Segway: Case Study

INTRODUCTION

In December 2001, Dean Kamen of Segway LLC unveiled the Human Transporter HT. With lofty ideas of replacing the automobile and unrealized sales forecasts, Kamen's Segway HT has not moved mankind nearly as much as Kamen had expected.

With an annual CEO change since start-up, it is apparent that Segway's lack of a stated vision and mission is haunting the organization. The lack of "a way ahead", coupled with a less than well defined marketing strategy, has caused Segway to fall short of Kamen's expectations. Kamen, while a definite asset to Segway, could be a detour or even a dead end on the company's road to success. Historically, Kamen's successes have been based on his abilities to be innovative in research and design, while at the same time being able to pass the developed product off to a partnering company that is able to take the product to market. Kamen's emotional attachment to Segway is preventing its success. As if these problems were not enough, combined with the fact that there was no pent up demand for such a product, Segway's future success will be dependent

on an organizational make-over.

SEGWAY: SNAPSHOT 2004

After analyzing the Segway case material we felt that the Value Chain would provide an all encompassing view of Segway's strengths and weaknesses in particular areas of interest (see Figure 1).

Figure 1.

Segway Value Chain

In order to highlight Segway's situation, we have broken down their value chain into two simple classes. Firstly we will focus on "what is working" and secondly on "what is not working" for Segway.

What is working

Technology: Segway uses their patented design to produce a socially responsible (green product), environmentally friendly mode of transportation. Kamen is a proven innovator with a history of success in the development of human assistive devices.

Procurement: Segway has developed relationships with 13 partner companies. These partnerships allow innovative companies to produce the specialized parts required for the assembly of Segway products.

Outbound Logistics: Segway offers both standard and expedited shipping options for B2C and B2B consumers. Understanding that they are not a shipping company, Segway uses external sources to handle their shipping requirements.

What is not working

Human Resources: Segway's workforce is split into14 specialized teams. They have attracted some of the top CEO's from the automotive industry. This high turnover rate of CEO's is not desirable and will lead to continued problems in the future. Kamen himself seems largely responsible for the revolving CEO syndrome that Segway is suffering from, as he appears unwilling to step back and let the CEO lead Segway to success.

Service: Consumers must return their Segway to the manufacturer for any servicing, due to the lack of a dealer network. Access to service is limited to a 1-800 number (1-866-4SEGWAY).

Operations: Surplus capacity could be costly to Segway. Segway has the ability to produce 40,000 units per week and yet sales for 2003 were only 6,000 units. Quality Control at Segway is insufficient. This can be proven due to the fact that it was necessary to recall all of its 6,000 units sold in 2003 due to safety issues.

General Administration: Dean Kamen is the inventor of the Human Transporter and is the current Chairman of the Board for Segway LLC. Jim Norrod, Segway's current CEO, is well known in the High-Technology industry. Most importantly, Segway has no declared vision or mission.

Marketing and Sales: The projected sales are not meeting forecasts that were set by Kamen in 2002 of 10,000 units per week. This is a result of not having the target markets clearly defined. Forecasting a product to sell over 500,000 units per year when it cost $5,000 US per unit seems to be unrealistic. As well, the demand for this product was extremely low. Promotions for the products have been limited which also contributes to low sales.

SEGWAY: A WAY AHEAD

The following outlines what we see as a way for Segway to get back on track and move forward effectively.

Vision

Segway aims to provide an environmentally friendly alternative method of personal transportation as well as a tool to increase efficiency of movement.

Mission

Segway will provide a mode of transportation that is unmatched in its use of cutting edge technology for both business and consumer markets, with economical day-to-day operating costs.

Segway will outsource the manufacturing of its high-tech components to specialized companies to ensure that the components used to assemble its products are of the highest quality materials, workmanship, and design.

Segway strives for excellence in the area of research and development. Segway will continue to employ teams and sub-teams in order to focus research in specific design areas. The organizational structure will remain horizontal, in order to mitigate communication issues from top to bottom and the reverse.

MARKETING

Segway should consider changing how the product is currently positioned. As we are somewhat unsure of their actual position, we feel it is necessary to reposition the Segway as a tool and not just a replacement for cars. This would go a long way towards increasing sales.

Selection of specific target markets is crucial to Segway's future success. The following are the primary and secondary markets that we feel Segway should pursue.

Primary