Caterpillar: What Continuous Innovation Looks Like

In his keynote speech, Oberhelman spoke about innovation at Caterpillar and how the 85-year-old company stays ahead of its nearly 100 competitors. Here are his opening remarks.

“A few months ago, I was participating in a panel discussion at Fortune magazine’s Tech Brainstorm in Aspen, and the moderator, Business Editor Jeff Colvin, said, ‘you don’t fit the traditional tech model, so everyone wants to know what you’re doing here.’ It was a great question. When you look at us, you see a company that moves dirt. But the reality is, when it comes to innovation, we’re equal to, if not more advanced than, the tech world. We created 1,100 patents in 2013 and have almost 8,000 active patents today for lean methodology, lean manufacturing and additive manufacturing and 3D printing.

Our immersive visualization cave is about the coolest thing you will ever see. You put these 3D goggles on and can touch a piston inside an engine. But when you take your goggles off you are looking at a white wall.

Sustainability is a big consequence of our innovation. We work to deliver more fuel economy, through less passes across the parking lot. And less fuel drives lower CO2 emissions.

We re-manufacture an entire 2,000-pound diesel engine. It’s amazing the impact that can have on the environment to not have to mine ore to pour a cast iron block. We also will take a fuel pump that has been in operation 10 years, recycle it and put it back in a new parts box with a new warranty. Think about the impact this has on the environment and on our customers.

Through innovation, we’ve gone way beyond moving dirt. Our largest bulldozer in the world is using robotics. In energy and transportation, we use a dynamic gas blending and high pressure direct injection. It’s a way to burn natural gas and oil in the same engine at the same time. It offers a tremendously lower cost alternative. We have several locomotives running with that tech and we have 40 patents on it.

With our wheel loader. the 966 KXE, we’re using a new drivetrain that is the first of its kind ever in construction equipment. It offers a 25% fuel savings and a significant reduction in CO 2 emissions. And our excavator is a hybrid, which generates 25% to 35% more fuel efficiency.

Our Tier 4 engines are very clean. No longer will you see smoke or smell diesel fumes. And you’ve heard of driverless cars? We’re already doing that with a 350 ton mining truck. In western Australia, it runs around a mining site 24 hours a day without an operator.

Cat Connect connects our customers to dealers. It monitor everything our machines are doing, so engineers can see whether it has a high exhaust gas temperature or is it running low on oil—all the things the engineer needs to know to run that machine in his fleet more efficiently.

Similarly, I visited a master control room in Atlanta monitoring almost all the machines in their territory. All of this involves software and technology. By the time I got done with that Fortune audience, I felt pretty good about where we were and how we fit in.

I concluded my presentation with a little robot that shot baskets for about 5 minutes and never missed one. It was all computer controlled.

I can’t imagine a job site or canal that doesn’t require iron, engines and fuel, but I wonder if that’s the same a way a farmer felt 100 years ago about a mule and a plow.

Yes, we move dirt. We move a lot of dirt. But this company started on innovation and that continues to be what drives us. When I arrived in 1975, we had a handful of competitors. Today, we have more than 100. The environment has never been more competitive. Disruption and competition are coming and we can’t predict it. [We all need to be ready.]”

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