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December 30, 2020 | 1 Mins Read

Top 10 of 2020 Part 1

December 30, 2020 | 1 Mins Read

Top 10 of 2020 Part 1

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To celebrate the end of a unique and challenging year, Sarah is joined by podcast producer and fellow website contributor Tom Paquin to discuss their favorite conversations and lessons from the past year.

Guests include:

  • Jamie Beck, Sr. VP of Field Operations at Peloton
  • Roel Rentmeesters, Director of Global Customer Service at Munters
  • Sae Kwon, VP of Customer Experience at Cisco
  • Henrietta Haavisto, Head of Service Transformation Change Management at KONE
  • Tim Baines of Aston’s Advanced Services Group at Aston Business School

December 28, 2020 | 3 Mins Read

A Love Letter to the Service Community for Surviving 2020

December 28, 2020 | 3 Mins Read

A Love Letter to the Service Community for Surviving 2020

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By Sarah Nicastro, Creator, Future of Field Service

I came across creative evangelist Debbie Millman’s “Love letters to what we hold dear” a few weeks ago and immediately had the thought to write this piece. I then went on to second guess myself, wondering is “love letter” too much? But I’m going with my gut because, no – I don’t think it is. First, I do love this community. I never thought I’d say that when I entered into it in 2008 not knowing what field service even was. But nearly thirteen years later it’s become something I, indeed, hold very dear.

Second, you deserve the love. This year has been intense and as I’ve talked with service leaders about how they’re doing, strategies for navigating the complexity, lessons learned, and everything in between, I’ve been in awe of the fortitude demonstrated in conversation after conversation. Here are some of the amazing characteristics that have stood out to me from those conversations this year:

  • Resilience – You’ve likely had days this year where you felt like you just couldn’t anymore; where you felt like running away. I have too. But you’ve shown up anyway. Day after day, challenge after challenge. You’ve stood up to the seemingly impossible tasks and fought through one step at a time.
  • Selflessness – A very common theme among the conversations this year is how you’ve put people first. Customers, but even more importantly, employees. You’ve taken great care to take great care of your people – to prioritize their safety above all else, to check in with them on a personal level, and to make sure they feel seen and supported.
  • Grit – Unfortunately, there were many hard conversations to be had this year. Conversations around pay cuts, layoffs, job reductions and even harder ones around illness and loss. You’ve faced these conversations with grit and bravery and it’s something to be admired.
  • Creativity – I don’t think there’s such a thing as a comfort zone after 2020! But rather than fight the fact, you’ve let comfort zones go and have embraced your need and ability to get creative. Whether in how you serve customers, how you lead a team virtually, or how you use digital tools, seeing creativity brought to life this year was a really cool thing.
  • Vulnerability – I’ve seen you all open up, as individuals and as a community. Having the courage to be vulnerable with your teams and your peers and to share when you’re struggling and ask for help when you need it. And calling on the community with the realization that there’s power in numbers and peace in knowing we’re all in this together.

A few of my favorite conversations of the year that touch on these characteristics, and more, are:

I do love this community, and I love how Future of Field Service has been able to serve as a platform for sharing and connecting in a year where those things have been so very critical. Thank you to each and every one of you that opened up to me this year, whether on record for an article or podcast or just because. I have deep respect for the work you’ve had to do this year – as people and as leaders – and immense gratitude to you for trusting me with your stories. Here’s to hoping that 2021 brings ample opportunity to share stories of how you’ve turned this year’s trials into triumphs.

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December 25, 2020 | 5 Mins Read

Finding Opportunities for Servitization in my Christmas Village

December 25, 2020 | 5 Mins Read

Finding Opportunities for Servitization in my Christmas Village

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By Tom Paquin

Today is Christmas, folks. So Merry Christmas, if that’s your thing. I’ve never been particularly fond of this holiday myself. With a currently-pregnant wife, I have a feeling that I’ll be singing a different tune in 354 days as I’m laying out presents from Santa, but for now bah humbug. I have always preferred January 3rd or so, when everyone else on the planet is just as miserable, cold, and depressed as I am all the time. There is but one Christmas tradition, self-imposed, for which I fully, extensively, and wholeheartedly commit, though, and that is my Christmas Village. Here it is, under construction:

Some background: I’ve been collecting Department 56 buildings and figurines since the early 90’s to assemble this village, having been inspired by my grandfather (about whom I have written before) who still painstakingly assembles an epic, pristine recreation of a semi-fictionalized 19th century London every year, which tells the story of Charles Dickens’ A Christmas Carol.

My village, by contrast, is not Dickens Village, but instead New England Village, modeled after a semi-fictionalized version of the region of the United States where I live. And I love it. I’ve been assembling houses, people, landscapes, and electric doodads of one type or another since I was seven years old. Having discovered estate sales and Ebay, the village has expanded, spawned neighborhoods and sub-villages, and developed a warm character of its own. That character has created interlocking systems and considerations, ones that my service-oriented brain cannot help but consider. So let’s have a little fun.

Yes—this village is loosely set in the mid 19th century, as New England, cultural melting pot of the northeast, helped to solidify many of the Christmas traditions from around the world that would come to represent the American identity. But it’s also in my fleshy, corporeal living room in 2020, so I will not hesitate to consider modern technology as a viable option for these small ceramic houses.

Most of the businesses in my village offer simple services like horseshoes or bell casting. A few could easily benefit from modern service technologies. Here’s some considerations.

Cape Keag Fish Cannery

A product of the Napoleonic wars, depending on which side of “Mid 19th century” you choose to land, canning could easily be seen as cutting-edge technology for this village. You’d imagine, given its proximity to the ocean, that this cannery focuses mainly on canning oysters and other provisions brought in by fishermen each day. Light load on a calm morning? The canning equipment sits, unused.

We often think about servitization as an opportunity to build maintenance contracts, but businesses have an opportunity as well to, where appropriate, offer their equipment in ways that benefit non-commercial activities. We’ve seen this in COVID times among restaurant suppliers. Creating canning subscriptions could be a way to offset the uncertainties of fishing.

There are obviously considerations of volume and scheduling, if a great deal of commercial product is, in fact, coming in. In modern times, thinking holistically about your business allows you to consider your internal infrastructure as it relates specifically to the confluence commerce volume plus service volume. Perhaps service volume meets a threshold where you invest in additional canning machines. It’s that degree of cross-functional resource planning that only best-in-class software offers.

Blue Star Ice Co.

I imagine that when the tools were developed to harvest, store, and utilize ice for preservation, the technology was seen as revolutionary. “People will always need ice,” some old executives certainly crowed, chomping off the ends of their cigars, “How else will they keep their food fresh?”

It might not come today, it might not come tomorrow, but it’s time to start thinking seriously about future-proofing what once seemed like a sure thing. While refrigeration might be a few generations away, in the previous section of this very article, we discussed a technology that makes food reliably shelf-stable for indefinite periods of time. In the ice industry, the cracks of obsolescence are already forming. And yes—pun very much intended.

Is service the answer? Of course it is! Blue Star Ice Co. could convert to a full-time ice house, which has a variety of different purposes. Chief among them is that it offers coolant without electricity, which, for businesses who require products be kept at a certain temperature regardless of the state of the electric grid, would be incredibly useful. Even in the world of home refrigeration, a large ice house would have practical applications for larger items. Perhaps create service contracts with the local butcher or morgue (I should note that my village does not have a morgue, because nobody dies in my idyllic Christmas village).

The Emily Louise

I’m not at the stage of my life where “pleasure boating” has entered the equation but I love the ocean, and I love spending time on a boat. For that reason, the Emily Louise, one of my newest additions, is one of my favorites. This ship represents the best that field operations of the mid-1800’s have to offer. Whether or not they provide any explicit service, or just transcontinental delivery, the ability to use service-oriented functionality to improve the experiences of those waiting for them at the next port would be a compelling selling point.

One technology that sticks out as particularly useful with respect are newly-minted location-tracking tools. The best show when you’re next, give you a map view, and let you connect directly with your service person. A few years ago, I mused that location tracking as a function has numerous caveats in practice. At the time, location tracking on its own actually lowered customer experience scored. What businesses have discovered since is that location tracking alone is not enough, and needs to be heavily curated into a tool for customer communication, and allow for that communication to run freely. With that sort of tech on the Emily Louise, ports can be prepared in advance of the ship’s arrival, so they can make the appropriate arrangements to prepare.

I don’t know about you, but all this talk about servitization and process optimization has really turned me around on Christmas. I feel downright jolly! Readers, in all sincereity, take care and stay safe. Merry Christmas and Happy New Year. We can’t wait to share another year of great service stories with you all.

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December 23, 2020 | 1 Mins Read

Spreading Holiday Cheer

December 23, 2020 | 1 Mins Read

Spreading Holiday Cheer

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In honor of the Christmas holiday, Sarah features two very special guests on this week’s podcast – her sons Evan (5) and Ellis (4).

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December 21, 2020 | 5 Mins Read

3 Reasons Schneider Electric is Excited for Service in 2021 – And You Should Be Too

December 21, 2020 | 5 Mins Read

3 Reasons Schneider Electric is Excited for Service in 2021 – And You Should Be Too

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By Sarah Nicastro, Creator, Future of Field Service

We published a podcast last week with Jerome Soltani, Sr. VP of U.S. Services and Alex Gershman, Director of Strategy, Services and Solutions both of Schneider Electric during which we discussed the company’s journey to outcomes-based service. Like many other organizations making their way to delivering outcomes, there are challenges to overcome as progress takes place. However, during our conversation, it was evident how some of the challenges particular to 2020 are really paving the way for accelerated success. Jerome and Alex are quite excited about what will happen next as it relates to service, and I think their reasons are points many others share excitement around too.

#1: Customer Conversations are Changing

Jerome and Alex discussed the fact that Schneider Electric has been on the journey to delivering outcomes for a few years and has been making progress all along. But COVID has accelerated progress in some key areas, one of which is in what customers are asking for. “There are a couple of big mega trends that we’re seeing out in the marketplace driving the change in conversation,” says Alex. “Many of them have accelerated through the last year, through COVID. First is changes in investment shifts that our customers are making from big capital expenditures toward more operating, annual kinds of expenditures. And again, through COVID we hear the need to extend the life of assets.”

