during the 1960s and 1970s, BahcoTools acquired a number of different busi-nesses encompassing such areas as pneu-matics, hydraulics, electronics, construc-tion equipment, and industrialautomation. By 1981 the Bahco Toolscompany was just one company in thelarge, diversified Bahco Group.

Bahco Tools and the Bahco Group

Headquartered in Stockholm. The BahcoGroup enjoyed annual sales of approxi-mately SEK 2.2 billion ($432.8 million) in1981, of which nearly 60 percent was de-rived from export. The Group employedapproximately 9,200 persons, two-thirds ofwhom were based in Sweden.

AB Bahco Tools’ headquarters re-mained in Enköping, with subsidiaries inEskilstuna (Sweden), Denmark, Finland,France, Holland, Argentina, and the U.S.The company employed about 850 peoplein 1981 and its annual sales amounted toapproximately SEK 220 million ($43.3million), of which exports accounted forapproximately 70 percent. (See Exhibit 1for financial data.) Its largest export mar-kets were Denmark, Finland, Norway,Great Britain, Belgium, Holland, Luxem-bourg, Italy, and Australia.

Until the end of the 1970s AB BahcoTools had manufactured both hand toolsand power tools. However, as a result ofthe Bahco Group’s decline at the end of1979, the power tool business had beenspun off into a separate company within

1 Since 1892, when Johanssonreceived his patent, more than90 million Bahco adjustablewrenches based on Johansson’spatent had been sold throughoutthe world. In the early 1980sBahco sold approximately 3million adjustable wrenches peryear; another 67 million copieswere sold throughout the world.

5

screwdriver, and the universal pipewrench. Characterized by their green,translucent plastic handles, the traditionalscrewdrivers were called “the green se-ries.” (See Exhibit 2.)

Company Organization and Culture

Bahco Tools was organized mainly byfunctions (See Exhibit 3). Product devel-opment had traditionally been part of themanufacturing function, because rationalproduction was fundamental to thecompany’s volume-based product strategy.Existing manufacturing capabilities hadtherefore been of foremost considerationin the product development process. Inthe mid-1970s, marketing director ClaesClaesgård, began pushing for more influ-ence. As a result, in 1978 product devel-opment moved from the production de-partment to the marketing department. Atfirst it came under market service, which


Financial Data for Bahco Tools 1973–1981

Million Swedish Crowns (SEK)1

1973 1974 1975 1976 1977 1978 1979 1980 1981Sales 83.8 110.3 116.2 141.2 154.6 181.8 207.7 212.1 220.6Profit2 16.8 13.9 12.9 20.8 21.6 25.0 27.8 19.3 14.4# ofEmployees 1,030 934 940 971 953 891 907 846

Financial Data for Bahco Tools 1973–1981

Million Swedish Crowns (SEK)1

Invoiced Sales Profit2

HIAB-FOCO 713.3 -16.5Mecman 288.4 4.0Kracht Group 158.2 1.1Tools Group 220.6 6.1South American Group 41.7 -12.8Record Ridgway 175.7 7.3Industry Group 101.7 -3.1Air Conditioning/Cooling 193.9 1.5Utilities 378.9 15.6Plumbing Fixtures 53.3 -3.8Central Corporation 30.7 -16.6Subtotal 2,356.3 -17.2Corporate Adjustments -142.7 +23.3Total 2,213.6 6.11 100 SEK≈ $18, $1≈ 5.5 SEK2 After depreciation but before revenues and expenses

Source: Annual Report, Bahco Corporation, 1981

Exhibit 1

the group. Bahco’s financial problems inpart reflected a general recession, but oc-curred primarily as a result of questionableacquisitions: though companies of strate-gic market importance were acquired,their economic losses and the associatedrestoration efforts overtaxed the resourcesof the Bahco Group.

For example, the acquisition of RecordRidgway in 1981 made Bahco one of thebiggest tool manufacturers in the worldand was an important step in furtherstrengthening Bahco’s position in the Eu-ropean market. However, Record Ridgwayshowed heavy losses, and it was not pos-sible to turn the negative cash flowaround. It was also very difficult to inte-grate Record Ridgway with Bahco Tools.

