Have you ever wondered what a fighter plane, a Formula 1 (F1) race car, and a passenger car have in common? There is a strong possibility that it is Dr. Arthur Bishop (1917–2006). In the late 1950s, Dr. Bishop adapted technology originally developed for power-steering systems for World War II aircraft for use in automobiles. To bring his innovations to the market, he founded AE Bishop Holdings Pty, Limited in 1957, which changed its name to Bishop Technology Group Limited in 1999 and in 2011 became a subsidiary of the German company GMH Stahlverarbeitung GmbH (GMHS) under the name Bishop Steering Technology Pty Ltd (Bishop).
From its humble beginnings in the United States of America (USA) and subsequent move to Sydney, Australia, Bishop is now a world-leading engineering company that develops steering systems, steering racks, and related components for the automobile industry. Its technology is incorporated into F1 racecars, IndyCar Series (the premier level of open wheel car racing in the USA), and many of the world’s most famous sports cars. Backed by a strong intellectual property (IP) portfolio and over half a century of innovation, Bishop’s car steering technology allows automobiles to respond quickly to shifts in load as they are driven around a variety of surfaces, smoothening the steering effort and making the driving experience safer and more enjoyable.
At the start of World War II, Dr. Bishop was engaged in redesigning sections of aircraft landing gear for the Bristol Aeroplane Company, where his efforts resulted in two innovations. First, a shimmy damping mechanism for the rear wheels of fighter planes that eliminated wheel vibration, making landings much smoother and more comfortable. Building on this success, Dr. Bishop subsequently invented a variable ratio nose wheel steering system. Following the end of the war, the entrepreneur patented his invention, licensed it to major aerospace companies in the USA and United Kingdom, and used the royalties for research and development (R&D) into applying his invention to automobiles.
Confident in the viability of his innovation, Dr. Bishop approached major automobile manufacturers in the USA and Europe, even setting up an R&D laboratory in Detroit, Michigan, the center of the automotive industry in the USA. Despite these efforts the inventor was unsuccessful and returned to Australia to further refine his invention. Additional R&D paid off, as after Dr. Bishop perfected his variable ratio rack-and-pinion power steering innovation domestic and international automobile manufactures soon employed it in a number of vehicles for the Australian market.
International success quickly followed, and as the small and medium-sized enterprise (SME) grew Dr. Bishop ensured that the small company continued its tradition of innovation through R&D, which allowed Bishop to transform into an industry leading company. In order to maintain its competitive advantage, Bishop has continued to make strategic investments in its physical, intellectual and human assets to ensure the development of new technologies.
In 1997, Bishop’s technology was significantly advanced as a consequence of an R&D START Grant received from the Australian Federal Government. The grant is designed to spur growth for SMEs. Bishop invested the grant into the company’s R&D equipment and the recruitment of additional expert staff, including patent attorneys.
The company subsequently developed a 28,000 square foot R&D facility with a full range of state-of-the-art machines, offering world-class equipment. The facility was equipped, for instance, with a wide range of computer numerical controlled machining centers. These centers are managed by a team of dedicated and highly trained engineers, making Bishop a center of excellence in precision research, development of precise components, and software design.
Bishop has relied on a policy of investing millions of Australian dollars (AUD) into R&D annually, which is made possible by the company’s robust IP portfolio. This investment is then employed in designing original components, conducting research, and testing prototypes geared to market viability. This approach has ensured the company develops products with superior performance and yet at a minimum production cost. For example, fifty years after the development of Bishop’s first variable ratio rack-and-pinion steering system, the company innovated a unique variant of the system – called ActivRak – that offers all of the benefits of the original invention as well as fast responses to steering inputs, which allows significant benefits to a vehicle’s dynamic behavior.
In a 1982 interview, when discussing IP Dr. Bishop said “The patent system plays an essential role for the innovator.” This view has been key to Bishop’s success throughout the company’s history. Early on, the entrepreneur discovered the importance of not only developing a new product, but also the associated manufacturing process and equipment. At each stage in the R&D process, Dr. Bishop and his team made patent applications for their ideas. By developing and patenting these complementary innovations, Bishop has been able to maximize income from licenses, joint ventures (JVs), and partnerships. This income is then put back into R&D on new technologies and innovations.
One of Dr. Bishops earliest registered patents was in 1958 for his perfected variable ratio rack-and-pinion power steering technology. Since then, Bishop has filed over 500 patent applications, with over 100 of them successfully registered. The company’s rack-and-pinion steering gear, one of its most successful inventions, is the subject of an international Patent Cooperation Treaty (PCT) application. The Bishop ATS Power Steering Valve and the Bishop VARIATRONIC, a speed-sensitive power steering solution, are further examples of the SME’s patent registrations and innovative success. Bishop has prodigiously used the PCT System to obtain patent protection for more than sixty technologies and processes in many different international markets.
In addition to patents, the company has a long history of strictly protecting its innovations as trade secrets, releasing them only after they are deemed ready to be the subject of a patent application. Full disclosure in the patent document is considered important for the enforcement of the SME’s patents, particularly internationally.
Early on, Bishop followed a simple strategy to bring its developments to the market: create new IP and license it to interested parties. This suited the SME, as instead of spending resources and time on physically manufacturing products, the relatively small company was able to focus on ingenuity and developing a steady stream of innovations that could compete internationally. This proved to be a productive strategy, in that after Bishop secured its first licensee – a major Japanese automobile manufacture – many other global licensees soon followed.
