Dan Stern– Engineering Inhouse/ Manufacturing Outsourced

Dan has a point of view and an opinion or two. His respect for quality engineering makes him an inspiration for those that know him. He has a special regard for vintage Chryslers and their engineering.

Editor’s note- Dan Stern is a remarkable man. He designs and sells a number of specialty car parts, specifically around automotive lighting. Dan is a regular wherever people are discussing the finer points of automobile engineering. He is the editor of Driving Vision News and the proprietor of Daniel Stern Lighting Consultancy.

Dan has a point of view and an opinion or two. His respect for quality engineering makes him an inspiration for those that know him. He has a special regard for vintage Chryslers and their engineering. He works to source and integrate parts from others and designs and manufactures some parts himself. When I have been a customer of his, I get more than a product that he helped engineer or sells, but an education as to how it works, and why it matters.

This interview is important, because it shows a common pattern– Keep the engineering in-house, and find good partners to build your product. Jonathan Werner uses this approach, and Chris Anderson has written extensively about this as well. In some cases, this has proven to be a good way for a Manufacturing Entrepreneur to build his company.

Transcript

Tell us a little bit about what you make.

I make easily-accessible explanations for difficult-to-grasp ideas. My product is expertise to help people understand the intricacies of automotive lighting. It’s a field that seems simple on first blush; people tend to think they’re just lights, either they work or they don’t, and that’s about it. But in fact, there is an enormous amount of physics and engineering and physiology—and even psychology and philosophy—in just about every aspect of the design, performance, and regulation of every lamp, light, and reflector on a roadgoing vehicle.

When did you start making this?

I’ve been at it for most of two decades.

How long did it take you to develop it?

Most of two decades! This is not a static subject that can be learned once and taught indefinitely on that basis.

What changed along the way?

Almost everything. The technology and technique in headlamps and other automotive lighting is presently undergoing a near-total revolution as LEDs displace older light sources. For the first time, both the light source and the optics used to gather, focus, and distribute the light are changing at the same time. But while this is certainly the biggest revolution the field has seen, it’s not the first. We’ve had new light sources before: high-intensity discharge “Xenon” replaced halogen, which replaced tungsten, which replaced burning wicks. And we’ve had new optics, too: projectors, condensers, light guides, complex-surface reflectors. New materials have come in; glass and metal have given way to a variety of advanced polymers and other engineered materials. Computers and cameras have given us smart car lights that can follow the curve of a road and otherwise adapt the lighting performance to match prevailing conditions. On a parallel track, the regulations for car lights have had to change to accommodate the new technology and its performance potential. And that has spurred philosophical discussions about the finer and grosser points of regulation itself.

Did you run into times that you needed to redesign part or all of your product?

That’s a constant given. My range of products is diverse, because my clients are diverse; there’s no one-size-fits-all. The law enforcement agency trying to understand which cars to pull over for dangerous lights, the attorney working on a case involving vehicular lighting, the guy who wants to be able to see better while driving at night, the working group or government agency trying to update a technical standard or a regulation or a law, the lighting supplier considering additions to its product line…each of these different kinds of client needs the right set of information, presented the right way. So I have to tailor my product to its intended use whether I’m serving as an expert witness in a court case, or as a freelance consultant, or as an answer-man on a podcast or call-in show or column, or as a writer hired to produce a report on some aspect of the automotive lighting field, or in my positions on various technical standards boards, or in my role as General Editor of DrivingVisionNews, the global automotive lighting and driver assistance industry journal.

How did you figure out your manufacturing process to make this? Have you changed it since you first laid it out? Did you consider outsourcing or off shoring?