Nevertheless, by 1982 Bahco Tools wasone of the two largest hand tool manufac-turers in Europe. Its most important prod-ucts were the adjustable wrench, the

By 1982 Bahco

Tools was one of

the two largest

hand tool

manufacturers in

Europe.

6

was at that time headed by Claesgård him-self. Later on, in 1979, market service andproduct development were separated intotwo different departments.

New CEO, New Strategy

Bengt Carlsson became president andCEO at Bahco Tools in May 1982. Unlikehis predecessor, a traditional, financiallyoriented president of a conservative, tradi-tional company, Carlsson was eager to takerisks and to make Bahco Tools competi-tive on a global stage. Shortly after becom-ing president, Carlsson reorganized thecompany, giving the marketing depart-ment even more responsibility. ConnyJansson became the manager of the prod-uct development department and BengtBrunosson became the coordinator be-tween Bahco Tools and Record Ridgway,which was renamed Bahco Record Tools.

The Decision-Making Process

Two committees—product and market-ing—were critical in the decision-makingprocess at Bahco. The marketing commit-tee consisted of representatives from themarketing department (marketing direc-tor, advertising, market service, market re-search) and from the product develop-ment department. This committeeprepared agendas that were then presentedto the product committee. The productcommittee consisted of the president, theproduction manager, the marketing direc-tor, the product development manager,and experts needed for special areas. The

product committee had the formal right tomake decisions, since the president waspart of it. Both committees met once amonth.

Two major institutions were also im-portant for the decision-making process.These were the two conferences that tookplace every year: the Scandinavian SalesManagers Conference in March, and theScandinavian Sales Conference (includingpeople from export) in August. At theseconferences, decisions that concernedmarketing and sales – like new products,advertising, distribution, etc. – were dis-cussed and decided upon. This was seen asa way to integrate the sales organizationwith the marketing process and to reachdecisions that concerned them both.

THE TOOL MARKET

Before the Industrial Revolution, handtools were often designed by the usersthemselves. The development of a newtool took place during work and, in thiscontext, tools were modified and im-proved upon step by step. Intimate profes-sional knowledge of the working situationwas the basis for design. With the intro-duction of mass production, this was nolonger true. Old tools were copied by themanufacturing companies, which slightlymodified the old design in order to mass-produce the tool economically, often withthe use of new production technology andnew materials. The existing solution forthe tool remained the basis for the newtools, and so hand tools like screwdriversand chisels had changed very little overhundreds of years.

Generally speaking, the tool marketwas national and as well as traditional.Growth in the world market was veryslow and was even decreasing for someproducts, such as the chisel. Many marketsegments were diminishing due to newproduction technology (especially auto-mation) or—where hand tools were usedfor repairs—the diminishing need for re-pairs associated with improved productquality. Although somewhat sensitive toeconomic fluctuations, demand was gen-erally stable over the course of a full eco-nomic cycle. It was a difficult task to breakinto a new market and especially to gain agood or dominant position. The interna-

Exhibit 2


Hand tools, like

screwdrivers and

chisels, had

changed very little

over hundreds of

years.

7


who used the tools in their work, such ascraftsmen in the construction, plumbing,and auto industries, as well as in telecom-munications, vocational schools, and soforth. Its success in this segment was dueto its reputation for high quality (e.g., inthe steel used in screwdriver blades) andits sufficiently broad range of sizes and va-riety of tools.

Bahco’s market share in the profes-sional sectors in Scandinavian countrieswas up to 80 percent, depending on prod-uct group (See Exhibit 5). Where adjust-able wrenches were popular, Bahco led thehigh-end markets; in Holland, for ex-ample, the company was so identified withthe product that a “bahco” was an adjust-able wrench. In other countries, such asGermany, fixed wrenches were morepopular; that market was dominated byGerman tool manufacturers.

West German firms constituted Bahco’smost important competition in other toolsas well. Unlike Bahco, these companiesoften specialized in one kind of tool—e.g.screwdrivers, pliers, etc.

The Do-It-Yourself Market

A growing segment was the so-called “do-it-yourself” (DIYS) market. Since Bahcoproduced high-quality tools especially de-signed for professionals, its prices weremostly noncompetitive with the cheapertools designed for the private segment.However, as more people worked at homeand became more quality-conscious(building their homes, boats, etc.), higher-quality tools were more in demand. Thiswas therefore a growing market segment.

