Discourse on Bio-economies of Scope (a primer)
Economies of scope and rethinking the bioeconomy (part of it anyway)…
Albert Butz had a problem. He was a Swiss-born inventor who lived in Minneapolis in the late 19th century. He was tired of waking up in the middle of the night to adjust his coal furnace that heated his home. He wanted a device that could automatically regulate the temperature and save him from the hassle and discomfort. He tinkered with various mechanisms until he came up with a solution: a thermostat that used a spring and a flap to control the airflow to the furnace. He patented his invention and called it the “damper flapper”. He thought he had solved his problem, but he had no idea that he had started something much bigger. He had no idea that his humble invention would spark a chain of events that would lead to one of the most remarkable stories of innovation in history.
He sold his patents and business to another company, which later merged with another company, which later merged with another company, and so on. Over the years, this company evolved from making thermostats and clocks to making jet engines and quantum computers. It entered new fields and markets, such as aviation, defense, chemicals, automotive parts and building controls. It faced challenges and opportunities, such as wars, recessions, competitions, regulations and environmental issues. It adapted to the changing needs of the world and created products that made life better, safer and more efficient. It became one of the most innovative and diversified companies in the world. It became Honeywell.
Honeywell is a Fortune 100 company that operates in four areas of business: aerospace, building technologies, performance materials and technologies (PMT), and safety and productivity solutions (SPS). It has revenues of over $35 billion and nearly 100,000 employees worldwide. It has been involved in some of the most remarkable achievements in human history, from the moon landing to the development of clean energy. It has been constantly innovating and investing in new technologies that can solve some of the world’s most pressing challenges, such as climate change, urbanization, industrialization and digital transformation.
One of Honeywell's core manufacturing technologies is its expertise in additive manufacturing. Additive manufacturing, also known as 3D printing, is a process of creating three-dimensional objects from a digital file. Honeywell uses additive manufacturing to create a wide range of products, including aircraft parts, medical devices, and consumer products. Additive manufacturing allows Honeywell to create complex parts with less waste than traditional manufacturing methods. This makes it a more sustainable manufacturing process and allows Honeywell to produce products that are more lightweight and efficient.
Another core manufacturing technology that Honeywell uses is its expertise in automation. Honeywell has a long history of automating its manufacturing processes. This automation allows the company to produce products more efficiently and with fewer errors. Honeywell's automation also allows the company to produce products in smaller batches, which allows it to better meet the needs of its customers.
Honeywell’s story is not only fascinating but also inspiring. It shows how a simple device can lead to a chain of innovations that span across different fields and markets. It shows how common manufacturing technology can be leveraged to create value in diverse segments for customers, shareholders and society. It shows how a company can capture economies of scope and learning to become a global leader in innovation.
Could this be a model for other industries? Could biotechnology companies, for example, use their expertise in living organisms or their products to create or modify products for human use in different domains? Could they use common manufacturing technology to diversify their product lines and enter new markets? Could they follow Honeywell’s example and become the next global leaders in innovation?