This point has been echoed by other manufacturing companies I’ve spoken with in the past few months that have seen significant increase in service and maintenance revenues. “That CapEx to OpEx shift has certainly changed the nature of conversations that we’re having,” says Alex. “We’re also seeing massive retirements on the part of the skilled labor inside of our customer organizations, meaning they’re turning more and more to companies like ours to help them with the services needs that they had that they may have relied on internally previously. Customers are feeling pressure to focus their efforts and attentions on their core business. Our candy makers want to make candy and they don’t want to necessarily focus on their infrastructure. So, again, they’re turning increasingly more and more to us to do that. Finally, with the rise of data connected technology, customers are looking to us to help them with making sense of the data that they have, being able to get toward the outcomes that they’re looking for with their customers.”

It almost feels to leaders like Jerome and Alex, who have been working hard to make progress on this journey for years, that customers have finally caught up with the vision of how outcomes-based service can deliver. This is exciting, because the conversation becomes mutually driven. “I think before COVID we had the feeling of being a little bit in advance. Not being arrogant, but you see when you’re a little bit too ahead of the market, you feel a little bit alone to create demand and create this awareness,” says Jerome. “But, I mean, COVID and the pandemic and the situation, working from home, nobody in the campus, in the university and so on, we saw this awareness and this acknowledgement coming from our user. It was a big relief for us, and it was great to see that finally the combination of our software portfolio connected product and services would make sense and would bring a lot of value to our user.”

#2: The Service Language is Catching On

Not only are customers now driving outcomes-based service conversations, the language has caught on internally as well. We’ve written a number of articles about the challenges in evolving from a product provider to service-based company. The cultural shift that must happen is immense and employing a service vernacular is a critical step. This is an area Jerome and Alex have focused a lot on and, again, have seen major strides in this year due in part to the real-world illustration of just how much service matters to the business. “The services journey started couple of years ago, but I think it was still at the operation level, at the country level, kind of second thought and not really a top priority. Now it’s a good thing that our CEO and our board members were strong believers and have been really promoting the services business for years and have made very structural and transformational investment into this different teams at country level,” says Jerome. “But what we saw this year is that COVID-19 has been a catalyst to prove that services is highly resilient, and the model that allows us to continue to deliver very strong profitability to our overall P&L. I mean, when I compare our traditional transactional equipment type of business versus services today, depending on the country, depending on the portfolio, you have a discrepancy between five to 10 points of growth between a services business and a traditional core CapEx driven business. It shows that this business is one of the most strong and reliable businesses, and resilient businesses in the economy.”

Witnessing that in real-time helped expand the understanding, acceptance, and language of service within the company. “Like everything else, it’s a journey and by no means what I declare victory. But I think, again, the position that we’re in now is markedly better and different than it was 12 months ago,” says Alex. “It starts for sure at the top down. There was a conversation maybe six months ago where it was basically said there are six priorities for the company: services and software, services and software, services and software. That helps, right? When you get that message from the CEO, people start to listen. Storytelling about customer successes are also impactful and resonate as you’re trying to make change.”

#3: We’re at an Inflection Point

While fraught with hard moments and complex challenges, for services COVID and the experiences of 2020 have left us at an inflection point. Companies have an opportunity here to build upon the increased awareness and acceptance, both internally and externally, to see significant progress in service success. “I think we’re going to look back on 2020 for a lot of reasons,” says Alex. “But if we think about what’s happened in the years before around service, there have been incremental changes that have happened – connectivity, customer demand, our own workforces. But given the intersection of external forces, acceleration of technology, from the customer demand perspective, from the sales perspective, from the delivery perspective, we’re going to look back at 2020 as a massive inflection point across the industry in how services are consumed and delivered as a whole and the value that a services organization is going to bring to customers.”

2020 has brought many changes that can be built upon in 2021 and I agree with Jerome that the opportunity is exciting. “I would say that for sure the outcomes-based services potential is exciting in the coming year,” Jerome says. “And we look at what is your current portfolio, based on what is your market or what is your customer landscape. What is relevant for your customers in terms of services based on this portfolio?” The possibilities are almost endless for those ready to make the most of this inflection point.

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December 18, 2020 | 3 Mins Read

Making Mobile Field Service a Better-Than-Desktop Experience

December 18, 2020 | 3 Mins Read

Making Mobile Field Service a Better-Than-Desktop Experience

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By Tom Paquin

Yeah, phones. We all have them, we all idly scroll through them, our kids can’t understand how it is that we managed to survive decades without them. They’ve naturally become assets in our personal lives, and have heavily penetrated service over the last decade as well, to the point that their near-ubiquity has created a sense of stagnation.

Still, some technicians struggle to push the buttons to start and stop appointments, log notes, or manage inventory and other elements on their mobile devices. There are a few reasons why this is the case, of course. Some technicians simply have their workflow worked out, they’ve been doing this for too long to add in steps that slow things down with no discernable benefit. Others have not been appropriately trained on the tools. Others still simply forget.

Much of this stems from a relative immaturity in the types of mobile tools that are put at your team’s disposal. There are a lot of ways to take mobile and do it wrong, so let’s break down some of the areas where businesses have seen success in leveraging mobile tools.

Making Mobile Matter

As I’ve said before, mobile needs to be much more than a pared-down portal with limited functionality, or—gasp—a webapp. True mobility takes advantage of the form factors at your disposal to deliver everything that’s available at a workstation and then some.

The Better-Than-Desktop Approach

This approach, which we will call the “Better than Desktop” approach, puts more power in the hands of technicians on the site than they’d have otherwise. Before we talk about what that means capability-wise, you need to think proactively about what your technicians are doing on a typical job site. Do they have access to both hands? Do they need to facilitate a handoff between hardware in the van or at their desk and hardware where they deliver service?

The bare minimum of this working is ensuring that your mobile utilities have identical functionality to desktop utilities. Technicians shouldn’t have to retreat to a laptop to bring up a part list or log notes, and if they’re in need of knowledge management, they need to be able to access it, not just completely, but quickly. No sifting through resource libraries. That’s enough of a pain on a full-fledged computer. How can you index and provide that information quickly and effectively on a job site?

A lot of that is going to come down to exactly what technicians are using on a job site.

Thinking about the Hardware

While rugged devices still abound, as well as the odd proprietary widget, but for the most part, when we think about mobile field service, we think about consumer-grade devices like phones and tablets. And yes—these generally should be the primary drivers of the mobile experience, as they’re ubiquitous, easy to develop for and to use, and relatively cheap to replace. But ancillary technology needs to be considered as well.

One of the many “better-then-desktop” utilities that should be considered on a jobsite is, naturally, remote assistance. End users are typically fine with using their phones for remote assistance, but what if you’re training up new staff on repair protocols? Remote Assistance can help onboard new technicians in significantly less time. And in those instances, it may be worth looking at augmented reality headsets, which create a more seamless field of view for drop-in, and even better persistent object tracking for more accurate overlays.

That’s one example, of course, but it speaks more broadly about how we can take mobile field service to the next level. Mobile devices themselves are full of uniquely useful sensors and cameras, including Apple’s newest iPhones, which ship with a LiDar sensor built in. Because of that, the opportunities to improve mobile functionality will continue to grow. If you start with a 1:1 mobile-to-desktop approach, you’ll be set up to capitalize upon it.

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December 16, 2020 | 28 Mins Read

Schneider Electric on The Move to Delivering Outcomes

December 16, 2020 | 28 Mins Read

Schneider Electric on The Move to Delivering Outcomes

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Jerome Soltani, Sr. VP of U.S. Services and Alex Gershman, Director of Strategy, Services and Solutions both at Schneider Electric join Sarah to discuss the inflection point service is at, the excitement that holds, and the challenges organizations face in bringing outcomes-based service potential to fruition.

Welcome to The Future of Field Service podcast. I'm your host, Sarah Nicastro. I'm excited to have today on the podcast a couple folks from Schneider Electric, talking about the company's move to delivering outcomes. If we look back over the podcast we've recorded this year, I think it's safe to say a majority of them have been about the path to outcomes based service and to organization. And there is some really good reason for that.

Sarah: I mean, first of all, I think it is the big evolution that companies are working on and toward. And hearing these stories I hope, for you, our listeners, gives you some light bulb moments that you're able to learn from and take back into your own businesses. I think these journeys are complex, as we're about to discuss, and I think sharing them with one another is fantastic because we all have something to learn from each other's stories.

Sarah: So, with that being said, I'm thrilled to welcome to the podcast today, Jerome Soltani, who is the senior vice president of US Services at Schneider Electric, as well as Alex Gershman, director of strategy, services and solutions at Schneider. Jerome and Alex, welcome to the podcast.

Jerome: Thank you. Thank you, Sarah.

Sarah: Thanks for being here. Before we dig in to the topic at hand, why don't you guys tell us a little bit more about yourselves? Jerome, can you start and do an introduction?

Jerome: Yeah. I'm Jerome Soltani. I'm the services leader for Schneider Electric in North America. I'm overseeing the field digital and consulting services for the biggest part of the Schneider Electric portfolio. Schneider, as we know, is the global specialist for NRG management and automation, and I oversee our entering services business, from building the strategy, develop the marketing plan, up to the execution and delivery. Alex, over to you.

Alex: Yeah, and I'm Alex Gershman, and I work on Jerome's team. And I've got the pleasure of working with him on the development of that strategy both over three-year period, as well as building our annual operational executional plans as well.

Sarah: Awesome. Well, thank you both, and excited to have you both here. We connected and I have a number of points I want to get to today, and I think we probably could've split this into three or four podcasts if we wanted to. But we'll do our best. With that being said, to sort of set the stage for the conversation today, I said at the beginning this path to outcomes based services is one that most companies are somewhere along today, right? And it's a journey. Can you share with me and the listeners for context, where would you describe Schneider being on this path, and how does that compare with what you have as the ultimate vision?

Jerome: Yeah, very good question, Sarah. Look, I think as you mentioned already, outcome based services is a journey. We are not yet there, but the good news is that we are strongly anchor the outcomes base value in our three-year strategy as mentioned by Alex. It's something that is completely in the core of our three-year strategy, and if you look back at what Schneider Electric has done, services and software and story and journey probably started probably five, six years ago in Schneider.

Jerome: If you look at this story, we have acquired different key players in the software domain in acquiring data, learning machine tools and so on and so forth, to really develop our capabilities and capacity in software. And services became very top priority for Schneider. If you look at that, this is really, for us, the prerequisite or the precondition to be able to move to outcome based services.

Jerome: So, with services and the digital piece, and now that we are able to have a much more unified approach in our services portfolio, we believe that we can accelerate very much our approach. And the good news as well is that we see the customer now. It was probably impossible a couple of months ago, a couple of years ago and now it's real. I mean, there were people who were asking for that, they are looking for that.

Jerome: To answer directly your question, I think we are at a inflection point where we are able, in some cases, some carrier, to redeliver the outcome based services, and be able to give this expectation or to provide this expectation to our end user.