Exhibit 3Organizational Chart, August 1982

Manufacturing MarketingClaes Claesgård

Personnel Finance

Product DevelopmentConny Jansson

Market Research Market Service Advertising Sales Export

CHAIRMANBengt Carlsson

Source: Company documents

tional tool industry comprised a numberof well-established companies, and theemergence of new companies was rare.Many countries had their own domestictool manufacturers with dominant posi-tions in their national markets. (Exhibit 4shows the major competitors in someWestern European markets.)

Tools could be categorized as commod-ity products; many companies and indus-tries had a contract or an agreement with alocal hardware distributor for supplying anumber of screwdrivers, pliers, screws andnails, etc., upon request. The specificationgiven was often the dimension of theproduct, not the brand name. The dis-tributor chose the brand on the basis ofcost or availability.

MARKET SEGMENTS AND BAHCO’S

COMPETITIVE POSITION

Bahco Tools participated in three marketsegments—the professional market, thedo-it-yourself market, and the low-priceddo-it-yourself market. Bahco enjoyed adominant position in the Scandinaviancountries, and elsewhere its original prod-uct, the adjustable wrench, was strong,claiming about 5 percent of the worldmarket. Given the fragmented nature ofthe market, that share (about three millionunits per year) made Bahco one of the big-gest manufacturers of adjustable wrenchesin the world.

The Professional Market

AB Bahco Tools focused mainly on thehigh-end, professional market segment (80percent of sales). It targeted customers

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Exhibit 4 – Bahco’s Main Competitors and Ranking

Market & Rank Adjustable Wrenches Pliers Fixed Wrenches ScrewdriversUK

1. Bahco (S) Lucas (UK) Britool (UK) Stanley (UK)2. Irega (E) Wilkinson UK Bedford UK Steadfastt (UK)3. Crescent (USA) CK (D) King Dick UK Spiralux (UK)

4/5. Bahco (S) Bahco (S) Bahco (S)Holland

1. Bahco (S) Knipex (D) Gedore Weralit (D)2. Gedore (D) Orbis (D) Stahlwille D Stanley (UK)3. Dowidat (D) H P Will (D) Hazet (D) PB (CH)

4/5. Bahco (S) Bahco (S) Bahco (S)Belgium

1. Gedore (D) Knipex (D) Gedore (D) Weralit (D)2. Dowidat (D) Facom (F) Facom (F) PB (UK)3. Facom (F) Bost (F) Stahlwille Stanley (UK)

4/5. Bahco (S) Bahco (S) Bahco (S) Bahco (S)Italy

1. Irega (E) Pastorino (I) USAG (I) USAG (I)2. USAG (I) USAG (I) Beta (I) Beta (I)3. Beta (I) Beta (I) Gedore (D) PB (UK)

4/5. Bahco (S) Bahco (S) Bahco (S) Bahco (S)Switzerland

1. Lobster (J) Knipex (D) Gedore (D) PB (UK)2. Irega (E) HP Will (D) Stahlwille Weralit (D)3. Hit (J) Orbis Hazet (D) Witte (D)

4/5. Bahco (S) Bahco (S) Bahco (S) Bahco (S)Sweden

1. Bahco Bahco Bahco Bahco2. Kamasa (S) Knipex (D) Stahlwille Wera (D)3. Luna (S) Luna (S) Gedore (D) Sandvik (S)4. KTC HP Will (D) Kamasa (D) Witte (D)

Denmark1. Bahco Bahco Bahco Bahco2. ETC (E) Knipex (D) Gedore (D) Weralit (D)3. Lobster (J) HP Will (D) Elora Wiha (D)4. Kamasa Orbis Stahlwille Witte (D)

Norway1. Bahco Bahco Bahco Geilo2. Kongsberg Knipex Stahlwille Bahco3. Acesa CK Hazet Weralit4. Kamasa Krefting Gedore Sandvik

Finland1. Bahco Bahco Bahco Bahco2. Hit Knipex Stahlwille Weralit3. Lobster Hit Dowidat Elora4. ETC HP Will Asahi Witte

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Bahco Tools’ Market Shares and Trend in the Nordic Countries (1981)

Adjustable wrenches: 40-65% uneven trendsScrewdrivers: 8-22% positive trendPipe wrenches 45-85% increasing trendPliers: decreasing on all marketsOther tools: 35-45%Source: Company documents

of declining market shares. Something elsewas needed. Even though it was hard tolaunch fundamental innovations in a fieldwhere “everyone knows what a screwdriverlooks like,” it was time to rethink thecompany’s product and marketingstrategies.

