UK: The billion dollar blade.

UK: The billion dollar blade. - The Mach 3, invented in an unassuming red-brick building in Reading, holds the key to the future success of Gillette.

by James Surowiecki.
Last Updated: 31 Aug 2010

The Mach 3, invented in an unassuming red-brick building in Reading, holds the key to the future success of Gillette.

Miles Yeoman is a tinkerer. His skin is pale pink, his hair is a faded brown, and his metal-rimmed glasses are thick enough to do away with the need for safety goggles. He spends his days in a small lab room, where he has put together a high-powered stereo microscope, a laser-guided measuring device and a monitor able to produce 3-D images, and has jury-rigged them into a machine that can tell you, with remarkable accuracy, how well you've shaved.

At 40 times normal magnification, a freshly shaved face looks something like a clear-cut forest seen from an aeroplane. Skin appears uneven and craggy, riven with streaks of broken red and interspersed with black stumps cut at irregular angles. Peering through his stereo microscope, Yeoman guides the laser pointer to each stump and marks its tip with a yellow dot. Later he'll download the data onto a computer, which will tell him just how much hair is cut by each stroke of the Gillette Company's newest razor.

Yeoman works in one of Gillette's major research and development laboratories, which is known as UK RDL and is situated on the outskirts of Reading.

There are only three real concerns here: skin, hair and metal. Reading, the Los Alamos of shaving, is where the world's most advanced technology in imaging, metallurgy and design is brought to bear on that most mundane of objects - the stainless steel razor blade. It's the place where Gillette's newest razor, Mach 3, was born.

The product of seven years of continuous effort and an unprecedented $750 million (£456 million) in manufacturing and development costs alone, Mach 3 made its American debut in July and its British launch is expected in October. Within two years, Gillette should be selling 1.2 billion Mach 3 blades each year. And Gillette needs Mach 3 to succeed in order to sustain the rapid profit growth that has made its stock among the fastest climbing blue chips of the decade and the company itself a dramatic study in corporate self-renovation. In the next few months, a deluge of Mach 3 ads will hit television and magazines around the world. If Gillette prevails in the marketplace, though, it will not be because its advertising is superior to the competition's but because its razor is.

Housed in a low-slung, red-brick building that looks like a lot of US junior high schools built in the '50s, UK RDL is a far cry from the gleaming modernist hives of most corporate labs. Its employees wander around on industrial-quality linoleum floors and gossip about spectroscopes by a coffee machine that looks left over from the days of the Macmillan government.

They wear short-sleeved dress shirts and white lab coats. Old-fashioned safety posters adorn the walls. One shows a bevy of hands erupting from a toolbox, with the legend, 'These are your most valuable tools'.

A few rooms down the hall, a young engineer sits at a Silicon Graphics workstation and applies himself to 'finite element modelling', which means (as he helpfully explains) that he is trying to duplicate 'the interaction between shaver, hair and skin'. I peer over his shoulder at what looks like an animated sequence of a blade pulling and cutting. If the machine works, you should be able to see how well a blade prototype performs without actually making one. It separates workable ideas from whimsical ones. UK RDL is attached to a Gillette factory, and when you walk through the lab's entrance you can hear the hum of large machines and the beeping of forklift trucks. It is all very grimy and real and it carries a not very subtle message to the boffins: don't just come up with cool ideas. Come up with cool ideas we can make.

'We're looking for the right sort of scientists,' says John Terry, who was director of the lab when the preliminary work was done on Mach 3 and who is now the director of its Boston counterpart, Boston Research and Development (BRAD). Terry, who has a shock of white hair, bright blue eyes and a ready laugh, is a 30-year Gillette veteran. He has an elfin manner, as if playing with razors all day long were just more fun than one person should be allowed to have. 'If their aim is solely to create knowledge,' Terry notes, 'it won't work for us. We're here to spot the thing that will make a difference in performance - that will lead to a new product.' After all, he adds: 'You want to be somewhere where you're actually producing something, don't you?'

Gillette never launches a new razor without having its successor in the pipeline. So with SensorExcel about to be launched, Terry and his colleagues had to top their own best efforts. SensorExcel and its predecessor, Sensor, were the most popular razors in Gillette's history, but they retained a twin-blade configuration that the company had been using for 20 years.

Gillette scientists wondered if something more dramatic might be possible.

'We knew that if you had more blades you'd be able to cut more hair,' Terry says. 'But we found that what you gained in efficiency you lost in comfort, irritating the skin too much in exchange for the closeness.

People wouldn't pay for that - too many nicks and cuts. Then, one day in 1991, we were in the lab and Bernie Gilder said, "What if we lower the trailing blade?"'

Gilder was no whiz kid. He had been with Gillette for decades, and his insight was the product of what Terry calls 'tacit knowledge' - knowledge that you acquire only after spending a long time in those linoleum-floored shaving labs. Still, in the incrementalist world of shaving technology his idea counted as bona-fide apple-on-the-head brainstorm. Every shaving engineer knew why two blades were better than one. As a razor moves, it makes the skin bulge, forcing hairs up and out of their follicles. The first blade catches the hair, pulls it up and slices through it, after which the hair starts to retract. Before it can retract fully, though, the second blade catches it and cuts it below where the first blade did. A third blade would do the same but it would tend to get too close. Gilder's insight was that by setting up each of three blades at a different angle - a difference invisible to the naked eye - the third blade would be able to get closer to the skin without tearing it.

The new three-blade model was code-named Manx (the coat of arms of the Isle of Man has three legs), and when Yeoman ran it through his reflex stereo machine he found that it removed 40% more hair than Gillette's best product, the still brand-new SensorExcel. Then the robust friction device proved that the razor was also exerting less drag on the face. In other words Manx seemed to offer a shave that was both closer and more comfortable, which is the Holy Grail as far as shaving techies are concerned. In its first 'out-plant' shaving test, Manx was a huge hit with consumers, too. 'So we knew we had a winner,' Terry says, a wide grin creasing his face.

Technological domination, a la Manx, has been the basis of Gillette's success over the last decade, but its value was a lesson hard learned. When Bic introduced disposable razors in the late '70s, Gillette responded to the threat by entering the disposables market and swiftly established itself as the dominant player. But that wasn't a title the company was proud of. 'It was commodity hell,' says John Darman, whose official title is head of male shaving for the North Atlantic Group.

Darman is a rotund, deeply tanned man with a moustache (a very well-groomed moustache, you can be sure), who bounces happily from topic to topic. He came to Gillette in the mid-1970s and for his first 14 years he tried to market the company's 'personal care' line, including products such as Toni perms, The Dry Look and Silkience. Commodity hell is exactly what American corporations fear most, because when your product is a commodity - essentially interchangeable with all its competitors - the only way to get market share is to cut the price. That means that your profit margin is continually dropping.

The way most corporations try to avoid commodity hell is through advertising.

If you can create a strong enough brand name, the idea is that you can charge more for your product, because people will pay for the brand. And certainly advertising was a crucial part of the turnaround that Gillette embarked on in early 1989, when it abandoned all its advertising for disposables and introduced the 'Best a Man Can Get' advertising campaign. But the turnaround ultimately succeeded because the campaign was followed by a product, Sensor, that was strong enough to transform the way people thought about shaving itself.

In the standard narrative of corporate renewal, this kind of turnaround happens when the board of directors goes outside to bring in a hard-driving chief executive officer, preferably with a background in soft drinks and telecommunications, who replaces the dead wood with a fresh corps of mavens from McKinsey. The fact is, though, that the turnaround was orchestrated entirely by Gillette lifers. Gillette's cadre of seasoned engineers has been able to make advances by building on a rich, if undocumented, history of trials and errors. When it became clear that the company had veered off course, its veteran managers knew what would work, because they knew what had worked. The 'new' Gillette was the old Gillette.