The irreplaceable basis of the process is comprehensive knowledge of the subject matter.It’s possible to bluff it effectively enough to make the cash register ring at a retail level—there’s a lot of that out there—but when the product is billed and reputed as expertise, sought by and marketed to those relying on the information to be all the way complete and correct, there is no substitute for thorough knowledge. And it can’t be one-dimensional; it’s not possible to give a usefully broad or deep explanation of the differences in American and European and Asian automotive lighting practices, for example, if one has only studied the field from within the American context. Beyond that foundation, the product development process is adaptation all the way. Adaptation to changing technology, changing facts, changing queries, and changing interpretations.

Outsourcing? Sure, there are services out of India that will generate a report or technical paper or whatever you want. It’s a great way to create a murky whirlpool of words on any subject, but that’s the direct antithesis of my product, which is clarity. It’s the same with product-development work; it’s possible to farm out the design of a headlamp (turn signal, fog lamp, whatever) to a job shop in China, say.

Outsourcing like this can be made to look like a great savings on paper…but only if we pretend that price and cost are the same thing. They are not! An outsourced technical report or a headlamp design-and-tool job with an attractive low price often winds up with a staggeringly high cost. Not only is the muddling effect of a language barrier greatly magnified when discussing a highly specialized technical subject, but a huge proportion of the outfits offering tempting services can’t deliver on their promises. I was doing a product-development job about five years ago on a line of motorcycle headlamps, and the boss said they had to be sourced in India or China for the low price. Every job shop I sent specs to would always come back and say they could do the job to an excellent standard, no problem, “sign here”. I drafted an unbuildable specification—a spec for a lamp that physically could not be manufactured—and sent it around. More than 9 out of 10 job shops still came back with “Yes, no problem, sign here”. Those very few shops that expressed some doubt about the spec were the only ones worth trying to talk to, and even most of those failed miserably. They just didn’t have the expertise and ability they claimed to have. On that project alone, the requirement to go to a “low-cost country” drove the cost of the project up far beyond what it would have taken to have the lamps designed and tooled in a top-flight American facility. And that’s just one example.

How did you find capital to get started?

Incrementalism, carefully controlled to remain within my actual means all along. I started out selling vehicle lighting equipment out of my college dorm room—headlamps and such—that I had evaluated and handpicked for being the best in their category. That’s how I started growing my reputation: headlamp customers took a chance that I was telling them the truth, bought what I said to buy, and found their night-driving problem completely solved. A good reputation began to develop, and then I did it again with specifiers, as when a truck builder asked which lamps should go on a fire truck being developed for the Australian market. Then I began gradually shifting towards a knowledge-based product, as when the government of a country in Southeast Asia wanted to know how they should update their headlamp regulations. Incrementalism, never spreading myself too thinly.

If you could go back in time, and talk to yourself at the beginning of this adventure, what you advise yourself to do? You must have learned a lot since then, so what lessons would you say stick with you?

Probably the main thing is that automotive lighting is a pretty rarefied field, and most of the participants are at least aware of one another. I think I would go back and tell myself to do a better job, in the early years, of allocating less of my time and attention to the big talkers, and more of it to those few bright stars in the field who really know what the hell they’re talking about, really know what they’re doing. And then I’d tell myself, once I sorted out whom to listen to, to talk less and listen more. Pretty standard older-self-to-younger-self advice, I suppose, but the Dunning-Kruger Effect is a big impediment to effective learning and teaching alike: we humans are poorly equipped to know just how much we don’t know, and the less we know, the more we think we know. I try to keep that in mind and never stop learning.

What is the worst advice that somebody gave you as you were building your operation?

“The customer is always right”. That’s terrible advice! Actually the customer is frequently wrong. by dint of ignorance. That might sound judgmental, but only because “ignorant” is often used as an insult. We have to keep in mind that there is no shame or fault in ignorance as such, and it is easily curable with knowledge and information. The fact that the customer seeks expertise or some other service or product amounts to “you have something I need; you know something I need to know”. There’s always an element of education involved, whether the product is pure knowledge, information analysis, some tangible product, or whatever else. The thoughtful customer seeks to replace guesses and assumptions with knowledge and facts, and the thoughtful provider seeks the same result.