BAHCO’S PRODUCT AND MARKETING

STRATEGIES

Product Development

Under the marketing department onlysince 1978, product development at Bahcohad traditionally involved toolmakers andengineers. Concerned about maintainingits reputation for quality products, thecompany had invested in laboratory equip-ment to develop, for example, the steelused in blades and wrenches. The steel wastested to determine which alloy was opti-mal in the interaction between the screw-driver blade and the screw. If the blade wastoo hard compared to the screw, the lattercould be damaged when torqued.

Manufacturing

Because of Bahco’s market position andreputation, manufacturing had high statuswithin the company. In 1983 the manufac-turing operations varied from highly tradi-tional (for the forged adjustable wrenches)to modern, automated systems (for thescrewdrivers). The adjustable wrench wasproduced completely at Bahco plants, butall plastic parts for the screwdrivers weremanufactured by a supplier. This meantfrequent contacts between the product de-velopment department and these suppliers.

Distribution

Ninety percent of Bahco’s products sold inSweden went through one or more chan-nels before reaching the end user. Only a

Exhibit 5

It was hard to

launch fundamen-

tal innovations in

a field where

everyone knows

what a screw-

driver looks like.

Bahco sold 20 percent of their products to“the quality-conscious private customer.”

The Low-Priced DIYS Market

Cheap imports made the growing DIYSmarket highly competitive. By 1977, com-petition from Japan, Taiwan, and otherAsian countries had become more intense,especially as the quality of their productsimproved and became competitive withthat of Bahco tools. In order to meet thiscompetition, Bahco Tools developed a newprogram called Handfast (“Hand firm”).The Handfast program consisted of 11screwdrivers, 5 wrenches, and 6 pliers, witha price 25 percent below that of Bahco’sstandard products.

Handfast missed by far, however, its pro-jected budget and sales forecast. At theSales Managers Conference in 1980, threequestions were raised: Was the potentialnot as large as we calculated? Was the timeto reach volume production longer than wethought? Have we chosen the correct mar-keting strategies? Complaints on the prod-ucts were few in relation to delivered ar-ticles. Many said, however, that they“looked different,” and this caused them tohesitate at the purchase. As explained byClaesgård,

Bahco as a brand name was associatedwith high quality and therefore highprices. The design of these new tools wasdifferent. Instead of forged legs on pliers,for example, we made a construction withbent iron plates. The quality was verygood for the needs of nonprofessionals,but many complained that they looked‘cheap.’ And professionals, who alsobought these ‘cheaper’ tools, did not rec-ognize them as ‘Bahco.’

By the end of the 1970s Bahco Tools’ man-agement recognized that the Handfast pro-gram was not the solution to the problem

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small proportion of that went throughwholesalers; the rest went to retailers. Tenpercent of Bahco’s sales were to major endusers—e.g., government agencies, big com-panies like Volvo and SAAB, etc.

Sales

Because wholesalers, retailers, and purchas-ing managers in larger companies were re-garded as those who decided which prod-ucts were bought, Bahco’s salespeoplenormally communicated directly withthem.

A NEW ENVIRONMENT

In 1975-76 Bahco began to explore thescrewdriver market in order to understandwhy its high-quality screwdrivers had failedto yield a competitive advantage. Germancompetitors specializing in screwdriverswere doing well with a new design. InSweden Bahco Tools was the market leaderfor screwdrivers, but outside SwedenBahco had low market shares (below 5 per-cent). Moreover, its volumes were regardedas too low for efficient expansion. In orderfor Bahco to increase its market andstrengthen its position, something had tobe done.

The results of the market research, inwhich a few thousand end users tested andevaluated the existing green screwdriver,were generally very positive. However, it

was felt that the screwdriver was slipperyand difficult to use if the user’s hand wassweaty or oily. The product developmentdepartment manager, Bengt Brunosson,was assigned to look at what could be doneto the handle. The result of this processwas the introduction of a new surface pat-tern, attained through spark-eroding thepattern into the handle’s mold. The rede-signed handle was launched in the marketin 1977. It was well received but did notimprove Bahco’s sales volume to any greatextent. Bahco was therefore open to newideas.

