Question We?rill?nc.?as founded?y?enry?riscoll?n?995,?ocused?n?he?anufacture?nd?ale?f?rill?itsused in oil drilling operations. In 1993, Driscoll took an early retirement from EXXON, where he had?een a supervisor in their exploration and drilling department. His 20plus years’ experience and his?onnections in the in the oil industry helped the sales to grow from $750,000 in 1996 to over $15 million?y 2014.?he explosive growth of fracking technology in 2000 also helped We Drill Inc. to achieve quick?ales?uild?p,primarily?ecause?f??rill?it?riscoll had?eveloped?pecially?or?racking?perations.?s? native of Worcester, Massachusetts, Driscoll worked with researchers at Worcester Polytechnic to?evelop a first of its kind drill bit, aptly named Frackbit, which developed a reputation for longer life in?ocky terrains.?rackbit was eagerly adopted by many fracking companies, both big and small, and. sooncommanded a large market share in fracking operations. The company rode the wave of increasing oil?roduction?n?he US?etween2002?nd?008?nd?oon?ound?tself?ith? backlog?f?rders.?n?006,We Drill Inc. invested $12.5 million to refurbish its factory, in order to double the capacity from 10,000?o 20,000 drill bits per year. The Frackbit brand and its reputation for meeting demanding fracking?peration?equirements?ed?o?e?rill?nc.?chieving approximately75??arket?hare.?n?ddition?o?irectly supplying to oil well drillers, We Drill Inc. sold its drill bits through resellers and oil accessorystores,?uch?s?orquato?rilling?ccessories,?n?tates?ike North?akota?nd?exas. In spite of the rapid success, Driscoll’s familiarity with the violent swings of the oil industry made?im to look for other product opportunities. He was also facing tough competition from less expensive?hinese?rill?its?looding?he?arket.?riscoll and?is?eamwere not?onfident?hat?hey?ould?ustain??ong-term high market share. There was also concern about the potential for the erosion of profit?argins due to drill bits from other countries flooding the market. Driscoll wanted to diversify away?rom the heavy reliance on Frackbit and was exploring areas where he could leverage the company’s?xpertise?nd technology.?e?ontinued to work?ith?orcesterPolytechnic?o find new?pplications?nd new products, and felt that We Drill Inc.’s expertise in oil drilling could be leveraged to developproducts?n?ater?rilling?perations. During the last quarter of 2013, oil prices started crashing, primarily due to lower demand as well as?rom increased production in the US.?n addition, Saudi Arabia continued to flood the market with cheap?il. Worldwide inventory started rising and by Dec 2015, oil prices dropped to $45 from a peak of $145?er?arrel.?he?ower?il?rices?dversely?mpacted the?conomics?f?racking?nd?any ofthe?maller?il?perations?tarted?losing?own.?he?emand?or Frackbit?tarted?lummeting?nd?riscoll?ad?olay?ff?orkers.?e Drill?nc. sales?nd?roduction dropped?y?0%?nd?ontinued dropping.?riscoll’shope?ow?ested on?is?bility?o?ind??ew?roduct?or water?rilling.Worcester?olytechnic Founded in 1856, Worcester Polytechnic Institute (WPI) was known for its outstanding engineering?ducation, as well as courses in science, technology, management, the social sciences, and the arts. WPI’s?pplied research was internationally recognized for numerous breakthroughs and innovations. Their?esearch team had done pioneering work in locating and drilling for water in arid areas. This work was?ed by Professor Douglas Walters, an internationally acclaimed scientist for his work in water drilling?perations. Professor Walters began his career as a geology professor at WPI and published numerous?esearch studies and books regarding the use of modern technology in finding and extracting water?esources. Professor Walters was highly sought out as an expert in water resource issues and was a?eatured?peaker?n conferences?round the?orld.?n 2009,?rofessor?alters?as?ommissioned by?he UN to?elp?overnmentsin?sia?nd?frica in?eveloping?ater?esources?or?rinking?ndirrigation. Professor Walters had pioneered a unique process for finding and extracting water in geological?tructures that had?reviously?eenconsidered barren.?n?he?ast few?ears,?e?as?een?orking?ith? colleague from metallurgical department at WPI, in the use of special metals for tools in drilling?perations.?hey had recently published a study in an academic publication on ways to