Koch Engineered Solutions Plant Workers

ENGINEERING A TRANSFORMATIONMore than just the name is changing for Koch’s chemical technology businesses

Dave Dotson<br>president of KES

by Dave Dotson
president of KES

Have you heard? Koch Engineered Solutions is the new name for one of Koch’s oldest businesses: Koch Chemical Technology Group.

We are proud of our heritage, which dates back to the formation of Koch Engineering in 1945. What used to be contained in a small shop and office in downtown Wichita has, over the course of 75 years and multiple acquisitions, grown into a multi-billion-dollar business with world-renowned brands and capabilities. As Charles Koch noted on the previous page, much of that phenomenal growth was thanks to the entrepreneurship and passion of the late David Koch.

Our customers know they can rely on us to create superior value for them by providing the best technology, services and talent in the business. This has enabled us to become the preferred supplier for many customers, have great brands and be consistently profitable. This is reinforced by our industry-leading R&D centers and one of the strongest parent companies in the world. So why, if we’re so well-established and successful, would we even want to think about transforming our group?

Because — to put it simply — we have no choice.

Koch Engineered Solutions Companies logos

An honest self-assessment

Our world is being disrupted daily by new technologies. Robotics, automation, data and connectivity are rapidly changing the way our competitors pursue opportunities. Meanwhile, the customers we are competing for are looking for new and better ways to optimize and improve their operations. They are also looking for preferred partners who can find problems and offer solutions before they even know the problem or solution exists.

For several years, what is now KES has consisted of nine different companies, each of which had great things to offer but when combined approached their customers (often the same ones) with nine different sales teams and nine different strategies. Because of this and a too-conservative approach toward risk, we developed a reputation of being difficult to work with. For years, we’ve tended to be too transactional. We take an order and supply our product or service, then wait for the next phone call. Although we have large market shares in North America, we have been less successful than our competitors in high-growth markets and other regions. Yet, we have the capabilities, talent and technology to be the preferred partner globally for many more customers. So, we have a sense of urgency to do something about it before we waste our advantages.

Koch Engineered Solutions John Zink Hamworthy Coen Product Line

Coen, a John Zink Hamworthy Combustion product line, is the market leader for providing boiler burner technology. Acquired in 2007, its customers include power providers as well as industrial steam users.

It all starts with Vision

We started what we call our revisioning process by thinking about the future. How will a competitor enter one of our businesses five or 10 years from now? What will that look like?

It’s not going to be clipboards and spreadsheets and people on the ground in refineries, chemical plants and other facilities. Instead, they’ll likely connect to our customers instantly from anywhere in the world. They’ll be able to use real-time data, computational models and predictive analytics to solve problems on the spot. When new products are needed, engineering and manufacturing will start at the push of a button. And customers will be able to track the entire production and delivery process.

We have historically thought of ourselves as equipment providers with some unique and specialized services. But when we applied the KII Vision, we started to think about ourselves as a set of highly specialized engineering and service capabilities that can do much more than just supply equipment. That was the moment when our vision of ourselves and how we can create value changed.

We now recognize we have unique engineering capabilities that we can use to solve problems for our customers. When we combine them with our service capabilities and apply modern connected technology, we can greatly expand the breadth of services we provide and bring innovative, integrated solutions to our customers. We can do a much better job of helping them design, install, operate, optimize and improve their processes.

Genesis Robotics and Motion Technologies Delta Robots

Delta Robots, like this one from Genesis Robotics and Motion Technologies, are often used in the packaging industry for “pick and place” applications. This model uses GRMT’s LiveDrive® Direct-Drive motor technology. It eliminates the need for bulky motors and gears while increasing line capacity and productivity.

What we must do

To implement this new vision, we must change how we think of ourselves and how we approach and create value for our customers. We need to add capabilities and continue to grow our domain expertise. To that end, KES must become a preferred partner for many more and different customers.

In the primary markets we focus on, we often have advantaged and unique technology and equipment. But even so, feedback from our customers has told us we aren’t always preferred because of the perception (or reality) that we are hard to work with. So we are changing how we interact with our customers. We will become a true partner of choice by, in part, integrating the capabilities of all our companies to provide customers with higher-value solutions.

We will expand our capabilities and apply new technologies to better bring our domain expertise to our customers — helping them optimize and improve their performance. This will require building new businesses and customer-service models.

We will do a better job of partnering with our KII sister companies to create more value in their businesses and improve the quality of our offerings and our speed to market. We will use the breadth and capabilities within Koch Industries (the Koch Lab concept) to be the fastest to market with new products and services. KII’s vision of long-term value creation has created industry-leading R&D and test centers. We will more fully use these innovations and capabilities to capture new markets and new opportunities, using new technology to change how we deploy our unique expertise.

We will also enable employees to discover and develop their gifts and apply them in roles in which they can make the greatest contribution. We will help them self-actualize and reach their full potential. We will be an enterprise that is highly sought after — by our customers and by talented, entrepreneurial employees.

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