Sarah: Excellent, excellent. So you're building momentum, which is really cool. So, I want to talk a little bit about we've set the stage for the fact that not only is Schneider on this journey, but a lot of companies are, right? Let's talk about why that is, and what I want to talk about really is what are you witnessing as a business from customers that is driving this demand, that's putting you on this path? So, happy to have you answer that question from a high level, and I know, Alex, you had made the comment that the conversations you have with customers today are far, far different than they were one or two years ago. Let's talk a little bit out what's changed. What's changed in terms of customer's needs, expectations, demands, and how is that really driving the need for Schneider to move this ball forward?

Alex: I think, Sarah, there are a couple of big, we call them mega trends, that we're seeing out in the marketplace that are driving the change in conversation. So first we see and certainly many of them accelerated through the last year, through COVID. Changes in investment shifts that our customers are making from big capital expenditures toward more operating annual kinds of expenditures. And again, through COVID we hear the needs to extend the life of assets, make sure that I don't have necessarily the capital to invest,

Alex: So that kind of CapEx to OpEx shift has certainly changed the nature of conversations that we're having. We're seeing from the customer perspective a couple things. One of my favorite terms of the last six months or so is the silver tsunami, hair color of the customers. We're seeing massive retirements on the part of the skilled labor inside of our customer organizations, meaning they're turning more and more to companies like ours to help them with the services needs that they had that they may have relied on internally previously.

Alex: We're also seeing a lot of pressure that our customers, especially a lot of our bigger strategic customers, that they're having to focus their efforts and attentions on their core business. Our candy makers want to make candy and they don't want to necessarily focus on their infrastructure. So, again, they're turning increasingly more and more to us to do that.

Alex: And then another one of the big ones, obviously the rise of data connected technology, the more that these things actually become real, the more customers are looking to us to help them with making sense of the data that they have, being able to get toward the outcomes that they're looking for with their customers.

Alex: So, all of those big trends have definitely changed the conversation, and I would say it really is in this last year, certainly in the few years previous. Jerome said that the journey started many years ago, concepts like IoT, customers were aware and cognizing and talking and early adapters had started to make investments. But it's really in this last twelve-month period and even in the last few months in particular, that we're really starting to see greater adaption, intense greater adaption.

Alex: I pulled some stats. We just wrapped a voice of customer survey a couple weeks ago, but more than a third of our customers say that they have or will be investing in connected software for their critical facility operations in the next year. Two thirds of them are investing in connectable hardware. So these things are happening, and they're real and very much it changes the dynamic, it changes the conversation that we're having with customers, because now they're looking to take advantage of these, they're looking for the ROI on these kinds of investments.

Alex: And quite frankly we're as well positioned as anybody to help them be able to take advantage to generate the ROI from those connected technology investments.

Sarah: Yeah. What's really interesting to me about what you just said, Alex, and, Jerome, I'm interested to get your take on this, is I actually think not only are you well positioned, but you are the reason that they are ready to take advantage of those things. And what I mean by that is, customers don't buy buzzwords, okay? That's why three, four, five years go you could talk about IoT until you're blue in the face and in most applications nobody cared, and that's because why should they, right?

Sarah: I mean, the organization is trying to sell that solution or recognize that evolution had not yet built the ability to translate those buzzwords into a value proposition. That's the change we've seen within the industry over the last few years, is the capability is of businesses like Schneider to see how do we take these buzzwords, make sense of it all, turn it into a solution that meets pain points of our customers, then they're ready to adapt those things. Of course they want to, because you've done the hard work of making it all make sense and making it valuable to them. Jerome, what are your thoughts on that?

Jerome: I definitely agree with you. I think before COVID we had the feeling to be a little bit in advance. Not being arrogant, but you see when you're a little bit too ahead of the market, you feel a little bit alone to create demand and create this awareness. But, I mean, COVID and the pandemic and the situation, working from home, nobody in the campus, in the university and so on, we saw this awareness and this acknowledgement of coming from our user. It was a big relief for us, and it was great to see that finally the combination of our software portfolio connected product and services would make sense, and would bring a lot of value to our user.

Jerome: I mean, again, there are a lot of things to work on, but we see definitely this resonating much more with our end user now than the past. So definitely now it's become a reality, concrete, and the customer. As mentioned by Alex, we see this trend now completely part of the description with our end user, and really asking them, asking us how can we deliver much more value into our services, our digital services, how can we connect the asset, our service, our connected service of North America. We drive data remotely from the installation, and what is of value and insight that we can bring to them to be more efficient, be more sustainable and really at the end of the day help them to deliver their value to the end users.

Sarah: Right, right. I want to come back to that increased acceptance and that increased awareness in a moment. But before we do, let's go back to the Schneider perspective for just a minute. So this is a path you've been on for a few years, right? It's not brand new because of COVID. But you did mention, Jerome, when we spoke, that there has been an increased recognition even within the business this year, of how service serves as a form of business resilience. Talk a little bit about that.

Jerome: You know, again, services journey has started couple of years ago, but I think it was still at the operation level, at the country level, kind of second thought and not really a top priority. Now it's a good thing that our CEO and our board members were strong believers and have been really promoting the services business for years and have made very structural and transformational investment into this different teams at country level.

Jerome: What we saw this year is that COVID-19 has been really a catalyst to prove that services was highly resilient, and the models that allow us to continue to deliver our very strong ordering tech and profitability to our overall P&L. I mean, when I compare our traditional transactional equipment type of business versus services today, depending on the country, depending on the portfolio, you have a discrepancy between five to 10 points of growth between a services business and a traditional core CapEx driven business.

Jerome: Very outstanding performance and at the end of the day we’re delivering strong profitability, and then contrastingly good. We talk about pandemic, but even the economy. In some area we saw some business struggling because of the situation. But as well oil and gas business beyond COVID was already in trouble. But this business still need to operate. They need to deliver, they need to drill, they need to extract oil, gas. And to do that they still need to maintain the equipment, they still need to be safe and reliable. And this business I'm passionate about. I love this business.

Jerome: But it shows that this business is one of the most strong and reliable business, and resilient business in the economy, in the market.

Sarah: Mm-hmm (affirmative). Yeah, and I think going back to what you said before, Alex, the changing conversations with customers, there's kind of a snowball effect in play to a point, right? Because as businesses become better able to translate the buzzwords into value propositions and to start to articulate those in a way that customers resonate with, then there's kind of a point where customers realize, "Boy, maybe we can rely on this company for more than just X product or X service," right?

Sarah: And I had a the exact same conversation with someone a few weeks ago who's in a different industry but similar situation in the sense of companies that have employed these highly skilled workers to run this equipment for a very long time, these folks are aging out and they're finding it impossible to replace that talent. So how can they turn then to folks like you guys, to help them bare the weight of that burden? What type of automation can you provide or insights can you provide that eases that and helps them maintain their business, right?

Sarah: And then you see how it can build. You bring something to the table, they have this moment of realizing you're bringing more to the table and it can build, you know? We've had a lot of conversations this in particular about COVID being a catalyst for service companies, manufacturing organizations that I'm speaking with, how they're far closer relationships with their customers in terms of really more intimately understanding not just how their customers use their products or services, but how they operate on a bigger scale, and letting that influence the journey forward, right?

Sarah: So, it's pretty cool stuff. And, Jerome, I know when we talked the other day we talked about the openness to change and acknowledgement of this evolution on both sides. On the company side and on the customer side. And I think we shared a bit of a moment where we both realized how passionate we are about the inflection point, as you said, that we're at.

Sarah: So, I do think that while this year has been immensely challenging and certainly wish things were different, one of the very positive impacts is going to be how it drives this evolution forward. You know, what are your thoughts on... How would you describe the impact this year has had and how you think that'll influence what's to come?

Jerome: I believe that we talk about this outcome based services and the value prep that we want to create for our end user, but it's urging a lot of senior as well on our coverage model, on our sales model and on our execution model. There is lot of consequences, implications on the way we want to now connect with our end user, discuss with our end user, which is much more remote. It's not the past model where you need to face to face, facing your customer, have this relationship intimacy and so on and so forth has completely changed.

Jerome: We have a shift in our sales model that we need to manage. Not only the tool that we are using and the capabilities we are using, but as well the DNA, the culture is different. You have to shift that. So yeah. Some people would be able to manage this shift and accompany you on the shift. The rest we will need partly to recruit different people. You need to change that. It cannot work the same way that it was working before.

Jerome: I see as well very strong impact on the execution, and the way you crowdsource, the way you have a much more diffuse market, you need to be able to sell your customer everywhere at every moment of the day and night. Now the connectivity and the remote approach and the data that you have allow you to be much more predictive, but also give you the duty that you need to intervene before anything occur or before anything create trouble on the process of your end user.

Jerome: So, there is definitely a way for execution and the way you manage your population of technician that will oblige you to rethink your setup and to rethink how you drive and you organize your team. Big changes as well on the back end, behind the scene, to deliver that. And we were talking with Alex we are looking this inflection point on the sellers, you cannot do the same thing than you are doing previously. So, you need to cross examine and have this kind of already the adapter or champion that will allow you to embark this new approach and be much more constructive and really... Because for me I believe that the outcomes based is linked to the understanding of, the pinpoint and the expectation of the end user.

Jerome: You are not anymore just troubleshooting or maintaining something, you are anticipating and complying to needs for the customer to continue optimizing his operation or her operation, and the maintenance of his infrastructure or her infrastructure. So you're going to have different people that understand this need and this expectation to deliver the right outcome to our end user.

Sarah: Right.

Alex: I think we're going to look back on 2020 for lots of reasons. But if we think about what's happened in the years before, there have been incremental changes that have happened, connectivity customer demand, our own workforces. But given the intersection of external forces and acceleration of technology from the customer demand perspective from the sales perspective, as Jerome mentioned, from the delivery perspective, we're going to look back at 2020 as a massive inflection point across the industry in the in which services are consumed, delivered as a whole and the value that a services organization is going to bring to customers.

Alex: I fully believe we'll look back when the white papers are being written a few years from now, 2020 is going to be that inflection point.

Sarah: I agree. And so that's the exciting part. But, Jerome, you just did a great job of articulating some of the layers of complexity, right? So while I wholeheartedly agree and I'm equally excited about the fact that I think 2020 is and will be an inflection point, and it's kind of minimized some of the barriers and it's sped some of the understanding and awareness. The reality is the reason that these journeys are journeys is because there's so many layers of things that need to change to really be successful in involving from a provider of X to a facilitator of success really.

