Dyson’s Success Story

How Dyson is producing electronic products that excite consumers in a post-Steve Jobs world


Dyson’s Success Story: How Dyson is producing electronic products that excite consumers in a post-Steve Jobs world
Dyson’s Success Story
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I. Dyson’s switch from a declining industry to a cutting-edge industry

Home appliances used to represent a declining industry for global electronics companies.

  • Samsung, LG, and other global electronics companies stipulate the market for semiconductors and panels (the key parts of smartphones, tablet PCs, smart TVs, etc.) to be high-yield/high-margin industries that can set themselves apart from competitors with a technological edge. Thus companies invest the majority of their labor force and resources to these product lines.
  • Meanwhile, the market competition revolves around marketing and sales promotions, as product differentiation grows harder for motorized home appliances like washers and refrigerators. It is an unattractive market even from a sales contribution standpoint, since the product life cycle is long (meaning infrequent replacements) and considered representative of the low-growth/low-margin industry that also requires a lot of customer service and auxiliary expenses—which is why investments in related industries are gradually decreasing.
  • Fans, hair dryers, vacuum cleaners, and other small appliances in particular are understood to be a small- and medium-sized industry to which cheap production and prices are most important. Consequently, most large corporations are withdrawing from this market.

However, the British company Dyson has created a new premium market by releasing iPhone-level products in the small home appliances market that was considered [1]past its prime.

  • After making its start with vacuum cleaners, Dyson is now releasing innovative products such as fans, air purifiers, and hair dryers that go beyond the existing paradigm in the field of small home appliances.
    • Filterless vacuum cleaner: Dyson introduced a product that solved, through technology, the inconveniences of conventional vacuum cleaners. The three main inconveniences were cords, filters (i.e., dust bags), and low suction power; the weak suction would cause dust to pile up in the filter and further lower the suction power with use, creating a vicious cycle. By applying the principle of cyclonic separation, Dyson developed the technology to separate dust even without a filter and later produced a high-power motor that opened the age of cordless, filterless vacuum cleaners with a suction power 2-3 times stronger than that of conventional vacuum cleaners.
    • Bladeless fan: After the vacuum cleaner, Dyson made a hand dryer (for public restrooms) that emits powerful winds using motor technology, which was then repurposed to invent a bladeless fan. Made with jet engine technology, the bladeless fan produces cool air from an empty circular ring, eliminating the noise of conventional fans and the safety hazard of blades while simulating a natural breeze.
    • High-tech hair dryer: Later, Dyson released a handheld hair dryer with a similar design to its fans. Unlike conventional hair dryers, the Dyson Supersonic is equipped with a high-powered miniature motor (up to 110,000 rpm, 27 mm wide) on the handle, allowing for a lighter product and a stronger air flow at a temperature that does not damage hair. In sum, it creates the effect of drying one’s hair with a strong natural wind.
  • Dyson’s product differentiation and industry competitiveness was made possible through its bold technological investments in the fields of motors, filters, and sensors, as well as its development of core technologies. The high-powered miniature motor invented by Dyson delivers more wind power for its fans, more suction power for its vacuum cleaners, and smaller and lighter products in general. Its cyclonic separation technology can remove particulates without a separate filter (e.g., the dust bag of a vacuum cleaner), giving way to products such as bagless vacuum cleaners and filterless air purifiers. By also developing advanced sensors, Dyson is able to release products that can offer the ideal wind strength, temperature, humidity, etc. to its customers. Because large electronics companies had been shrinking their investments in motor and filter technologies for these small appliances, Dyson was able to retain their monopolistic competitive edge for a long time.
  • Dyson sells self-developed small appliances at a premium price 5-20 times higher than its conventional counterparts (e.g., hair dryers at $400-600, fans at $250-500). Even with such expensive prices, Dyson is expanding quickly at 40% annual growth, proving its popularity by controlling 10% of the South Korean vacuum cleaner market and 80% of the cordless handstick vacuum cleaner market. ➔ In the low-growth/low-margin market of small appliances, Dyson pioneered a new premium market that it continues to dominate by inventing innovative products on the level of the Apple iPhone. Dyson has grown into a global corporation with 5.2 trillion won in sales as of 2017 and 1.2 trillion won by EBITDA standards.

II. The story of the entrepreneur who led Dyson’s innovation

James Dyson, a British inventor and the founder of Dyson, was born exactly 100 years after the birth of Thomas Edison; he is considered to be a genius inventor in his own right.

  • Dyson studied furniture and interior design at the Royal College of Art.
  • After graduation, he worked at Rotork, an engineering company, where he designed car carrier ships for 4 years and helped design the Sea Truck in 1970.

After inventing a new concept garden wheelbarrow, Dyson co-founded a company with his friend to manufacture and sell this product.

  • With the urge for innovation, Dyson invented a new concept wheelbarrow that improved upon conventional garden wheelbarrows.
    • The narrow wheels of conventional garden wheelbarrows were inconvenient because they would sink in mud and easily fall out.
    • Dyson replaced the narrow wheel with a plastic ball, solving the problem of the wheel sinking into the ground and/or losing stability.
  • Dyson’s Ballbarrow reached 70% market share and gained massive commercial success.

Despite the Ballbarrow’s success, Dyson was ousted from the very company he founded after insisting that they invent a new vacuum cleaner instead of focusing on their core(new) product.

  • While his company was experiencing financial difficulty due to the emergence of products similar to the Ballbarrow, Dyson argued that they must pioneer a new market by developing a filterless vacuum cleaner.
  • Dyson had discovered, while using a vacuum cleaner, that conventional vacuum cleaners had the problem of weakened suction due to the dust bag and argued that they could achieve another big success if they could find a solution to this problem.
  • However, the co-founder and board of directors chased Dyson out, emphasizing that they had to keep focusing on their core product and maintain their market leader status.