Continuing to use this approach throughout much of the company’s history, Bishop strategically exploited its many licensees, taking full advantage of business partnerships and adapting contracts to suit the prevailing business environment. Bishop originally entered into exclusive licenses with various companies, a strategy which generated a high royalty return. However, as Bishop’s innovations became accepted in the industry and more widely available in the market, it renegotiated those licenses to make them non-exclusive, which allowed the SME to significantly broaden the user base of its technologies. For example, Bishop’s 2004 license agreement with Chongqing Changfeng Machinery Company Limited (Changfeng), one of the major steering gear suppliers in the People’s Republic of China (China), enabled the company to produce state-of-the-art hydraulic power steering valves for the Chinese and international markets.
As the company grew, Bishop made the decision to make a change in its business model. The SME wanted to become more involved in the industrialization and marketing of its IP, instead of simply licensing it to other companies. To that end, in 1997 Bishop entered into a JV with the steering division of Mercedes-Benz, a large automobile company based in Germany, to commercialize Bishop’s power steering technology.
The Mercedes-Benz JV allowed for the introduction of the SME’s ActivRak invention in 2008. In 2000, Daimler Chrysler AG took a 30% shareholding interest in Bishop, which ultimately led to the SME’s first implementation of ActivRak. These efforts exceeded the company’s expectations, and as a result Bishop continued to follow a new strategy of combining licensing with more direct commercialization efforts, including continuing to enter into strategic JVs. This method has allowed the SME to capture more value in its IP, reach more markets, and develop a deeper understanding of the entire innovation process, from the first blueprints to the final product.
Due to this strategy and a culture of creativity and innovation, Bishop has been able to commercialize its technology in a range of motor vehicle applications throughout the world, from F1 racecars to everyday automobiles. The SME’s core commercialization efforts include the development, licensing, and manufacture of steering systems, racks, and components. In addition, Bishop develops prototypes, production equipment, and support services for specialized steering components and assemblies.
By 2014 Bishop had over 50 years of experience in developing, protecting, and marketing IP, and the company has used this experience to diversify the products and services it offers. For example, the SME assists its clients in developing their own IP and using it to maximize a client’s position and business strategy. This diversification has led Bishop to become an innovation, product, and service provider of automotive steering technology. From concept development and design to marketing and IP protection, Bishop’s extensive experience, R&D, and range of in-house experts (such as engineers and patent attorneys) have ensured that the company’s products and services achieve success.
Key to Bishop’s business strategy throughout its history has been the strategic use of partnerships. One important type has been JVs, through which the SME has been able to develop new IP while ensuring it remains commercially viable. Furthermore, JVs have given the company access to manufacturing (by leveraging their partners’ resources) and a way to break into new markets.
A few years after the successful Mercedes-Benz partnership, the company announced that it would undertake at least three more JVs over the ensuing years at a value of more than AUD$100 million. These investments allowed Bishop to speed up existing projects while taking on new ones, increasing its ability to create further technologies whilst continuing to operate as an independent supplier in the global market.
Bishop also teamed up with the developers of Adams, the world’s most widely used multibody dynamics computer software that simulates real world physics and aids engineers in the study of the dynamics of moving parts for the design and analysis of mechanical systems. The partnership resulted in a new set of software tools that became widely used in the car industry for virtual reality developments of new vehicles.
Perhaps the most important partnership the SME entered into was the acquisition of Bishop by GMHS in 2011. A subsidiary company of the Steel Processing Unit of Georgsmarienhütte Holding GmbH (the GMH Group), GMHS is a leading global developer of specialized materials for steering racks. Bishop joining the GMH Group allows the SME to collaborate closely with GMHS and its related companies and partners, providing it with significant assets in the design and development of new steering innovations. Now operating as a subsidiary company and still retaining the Bishop name and culture, the company has been able to increase its technical and manufacturing capabilities through the acquisition.
Bishop’s cutting edge technology, substantial R&D investments, rigorous patenting and IP management, prudent partnerships, and strategic commercialization initiatives have led to stunning business success for the company. By 2000, the company’s revenue reached over AUD$44 million annually, up by over 27% on the previous year.
The company and its partners generate further revenue via effective management of the SME’s IP, which includes over 100 patent registrations worldwide that return millions of AUD$ annually in royalties. For example, the license with Changfeng was worth over AUD$5 million and allowed Bishop to enter new and fast-growing markets. Other licensees include some of the largest automotive and aerospace manufacturers in the world, such as Ford Motor Company, Mercedes-Benz, and TRW Australia.
Maintaining a diversified revenue stream has enabled the company to develop new innovations, reach new markets, and eventually attract a major partner (GMHS) that helps to ensure the company’s future success. By 2014, more than 23% of all vehicles produced globally each year contained components that were built using Bishop’s technology, and the company has a presence in major automotive markets in Europe, North America, Asia, and Oceania.
In addition to financial success, Bishop’s achievements have been internationally recognized on numerous occasions. In 2008, the company won the BorgWarner Louis Schwitzer Award for its ActivRak innovation as applied to racecars for the IndyCar series. The following year, the SME received an Engineering Excellence Award from the Sydney division of Engineers Australia.
Taking inspiration from the steering of old fighter planes and adapting them to new uses in sports cars and passenger car steering, Arthur Bishop changed the course of motoring history, turning it into a path of his own making. Bishop’s road to success has been paved with patents, expert personnel, strategic partnerships, IP assets, and acquisition by a leading global company, which has brought new opportunities for a future of continued innovation.
This case study is based on information from: