Four teams of students from The Ron Rubin School for the Entrepreneur took on the challenge of researching and recommending whether or not diesel engine manufacturer Cummins, Inc., should enter in the electric motor market for buses and large trucks.
After visiting Cummins officials at its Columbus, Ind., headquarters, the students came back to Culver and used the “Sprint” method formulate their proposals. On Friday afternoon, Jim Schacht ’81, W’76, and Jahon Hobbeheydar ’91 of Cummins and independent business consultant Matt Kelley ’88 listened to the groups’ presentations.
The “Cummins Challenge” is a continuing program of The Rubin School which is based on the Harvard Business School case study method. Past challenges have included a proposed expansion plan, a new product line, an advertising campaign, or a marketing idea. Past businesses have included Fort Wayne entrepreneur Tom Spiece and Red Gold, Inc., in Elwood, Ind.
The four teams used Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days (written by Jake Knapp, John Zeratsky, and Braden Kowitz) as their strategy guidebook.
While all four teams recommended investing in the development of electric engines, one team said Cummins should continue to focus on improving the efficiency of its diesel engines. The other teams recommended larger investments in electric engine research or going with a hybrid diesel/electric combination.
The engines would be used in buses and trucks, and the groups favored buses because they are often municipally-owned and subsidized by the federal and state grants. This helps to limit the city’s exposure over the payback period, each group concluded.
As the incentives involved in deciding which markets to enter were considered, each group looked at the motivation. One market – delivery trucks – would be driven by economic considerations while the environmental concerns and incentives may influence the municipalities purchasing the buses.
As the fourth group stated, with major cities like Mexico City, Paris, and Madrid facing pollution problems, the need for a solution makes the incentive for electric buses that much stronger. China is already working with electric buses with limited success. Meeting federal emissions standards in the United States will also help drive the market.
Group three, which decided it was better to hold back, suggested investing in electric engine research on a small scale. This would allow Cummins to stay abreast of the technological changes. However, if Cummins officials believe diesel engines could still be made 27 percent more efficient, that was where the best use of its research dollars should go, the students said.
Schacht, Hobbeheydar, and Kelley said it was interesting how the students took “the same piece of information but attacked it differently.” Kelley added, as an outside person, he found it interesting how Schacht and Hobbeheydar, who come from different departments within Cummins, assessed the information.
Schacht said one thing students should remember is that research and development will usually take “more money and more time than anyone thinks.” That is why it is important for companies “to be willing to fail fast,” then step back and reassess what they learned.