In 10 years’ time, Dyson successfully invented a filterless vacuum cleaner and then founded his [2]namesake company.

  • After being ousted from his first company, Dyson remodeled a stable into a laboratory and started developing a filterless vacuum cleaner on his own. This was a difficult period for him, as he struggled to secure financial investments.
  • Fortunately, with the financial support and small investment (49% investment, 51% loan) of his art teacher wife, Dyson was able to produce more than 5,000 prototypes over the next five years. He successfully developed the technology for a filterless vacuum cleaner, and applied for a patent.
  • However, most of the large corporations at the time did not purchase Dyson’s patent, due to either disinterest in or fear of his technology. He [3]caught a lucky break by signing a contract with an Italian home appliance company affiliated with his former boss, releasing his filterless cleaner at a high price. However, the product failed. Apex, a Japanese home appliance company, paid 10% royalties for Dyson’s filterless vacuum cleaner, which became quite a hit in Japan.
  • After saving up some capital from the license contract with Apex, James Dyson founded his namesake company.

Since then, Dyson has released new-concept vacuum cleaners, fans, and hair dryers at a technological level commensurate to the Apple iPhone, re-emerging as a global brand.

  • Dyson focuses on troubleshooting the large inconveniences presented by commonly used, yet limited-performance small appliances.
  • Dyson has achieved great success in releasing vacuum cleaners, fans, hair dryers, etc. that are on a different level than their conventional counterparts by using motor, filter, and sensor technologies.

Recently, Dyson announced that he will release a new concept electric car by 2020, showing passion for a totally new invention once again.

  • In 2017, Dyson revealed that he has secretly invested about 3 trillion won in the past two years and hired about 4,000 people to develop an electric car that is fundamentally different from conventional ones.
  • Dyson is investing half of the 3 trillion won in developing its battery technology and the other half in developing the electric car.

III. Dyson’s management style

Dyson uses a business strategy that is quite similar to that of Apple during Steve Jobs’ tenure as CEO.

First, Dyson focuses to the point of obsession on developing products that will amaze their buyers.

  • As a company, Dyson demonstrates a passion comparable to Steve Jobs’ obsession with making first-rate products like the iPhone, iPad, and many others.
  • For example, Dyson’s hair dryer was developed by 103 engineers in 50 months. In the process of creating a wind that does not damage hair, they conducted tests by purchasing nearly 1,000 miles of real human hair and inviting global hair designers to provide feedback.

Dyson also uses simple designs that maximize usability while plainly showing the quality of each product, elevating small appliances from expendable goods to items inspiring brand loyalty.

  • The core of Dyson product design is simplicity, much like Apple’s. Dyson products are equipped only with the utmost necessary features and designed as simply as possible. Because Dyson products are markedly different from conventional products, the simple design acts as a visually captivating factor, while the usability leads to customers’ compliments about its convenience, encouraging very high repurchasing rates.
  • Dyson is solving various design problems by recruiting from not only his alma mater, RCA, but also a number of English universities.

Like Apple, Dyson uses marketing tactics based on product exposure through advertisements and hands-on demonstrations at its flagship store.

  • Advertisements: Dyson runs ads that focus on showcasing the product and its major components, particularly the ways in which the product is unique. Celebrity endorsements on social media also serve additional marketing effects.
  • Flagship store: Dyson operates the Dyson Demo Flagship Store, encouraging customers to easily experience all its products much like an Apple Store. The numerous full-time employees there can explain the quality of Dyson products and directly answer customers’ questions.

IV. Implications

There are three lessons that can be learned through Dyson.

Lesson #1: If you approach the problem from the customers’ perspective instead of the market’s, you can change the [4]red ocean market into a blue ocean market.

  • Domestic appliances had been perceived as a red ocean market with low growth and profit amidst fierce competition. However, this declining industry changed into a blue ocean market due to Dyson.
  • Dyson was able to find this opportunity in the small appliances market because he considered the products from the customers’ perspective of various inconveniences rather than the business management perspective of sales, profit, etc.

Lesson #2: Truly innovative invention takes a long time. But your efforts will not betray you.

  • James Dyson invested over a decade into developing a filterless vacuum cleaner. Even after rising among the ranks of global corporations in the mid-2000s, Dyson still shows an obsessive side, going so far as to invest 50 months solely on developing a new hair dryer. His obsessiveness was dismissed as a “stupid stubbornness” even as recently as the 1980s-90s, but it is now praised as his tenacity for innovation. Though innovation entails the challenge of dissuading people from a fear of change, Dyson showed that one can invent a product that can solve customers’ problems as well as offer something new and valuable to the world. He’s a perfect example of someone who realized the maxim, “Time and effort will never betray you”—which is so obvious, but something that only a very small minority of people actually manage to achieve.

Lesson #3: Core source technology opens the door for various areas of growth in the company.

  • Dyson’s core technologies in sensors, motors, and filters were developed through its invention of a new vacuum cleaner, but continues to prove valuable when applied to fans, air purifiers, space heaters, hair dryers, and the upcoming electric car. If a newly developed product is adequately well-made, it might make a profit in the product market, but most likely fail to advance to the relevant industries. Only through the successful development of core technologies that prove versatile in application to product design can you enter various industries and make enormous profits. It’s a great illustration of how, in the case of product development, choosing the “right” path over a shortcut may bring about better long-term profit.

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