The Ergonomic Design Group (EDG) Comes to Town

EDG was a design firm consisting of about11 industrial designers and ergonomics ex-perts located in Stockholm. They provideddesign consultation to industry and didproduct design research, funded by suchgovernmental research organizations as“STU” (Swedish Technical Development).Their projects were based on ergonomicstudies, in which a working situation wassimulated, prototypes of different modelswere used, and the process then docu-mented by videotape and computerized.After an evaluation of the result, the de-signers had substantial information for thefinal design of the product.

In 1978 EDG asked Bahco to look at anew design for side-cutting nippers, based

Exhibit 6

11

on a new working principle. When the de-sign was complete, EDG wanted to com-mercialize it and, for this purpose, they hadturned to Bahco Tools. A meeting was ar-ranged during which the industrial design-ers presented themselves and their com-pany to Bahco. Bengt Brunosson andConny Jansson (product development),Folke Möller (production manager), andClaes Claesgård (marketing) were allpresent. They did not consider the nipperappropriate for Bahco, but they were in-trigued by EDG’s design consulting and re-search methods, and subsequently commis-sioned EDG to take an objective look atdesigning an entirely new screwdriver.

THE SCREWDRIVER PROJECT

Prelimary Work: Phase 0

EDG was given no particular concept for ascrewdriver and thus could start their workfrom scratch. Their only charge was to de-sign a tool that would secure a competitiveadvantage for Bahco. The project was to becarried out in three stages; at the end ofeach, Bahco was to evaluate the project anddecide whether or not to continue with it.

At EDG, two industrial designers, BengtPalmgren and Hans Himbert, headed theproject. For the design research, the ergo-nomic experts at EDG were engaged in theproject. At Bahco, Bengt Brunosson, headof product development, and ConnyJansson, his assistant, managed the collabo-

ration and contacts with EDG.EDG started the project with a critical

survey of existing screwdrivers. For helpthey enlisted 20 craftsmen who usedscrewdrivers in their daily work and haddifferent hand sizes. The object of the er-gonomic studies was to find a tool thatwould:

• reduce the force needed• reduce injuries• achieve higher precision• have greater flexibility• have higher efficiency/speed.

Development: Phase 1

In order to study how each of these crafts-men used screwdrivers in a variety ofworking situations (e.g., how they grippedthe handle), the EDG researchers filmedthe craftsmen in action. (See Exhibit 6.)They also interviewed their subjects abouttheir reaction to the feel of the differenthandles. They measured the force neces-sary to screw into hard and soft woods.They also observed how the screwdriverswere handled while working at differentpositions, and made drawings that capturedthe variations. (See Exhibit 7.)

An analysis of this data revealed signifi-cant failings in conventional handle de-signs. For example, the researchers noticedthat the craftsmen really needed a handlethat could be gripped with two hands up to70 percent of the time. They also foundthat towards the end of the screwdriving


Exhibit 7

12

cycle, the axial pressure increased while theangle of rotation decreased.

EDG’s model shop next made a wholerange of experimental handles with differ-ent sizes, forms, and cross-sections pairedwith a variety of surface textures. (See Ex-hibits 8 and 9.) In order to determine theoptimal diameter of the cross-section of thehandle, test handles with nontextured sur-faces were made with diameters varyingfrom 25 mm to 50 mm. (See Exhibit 9.)Test rigs were used to demonstrate whichdesign was most effective in terms oftorque and thrust. Working with the testgroup, in which hand sizes varied, they de-termined that the optimal diameter was 35mm.

The mean value for torque was veryclose for all the shape variations. However,where maximum force was applied, the testpanel found one shape to be the most com-fortable. The other test handles ran intoproblems when pressure was concentratedin the palm of the hand. The measure-ments also demonstrated that where screwdimensions were large, a two-handed gripsignificantly improved torque. (See Ex-hibit 10.)