Trouble comes in the form of the customer who isn’t really shopping for knowledge or information or a product, but rather seeks reinforcement of existing guesses and opinions and preferences. This buyer is determined not to let mere facts topple guesses, preferences, folk “wisdom”, and baseless conclusions. The provider must make a sincere good-faith effort to provide what the customer actually needs, but when faced with a customer who has decided to prioritize his ego over his project, the thoughtful, conscientious vendor does not—cannot afford to—cater to the customer’s jealously-guarded ignorance. There’s nothing to gain once the would-be customer insists that his preferences and opinions must take precedence over the facts, and there is much to lose. The thoughtful vendor, in fact, has no qualm about promptly telling such a customer or client to take his business elsewhere.

My grandfather, a public-utilities regulation consultant renowned internationally, gave much better advice. He told his clients and customers, “You are entitled to an opinion; you are not entitled to an uninformed opinion”. That sounds harsh, but it’s critically important: each of us, whether we’re the maker or the vendor or the consultant or the customer or the client, is entitled to his or her own opinion, but not to his or her own facts. When that basic reality is disregarded in favor of a bromide like “the customer is always right”, everybody’s actual, real interests go unserved—supplier and customer alike.

How do you innovate? When you get the next great idea for a product, or improving an existing product, where do the ideas come from, and how do you make it real?

The answer here ties in with what I’ve been saying throughout this whole interview: never stop learning. It’s not enough to keep up with the developments in the field itself; it’s crucial to continually seek new ways of looking at facts, new ways of thinking about existing questions, new ways of looking at existing reality. Inspiration can hit anywhere, at any time. In the shower, or while stuck in traffic, or on the way to the fridge for a midnight snack, sure, but also when talking and listening with people. It’s really important to listen not only to my direct buyers, but also to the people whose lives are affected by what happens in my field of automotive lighting.That’s pretty much everyone, since most of us drive and just about all of us interact in some fashion with cars every day. Everyday viewpoints and experience are vital to hear and understand, and they don’t filter up into the “expertsphere” on their own—you have to go strike up conversations, then close the mouth and open the ears.

But that “never stop learning” coin has another side, too: never stop teaching! It’s not enough to just pump people for info, listen and nod and go “Mm. Mm-hmm. Very interesting. Thanks for your thoughts.” As new viewpoints and perspectives get integrated into the knowledge, and thence into the product, it’s important to give back, to work towards greater accuracy of information on the subject accessible to the general public. Work at it hard enough, consistently enough, and eventually you get a nice positive feedback effect. The basic quality of people’s questions starts to get noticeably better. Facts and science start to edge out guesses and suppositions in the general chatter on the subject. It’s not only heartening to see and hear, but it lets more people make better decisions. Everyone wins.

How do you connect with your customers and fans? How did you build a community of people interested in your product and ideas?

The means, modes, and methods of connection have to match up with whoever I’m trying to reach. It doesn’t work to plop a product down and say “Here y’go, come and get it”. For the commercial side of things it’s word of mouth, online and offline. I’ve never bought an advertisement of any kind, and I deleted my Facebook account three years ago—don’t miss it, either; that turned out to be a great decision. My ability to buy groceries and keep the roof over my head and the floor under my feet lives or dies by my reputation…now that’s motivation!

As for building and keeping an interested community: that comes back to engaging directly with the community. That’s central and vital, but a lot of business don’t seem to think so. They make it impossible for users (or non-users!) of their products to get in touch and share their thoughts. You can’t call and talk to them. You might be able to send e-mail, but usually the best you can hope to get back is a bland, unresponsive “thank you for contacting us” from someone unequipped, uninterested, and unauthorized to engage meaningfully.