Sarah: So, Jerome, to your point, that's what I see the new role as, right? And it's a big difference, right? There's a lot of work that goes into getting from A to Z. So let's dig in to a couple of those things. The first... and I think you've eluded, Jerome, to most of these, so let's just talk in specific about a few.

Sarah: The first is the cultural and mindset shift, and to me this is one of the areas of biggest impact of this year. Because I think it's really forced people to get out of their comfort zone. I think it's really then the push that a lot of companies needed to realize, okay, it's time to do something different here. But it is a big change.

Sarah: I think the deeper, the richer the history. Often times the harder it is to really get everybody on board with this services mindset and all of these things. When we spoke the other day, Alex, you mentioned specifically that Schneider has done a very good job of creating a language around service. How? Because I think that this is an area where a lot of people struggle, right? Because there is pockets or recognition within the organization of why this journey is so important and how it can benefit the company. But to be able to persist that understanding all the way through a business and really change the culture is tough.

Jerome: Yeah.

Sarah: So, having that language and being able to get everyone speaking a common language is a really important step. So what are some of the aspects of that for you guys? How would you summarize the progress and success there?

Alex: I'll go first and let Jerome add. And it's hard, and again, like everything else, it's a journey and by no means what I declare victory. But I think, again, the position that we're in now is markedly better and different than it was 12 months ago. It starts for sure at the top down. Our CEO deserves a lot of credit. Jerome mentioned he's been using this kind of language for the past several years. There was a conversation, I don't know, maybe six months ago where we basically said there are six priorities for the company, services and software, services and software, services and software. That helps, right? When you get that message from the CEO, people start to listen.

Alex: But it's been a very deliberate push from Jerome, myself, our team, out to the rest of the organization, taking advantage of the door being opened for us and making sure that we're doing our best to kick it in. It is repetition on the language that we're using. It's reinforcing the concept that we're talking about. It's painting the vision about why we are where we are, and what, quite frankly, some of the implications are if we don't make some of these changes now.

Alex: I think that repetition and that storytelling about customer successes that we've been having about the kinds of conversations, the things customers are asking for us about what we're trying to do. That repetition, that language, that resonates as you're trying to make change.

Alex: But again, I'd say we're still in the early stages of making that happen.

Sarah: Mm-hmm (affirmative). And this is where it gets tough for me without having a five-hour podcast. This is where we get into there's probably 20 questions I could ask you just one this topic, because yes, you still have a ways to go, I get that part, right? And I think that companies that are really innovating well realize that there is no finish line to this journey, right? You're not all of a sudden going to put your feet up and say, "Ooh, we Servitized. We reached the outcomes based nirvana, right?"

Sarah: It's going to be a continual process, so as such the language will continue to evolve, the culture will continue to evolve, but I may ask to have you back just specifically to talk about what does creating services language within a manufacturing organization look like? Because I think that, that's a cool topic. But we'll leave it there for now, I guess. Jerome, anything you wanted to add to that or can I ask you the next point?

Jerome: Yeah, I like to respond on what Alex said... a little bit. Definitely it's one of the biggest challenge to change this culture and this language. I think as leader you need to drive adoption. And we were discussing that with Alex a couple of weeks ago. I mean, it's a must and not nice to have. And you need to at one point explain and message to our organization and the shift to outcome or the shift services or the shift to digital may not be super beneficial today, but if you don't start to shift your boat or your organization right now, in two or three years you will be completely out of the market.

Jerome: So, this is a difficulty to manage this situation where, I mean, you need to start before it's happening, proactive anticipation. And really I was telling you the story adopters or this champion. You need to have people that get it. You need to have change agents that will allow you in terms of services to show you that, I mean, it makes sense, and successes bring successes. We saw that in some of our customers. They realize that as soon as we provide them with the digital connectivity and the services, they were operating much better than before. And we have some testimony that has been shared across our organization and people realize from bottom to top that, "Wow, yeah." It makes sense and it can deliver a very different shade of added value or value prop to our end user.

Jerome: It’s kind of chicken and egg. You know at one point you see the benefit and so the thing that you have kept messaging, kept communicating, starts to resonate outside and internally and then it's a way you can cross examine in your business. But it's not overnight, and it's a complex shift in the culture of our organization.

Alex: Nothing does a better job... something that Jerome said is nothing does a better job in amplifying and making that message sticky. Again, the CEO can push it, but when customers share that and when we can share that success with all of our people, with our colleagues when our customers come on and do it directly, those are the things that ultimately make the difference in resonating in people's minds.

Sarah: Right, right. That makes sense. Okay, I want to talk next a little bit about some of the operational change that has to take place as well. And again, this is a whole separate topic that we could really dive into. But I want to talk quickly about two things. The first is how do you convince people to evolve when business as usual is working quite well?

Jerome: Again, it's one of biggest difficulty, biggest challenge. I think-

Sarah: I'm only tackling the big, hard ones. I'm not going to ask you any easy questions, Jerome.

Jerome: I see it as being one of my pet peeves, my things that keep me awake at night. I mean, especially... again, as I said earlier, the services business in US was doing well. Your core business is growing, and generating the right level of, the expected level of profitability. Now you need to say to your team you start to shift your focus from 100% of this highly profitable growing into something that takes more time, is more practice, more consultative business.

Jerome: And so you need to educate, you need to convince, and as I said it's becoming mandatory. And we need to, as we discussed with Alex and with our financial partner, with our HR partner, we need to experiment things to see what could work to shift this behavior and this focus.

Jerome: We've changed ourselves. You need change, something different, because it's different quarter, different financial investments. So you need to change about that, because people will not be paying out as it were and you don't see the same return investments. So you need to work on changing your incentive plan and the way people are paid out.

Jerome: You need to change your model. You need to give more time to your sellers that used to phase customer and you need to give them more time to create this pipeline of activity to create opportunities. You need to find a way to manage transactional services business elsewhere, because they cannot anymore spend their time on spare parts business. That's not what we want to drive.

Sarah: Right.

Jerome: So, you need to change your sales model to give to your top guns, highly competent sales guys that understand this approach more time and you need to be probably at the beginning less stringent, less demanding on the return on cost than before, because it's not the same value. It's a different value that you are selling to the end user, and even if the market has changed and the expectation are different, you still need to convince. You have some challenge in terms of we talk about connectivity but you should've talked about cyber security.

Jerome: And so there's some additional complexities that need to be taken into account, and you need to give the right support to this team to be successful. So lot of changes in terms of incentive plan, changing term of sales model and sale setup and rules of engagement to you can really make sure that you can give room for your people to be successful in this new ecosystem.

Sarah: Mm-hmm (affirmative). That makes sense, and it kind of ties in with the second part that I wanted to talk about, is eliminating silos, right? And having a more cohesive strategy and cohesive approach. So what are the thoughts there? How have you made progress on breaking down some of those silos and working more for the greater good of the customer outcome?

Jerome: Yeah. I mean, look, Schneider Electric is a great a company and, as we said, making the right move at the right time for software services, and I think the direction and strategies is very key and relevant. Now it's a complex organization. You have many functions, you have hardware functions, software functions and most of them are working silos still, okay?

Sarah: Mm-hmm (affirmative).

Jerome: And now what the company has done is really try to shift from this profound performance measurement by BU and being much more agnostic in terms of performance tracking and performance monitoring. If the possibility of opportunity for our seller, for our people to be recognized not only on the silo, but be recognized on the overall accountability or responsibility that they have on a larger, wider portfolio.

Jerome: So, you need to break this, you can't still have this BU because you need R&D very specific to each BU, and you need to have some marketing very specific to each BU. But at the country level, you need to have a performance management and performance tool that allow you to break this silo. This is from the hardware and software point of view. On the service side I think it had been clear from the get-go, and we see that with Alex we have expanding our portfolio and we have a national unified approach.

Jerome: I mean, for us, I mean, we talk about digitization, we talk about services. Again, to move to the outcome based services, you need to move from an asset and BU point of view, to a much more system and solution point of view.

Sarah: Right.

Jerome: And you don't bring an outcome-based services if you just monitor the obsolescence of your title. You need to cover a system and a multi BU approach with this decision and with services will allow you to provide this outcome based services. So problem for us, every discussion that I'm having with the different BU leaders is that I will own the outcome based services, and I will generate the outcome based services if the customer or the market is expecting that. But then I will need to provide them the right performance, and allocate the performance that they own and they deserve. But truly as a services team to be able to integrate and blend the different BU to make sure that it's completely transparent for our end user and you manage the complexity behind the scene.

Sarah: Right, right. Yeah, I mean, this is another very common conversation that I end up having, right? Because, as you said, it's another very complex part of the change. So as a product manufacturer you're structured operationally for internal efficiency usually, and if you're trying to be structured instead for customer centricity what you need to be to your point to tie all the pieces together and deliver outcomes, it's a big difference.

Sarah: Okay, I'm stressed out because we're running out of time and I want to make sure we get to two more questions, so bear with me. I want to make sure we talk, again, when we're talking about the different layers to this journey about digitization. So I know this, again, could be an entire topic on its own, but for the sake of giving the Schneider Electric overview today, talk a bit about how digital transformation, the need to be able to collect and deliver data, things like that plays a role into this evolution.

Jerome: I will start and, Alex, you can go on. For me you transform your assets and your products into a smart connectable product and equipment. So digitization for me is going from this dumb equipment and gear to this smart and connectable products that you can connect on the cloud, and then completely leverage all the algorithms, all the abilities to deliver insights and actually insights to our customer, again, to deliver this outcome.

Jerome: So, digitization is key for us, for riding this layer of connectivity to your equipment, to your software to really be able to deliver this apps and this advisor for our customers. So, digitization for me is key as well on the execution. We made a huge transformation on how to schedule and dispatch our technicians who have access to our partners, because they are technicians as well and we are leveraging now our technicians.

Jerome: We’re giving as well to our partner when we connect the end user we are providing insight to our partner as well to connect to their end user. So the digitization for me it's key on the offer and value prop, but it's key as well on the execution piece for crowdsourcing and for making sure that you send the right technician with the right competency, with the right component to deliver the right services. So it's for me forming digitization on both sides.

Sarah: Mm-hmm (affirmative). Alex, anything to add to that?

Alex: Yeah, the only thing I clearly get is the currency that enables the customer value to be driven to enable the efficiency, and it's also that maybe a third layer is the customer experience as well. The bridge between what you're being able to deliver, what your people are doing, the ability to seamlessly on their own get in touch with you, schedule the appointment, whatever it may be.

Alex: I mean, the reality is it's critical to all facets of the transformation. Data is the currency on which all of this is built.

Sarah: Right. I always say making the decision to deliver outcomes is taking on the responsibility of mastering a lot of complexity and making that invisible to your customers. And to do that, obviously, these tools are critically essential.

Sarah: Okay, one last question for each of you, and it can be a quick one. If I were to ask you each to share your biggest lesson learned or your biggest piece of advice for a peer that is listening to this episode, what would it be?

Alex: I'll let Jerome think. I've actually been keeping a bit of a running list of the lessons that we've been learning as we've been going through this, because there are many. So, Sarah, if you'll forgive I'll share. There's four or five of them.

Alex: So, one is look, becoming more outcome based is a process, it's not a switch, right? Don't have any misgivings that this is going be a year's long process that ultimately has no destination, right? And you have to orient yourself that way. The second is that customer selection, especially at the outset really matters. Finding customers or partners who want to work with you, who are willing to accept that things aren't going to be perfect right away, who are going to serve as case studies for you as you make the case internally and externally is hugely, hugely important.

Alex: It also means that segmentation and specialization within vertical segments also matters. You’ve got to be an expert. The way that you handle a healthcare system and the way that you handle an automotive facility, the outcomes they're looking to drive are going to be different and you have to be able to understand that.

Alex: Two others, one is that designing for services is key. So we work in an equipment, historical equipment manufacturing company that makes the best products, and one of the big keys to being able to drive this type of change is having the services team, having a seat at the R&D table, at the offer generation, creation table very, very early on, making sure that services isn't an afterthought. And we've pushed really, really hard for that seat. And I think that, that's been critical for us being able to build the momentum.

Alex: And then the last one is that I will say that internal selling is as important, maybe even or more as external selling. Again, your customers are pulling you along. Customers want this. I mean, this is where they're going this year. And that repetition, that setting the picture, that storytelling I think has been equally, if not more important, for the success we've had so far and enabling us to maintain that momentum. That's in so many was at the heart of sale.

Sarah: Mm-hmm (affirmative). Okay. Jerome?

Jerome: Alex covered that. But for me probably... I mean, I would say that for sure the outcome based services potential is exciting in the coming year. And we look at what is your current portfolio, and as mentioned by Alex, based on what is your market or what is your customer landscape. What is relevant for your customers in terms of services based on this portfolio? Do you need to partner to expand your value prop, because you cannot deliver an outcome by yourself if your portfolio is not enough or do not bring enough coverage.

Sarah: Right. So expanding the value chain?

Jerome: You need to change your value chain or adapt your value chain depending on the outcomes that you want to deliver versus what you have in your portfolio currently. So think about that before moving into this journey. I think it's important strategically. And then you can find the right alliances or partnerships to enrich your portfolio and deliver this outcome. But there's partly some work to do in terms of marketing intel to look at this portfolio versus the outcome based that you want to get.

Sarah: Okay. Good. Jerome, Alex, thank you both so much for being here. Plenty of areas that we could dig into further, so we'd love to have you back at some point if you would be willing. But thank you for coming and sharing your story today.

Jerome: Thank you.

Alex: Thanks for having us, Sarah.

Sarah: Yes. You can learn more about the journey to outcomes based service by visiting us at www.futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter @TheFutureOfFS. The Future of Field Service podcast is published in partnership with IFS. You can learn more about IFS service management by visiting www.IFS.com. As always, thank you for listening.

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December 14, 2020 | 6 Mins Read

How the Context of COVID is Growing A Culture of Service

December 14, 2020 | 6 Mins Read

How the Context of COVID is Growing A Culture of Service

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 By Sarah Nicastro, Creator, Future of Field Service

I discussed earlier this year my thoughts on how COVID will speed Servitization progress and that belief has only been strengthened since. While an incredibly unfortunate and taxing situation, the pandemic is creating more openness to change both within companies and from their customers; greater appreciation of the digital tools that enable not only business continuity but also set the stage for business transformation; and affirmation of the role service plays in more resilient revenue streams.

I first welcomed Tim Baines, Professor of Operations Strategy at Aston Business School and Executive Director of the Advanced Services Group, to the podcast for episode 70 in August where he shared an overview of the Advanced Services Group’s research and explained how the firm categorizes the four forces behind Servitization. Last week, I welcomed Tim back to discuss his thoughts on how the events of this year will impact the Servitization trajectory and his predictions for 2021.

We discussed that, in navigating the complexities of COVID, what’s happened is that the context has shifted for many businesses. This context shift is having impact in several different ways that are likely to spur the Servitization efforts of many companies forth. “What has happened massively for us over this past year is that the context has shifted. And as a consequence, the decisions we’re making inside businesses has shifted also,” explains Tim. “If you accept that a lot of the forces which are shaping industry were there anyway, what COVID has done is to strip away the grayness of those forces. COVID has shown us that forces which are shaping industry have almost accelerated the shift.”

Primed for a Cultural Pivot

This evolution of context leaves companies primed for a cultural pivot towards Servitization and outcomes-based service. “When we think about Servitization inside the context of a broader firm, one of the big inhibitors of progress has always been almost the cultural change, the legacy of the production that’s sitting behind,” says Tim. If ever there’s been a (albeit forceful) nudge in the direction of advanced services, it is in the context of this year.

“I think businesses are at a crossroads,” says Tim. “Some businesses will look at what we have been through over this last year, they will look back at what has happened in the past and say, ‘Okay, as soon as we can get back to the old way of doing things, let’s do it.’ Then there will be others that say, ‘Okay, we’ve come from there to here and have found ourselves in a position where our people are actually quite ready for change. Let’s move forward.’”

Based on the conversations I’ve had this year, I think more companies than not have taken the challenges of this year and channeled them into a catalyst for change – I think the majority are primed for the cultural pivot necessary to bring Servitization visons to fruition. “The reality is, I am sure that the future direction will be a compromise of both decisions, and that’s fine,” says Tim. “But there are so many exciting opportunities to embrace these forces which COVID has made so apparent to us and capitalize on it through Servitization and advanced services.”

Financial Innovation

Tim predicts that beyond the ways in which context may impact culture in 2021, financial innovation will play a role in advancing companies’ Servitization and outcomes-based service journeys. “Eighteen months ago, I went to an asset financing conference in London to speak about Servitization. And I was really surprised to hear about all these financial institutions who were talking about Servitization,” he says. “We’d never come across this community before. They spoke about things like subscription charging, which we’re familiar with. But then it moves into conversations about asset financing, partnering with a manufacturer. It moves into conversations about ownership, moves into conversations about contracting. They’re looking at Servitization as innovation… almost what I would call the mechanism for revenue capture. When we talk about Servitization, we’re talking about how you’re bundling the service offerings together to build a bigger customer value proposition. Basically, this is all about, to me, the shift to an outcome-based society. The subscription charging can go hand-in-hand with that, but it’s slightly different things.”

Tim explains how he sees this financial innovation having an impact in 2021 and beyond. “Let’s take a practical example. In the U.K., fossil fuel heating on new-build properties will not be allowed by 2025, even retrofitting. The alternative technology is technology like heat pump technology. It’s expensive, so how do you get that new technology into it? If you or I went out and bought a fossil fuel heating system, it might cost us $2,000. The heat pump system for a house or equivalent property might cost us $20,000. How do we do it? Well, we obviously need financing. And if that financing can be bundled together in terms of a subscription charging, where we don’t feel the pain as a big lump investment, but rather, the pain is spread out over multiple, maybe five-year contract. Then, we’re going to feel more ready acceptance of the technology.” Thinking through how the proliferation of financial models like this could impact the ability to combine product, technology, and service sales across a variety of industries is certainly compelling.

Environmental Pull

Finally, Tim expressed just how big of a role he believes environmental sustainability will play in advanced service efforts over the coming years. “COVID has made the environmental context more apparent to people,” he says. “In the U.K. particularly, people are spending more time at home, they’re spending more time at the gardens, they’re looking around them and they’re seeing what’s happening. They’re more aware of their environment, and they’re saying, ‘Hey, we like this. We want to spend more time with this environment, we want to care with it more.’”

This growing awareness, acceptance of responsibility, and commitment to action is shared by many of the companies I’m speaking with. I do agree with Tim that sustainability will play a greater role in serving as motivation for advanced services efforts going forward – both in the objectives of the companies to minimize carbon footprint and also from the perspective of the customer looking to choose more environmentally conscious companies to buy from. “The environmental pull is becoming more apparent, so how can industry respond to it? Well, you’ve got all the technology which is required to be put in place and got out there, that manufacturing can provide and get into the marketplace,” says Tim. “There are services upon services, whether it’s heat pump technology, whether it’s hydrogen for house heating, whether it’s shift in mobility, all these different technologies which can be got out there through advanced services.”

While 2020 has been an immensely challenging year and isn’t over yet, I take heart that there is a lot of good to come for companies looking to grow their culture of service. And we’re at a perfect point to do just that. “The potential is great. It’s the bundling between the cultural organization to offer the services that the product enables, coupled with the technologies which help us to monitor how the product is used and build up intelligence, coupled with the financing which gets those innovations into the marketplace as quickly as we can,” says Tim. “If you look at the evidence of data coming out of the World Bank in terms of where gross domestic product is generated, the fact is that services supersede products and production. I think it’s extremely difficult to argue against the adoption of Servitization.”

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December 11, 2020 | 3 Mins Read

The Path to Sustainability Runs Through Service

December 11, 2020 | 3 Mins Read

The Path to Sustainability Runs Through Service

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By Tom Paquin

Let’s start with the obvious: There’s a moral imperative for businesses to increase their sustainability. While individual waste and pollution certainly has a greater-than-zero effect on the health of our planet, businesses, by virtue of their scale, have an outsized effect on our ability to impact our environment, and while these organizations may not have a fiduciary duty to their shareholders to be conscious of their waste, they certainly have a duty to humanity. And many firms have chosen sustainability as a practice for that reason, but in reality, there’s not just a moral imperative, but an economic imperative as well.

For our purposes, we’re going to focus on managing, and mitigating waste, and the catalyst for minimizing waste is the well-covered concept of the Circular Economy. For the uninitiated, the circular economy is the process of eliminating the linearity of delivery by rethinking supply chains, workflows, and delivery cycles. Here’s a short video that considers it from a consumer perspective:

This is obviously a multi-year process that requires significant investment and organizational restructuring, but at its heart, it is aided by rethinking the compact that you, the supplier of goods, makes with your customer. Specifically (and no surprise here!) I’m talking about service.