One of the lifers who put the company back on course was a vaguely Patonesque man named John Symons who, as the head of Gillette's North Atlantic Group in the late '80s, embarked on a crusade against the disposables and all they represented. Arriving at Gillette's Boston headquarters for a divisional review session, he listened patiently while the man in charge of refillables got up and gave a three-hour presentation. Then the man in charge of disposables rose and began to speak. In his hand he held a bag of 10 Good News disposable razors - those blue plastic things - for show-and-tell purposes. He had barely started when Symons took the bag of disposables from him, threw it on the floor and crushed it beneath his heel. 'That is what I think about disposables,' he said in his low, gravelly voice. 'Your review is not required.' Darman explains: 'We wanted to get men back to the way it was before the 1970s, when they thought of razors as fine instruments. That's why Sensor was so crucial. It was metal, which gave it the fine-instrument feel that we wanted. But it also just gave you a much better shave.'

Sensor's superior performance, in turn, was what allowed Gillette to charge more for it than for its predecessor. This gratifying experience was what inspired Al Zeien's decision that Mach 3 would inaugurate a new blade technology. That decision also fitted into a broader vision laid out by Zeien, a one-time engineer who took over as chief executive in 1991 after 22 years at Gillette.

Zeien identified what he liked to call 'growth drivers' - R&D, capital investment and advertising - and he committed the company to increasing total spending on them at the same rate that the company's sales were growing. Moreover, Zeien saw to it that Gillette would make products only in categories where it would be world leader - today 1.2 billion people use Gillette products - and where the market would, in Darman's words, 'yield to technology'. Under Zeien's tenure, Gillette's market capitalisation has risen from $6 billion to nearly $60 billion. And shaving has become perhaps the only business in the world where the most popular product is also the best: Gillette is simultaneously the Porsche and the General Motors of shaving.

That curious circumstance has essentially given Gillette a license to print money. Last year, it sold $2.9 billion worth of razors and blades, earning $1.2 billion in profit on them. Its razors are not just more popular than the competition's - Gillette has 66% of the male shaving market, and 70% of the female market - but also more expensive. The great virtue of making top-of-the-line razors, as opposed to top-of-the-range cars, is, after all, that a hefty profit hike for the company - Gillette will charge 35% more for its Mach 3 than for Sensor - doesn't much register with customers.

Darman mentions this, then levels his eyes at me as if he were about to divulge the secrets of the temple.

'Look, everybody else out there is lower-priced,' he says. 'We're not doing this out of the goodness of our hearts. We're saying that we'll deliver performance and ask you to pay a higher price.' As his pen races across a white notepad, he shows me that since Gillette's newest razor costs more than its predecessors, the company makes an additional profit for every Gillette customer that it can persuade to upgrade. Even more profitable, of course, are converts from disposables or from Gillette's competitors. He glances at the figures on his notepad, and his face opens into a grin. 'You know,' he says, as if only now making the happy discovery, 'this is a very profitable business.'

Darman's main role in the development of Mach 3 was the design memo that his department gave Gillette's chief industrial designer, Mike Gray, who has been with the company since the early '60s and still talks about his craft with an air of wonderment.

Darman told Gray, who had designed Sensor, that he wanted something masculine, hi-tech and aerodynamic. Gray already knew that, for engineering reasons, the razor had to have a very wide head and a forward pivot. And then he listened to what people who were shaving with early versions of Manx were saying.

'I heard that in some early shaving tests people compared the razor to a paintbrush,' Gray tells me. 'It was so effortless, they said, that it felt as if you were painting your beard off. So I took a paintbrush and put a razor cartridge in the bristles, and at a meeting I pulled out the paintbrush with the cartridge and showed how as you drew the brush along a surface the cartridge head would swivel and bounce back into position.'