This preliminary research and develop-ment took about two months. During this


Exhibit 8

Exhibit 9

time the EDG and Bahco project partici-pants met twice a month, with frequenttelephone contacts in between. ConnyJansson and sometimes Bengt Brunossonvisited EDG’s office and workshop severaltimes and discussed the progress of thestudy. Hans Himbert and Bengt Palmgrenwere both very enthusiastic about the re-sult:

“We were sure we had found an optimalsolution for the screwdriver handle but wewere somewhat skeptical about whether itwould be accepted in the market. We werealso not sure how conservative Bahco’smanagement would be and how great theirinterest would be in a screwdriver designthat was such a departure from existingforms.”

EDG had underestimated Bahco, espe-cially marketing director Claesgård, whowas very enthusiastic about the new design.

“We needed a different handle in order tocompete with the new ones from Germany,and this gave us a good argument. Productdevelopment had been transferred to my de-partment, and I saw this as primarily a mar-keting question. I therefore supported thecontinuation of the project from a marketingaspect. Bengt Brunosson and Conny had toanswer for the technical aspect.”

13

The next stage in the first phase of de-velopment was to find a handle shape thatallowed comfortable handling with a two-handed grip. The methodology was thesame. (See Exhibits 11 and 12.)

EDG then worked on finding an opti-mal surface texture for the handle. Thetests were repeated with oily hands. Acheckered surface gave a 30 percent im-provement in the torque and doubled ef-fectiveness of the tool when used with oilyhands. The best handle had forty axialgrooves with sharp edges. This handle hadgood friction and at the same time feltcomfortable, because the pressure on thepalm of the hand was distributed over somany fine grooves that the surface feltsmooth. (See Exhibit 13.)

Refinement: Phase II

So far the project investment had not beenvery large—virtually none besides the feefor EDG. But if the project was to be real-ized, the company would have to developmanufacturing tools, usually a considerableinvestment. The final decision to proceedto manufacturing belonged to the productcommittee and to Gösta Höij, president ofBahco at that time. EDG therefore pre-pared a presentation that was structured tomake the logic of the new design obvious.They built up a chain of evidence for thenew design by showing the developmentprocess and the result. At this meeting, inthe beginning of 1979, Claesgård presentedhis marketing objectives. (See Exhibit 14.)At that time, Claesgård was anticipating alarge increase in screwdriver sales inScandinavia, especially in the AUS (auto-mobile sector). His goal for Bahco was totake at least 50 percent of this market seg-ment and thereby increase the total marketshare for screwdrivers in Scandinavia.

The result was “S-85,” an integratedmarketing plan for which all resourcesavailable were to be coordinated. The planwould cover a three-year period beginningin January 1982. The period 1980-1981 wasto see nominal efforts, with major invest-ments coming in 1982-1984.

The introduction of the new screw-driver, which was to be Bahco’s competi-tive edge, was tentatively planned for Janu-ary 1982. This constituted the mainargument for proceeding with the EDG

development. According to Claesgård, “themarket trend was positive and the potentialwas very high, so the calculated forecastlooked very good.” This was important forGösta Höij, who, according to Claesgård,was primarily interested in “the payofftime.” Höij and the product committeemade the formal decision to continue withthe project.

At the conference in March of 1979Bengt Brunosson informed Bahco’s sales


Exhibit 10

Exhibit 11

14


Exhibit 12

managers from Denmark, Norway, Fin-land, and Sweden of the collaboration withEDG and its results. He asked the salesmanagers if they thought this could be ofany interest to the market. The answer wasdefinitely yes.

Extending the Line: Phase III

At this point Bahco also commissionedEDG to test and develop a new design forsmaller screwdrivers. This resulted in a se-ries of handles in four sizes—two bigscrewdrivers with space for two hands onthe handle, and two smaller screwdriversfor a one-handed grip, designed with athinner neck at the lower end. (See Ex-hibit 15.) Whereas conventional screw-driver handles become shorter as they be-

come smaller in diameter, this was not thecase with the new design. Since the size ofa user’s hand does not change, of course,when he or she goes from a larger to asmaller screwdriver, EDG saw no reason togo with tradition. Therefore the length ofthe new handles remained the same, evenwhen their diameter changed. (See Ex-hibit 16.)

After a meeting with Bengt Brunossonand Conny Jansson, EDG designed a fifthhandle in order to fit all the dimensions ofBahco blades.

At the end of 1979 EDG delivered thefinal design. For them the project hadended. From the design models, BengtBrunosson and Conny Jansson now startedto make drawings for the construction ofmanufacturing tools. At this point, it wouldturn out, the real work began.