Structuring Around Service
Service has the effect of taking the seemingly transactional relationship that many businesses have with customers past the sale into their utilization of products and services. If any of that is news to you, I don’t know what to tell you. As we’ve said repeatedly here, building a business around service is good for business. Apple’s products are great, but Apple’s service is why they’re a leader. And that service mindset has helped Apple set itself apart as an example of sustainability.

By keeping your hands on your products past the sale, you can use the resources at your disposal to, of course, ensure that the products are working optimally for the customers. But furthermore, this allows you to more fully control the lifecycle of your products, identify with authority a point of obsolescence, and remit, recycle, and rebuild products, this lowering the bottom-line and keeping hazardous materials out of landfills.

Building a Sunset Plan for Assets
I’ve spoken with a variety of leaders about how they go about the process of evaluating sunset plans for assets, and the list runs the gamut—from choosing a five-year sunset plan for assets that refresh at quick rates, to mandating that products be replaced if repairs costs exceed 50% of the cost of a new unit. The means to gauge this sit unique with each business, thought here are certainly some industry analogues in place. It’s likely that a variant of this policy exists within your service organization at some point already.

Once it’s formalized and socialized, it needs to make its way into your repair systems by default. When logging a job, service workers should be prompted automatically in real-time when a repair passes a specific threshold. With those business rules in place, there’s no second-guessing or questions on the job site.

Building the Right Reverse Logistics Processes
What happens after that is where sustainability takes center-stage, and assuming your service software has prompted a product refresh, and that replacement has concluded, the crux of sustainabile business comes with figuring out what to do with the old asset. This is where a solid, full-featured reverse logistics engine come in.

We’ve spoken about reverse logistics previously, mostly in terms of how it impacts the repair-remittance cycle, but thinking about it through the lens of sustainability, when scrapped parts are returned, remitting them appropriately becomes a unique new challenge. What internal materials must be sent where, what is recyclable, and how must non-recyclable materials be safely disposed of.

You can and should build those rules, and those supply chains, into your reverse logistics workflow, and maintain the ability to adjust them however you need to. This echoes the necessity that you, the business, maintain the levers of the recycling process for your customers. You have the resources (and the incentive) to break apart their products, so that they don’t end up in a landfill.

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December 9, 2020 | 28 Mins Read

Tim Baines of Aston Business School’s 2021 Servitization Predictions

December 9, 2020 | 28 Mins Read

Tim Baines of Aston Business School’s 2021 Servitization Predictions

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Sarah welcomes back Tim Baines, Professor of Operations Strategy at Aston Business School and Executive Director of the Advanced Services Group to share his insight on what businesses can expect as it relates to the Servitization journey in 2021.

Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Very excited to welcome back to the podcast today, Professor Tim Baines, who is the professor of operations strategy and the executive director of the Advanced Services Group at Aston Business School. Tim, welcome back to the Future of Field Service podcast.

Tim Baines: Thank you, Sarah.

Sarah Nicastro: We had Tim on episode 70 of our podcast. If you have not heard that episode, you may want to go back and check it out after today's discussion. Tim will tell us in a moment a bit about what he does with the Advanced Services Group at Aston, but today, we're going to be hearing Tim's predictions for what will take place in the world of Servitization in 2021. Tim, before we dig into the conversation, for those that may not have heard our first podcast together, can you give them a little bit of background on your role, the Advanced Services Group at Aston, and what it is that you all are doing?

Tim Baines: Okay. Thank you, Sarah, for that. I'm a professor of operations strategy, manufacturing operations. My background is that I've spent all my working career working either for or with manufacturing businesses, helping them with their strategic decisions with regards to their operations.

Tim Baines: I became involved with the Servitization conversation around about 2003, 2004, that type of period. And I did so because we were asked to... Within the U.K., we were asked by the U.K. government. A group of universities were asked to respond to the competitive priorities for manufacturing firms moving into the new millennium. Up until then, our attention had been looking within the factory, had been looking efficiency within the production process and how to be effective, how to exploit digital to make sure that products are made cut, made quickly, made of a good quality, and made cost-effectively.

Tim Baines: This project, this program of Servitization was really about, within manufacturing, within the research community in the U.K., looking beyond the factory gates, looking at the opportunities for manufacturers beyond the factory gates. And that really brought us to get interested in this topic of Servitization or advanced services.

Tim Baines: Since that time, my work has been entirely focused on Servitization. Servitization, very simply, in my mind, is all about helping manufacturing companies to compete through services rather than products alone. Since that time, my work has been entirely focused on this topic. A few years ago now, we titled the whole research center the Advanced Services Group, because we wanted to distinguish between those service-based business models which are truly disruptive and high-value and game-changers in the marketplaces, versus the more traditional view of services inside manufacturing firms, which is about selling spare parts and brake fix. We really wanted to position our work as being about the new business models, the new service-based business models for manufacturing organizations moving forward.

Tim Baines: That's where we are, and that's just a brief overview. The work that we do is a combination of research, which is very much trying to understand and frame what it means for a manufacturing company to compete in this space. We develop research frameworks, such as services staircase, which talk about the different customer value propositions an organization can offer. Transformation roadmap, which describes how organizations have moved into this space. The business model blueprint, which focuses on the core elements of a service business model.

Tim Baines: We do research which is very much about framing the innovation, helping to understand it. We work closely with businesses in the U.K. and around the world to apply the concept, and through the application of the concept of Servitization, advanced services, we learn, it fits back into our research, back into our teaching, back into our publications. And we just keep the virtuous cycle moving, of research, impact upon practice, research, impact upon practice, to move forward the whole knowledge in this area.

Tim Baines: The one thing which galvanizes all our work together is this open ambition to really change the world for the better through these advanced services. It's based upon a motivation that... The business that many manufacturing firms follow hasn't really shifted much since the ideas of Henry Ford in 1910, 1912. A lot of manufacturers are still very much committed to that business model of production, consumption, and dump. And the whole business model of advanced services maintains that route in the products and the IP of the products, but very much looks at gaining value through the services, and is a much more environmentally, economically sustainable business model. And we're very much committed to promoting that business model.

Tim Baines: Sarah, does that help as a form of introduction? Is there anything you think I ought to have covered there, which I've missed or skipped over?

Sarah Nicastro: I think it's perfect. I've said here before that the work you guys are doing is really, really good, well worth everyone checking out. We'll make sure that there's a link to the Advanced Services Group in the notes.

Sarah Nicastro: What struck me is that the research you all do and the work you do, it's very clear when you look at it, when you consume it, that it is very grounded in the voice of the industry. To your point, my passion is helping folks that are on this journey in any way I can through providing them insights and content and connections that can help them, because we know that this path to Servitization is not one that is very simple or happens overnight.

Sarah Nicastro: If you were to go back and listen to the episode Tim and I did, episode 70, we talked about the four forces behind Servitization. It's well worth a listen. But the reality, to set the stage for today's episode, is that I think the vast majority of our audience recognizes those four forces. They recognize the fact that this is the future, this is where we're heading, and they're at varying stages of readying themselves and progressing themselves through this continuum.

Sarah Nicastro: Today, what I want to talk about is what we expect to see next year. 2020 has been an immensely challenging year for all of us personally, professionally, and I have a deep respect for the service leaders that I talk with on a daily basis for the fortitude that they've had to show. Not only progressing forward-thinking goals like this, but dealing with a lot of very complex challenges on top of it. I certainly don't want to minimize that.

Sarah Nicastro: I think one of the things that I've taken heart in this year, one of the silver linings, if you will, of this situation is the impact that it's having on the Servitization journeys, in the sense of really spurring them forth, in my opinion. There's a number of factors that have come into play in this very challenging year that I think really have helped make some significant strides in Servitization efforts. What are your thoughts, Tim?

Tim Baines: It's really interesting to hear you speak, Sarah, because you touched on, when you were introducing the work that we do, about the contribution that an academic makes in this space. And it's very interesting, because my background's a little bit unusual within the context of a business school. I'm actually a professional engineer, I'm a chartered engineer. When we look at what research engineers do, it's very much around materials, products, functional things. Engineers are allowed to invent things, but when you look at a business school and research that's carried out inside the business school, the research inside a business school is very much based upon this world of observing the phenomena. You recognize innovation and you look at the innovation, you try and make sense of the innovation. And a lot of the research which is carried out in business schools is all about trying to make sense of the innovation.

Tim Baines: Now, the innovation that we're talking about here is this notion of Servitization. When you ask me to comment upon the innovation which is taking place inside industry, you're trying to make sense of this innovation. The academic community isn't inventing it, but they're trying to make sense of it, they're trying to clarify what is actually happening.

Tim Baines: One of the frameworks the academic community has come up with to help to understand these innovations is a change management framework, which basically says that change takes place as an interplay of the context within which the organization sits, the management process which take place inside an organization, and ultimately the outcome of the decisions that are played. The machine tool, the management processes, the business context to be all into play.

Tim Baines: What, of course, just happened massively for us over this past year is that the context has shifted. Now, the way in which we tend to think about making strategic decisions inside businesses hasn't necessarily moved. The cultural side of things hasn't shifted in terms of how we run businesses, but the context has shifted. And as a consequence there, the decisions we're making inside businesses, the actual outcome of the decisions has shifted also.

Tim Baines: When you ask me to comment, I'm sitting and I'm thinking about this context, and thinking, "What shifted about the context?" We are in this world when we're thinking about what's going around us at the moment in time. It's a bit like predicting the weather. Of course, we're sifting through the trends in the past and we're trying to reflect upon what we've seen and make predictions as to what the future might be, and of course, it's been a year of tremendous shift and change. But if you accept that a lot of the forces which are shaping industry were there anyway, what also COVID has actually done is to strip away almost the grayness of those forces. If you strip those away, I think COVID has shown us that forces which are shaping industry have almost accelerated the shift.

Tim Baines: This time last year, I wrote a blog, and I was talking about the shift, the forces. And I was saying, to me, in terms of Servitization, the forces which were shaping industry were this desire for productivity, greater outputs for the amount of inputs we're putting, this adoption of digital and accelerating the adoption of digital, and sustainability. And I was talking about environmental sustainability.

Tim Baines: Particularly if you're in Europe, the environmental sustainability agenda is really at the forefront of a lot of people's minds. Sitting where I am in the U.K., you were looking and you were saying, perhaps in the order of digital productivity and sustainability, these were the things which were coming on the agenda. These were the priorities. Now, we still have this bizarre situation where we've got this thing called Brexit, but let's not worry about that, because that'll take us in another direction together.