increase drill bit?erformance with?rills?ade?ith?ynthetic?lloys.?hen?riscoll?xpressed?nterest?n?ollaborating?o?evelop and commercialize a new drill bit for water drilling incorporating the technology developed for?rackbit,?rofessor?alters?eadily?greed?o?hare?isexpertise.The?roduct-?aterFastIndustry reports indicate that on the US East Coast, an average drilling depth of 9,000 feet is required to?it water. Driscoll and his managers wanted to target water companies that specialize in bore wells?ocated throughout Massachusetts first, before expanding nationwide. The drill bit developed by Driscoll?nd Walters was a hybrid of an industrial grade diamond bit combined with a special alloy.?aboratory?esting of an early prototype by Professor Walters indicated that the drill performance far exceeded the?urrent?rill?itsused?or?rilling?ater.?n?014,?he prototype was?eady?or?ield?esting.?nitial?esults?rom tests on?niversity?ampus showed that?rillbit?erformance,?n?erms of?istance?rilled,?as?5% faster than currently used drill bits.?riscoll felt that the new drill bit had to be subjected to field?est at a location outside the university, preferably a commercial location to record the higher?erformance.?fter struggling to find a reputable drilling contractor to use the product and monitor its?erformance, Driscoll was able to persuade Worcester Utilities (WU) in Worcester town, to use the new?rill?its?n? trial?asis.The?esults?ere?ncouraging?s?he WU?ob?as?000?eet?nd?he?ew?rill?it?rilled?00?eet?er?our?ompared to 250 feet per hour by the old drill bit.?n addition, previous drill bits had to be replaced?very 500 feet requiring about 18 changes for 9000 feet well whereas Driscoll’s drill bits lasted 900 feet?hus requiring only 10 changes per job.?he process of changing the drill bit required pulling the drilling?haft above ground and replacing the drill bit. The replacement work and the time required to get the?rilling started again required an average of 30 minutes for each drill bit change. The table below shows?he results?rom?he?orcester?tilities?WU)?roducttrial.Table?:?esults?f?peration?n?ell??21H1?nd?21H2Well?epth?n?eet90009000Drill?it?sedCurrentWaterFastLength?n?eet?rilled?er?our250300*Percent?ncrease in?ength?rilled20%No?f?ours of?rilling3630Number?f?rill?its?sed?er?ell1810Number?f?hanges?equired?er?ell1810Time?or?hanging?he drill?it i-?inutes?er drill?it3030 Note: The actual distance drilled per hour with WaterFast was 325 feet or 30% increase. Driscoll was?eluctant to use this high number based on one field test and decided to use the 20% increase. He believed that it?s?etter?o?romise?0%?ncrease?nd?eliver?0%??hus?xceeding?serexpectations. Drilling rig systems are very expensive and rented by the hour by independent drilling contractors,?s?ell?s?ater?tilities.?Urents?rilling?igs?t?100?er?our.?killed?rilling?ig?perators are?aid$ 65 per hour plus benefits, which is estimated at 40% of labor costs.?bout 60% of the drill bits?urrently used in the country for water drilling are imported from China. Like many other companies,?U utilized an annual supply contract to purchase Chinese drill bits from a local distributor at $150 per?rill?it. Driscoll is developing an action plan to introduce his new product to the marketplace in general and?elieves that the following stakeholders are essential to the successful acceptance of WaterFast by water?rilling community. He is hoping that the performance of the drill bit and the cost saving estimates from?he WU trial, will help him in secure a contract with Boston Water Works, one of the big water utilities?or?heir?ater?rilling?perations.Drilling?ig?istributing/Renting?ompanies. Water?rilling rigs are manufactured in the United States and many are imported from Europe and?apan. The leading domestic producer in 2008 was Caliber Irons, whose Model #1 was used as a?tandard by engineers for specifying drilling systems for a job.Replacement drill bits are available at?hese?ental?ompanies,?s?ell?s?t?ardware?tores?pecializing?n?rilling?ccessories.?bout60%?f?he independent contractors buy their replacement bits from rental agencies during the first year. The?ales revenue and profitability of the drilling rig rental companies are tied to the number of rigs they?ent?ut?nd?he hours?f use by?he?rilling?ontractorsDealers?nd?esellers Resellers stock drill bits from different manufacturers and earn