It was also clear from the beginning that Mach 3 had to have a distinctive metal finish. To make sure that the plating company they were using got it right, Gray suggested that its engineers go out and rent the movie Terminator 2, with its computer-generated liquid-metal villain. 'Once the guys at the plating company saw the movie, they knew exactly what I was looking for,' he says. 'It's not chrome. It's almost mercury-like in its finish, and it should seem as if metal had just been poured over it.' The aerodynamic look of the razor does make a happy match with its new name, which was chosen after an elaborate filtering system had pared down an original list of several hundred to four - Triad, Synchro 3, Vector 3, and Mach 3. Besides being resonated with the themes that Darman wanted to strike with the product's $300-million advertising campaign.

Clever names, slick advertising, power branding: in today's business world, these are taken to be the only things that really count. But if branding were everything, companies like Disney and Gillette, with their enormously potent brands, wouldn't have fallen apart in the first half of the '80s. Disney found the way to recovery in its extraordinary animated films (which, in turn, supported an explosion in merchandising) and in the 'imagineering' of its theme parks. Gillette's experience, too, demonstrates that Mullen's formulation is backward. To lay the foundation for business growth, it's hard to do better than invest in new technology, build factories, buy new machines. Strong brands are almost always effects, not causes, because sooner or later performance defeats positioning.

Excellence in manufacturing has become the most underrated ingredient in corporate success, and yet nothing distinguishes strong companies from weak ones like the ability to make goods efficiently and reliably. Gillette rules in shaving because of decisions like the one it made to spend hundreds of millions of dollars on machines that would allow it to mass-produce Mach 3 in an entirely new way.

When Gillette was putting the production lines for Mach 3 in place (they became operational last autumn), it built a giant plywood wall to separate them from the rest of the factory; workers on the 'plywood ranch' had to sign strict confidentiality agreements. The most dramatic of the new machines is a 60-ft long vacuum chamber. Before entering this chamber, 14,000 freshly sharpened blades on a giant spindle are given what one Gillette employee called 'an atomic-level cleaning' in a clean-room, populated by gowned and shower-capped workers. Inside the chamber, a high-voltage charge is sent between a sheet of carbon and the spindle of blades, hurling carbon atoms in a process called sputtering. 'Our tolerances are on the order of the wavelength of visible light,' an engineer says tersely.

The bunny-suited environment around the chamber, though, is unique on the factory floor. For the most part, what is striking about the Mach 3 production lines isn't how hi-tech they look but how sturdily functional, and how the machines still seem to belong to the Industrial Age. In Japanese car factories, the floors are clean enough to eat off; here the floors are just - well, fine places to put big, heavy machines on. The most important of these are the whirring, continuous-motion machines that are used to assemble the Mach 3 cartridges. The intermittent-motion Sensor machines stop and start before each task (hence the sewing-machine look); the languidly gliding Mach 3 machines appear to be doing much less work, but they're more than twice as fast. Interestingly, machines, like people, have learning curves, and in the next two years the speed of the continuous-motion machines is going to be steadily ratcheted up until they're turning out two million Mach 3 blades a day.

'When you get a new machine, you have to debug it - make little changes here and there,' Fred Campatelli, who is in charge of engineering on the factory floor, says. 'Then, when you solve those, you take it up another notch in speed and you find a whole new batch of things to fix. But we'll get it up to its top rate soon enough.' Mike Cowhig, the head of manufacturing, who has been standing next to me during this explanation, now leans in and adds, 'Then we're going to ask them to push it past that.' Campatelli looks at him hard, wondering if he's serious. He is. 'I knew you didn't know that,' Cowhig tells him breezily.

Standing in the middle of all these brand new machines, I find it a little unsettling to realise that a few years from now they will be obsolete - or, anyway, not good enough for Gillette's best product - and that soon a new plywood ranch will be constructed. Somewhere in the Reading lab, after all, Mach 3's successor is already in the pipeline.

'We'll get a hell of a kick when we see the new razor on the shelves,' John Terry told me. 'But the truth is that by then we're already preoccupied with what comes next.'

A longer version of this piece appeared in The New Yorker.

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