Tim Baines: And then you've had this year. Of course, we stripped away this grayness about what's shaping industry. And I would argue now, moving forward over this next year, of course, I think recovery and resilience are going to be the two fanfares, almost, at the forefront. But then coming right behind that is I do think the environmental sustainability agenda is going to be very high on people's list of priorities.

Tim Baines: Here's a great example of this. You very kindly helped us with the World Servitization Convention. You did a great job with that. It was excellent, thank you. But a few weeks before it, the BBC published a statement, and it was about Apple computing. The value of Apple was given to be higher than the whole of the FTSE 100. The FTSE 100 is the U.K.'s top 100 share index, and the U.K. share index was declared as having... It was full of dinosaur stocks, it was stocks like British Petroleum, Shell, all these different things. Fossil fuel-based stocks. And Apple was held up as being worth the equivalent of that.

Tim Baines: Coupled with that Apple statement, you had a statement about sustainability. And whereas in the U.K., we have this ambition of being carbon neutral by 2050. Apple was saying, "We're going to be carbon neutral by 2030, and we're going to be carbon negative by 2050." Carbon negative. And then when you look inside Apple and you look at... If you want a second example of Servitization and see how Apple have dematerialized their supply chain, and are really... The Apple iPhone, it's all based around services. The value's coming through services. And you look at that as an exemplar and you look at what's happened, you say, "Absolutely, these are going to be the trends." Industry is responding to public demand for this improvement in sustainability.

Tim Baines: When we look at it, and I take a step back, I say that my prediction, my reflections, is that the forces which will be shaping what we do over the next year will be, of course, responding, resilience, but I do believe that sustainability is going to be evermore at the forefront. And those leading businesses, those businesses which... There are really excellent examples of businesses which are leading the way there and are really making a lot of ground. Does that help, Sarah? Does that resonate with your own thoughts?

Sarah Nicastro: It does. There's a couple areas I want to dig into. You spoke about context and that the context is what has changed a lot this year, and I agree with that. I think that that shift in context... Really, if you break it down, I think that the biggest impact of that is... Like I said at the beginning, we talked on our last podcast about the four forces behind Servitization, and I think that there is a general acknowledgement of those forces and, again, I said this earlier, an awareness that this is the direction we're heading.

Sarah Nicastro: But I think that, for a variety of factors, if you were sitting in January of this year again, there's just still a lot of things that can lead to more of a resistance to really progress as quickly as is possible through that journey. There's some history and some operational things and some cultural things that were holding companies to their roots. And I think that what has happened is, particularly for anyone that was lagging a bit in getting on board this journey, the context of this year has given them a quick shove in the direction of progress.

Sarah Nicastro: And I would argue, though, that that shift in context is, I think, having a cultural impact in companies. I really do believe that... And it's probably what I'm most excited about. I think that there's been so many interviews I've done this year, where people have talked about just very quickly becoming more creative, more innovative, and more quickly adapting to, what do our customers need from us right now? And it's okay if that doesn't look like how we've historically delivered value. We need to shift, we need to pivot, we need to react quickly.

Sarah Nicastro: Companies have had to become accustomed to making far more rapid decisions than they ever have before with, arguably, more complex and quickly changing criteria than they've ever had to deal with before. The use of digital tools and technology. Again, even employees that were resistant to that have a change in thinking, because they see it as a way to persist in doing their work and having a job. I think that there's a lot of challenge to what's happened this year, but the outcome, I do think is on the company culture, and I think there's a lot of positive things that are going to come out of that.

Sarah Nicastro: I want to dig into a bit more of your specific points and some others and talk a little bit about more of those. When I think about the excitement that I have for moving forward, I think that, as we focus on that resilience and move toward recovery, these companies are doing so from such a stronger place because of the experience of this year and how both the context and the culture have changed in a way that can really move them forward in a positive way. Does that make sense?

Tim Baines: It does, Sarah. If I was to reflect upon the situation, I think businesses are at a crossroads, a t-junction crossroads. And we have this, certainly inside the U.K., where there is this... Some businesses will look at what we have been through over this last year, they will look back at what has happened in the past. And you might take this, for example, as the automotive industry. Look in the past, and then they're saying to themselves, "Okay, as soon as we can get back to the old way of doing things, as soon as we can get back to the past, then that's great. We've got to try and move back towards there, we've got to get people back into their offices, we've got to focus on production, get the product out there, get the shops open, et cetera." That's the whole business model Henry Ford made so successful, and was absolutely right for that context. It's not a critique of the business model; it's a critique of the fit of the business model with the context.

Tim Baines: And then you've got the second one that says, "Okay, well, we've come from here, but we're in a situation where we found our people were actually quite ready to change. We're finding that the people are becoming more sensitive. What we have been through over the past year has forced us to make redundancies. We've stripped away people inside the organization." Invariably, these perhaps are people who have been with the organization longer term, or perhaps were custodians of the old business model. Some organizations say, "Well, let's see and move forward with this."

Tim Baines: I'll be honest. The reality is, I am sure that the future direction will be a compromise of both, and that's fine. But there are so many exciting opportunities, to my mind, of embracing what these forces which COVID has made so apparent to us, embracing those through Servitization and advanced services, really capitalizing upon it. So many exciting opportunities.

Tim Baines: To your point initially, Sarah, I am mindful that there's a lot of people who are senior positions inside services businesses who've had a terrible time dealing with what we've been through and having to make the best of it. You and I today, we're talking and we have this very privileged position to be allowed to talk freely about these things without this legacy of having to bring the whole organization with us. That's our responsibility, is to talk a little bit about some of what the future might hold.

Tim Baines: The opportunities, to my mind, are absolutely phenomenal. Let's take some examples. If we take what's happened in terms of these forces which are shaping industry, and we talk about the market pull and the technology push, the market pull has shifted. Go back to the environmental one. If you look at the environmental context, which COVID has made a more apparent to people... In the U.K. particularly, people are spending more time at home, they're spending more time at the gardens, they're looking around them and they're seeing what's happening. They're more aware of their environment, and they're saying, "Hey, we like this. We want to spend more time with this environment, we want to care with it more."

Tim Baines: The environmental pull is becoming more apparent, so how can industry respond to it? Well, you've got all the technology which is required to be put in place and got out there, that manufacturing can provide and get into the marketplace. There are services upon services, whether it's heat pump technology, whether it's hydrogen for house heating, whether it's shift in mobility, all these different technologies which can be got out there through advanced services.

Tim Baines: And then we look at another area. Food has become more of an issue. We live on an island. The food supply, et cetera. Again, advanced services, looking at food, looking at this whole sector, how it can provide a more resilient supply chain, how we can get new technologies, how we can get robots out there. Again, through advanced services. That's another exciting opportunity. And we see the same service here in what I might call assisted living. People living independently and promoting that, without the need to jump in the car and go somewhere. All these different sectors, the opportunities are becoming so exciting for these innovations that we're talking about.

Tim Baines: Really, the biggest challenge, I would say, to a lot of people for this next year, the one challenge is, have you got the vision to actually exploit those things? Can you get the vision there? Or are you going to push this away? Are we going to try and regress? Or have you got the vision for imaging, for thinking about it in manufacturing industry, beyond the idea of producing, consuming, and just dumping it? That's the challenge to my mind.

Sarah Nicastro: Mm-hmm (affirmative). Maybe the conversations I'm having are just a really good sample, but I think that the vast majority of service leaders are really focused on harnessing this momentum and caring forward. I'm not talking to a lot of people that are intent to go back to the way it was.

Sarah Nicastro: I want to dig into a couple specific areas and talk about how the challenges of this year are really going to have a positive impact once we've progressed through them. The one is, we've seen an increased uptake of an openness to technology this year. Obviously, companies have, in parallel, been on their digital transformation journeys. There're still laggards and leaders. I think anything related to innovation, when things are going well, it's easy to deprioritize the need to evolve if you're in a good spot. This year, we've seen companies that have either rapidly expanded their use of technology to persist with business, or have quickly looked to get up to speed in that area. When we think about an increased use of an openness to how technology can play a role in these operations, how do you think that will impact Servitization progress in 2021 and moving forward?

Tim Baines: Okay. If I may, Sarah, I'll just comment very briefly upon what you just said about the service leaders you've interviewed. I would say the same. I very much endorse that, that these service leaders... And maybe it's because people inside of services are naturally more intimate with customers, so they are seeing these trends.

Tim Baines: However, when we think about Servitization inside the context of a broader firm, one of the big inhibitors of progress has always been almost the cultural change, the legacy of the production that's sitting behind. Of course, for the organization to shift, it requires that production environment. When I talk about people who perhaps not embracing the new business models with perhaps as much enthusiasm as you and I are, it's because I am reflecting also upon this traditional legacy lots of organizations have had. But it's really reassuring to hear that the people you've been interviewing are being consistent with ourselves. We're not just a bunch of crazy academics talking about what the future might like.

Tim Baines: Let's talk about digital. If you ask me about the innovations which are likely to have the biggest impact upon manufacturing businesses moving into services, I wouldn't put digital in the top two. I would put the two innovations which I think are most exciting at the moment in time. One is what we've already spoke about, which is the cultural change. I think there's an awful lot to be done there about vision and empowerment and really grasping the opportunity. I think the second opportunity innovation is financial innovations.

Tim Baines: That is not to say that I don't believe that digital has got tremendous opportunity to accelerate. I think that what we're talking about is the confluence of digital, financial, cultural. We're sitting at the center of these three, and we're enabling an acceleration into a new way of doing business which wasn't there previously. Whether it's artificial intelligence, whether it's remote monitoring, whether it's big data, whether it's blockchain. Those are fantastic innovations and they're really enabling what's going on, but the thing which has really come to my attention recently is the financial innovations, because it's the financial innovations which, I think, we need also.

Sarah Nicastro: Tell us more about that.

Tim Baines: Okay. The background to this is, 18 months ago, I went to a conference which was an asset financing conference. It was a big event, it was held in London, and I spoke about Servitization. And I was really surprised to hear about all these financial institutions who were talking about Servitization. We'd never come across this community before. What they're talking about is things that you would be familiar with, Sarah. It starts with subscription charging, which we're familiar with. But then it moves into conversations about asset financing, partnering with a manufacturer. It moves into conversations about ownership, moves into conversations about contracting.

Tim Baines: It's complicated, and I'll be honest. If anybody's listening to this podcast who is from the financial community, please forgive me when I say this. But their understanding of the concept of Servitization is inconsistent with the popular understanding of the concept of Servitization, as is held by the broader scholarly community that looks at it. They're looking at Servitization from an innovation... It's almost what I would call the mechanism for revenue capture. When we talk about Servitization, we're talking about how you're bundling the service offerings together to build a bigger customer value proposition. Basically, this is all about, to me, the shift to an outcome-based society. The subscription charging can go hand-in-hand with that, but it's slightly different things.

