The Innovacelli at Dingens Barometers & Clocks

 

 

Dingens Barometers & Clocks is a small Belgian company that produces high-precision barometers for the high-end market segment. Denis Dingens and his wife founded the company in 1965. Initially, the company produced only frames; the instruments themselves were purchased elsewhere. After 15 years, Dingens began producing mercury barometers, including both instruments and frames.

 

In 1990, Paul Dingens, the son of Denis, took over the company shares and started a glass works company in which he produced glass instruments. Dingens broadened production and added woodworks, spray-painting, and frame production and design. Launching top-segment barometers opened new markets, and the company was very successful, realized strong growth, and built a new venue.

 

In 2000, however, the tide turned. Asian producers introduced digital barometers, which were less expensive and less complex to produce. Although the high-end market stayed relatively stable, this new competition affected the lower segment. To compensate for the loss in sales, Dingens Barometers & Clocks started producing clocks and frames as an original equipment manufacturer (OEM). This strategy slowly started to pay off, but in 2007, the company faced another major blow when German EU commissioner Gunther Verheugen banned the use of mercury in consumer products. With this prohibition, 80% of Dingens’ sales were lost, and the company faced serious financial challenges.

 

What followed was a turbulent period during which only Paul Dingens himself believed the company could survive. In 2008, VOKA (the Chamber of Commerce for the region of Flanders in Belgium) informed the company about partners that could eventually help in exploring the possibility of innovating new barometers without mercury. Dingens scheduled a meeting with the Innovation Centre of Limburg (a province in eastern Belgium). In this meeting, external advisors and management of Dingens Barometers & Clocks brainstormed about a strategy to follow, and Paul Dingens decided to pursue a new type of high-precision barometer. The subsequent strategic change was drastic: He not only purged the company of nonbelievers, but further, he laid off 13 of the 20 employees to stanch the company’s financial bleeding. It was an expensive and painful process.

 

Meanwhile, with the help of the Innovation Centre Limburg, Dingens prepared a proposal for an IWT (Agency for Innovation by Science and Technology) project. In January 2009, IWT approved the project, covering 45% of all costs. In addition to the IWT support, the company secured a loan for 80% of the remaining costs. Nevertheless, this was a major and risky investment for Dingens given the company’s difficult financial situation.

 

With these support measures, Dingens developed a new instrument in close cooperation with two knowledge partners: the Universitiy of Hasselt and Sirris, the “Collective Centre” of the Belgian technology industry. The result of this open innovation project was a new barometer, the Innovacelli (see Figure‑1). This innovation had all the advantages of the mercury barometer in that it is accurate, legible, durable, and decorative. However, it was also an environmentally friendly product.

 

The Innovacelli was based on techniques that have been used in aviation for many years. In flying a plane, high-vacuum metal cells respond very precisely to pressure differences and indicate the plane’s height. The expansion of these cells can be measured to thousandths of a millimeter. To convert these pressure differences into a tool to record air pressure, the metal cells were brought into contact with a liquid that reacted to differences in air pressure very accurately.

 

Dingens’ initial goal was to develop an instrument that could replace the mercury barometer while being eco-friendly and sustainable. In addition to attaining these goals, the company ended up with a product that was even more accurate and user-friendly. The Innovacelli outperformed the original mercury barometers in several respects. Unique to this instrument was the altitude calibration. With a simple turn of a knob, the barometer could be set to the altitude at which it would be used—unlike mercury barometers, for which the procedure to adjust to different altitudes is much more complicated.

 

All of these advantages created unexpected and unintended business opportunities for the company. The Innovacelli could, for instance, solve a pressing need in American hospitals, where the resistance to using mercury is much more outspoken than in Europe. Barometers are needed for blood gas analysis, treating lung disease, and delivering cancer treatments. Before the Innovacelli barometer was developed, the only environmentally acceptable alternative was digital barometers, which are not accurate enough for professional applications. In the US, there are some 5,900 hospitals, representing an interesting market for Dingens Barometers & Clocks.

 

In other words, Dingens Barometers & Clocks converted a mercury crisis into an opportunity via the help of several innovation partners. The help of the innovation partners was crucial in the successful development of the Innovacelli: The Innovation Centre motivated Dingens and it provided the much-needed knowledge of different technological disciplines. The knowledge partners—the University of Hasselt and Sirris—were crucial as they provided extended knowledge, structured research, and experience that elevated the product to a technically better level. Not only did they meet the standards of accuracy, sustainability, and legibility, they also created a user-friendly, easily calibrated, and transportable product.

 

The Innovacelli was a commercial success in 2010. Customers readily accepted the innovative barometer and the launch was a great success. However, the following years starting in 2011 were extremely difficult for Dingens because of the changes in the gold price and the resulting problems in the jewelry market, a traditional dealer network for Dingens in several countries. The average gold price was historically low in 2001 at 271,04 US dollars per troy ounce. The price progressively increased to 695,39 US dollars in 2007, 1571,52 in 2011, 1668,98 in 2012, and 1411,23 in 2013 before declining slightly to 1266,40 in 2014[i]. These high gold prices turned customers away from gold jewelry and many switched to fake jewelry, which became highly fashionable but was not a money maker for jewelers. The increase in gold price was eating into jewelers’ profits and many traditional, small jewelry shops closed. Their number was reduced to one third of what it had been before 2008 in the Netherlands, and the situation was similar in almost all European countries. This was a major problem for Dingens as many barometers were sold through the jewelry channel.

 

Online sales represented an interesting sales channel, but Paul Dingens preferred not to sell through the Internet in countries where the company worked with a dealer network. Dingens achieved customer attention via its website, but the actual sales took place via dealers in the country where the customer was located. Therefore, Internet sales generated small margins for Dingens as the dealer was still involved and proceeds had to be split. Dingens was, however, interested in a new option offered by Nature et Découverte. This retailer, with whom Dingens had worked before, created a website with an online shop through which Dingens could sell barometers online but was required to share 20% of the margin with Nature et Découverte.

 

The B2B market was also more difficult than originally thought. Hospitals liked this product and there were spontaneous orders from all over the world. However, sales didn’t take off as expected for several reasons. First, Dingens Barometers didn’t have the financial means to promote the Innovacelli and go regularly to trade fairs, and these promotions were necessary to get the product sold. Second, the collaboration with a major supplier to hospitals failed as that company sold machines to hospitals for several million US dollars, and selling the Innovacelli was not moving the needle for the sales agent of that company. Third, in the hospital market it takes two to three years before sales pick up. The decision-making process is very slow and the payment process takes an additional two to six months. Fourth, Paul Dingens also discovered that it was difficult to find the right partner in hospitals. He first approached doctors, but they were not interested. He later learned that not it was the doctors but rather the physical therapists who take care of air pressure and barometers in a hospital. Margin wise, it is still the most attractive market, there is no competition, and technically it is interesting because the Innovacelli can easily be adjusted to any altitude. In 2015, Dingens continued trying to reinvigorate the hospital market, but the company lacked the time and money to promote the Innovacelli in a professional way.

 

Paul Dingens commented on the situation: ”There are several commercial options for the Innovacelli, but the biggest difficulty is that we have to manage other, more urgent problems than sales such as laying off personnel and dealing with creditors. This is taking away our attention from what we should be doing—achieving sales and visiting dealers. The other problems are more urgent; that is our major challenge.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure ‑ 1: The Innovacelli barometer

 

 

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[i] Source: http://www.statista.com/statistics/268027/change-in-gold-price-since-1990/

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