I really think that’s the wrong way to do it. When I was a teenager, long before I started any kind of business activity, I read Guy Kawasaki’s book “The Macintosh Way”. I was much too young to grasp much of what he presented, but two crucial concepts stuck with me: doing the right thing’s useless if it’s not done the right way, and personal engagement is centrally, utterly important. That second point was really hammered home for me when I finished the book and came upon Mr. Kawasaki’s phone number, right there in plain text. I called him up and he answered the phone and talked to me. He didn’t condescend or patronize, he really talked with me. It was as substantial a conversation as a highly successful executive and a 14-year-old could have had, and it really stuck with me: whoever sends me an email gets a personal reply from me, and I answer my own phone.

At the same time, there’s a tendency for individual participants in an industry to clam up and refuse to talk to other participants. Of course thoughtful discretion and diplomacy are needed; nobody wants to give away the proprietary secrets, and making unkind remarks about one’s fellows in the industry is seriously unwise. But there are huge benefits to intra-industry communication and community at a much higher level than we tend to see, especially in North America. Hey, there’s a trade journal and a trade association for just about any industry you care to name: the people who make bottles and cans have one. The people who make art supplies have one. But until a few years ago, there was none for the automotive lighting and driver assistance industry. Now we have one, DrivingVisionNews. It got started in Europe, where there’s less hesitation to form a community wherein people actually talk and listen with each other, even though they work for competing companies. Now we’ve got a lot of American and Asian companies on board, we’re holding workshops and panel talks and round-table discussions to capacity crowds, and the benefits of the improved communication are starting to be felt. Whole sectors of the industry, instead of remaining constrained by outmoded regulations blocking really good innovations from reaching the market, are putting their heads together. They’re paddling the canoe in the same direction, talking to regulators with a coördinated voice, and things are moving in a productive direction as never before. This is much better!

How do you do design work vs sourcing? When do you say- “ I know what I want, and I need to design it and send it out for production” vs. “I can make this product work exactly the way that I want””?

There’s no firm heuristic for this decision; it really is on a case-by-case basis. A lot of it depends, casewise, on whom I’m working with, in what context, and what constraints exist in terms of time, cost, confidentiality, etc.

What can you tell me about finding good manufacturers? How do you know that you found one that you like?

I like to do careful evaluation of a company’s existing products. Obviously there are objective tests for compliance with whatever standards and regulations are applicable, and those are a good go/no-go sorting criterion. But most standards and regulations in my field don’t require a good product, just a compliant one. So it becomes important to scrutinize the company’s products subjectively, too. A hold-in-the-hand test can be very revealing, if done by someone who knows what to look for, what’s good, and what’s not.

Likewise, it’s important to interact with the company at as many levels as possible. How quickly, accurately, and usefully do they reply to inquiries from potential business partners? From potential customers? From existing customers? If they’re slow and vague to respond to an enquiry before the project starts, they probably won’t speed up once it’s under way.

Last on my list is scrutinizing their certifications and processes and suchlike. Of course I want to know about the processes and protocols a company has in place, but I am not a big fan of things like the ISO 9000 and ISO 14000 series of quality assurance and quality control certification schemes. I just don’t think they’re anywhere near as helpful as they’re promoted to be. Of course, being human, I’m subject to confirmation bias just like everyone else, but in my experience there’s no reliable correlation between ISO certification and the ability and consistency of a company in producing a quality product. I’ve seen consistently excellent products from uncertified companies, and I’ve seen garbage from certified companies.

Do you have any horror stories about a bad vendor or source?

Unfortunately so. In that product-development work I mentioned when you asked about outsourcing and offshoring, I did not have free reign to choose vendors and sources. One of the project parameters was “product must be sourced from a low-cost country”, which in that particular case was code for China or India. I had severe qualms about this, because all my research and scrutiny told me it was not possible to get a satisfactory product of this type out of those countries. Nevertheless, that edict stood, so I made my objections known in writing, picked a vendor in India I hoped could be coached adequately to produce something at least usable, drew up a very highly detailed specification spelling out every last little detail in words of one syllable along with all the requisite drawings, crossed my fingers, and forward we went. Only we didn’t go forward! It was more like we were jammed in Neutral. What should have been a four- to six-month development timeline dragged out to two and a half years. There were long periods of time with no contact from the vendor—emails not returned, faxes not acknowledged, phone calls deflected. Every once in awhile they would send an unacceptable sample; we’d evaluate it, list and describe the faults for them, and after a few months they’d send another sample…with one of the listed problems partly addressed and three new ones. Lather-rinse-repeat! It was ridiculous, especially since there was nothing innovative about the product we needed. This was in 2005 or so, and it was utterly standard, basic technology—state of the art circa 1972 all over the world.

