For Armin Schön, CEO of tire manufacturer Galileo Wheel, leading a manufacturing company requires more than strategic vision—it demands a strong command of the nitty-gritty.
With more than two decades in the industry, Schön argues that CEOs who can engage in technical conversations, evaluate new manufacturing methods and understand the ROI of automation have a clear edge, especially in the high-pressure startup world.
Schön knows the pressures firsthand, running a company that invented and is now producing tires with a patented technology for agricultural and construction machinery. He spoke with Chief Executive to share best practices for leading a startup in manufacturing, from production strategies to balancing day-to-day processes and long-term vision.
Why is technical education important for a CEO of a manufacturing company?
I have been leading manufacturing companies for more than 20 years, and what I can say is that in manufacturing, you have to understand two critical aspects: the technology of manufacturing—processes, tools, robots, software—and the efficiency of this equipment, especially return on investment. That’s what manufacturing is all about: driving quality up and costs down for customers while maintaining profitability.
That means the best way to lead the company is to have both technical and economic education. Of course, you can have a technologically oriented CEO with a strong CFO and COO as a team that makes decisions. Alternatively, you can have a financially oriented CEO with a strong CTO, but you must have technical knowledge somewhere on the C-level team.
Still, if the CEO does have a technical education, it helps tremendously when talking to customers. Often the technical discussion is critical, and customers appreciate that the CEO isn’t outsourcing this conversation to someone else on the team. From a marketing perspective—how to talk to customers, serve their needs and engage with their technical personnel—having technical knowledge is also a big advantage.
How do CEO functions in a manufacturing startup differ from corporate ones?
In a startup, the world is far more dynamic. Challenges arise sometimes daily that require response and adaptation within days or weeks, whereas in the corporate world, making a decision to “change the oil tanker’s course by a few degrees” takes months. This dynamic isn’t unique to manufacturing—it’s the same in any other sector.
In well-run companies where people aren’t afraid to speak their mind, there’s more brainpower to tackle problems. But coordinating all those people takes time, so what you gain in capabilities, you lose in speed. This difference in timescale is why startups exist.
The startup CEO operates in an environment that’s much less predictable, with the constant pressure of securing funding and navigating a business environment where one or two mistakes can kill the company. There’s a different timeline for necessary decisions, often made with a lack of sufficient information.
For manufacturing startups producing their own products, the dynamics are similar to any technology-based business. For contract manufacturers, there’s no traditional phase where you build a state-of-the-art factory with advanced machines and then look for customers.
The challenge is finding lead customers willing to work with an unproven partner and take the risk, while also developing capabilities quickly enough to make the partnership worthwhile—a challenge not every CEO is willing and able to take.
Another point is that the startup CEO must believe deeply in the product. The ups and downs are extreme, and their frequency is high. To sustain this roller coaster, you need an intense belief that you’ll ultimately succeed, plus the ability to share this belief with others—customers, partners and your team.
Corporate CEOs should have this quality, but a corporation can survive many years of uninspiring leadership and lower-level management can compensate for that. In startups, the CEO is at the forefront, highly visible and drives the business forward. That’s what I am doing every day.
How can small manufacturing companies set up their own production lines and quality control?
The first question here is not how, but if it’s needed or not. And this is fundamentally a question of intellectual property and technological novelty.
For many startups the optimal solution is working with a manufacturing partner—that’s how we started our production. You provide drawings, specifications, test instructions and assembly guidelines, and receive a finished product. But with novel technologies involving new materials or assembly methods, you’ll need either temporary or continuous involvement in setting up manufacturing processes and quality control.
If what you’re doing is new and there’s no manufacturing partner with experience in that field, developing in-house capabilities initially makes the most sense—focusing on proof of concept, manufacturing technologies, tooling and methodologies.
When you have manufacturing processes under control, can explain them to a contractor and are in need of scaling, it’s the right time to transition to a manufacturing partner rather than undertaking capital-intensive factory building yourself.
When working with contract manufacturers on novel technologies, two major challenges emerge. First is pricing—contract manufacturers operate on thin margins and require well-controlled processes to remain profitable. You need pricing agreements flexible enough to accommodate inevitable surprises while keeping the contractor commercially motivated.
The second major challenge is IP protection. That is why some companies prefer to keep IP-intensive components in-house, only outsourcing assembly, integration and testing until formal IP protection through patents and trademarks is established.
For quality control, the approach depends on the technology’s novelty. With established processes, you can generally rely on a certified manufacturer’s quality systems, though independent verification remains important initially. For novel processes where subcontractors lack experience, you must help establish proper QC procedures—defining measurements, frequency and required equipment.
Your goal should be transitioning quality responsibility to the manufacturer as processes mature. This transition happens by setting specific quality targets.
In our industry, we use “scrap rate” as a key metric. During initial product introduction, customers typically accept higher scrap rates which gradually decrease to industry-standard levels. Once established, manufacturers bear the cost of excessive scrap. However, if your core IP relates to manufacturing methods rather than just the final product, building your own initial production capacity is crucial. Some innovations simply can’t be outsourced.
