Navigation and truck parts and boat cruises—oh my!

Day 2 for me began with a morning run through the streets of Budapest. The old world architecture is amazing, though I’d add a few blades of grass and some more trees if I were granted the job of city planner.

Our first company visit was to NavNGo, a 4-year old OEM software provider for the GPS navigation market. The company seems to have a culture that has attracted some incredible programming talent, permitting them to develop compression technologies and a 3-D map interface that the market has deemed “cool.” They married this with an uncontested Eastern European marketspace in 2005 and partnered with a variety of hardware vendors to grow revenues substantially over the intervening 3.5 years. The first key takeaway for me is that if you have a solution that offers unique value and can make a 3rd part sell it for you, you can grow revenues very, very quickly. The second key takeaway is that this approach puts you at substantial risk moving forward. NavNGo has no direct contact with end users, and they seem totally dependent upon (1) the correct guesses of their IT savants or (2) specific direction from the OEM hardware partners to guide what they build. If it turns out that one of the big bets placed by their IT savants in the space is wrong (i.e., they think the world wants a 3-D interface but the world really wants a system that displays where your friends are driving in real time) or if the OEMS find someone else who can do it faster or cheaper, the company’s prospect seem limited. My third and final key takeaway is that corporate culture matters greatly; there isn’t so much a right or wrong, but each culture we create presents certain opportunities and certain risks simultaneously; the choice is one of alignment.

After lunch we had a nice visit to the PACCAR Parts Distribution Center outside Budapest. The facility serves DAF dealers in Eastern Europe and has been regularly taking on responsibility for new geographic markets. It’s been a while since I’ve toured this kind of warehouse, and the mix of “high-tech” technology (electronic tracks for forklifts, automatic height adjustments of the lifts, RFID) and “low-tech” technology (efficient layout, color coding by country of delivery) was impressive. The facility has only been up about a year, but it’s extremely tidy and well run. Inventory turns about 5 times per month on average, and they have a target complaint rate by DAF dealers of 4 per 10,000 lines delivered. For me the key takeaway relates to the fundamental management principle of alignment—everything about the facility, the people, and the processes screams quality and efficiency.

Our day concluded with dinner and sightseeing via boat on the Danube. Lots of fun, and the drinks were priced right ($0)—a true can’t miss proposition.