Tim Baines: Let's take a practical example. A couple of examples, if I may. I think I spoke about this last time. In the U.K., fossil fuel heating on new-build properties, 2025, you're not going to be allowed to have it. Even retrofitting, fossil fuel heating has been challenged at the moment in time. The alternative technology is technology like heat pump technology. It's expensive, so how do you get that new technology into it? How do you actually get somebody like you and I... If we went out and bought a fossil fuel heating system, it might cost us $2,000. The heat pump system for a house or equivalent property might cost us $20,000. How do we do it? Well, we obviously need financing. And if that financing can be bundled together in terms of a subscription charging, where we don't feel the pain as a big lump investment, but rather, the pain is spread out over multiple, maybe five-year contract. Then, we're going to feel more ready acceptance of the technology.

Tim Baines: We shift and take something alternative. You take food production. In the U.K., aging population, you got food production. A lot of the farmland in the U.K. is held over to dairy. And then as you start to move over from dairy, as people's... We're having a growth in people moving to being vegetarians, being vegan, et cetera. Concerns about climate change. There's pressure on dairy farming, and there's a request to actually exploit the land in different ways, but exploiting the land in different ways requires new technologies to get in there. You start to talk about autonomous vehicles and robots and such like. How are you going to make that happen? Again, you want to shift to an outcome-based contract, and financing can enable that. It's on subscription-based charging with really intelligent ways in which you're financing the asset.

Tim Baines: It's our service world, and it's our move to these advanced services, this outcome-based world, where we're buying the outcomes. But it's the bundling between the cultural organization to offer the services that the product enables, coupled with the technologies which help us to monitor how the product is used and build up intelligence, coupled with the financing which gets those innovations into the marketplace as quickly as we can.

Sarah Nicastro: Yeah. That makes sense.

Tim Baines: Sorry, Sarah. I've gone off into complete tangent there, but hopefully it's relevant.

Sarah Nicastro: No, that makes sense. This is in line with... Historically, one of the challenges that I hear a lot from people, and this is a combination of different factors, but people saying, "How do we bring our customers on board this journey?" While there is a market pull, there's also the real shift in terms of... Now, we're moving from delivering products to delivering service. What does that look like? How does all of that work?

Sarah Nicastro: One of the things I've heard a lot this year echoes what you just said. If you think about a manufacturer of really large equipment, obviously if people are looking to avoid CapEx expenditures and move toward more OpEx options, then they're looking for more of that financial innovation. How do we do this differently? How do we bundle these things together? How do we achieve the outcome we need in a way that looks different than that purchase or revenue model did in the past? That makes sense.

Sarah Nicastro: Generally, again, going back to the positive implications here, I think that the need to get creative this year is breaking down some of the barriers in communication between companies and customers to have discussions around what different models might work. What does this look like in reality? And I think that, again, that's something that will propel companies forth, because rather than avoiding those conversations or struggling through those conversations, they're coming together in a time of need to find outcomes that are mutually beneficial to both parties in a way that hopefully makes progress these folks can build upon. Does that make sense?

Tim Baines: It absolutely does. And this is tough, isn't it? We're asking of ourselves to envision a future which is different to the past. And just like when you started this conversation, you were saying what's our predictions for next year, we're making those predictions by looking at the past and teasing out which we can conclude factors, and we're being effective by our own assumption and prejudices.

Tim Baines: If you can, when you move to our world of these advanced services and you start to think about the opportunities which have been opened up and are opened up by this combination of this digital, this cultural shift to these outcome-based contracts, digital, shift to outcome-based contracts then the financing, they take you home. I'm fortunate enough to have a sensible office in my own home, et cetera, but an awful lot of people were shifted from being based inside the factory or inside the office block, and they now work from home.

Tim Baines: And then you look at it and you're saying, "Okay, well, what do you need to work from home?" And you think about the computers, you think about the printing technologies, you think about your desk, et cetera. How are we expecting people to go out and buy this? Actually, the old model is, go and buy it. The model that we really want is, the outcome I want is a work environment that I can be productive within, that's got all my technologies. It's safe, it's ergonomically sound, et cetera. What a fantastic opportunity for an outcome-based contract.

Tim Baines: It's not about a big asset. It's about that shift, enabling this outcome where I can be productive in my own workspace. And for that to happen, of course, requires the technology, but it requires the digital. I've got a printer over there. If my printer doesn't work, I need somebody to ring me up and tell me how to fix it. I don't want to go into YouTube and have to sift through all the various presentations how to fix my HP printer. I want it fixed, and I want financing in a way which I can afford it. I just want these outcomes.

Tim Baines: This goes back to your initial point about, what does the future look like? Look at this fantastic opportunity for the home working environment. Physical fitness, everybody's saying... In the U.K., we had a big run on people buying bikes and fitness equipment, et cetera. You want this gym at home, you want the outcome of being able to exercise at home. All these different things, all these opportunities.

Tim Baines: The big challenge for us, in my mind, is, is it envisaged that this is forthcoming, or this forthcoming? This is how the future could really look if we really exploited what is happening. The digital, finance, and the shift towards an outcome-based economy.

Sarah Nicastro: Mm-hmm (affirmative). Yeah. We had Peloton on the podcast earlier this year, and boy, are they one that has... The challenges they have are opposite of many of the companies we're speaking with, because their demand has just been through the roof, and it's been immense growth.

Sarah Nicastro: It is a good point. The opportunity here to innovate is not limited to manufacturers of huge equipment. We've talked with service companies that... Again, it's about listening to the needs of the customer and adapting quickly. We've had a lot of different examples of organizations that have just paid very close attention to the outcome desired in January and how that differed to the outcome desired in March of April, and they just moved quickly to be able to meet those needs.

Sarah Nicastro: I think, again, the thing I love about this is it's forcing these companies to flex these muscles of openness and creativity and innovation. As they're doing that by force, they're learning that they're capable, and that the opportunity to continue doing that is immense. That, I guess, is what really excites me about the way that the challenges of this year, I think, are going to pay off immensely in 2021 and beyond. It's really interesting to think about some of the ways that we'll see this come to fruition as we move along.

Tim Baines: Sarah, I... Sorry.

Sarah Nicastro: Yeah, go ahead, Tim.

Tim Baines: No, I was just going to... And your point about the threat side of things is interesting. One of the businesses we work with looks at assisted living inside your home, particularly for disabled or elderly people. They're very conscious of how the technology providers... We saw it this week with Amazon declaring that they're offering the capability to monitor machine tools and report on machine tools' performance. How do you compete against somebody like that? Well, you don't take them head-on in terms of the product. You do something that they can't do. And what they can't do is that services package. We're not talking about just good delivery. We're talking about that services package of assuring somebody can live safely inside their own home.

Tim Baines: Even if you're traditionally rooted in production and products, and you're looking at the future from... Not just the threats of COVID, but what else? For example, what technology vendors are doing, how they might move into your space. Customer intimacy that's demanded to be successful with services, particularly advanced services, is such that it builds that resilience. And it's resilience not just to pandemic, but it's resilience against the technology vendors. And that's good for us. None of us want to live in a world where everything's dominated by one particular business. It's healthy for people to have choice, and that's what services enables. It's a much more resilient business model.

Tim Baines: I should just say, we're certainly fine in the U.K., you have to be careful. Organizations such as Rolls-Royce have been hit very badly. When you look at something like Rolls-Royce, there has been an ambassador for the more advanced services, certainly over the past 10 years. It's very easy to look at them and say, "Oh, is that a reflection upon the service-based business model?" If that is a reflection on the sector... The whole sector of air travel has been so badly hit. Sectoral factors will always play into this, but nevertheless, the level of the individual business, services give resilience. Services provide the platform to respond, to recover, to get innovation out there, and sustainability.

Tim Baines: Big challenge to me, though, is whether organizations and politicians can actually envisage that, can buy into the vision, can see the vision, can understand that this is not about... So many opportunities have been opened up by this pandemic, and let's embrace them.

Sarah Nicastro: Mm-hmm (affirmative). Absolutely. All right, Tim. We've talked about the context and how that's shifted. We've talked about culture, we've talked about financial models, we've talked about sustainability. Any other thoughts? Any other thoughts or words of wisdom to folks as we wrap up 2020 and move into the new year?

Tim Baines: I think one of the challenges, Sarah, is for anybody that is spectating and looking to what's happened, there's a myriad of spectators, et cetera. The only thing I would say is look at the evidence. When we go back and you look at the Apple example that I spoke about shortly, there was evidence of a response and a potential trajectory. And then look at the evidence of other organizations, look at the evidence of data coming out of the World Bank in terms of where gross domestic product is generated, and the fact that services supersedes products and production.

Tim Baines: Look at the evidence, and the classic ways you know to look at the evidence is to find it, recognize what you believe in, form what we call the null hypothesis, which is the opposite view, and go out to prove the opposite view. And when you can't prove the opposite view, then there may well be some truth in the view that you want to believe. And I think if you go out there and you look at the evidence, then you can make your own mind up. I think it's extremely difficult to argue against the adoption of Servitization. That will be my finishing... I can't find the arguments against it.

Sarah Nicastro: I agree 100%. Again, in a year fraught with difficulty, I think we, as individuals and as a community, need to look for, what are the positives? And again, to me, the conversations I've had around... From company to company and individual to individual, how this has opened eyes and created more open-mindedness and spurred more innovation and creativity and agility, it's really heartening to see. And I think that, while we probably all would wish this situation away if we could, it's something that I think is really going to create a lasting positive impact for a lot of these organizations in terms of their ability to be resilient and to persevere and to think differently than they have historically.

Sarah Nicastro: I'm personally really excited to see what 2021 will bring, and certainly hoping it's an easier year for everyone than 2020 has been. But I appreciate you coming and sharing your thoughts and insights, and I know that we'll look forward to having you back next year to discuss how things are going and what we're seeing in terms of these predictions becoming reality.

Tim Baines: Thank you, Sarah. I very much enjoyed today's conversation, and I look forward to speaking to you again on this.

Sarah Nicastro: Me too, Tim. Thank you.

Sarah Nicastro: For those of you that haven't listened to episode 70, go back to futureoffieldservice.com and take a look for that. It's a great discussion. You can also find us on LinkedIn as well as Twitter @TheFutureofFS. The Future of Field Service podcast is published in partnership with IFS. You can learn more about IFS Service Management by visiting www.ifs.com. As always, thank you for listening.

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