Rev. December 18, 1998
Managing Innovation at Nypro, Inc. (A)
Gordon Lankton, president and majority owner of Nypro, Inc., one of the world's leading makers of precision custom injection molded plastic parts, paused at the entrance to his Clinton, Massachusetts, plant, and put on his plastic hair cap and safety glasses. Passing a line of large Nestal molding machines, he entered a closet-sized room housing a single prototype molding machine—a machine that might represent Nypro's future. Lankton watched as a technician changed the mold in a minute flat, compared to the several hours necessary to change a mold on the Nestal machine, Nypro's main production equipment. NovaPlast—the revolutionary molding machine which could mold a broad mix of low-volume precision parts without the cost penalty generally incurred in frequent machine setups—immediately started filling the magnetically clamped mold. As Novaplast's servo screw pushed viscous plastic into the mold, he reflected on the past and speculated about the future of Nypro. He wondered how he should begin integrating the NovaPlast machines into Nypro's 21 plants that spanned the globe. How fast should they be rolled out? Should Nypro build one plant dedicated to NovaPlast molding machines, or should the machines be scattered across Nypro's plant network?
Nypro's injection molding machines melted small beads of plastic material, then squeezed the material into a mold at high pressure, either with a hydraulically powered piston ram or screw operating inside a cylinder. Customers provided Nypro with detailed specifications for each product. Nypro's three divisions—consumer/industrial (32.2% of sales), health care (46.7%), and communications/electronics (21.1%)—logged 1994 sales of $165,983,000 and profits of $10,826,000, marking Nypro’s ninth consecutive year of record performance (Exhibit 1). The plastics injection molding industry historically had been populated by small, low-valueadded molders—any person trained as a molder who could afford a molding machine could set up a business. Barriers to entry were low because there were few economies of scale. Differentiation was difficult. Nypro, founded as the Nylon Products Corporation in 1955, had been one of these small molders until Gordon Lankton, a Cornell-trained engineer, joined the company as general manager in 1962. Lankton followed a strategy of developing superior technology by focusing on large-scale molding jobs with demanding, technologically progressive customers. Through this focus, as the Research Associate Rebecca Voorheis prepared this case under the supervision of Professor Clayton Christensen as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Some of the data in this case have been disguised to protect the proprietary interests of the company. Copyright © 1995 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
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Managing Innovation at Nypro, Inc. (A)
number of Nypro customers dropped from about 700 in 1980 to around 50 large, multi-national customers by 1995, its revenues per customer jumped from $60,000 to over $4 million.1 Nypro was the...