a margin on unit sales revenue. They?re keen on moving the stock and as such promote fast moving products that have high margins. In?ecent years, Resellers have been stocking Chinese drill bits more than US made drill bits, as they can?mport?t?t??ery?ompetitive price. The average selling?rice for?hinese?rill?its?s?150?er?rillbit.Soil?xperts/Consulting?ngineers Water?rilling?ompanies?nd?ndependent?ontractors?ely?n?oil?xperts?nd?onsulting?ngineers?or expert advice. Soil experts first study the topography of the area to understand the groundwater?ondition?nd geology?f?he area.?he?xperts?rovide guidance in?oilanalysis,?evelopment?f?ostestimates, trouble shooting, as well as stress tests and other mathematical analysis. Due to the risks?nvolved?ith?ater?ables?nd?ther factors,?oil?xperts?nd?onsultants?ere often?een?s?ltimate?uthorities for drilling locations.?ater utilities and contractors seek their opinion for selecting a?ocation?or?rilling?s?ell?s?n the?hoice of drilling?ig?nd?rilling?its?sed?n?heoperations.?riscoll?new?hat?oil?xperts/Consulting?ngineers?ould?ave?ignificant?nfluence?n?rill?it?urchasing?ecisions.Independent?ontractors Water drilling contractors bid for drilling jobs as a fixed price contract, using their estimates of?rilling?ime?o?etermine?he price?ased?n?ig?ental?ees,?rill?its?sed,?abor?ost?nd profit.Contractors buy the drilling bits in bulk from dealers to ensure that the worn-out drill bits are?eplaced right away to avoid costly project delays. Water drilling contractors are knowledgeable as?o the practical aspects of drilling, break downs and labor management. Once they accept the job,?he goal is to complete the job as quickly as possible, to reduce operating costs and increase their?rofits. In the past few years, increasing number of water utilities have been outsourcing drilling?obs?o?ndependentcontractors.Industry?etwork Water utilities, independent Contractors, and engineers who work in the drilling industry have?egional associations that meets once a month to discuss business trends, share trade industry gossip?nd hear presentations from guest speakers. The topics generally cover practical issues of water drilling,?he status of the industry, and new techniques and/or developments. The organization also publishes amonthly trade journal for its members and reports developments in the water drilling industry. It?eatures?dvertisements?rom?rilling?igrental?ompanies,?ontractors,?nd?ther?uppliers?f?he?rade. Given?is?eputation?n?he water?rilling?ndustry, Professor?alters?s??requent?peaker?o?ater?rilling industry associations and gets enormous respect as an expert and a local celebrity. In fact, the?ocal drilling industry organization had contributed to the establishment of a department at WPI to?tudy water drilling.?ngineering/ construction firms, contractors and many consultants were familiar?ith?is?ork?nd?ften?ought?is?pinions.?n?iew?f?heir?lose?orking?elations?nd?he jointresearch effort, Driscoll was hoping to have Professor Walters’s support of the new We Drill Inc.?roduct.?e?elieves?hat?rofessorWalters?s?uite enthusiastic?bout?he potential?f?he?ew?rill?it?ut?ot?ure?hether?he?rofessor?ill?gree?o?o??ommercialendorsement.Boston?ater?orks By far, the largest consumers for drill bits are water utilities. Boston Water Works is the largest?ater utility in the State of Massachusetts. The drill bits are considered as component parts and water?tilities sign an annual supply contract to procure drill bits. Buying process at the water utilities is?omplex and generally requires the approval of buying team whenever a new product is to be approved?or?se. BWW buying?eam?embers?onsisted?f the?ollowing:Ralph?mai?General?anagerThe administration and operations of BWW was under the General Manager, Ralph Imai who is?esponsible for running the organization. Ralph recently retired from the Navy and was focused on?eeping the projects under time and budget and maintaining the water reserve levels.?alph is fiscally?onservative and?s?xtremely?ary?f purchasing?xpensive technological?izmos?ith?nproven trackrecord. He was known for his strict insistence on facts and figures and often heard using the slogan?Show me the Money”” when employees approached him with new project ideas or request for?pprovals.?alph’s?ecurring?ightmare?s shut?owns?ue?o?aborstrike
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