Eventually it was decided I should travel to India to see what was the matter. The vendor had me to their factory, we sat down at a conference table with cookies and tea, and they finally explained why they hadn’t sent a satisfactory sample: they’d never received such a closely detailed specification from a customer, they said, which meant we were the most knowledgeable customer they’d ever had, they said, and so they felt timid about asking questions, they said. 30 hours in Delhi sandwiched between 17-hour plane flights for that lame excuse! In the end we never did get a satisfactory product out of them. We had to unwind the deal and nobody wound up happy.

What would you tell somebody that wants to do something like what you are doing? Maybe it is automobile brakes, instead of lights—The pattern you built is what I am trying to suggest is repeatable.

Don’t overlook the ABCs! I see so many people screw this up; they get so enthralled with their gimmicks, slogans, novelties, and innovations that the basics get done in a slapdash, minimally-satisfactory way (if at all). The primary main objective of a headlamp is to light the driver’s way safely through darkness—not to look cool. The primary main objective of brake parts is to stop the car quickly and safely—not to come in a sexy box advertised on a fabulous website. There are tons of vehicle lighting products marketed with all kinds of claims and hype, expensive packaging, catchy slogans and promos, but just try asking how well they work in terms of objective safety performance. If you get a meaningful answer at all, it’s something like “Oh, they fully comply with all applicable regulations”. Again, the regs don’t require a good product, just a compliant one, so that’s an evasive non-answer. The same goes whether the product is a tangible item (headlamp) or an intangible (knowledge). Don’t be that kind of consultant who borrows the client’s watch and charges him to write up a report saying what time it is—have the passion, knowledge, and resources to give the client genuinely new and pertinent information, or do something else for a living.

And treat your customers as intelligent grownups. The market is crowded with fluff and garbage, and there are a lot of buyers for it. But there are also a lot of adults out there, and adults have more discretionary money than kids. They’re tired of being lied to, tired of being sold shoddy products whitewashed with lavish warranties, tired of feeling bewildered by a mountain of hype, tired of being the victim of “if it’s priced this high, it must be good!” games. These are people who want to see as well as possible at night, or want the best possible brakes (windshield wipers, whatever). They don’t care if it comes in a plain brown box, they’re not impressed with infomercials, they just want an honest deal on an honest product. The marketing decisions needed to make a successful go of such a strategy—here again, whether it’s a tangible product or a knowledge-based venture—are sometimes counterintuitive, but this market segment will always exist, even if it’s invisible to some of the louder marketeering strategists.

Where will your market, product, or business be in 5 years?

Well, the technology is advancing at an unprecedented fast pace. And the rate at which that pace is accelerating is also faster than ever seen. Every time we turn around and blink, LEDs are getting brighter and cheaper—and that’s just one example. There are new mirrors that give a broader field of vision without distorting the view. There are tiny cameras so sharp and fast that whole new driver assistance systems are possible that we couldn’t have imagined just a couple of years ago. In five years’ time, we’ll be thinking much less in terms of separate vehicle lighting systems and driver assistance systems, and more in terms of integral driver vision systems. Eventually cars will drive themselves and we won’t have much need of headlamps, stop lamps, turn signals, and suchlike. But that day’s not coming for quite awhile, so if you’ll excuse me, I’d better go get back to work on an analysis of how different types of headlight bulbs affect headlamp performance!