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Change Management

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We visited a giant in tech manufacturing in Silicon Valley, who is shifting its focus to more profitable businesses like engineering design and intellectual property.

Flex is an organization that most people on the street have never heard of, yet which produces most of the electronic products and technologies found on store shelves and which power buildings, transportation systems, and a multitude of other technologies. As an American international supply chain solutions company, Flex offers design, manufacturing, distribution and aftermarket services to original equipment manufacturers. It offers the second largest global electronics original design manufacturing company by revenue, only behind Taiwan's Foxconn. Flex has manufacturing operations in over 40 countries, in 100+ locations, totaling approximately 52 million square feet and 200,000 employees, serving more than 1000 customers. Just 57 of the original Fortune 500, published 60 years ago, remain on the list today – and Flex is one of them.

We had the opportunity to see the
Flex-designed jacket embedded with wearable biosensors

The new era: Sketch-to-Scale

Reinvention is the most elusive of all challenges for an established corporation. The company made its bones as an outsourced-manufacturing arm of gadget and IT hardware makers like Apple and Cisco, receiving and flawlessly executing customer designs. That’s a big business, but it sports puny margins and includes low-cost competitors like Foxconn in China. So Flex has moved upmarket, refashioning itself as a “sketch-to-scale” engineering design shop. Flex’s 2,500 designers develop intellectual property both for Flex and on behalf of companies whose products it makes. At an innovation lab near its headquarters in San Jose, for example, it shows clients’ designs for products like sensors embedded in fabric for “wearable” applications. Customers can send their own design engineers to the lab to noodle on how their ideas might mesh with Flex’s wares, and Flex provides ultra-secure work areas where customers can pursue top-secret projects.

Accelerator program: Flex Lab IX

In 2013, Flextronics launched Lab IX, an accelerator program based out of Milpitas (where the company also has an R&D center), which will award $500,000 to each selected company to grow their ideas and bring it to the market. The focus of Lab IX is to find start-ups that are less than three years old and have less than $5 million in funding — “early stage disruptive companies incorporating hardware and software innovation”. In addition to a capital injection, Lab IX will also provide access to Lab IX and Flextronics’ engineers and designers, access to manufacturing and prototyping equipment — some $30 million in the R&D center alone. As an added bonus, the start-ups have access to IDEO, a global design firm that has made products like Apple's first mouse. Those who look like they may be progressing to the next stage of their development get access to Flextronics’ network of factories for manufacturing, procurement network and marketing network.

In our 1,5 hours tour we have seen a lot of examples and heard interesting stories in detail about technology, innovation and service which may also be a good example for others in the markets.

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