Realization

When EDG handed off the design toBahco, no one anticipated the problemsthat would ensue.

New ISO Standards

For one thing, the International StandardsOrganization, or ISO, was calling for a newstandardization of screws. Bahco had al-ready planned for its “green series” screw-drivers to reflect the new standards. But toimplement the change in the new line, per-haps sooner than necessary, might meanfurther delays. It was particularly difficultto make decisions regarding the new ISOstandard because information about the ac-

Exhibit 13

15

tual dimensions of the screwdriver tipswas only 90 percent available.2 Moreover,it was unclear whether the market wasfully aware of the coming change. Whenwould users have the new screws, and thusneed new screwdriver tips? At the Scandi-navian Sales Managers Conference in thespring of 1980, Bengt Brunosson won-dered whether the introduction of the newscrewdriver should be delayed until itcould fit the new standard fully. Or per-haps both lines should be changed at once?Some of the sales managers wanted thenew line introduced regardless of whatwould happen with the green series. Thegroup concluded that for the time being,the green series could be kept if it contin-ued to sell well. They believed it was nec-essary to see how the market reacted to thenew screwdriver before a final decisioncould be made about the old.

Meanwhile, in December 1979, prod-uct development received a memo fromthe material quality department about theneed for a steel of higher tensile strength,i.e., a blade strong enough to match theimproved torque of the new handles. Dif-ferent alloys were suggested that might fitthe anticipated ISO standards. This infor-mation was forwarded to the productiondepartment.

The Handle Molding Tool

A memo from the export department tothe product committee in February 1980had stated that sales wanted an introduc-tion in August 1981. Due to delays in de-livering the new molding machine fromGermany, January 1982 was still regardedas more realistic. Kabe, a supplier for plas-tic parts of Bahco tools, had been commis-sioned to produce a molding tool and tomanufacture the screwdriver handles. Toget a smooth surface on the top withoutany splice that would hurt the palm of thehand, Bahco wanted the forms for plasticmolding tools to be in three parts insteadof in two parts, as was usual. This turnedout to be a major problem, which caused afurther delay in the construction and even-tually manufacturing of the tools.

Kabe could not do a three-part mold ata reasonable cost. Instead they succeededin producing a molding tool that wouldmake the splice on the top of the handle


Market Share Objectives

1979 1984Sweden 17% 25%Denmark 22% 30%Norway 8% 20%Finland 10% 20%Source: Company documents

Exhibit 14

Exhibit 15

only three hundredths of a millimeter high.This was found acceptable by Bahco Tools.

Pricing

It was also clear that Bahco needed a policyregarding the price level of the new screw-drivers in relation to the green ones. Notonly were the manufacturing costs going tobe higher, but the new design offeredadded value to the customer, in terms bothof ergonomics and of better performance.The sales managers felt this justified ahigher price, and they believed a maximumof 20-25 percent above that of green serieswould be acceptable to the market.

Market Pressures and Marketing Strategies

Nearly a year had passed and the Europeantool market was changing. In 1981 Bahcowas still market leader for screwdrivers inSweden and Denmark. However, cheapimports had improved in quality and Ger-man manufacturers, with equally good oreven better quality, had become especiallyaggressive. Outside Sweden and Denmark

2 The new standard wouldbe a new combination of widthand thickness; for example, a6.5 mm width with 1.0 mmthickness would, according tothe new standards, become a5.5 mm width with 1.0 mmthickness (in the case of slotscrews). The user paysattention mostly to the width,not the thickness, whenchoosing a screwdriver,because the width can beascertained more quickly withan experienced eye.

16

screwdrivers, but relied also on adjustmentto new standards, more efficient distribu-tion, intensified advertising, education ofsalespeople, etc.

Further Production Problems

Meanwhile, production problems contin-ued. One involved fitting the handle to theblade. Tests showed that with high pres-sure on the blade, the fitting cracked.Moreover, the production of the blades inthe forge revealed problems with the earsof the blade. The latter problem seemed tobe solved at the end of 1981, however.

