Reference no: EM133212765

Case: Despite transportation's many benefits, the idea of a clean-burning automobile has been largely unimaginable due to the car engine's link to petroleum-based gas. But with the recent introduction of natural-gas engines, the car has begun one of the biggest evolutions in its history. Not since Ford introduced the Model T has an innovation promised to transform so thoroughly the automotive industry and the carbon footprint that it leaves behind.

The greening of modern transportation can be traced in part to Dr. Philip Hill, a mechanical engineering professor at the University of British Columbia (UBC). In the 1980s, Hill became interested in clean energy and began a quest to improve the internal combustion engine. With an eye toward clean technology, Hill and a group of graduate students conducted experiments to see if diesel engines could run on natural gas, a clean-burning fuel that produces fewer emissions than petroleum-based gas. Hill wanted to preserve the diesel engine's astounding torque, but he envisioned a future where high-powered engines didn't leave behind smog or dirty exhaust. "Though the diesel engine was a wonderful machine, it really needed cleaning up as far as emissions goes," Hill says, thinking back on his early research. Hill's breakthrough came in the form of High-Pressure Direct Injection (HPDI), a new fuel injector system in which a tiny amount of diesel fuel sprays through one injector needle to ignite natural gas in another, which leads to combustion. Hill's patented duel-injector system was so ingenious that virtually any diesel engine could be converted to run on natural gas-with no loss of horsepower.

Hill's invention might have stalled there if it hadn't found a use in the marketplace. But in 1995, UBC tapped businessman David R. Demers to commercialize Hill's HPDI system, and Westport Innovations Inc. was born. Since that time, HPDI technology has found its way under the hoods of trucking fleets, heavy ma- chinery, and consumer vehicles around the world. From Kenworth and Peterbilt to Volvo and Ford, top automotive brands are adopting Westport natural-gas engines for cars, trucks, and industrial vehicles. Accord- ing to founder and CEO Demers, Westport's emergence as the global leader in natural gas engines is owed to Hill's system. "The initial research conducted by Hill and his team at UBC was the genesis of our company's leadership in developing and commercializing low- emissions, environmentally friendly engine systems," Demers says. "Westporters continue to draw inspira- tion from Dr. Hill's design and technical brilliance."

How did Westport Innovations grow from a start-up to a global leader of the green automotive revolution? With Hill's HPDI technology as a principal strategic asset, Demers resolved to bring natural-gas engines to various gasoline-based automotive sectors. In 2001, Westport and diesel engine giant Cummins Inc. formed a joint venture to introduce HPDI technology to the trucking market. With Hill's injector system and Cummins's heavy-duty engine blocks, Cummins Westport Inc. succeeded in manufacturing over 34,000 natural gas engines for high-powered buses and semi- trailer trucks. The success of the venture led Demers to establish Westport's first business unit, Westport HD, which specializes in liquefied natural gas (LNG) systems for heavy-duty Class 8 trucks-eighteen- wheel road warriors manufactured by companies like Kenworth and Peterbilt. In 2007, Demers launched a joint venture with Italy's OMVL SpA and began producing light-duty engines for consumer vehicles, including the Volvo V70 station wagon and Ford F-250 pickup. Westport acquired OMVL in 2010, and a new light-duty division was established-Westport LD. The creation of Westport LD opened the door for Westport to build natural-gas engines for General Mo- tors. In 2012, Westport and equipment manufacturer Caterpillar formed a partnership to make natural-gas engines for mining vehicles, locomotives, and off-road machines. These changes to Westport's structure have positioned the company to provide natural-gas engines to multiple markets for years to come.

Why are automakers and equipment manufacturers suddenly snatching up natural-gas engines? Hill says that market forces are at work. "For a decade, emissions was a primary driving motive for alternative fuels for diesels," states the professor. "But economic factors are a huge driving force right now, particularly with the abundance of shale gas reserves being dis- covered, and the economic advantages of domestically produced fuels." As Hill notes, shale gas discoveries in the United States have boosted domestic supply, driv- ing down methane prices to approximately half the cost of diesel. The change is leading businesses and industries to switch to natural gas. If the trend continues, the Westport brand could become as recognizable as Navistar, Ford, or Mopar.
As for Hill, the UBC professor and Manning Innovation Award recipient says that helping transpor- tation go green has been humbling. "I feel grateful for being able to play a small part in the beginning of what's turned out to be a fascinating venture," he says. "It has been an eye-opener to me how people of wonderful talents can come together, trust each other, and work cooperatively, not worrying about who gets the credit, but just being focused on the job and getting it done."

Question 1: What type of change and innovation is taking place at Westport Innovations Inc.? Which innovation strategies helped turn Hill's research ideas into successful new products?

Question 2: Which structural design approach are managers using to organize and grow Westport Innovations Inc.?

Question 3: In what way has Westport's organization structure followed its business strategy?