Ergo is Launched

In August 1982, nearly a year later, the dateof the Ergo launch was still under debate.Bengt Carlsson, only three months into hisnew job as head of Bahco Tools, exclaimedin exasperation to Claes Claesgård: “It can’ttake four years to develop a screwdriverwithout introduction in the market when ittakes only four years to develop an air-craft!!!” Carlsson’s pressure was welcomedby Claesgård, who was convinced that aSwedish competitor was getting ready tolaunch a new product. It therefore becameclear that an October launching had to berealized, regardless of any remaining prob-lems.

Two months later the Ergo screwdriverswere finally introduced to the market. Thelaunch was backed by advertising cam-paigns and by brochures with the headline“Power and Feeling” that were distributedto the dealer network. The brochures em-phasized the ergonomic aspects of the newtool and the scientific method used to de-velop the new handles (see Exhibit 17).Test rigs were set up at Bahco’s distribu-tors, where the customer could test andcompare the Ergo screwdrivers with others(see Exhibit 18). Salespeople wereequipped with packets of test materials that“proved” the ergonomic arguments.

ERGO IN THE MARKETPLACE

As soon as the Ergo screwdrivers hit themarketplace, problems arose with the fit-ting of the handle to the blade. When thebig screwdriver with the heavy blade hungin the display case the blade fell out. Thishappened in only about 30 instances, butcaused much trouble. Bahco had to with-

Exhibit 16


Bahco’s market shares were not as high andwere even decreasing. Bahco was losingground and wanted to regain these marketsand increase its market share.

At the Scandinavian Sales Conference inAugust 1981 Håkan Norén (export depart-ment) expounded on this situation and dis-cussed ongoing problems in manufacturingthe new screwdriver. Its progress was nowthe first priority of Bahco product develop-ment. It was time to name the product,among other things. Among the candidateswere Ergo 8000, Industri, Excellent,Turno, Black 8000. In the end, a majoritysupported “Bahco Ergo,” and the companydecided to launch it as a protected brandname.

The expectation for growth was high,and the goal was set to achieve marketshares of at least 20 percent in Norway andFinland and 30 percent in Denmark by theend of 1984. This expectation was basedpartly on the introduction of the new Ergo

Exhibit 17

“It can’t take

four years to

develop a

screwdriver

when it takes

only four years to

develop an

aircraft!!!”

17

draw this size and redesign the mechanismfor attaching the handle to the blade. “Wehad to find a solution quickly, and wesolved the problem by changing the di-mensions and measurements of the torquewings at the upper part of the blade. Wehad tested the original fitting, but underconditions of pressing the screwdriver to-wards the screw. Perhaps due to timepressure we had overlooked the possibilityof the blade falling out just from gravity,”said Conny Jansson, who was now head ofproduct development.

In December 1982, EDG was awardedthe SID (Swedish Industrial Designers)Design Diploma for the Ergo, in collabo-ration with Bahco Tools. The award wasgiven, according to SID’s announcement,for EDG’s “well-adapted design andmethod. The problem analysis gave objec-tive methods of measurement that couldshow the influence of the form and thesurface on the torque and ergonomic con-straints.”

New claims, however, clouded the oth-erwise successful launching. Customerscalled Bahco Tools and claimed that thescrewdriver’s handle cracked, when, forinstance, it was used as a crowbar.Claesgård sighed. “We have tried to in-form customers that this is a special screw-driver, to be used only as a screwdriver,but it seems impossible or at least very dif-ficult to change people’s behavior.”

In March 1983, at the Hardware Exhi-bition in Cologne, Bahco exhibited thewhole development process of the Ergoscrewdrivers, with ergonomic tests and re-sults, including the improved results ofthe two-handed screwdrivers. The reac-tion of the visitors at the exhibition wasvery positive and their interest was re-flected in the orders made during the ex-hibition as well as in the press attentionfollowing the exhibition.

Response to Preliminary Success

In the euphoria after the Cologne exhibi-tion, Carlsson was already outlining a ma-jor “Ergo” program that would encompassa whole line of hand tools. Claesgård wasvery pleased with the results of the exhibi-tion as well, but he believed that Bahconeeded to place a priority on getting its


Exhibit 18

manufacturing problems under controland dealing with its somewhat tarnishedcustomer relations. “We have the chanceto use Ergo to develop a new marketingstrategy. We shouldn’t get hasty, or we’llruin our image as a solid, reliable toolcompany. I think we need to thinkthrough several issues very carefully.” ◆

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