Click on the link for more information on Schneider Electric’s innovative aaS offer EcoStruxure Outcomes: Secure Power as a Service - www.se.com/au/outcomes
This is part two of a two-part podcast. If you missed part one, be sure to listen to it here.
Sarah Nicastro: Can you tell us a little bit, Howard, about ... You just said the go to market is the biggest hurdle, right, so we've talked about that, but, even once you have that right, you're not home free, right? Let's talk a little bit about operationally what you needed to address to be able to bring the model to life.
Howard Bowland: Oh, okay. It's actually ... I say go to market is the most challenging item, and I know if I talked to my people building the operational side, they'd maybe have a difference point-of-view. The way I think about it a little bit is it's a little more well defined, the operational challenge. We've got a gap in our operational capability that we've got to fill. When you're talking about having to go to market, it's a little softer about exactly what's required and the skills, and how do you develop the people? How do you reach the right customer? It's a little less well defined. That's why I see the go to market as the bigger challenge. And you're talking about compensation or salespeople, and that's always complicated as well. Are you motivating the right behavior? It's one thing, as you pointed out, if everything was sold as a service, then that would be simple, but because we've got different offerings as well different business models.
Howard Bowland: On the operational side, what we're able to leverage is a lot of core building blocks of Schneider Electric service. The ability for field service, the organization itself, the digital connections into that infrastructure and the data lake that monitors that. We have connected service hubs around the globe that are able to roll a truck on the basis of some outage, for example. Putting together that ability to monitor the infrastructure and make sure it's running. We had to shift, also, the metering, the measuring, of what is the consumption that we're going to bill the customer for, so that required a bit of development and a bit discovery about who does what in Schneider. Some good building blocks, but then, as we try to connect, well, we need something different to fill in this piece, and it was quite a challenge navigating who is the person that can give approval to our person to get that piece of data?
Howard Bowland: There's quite a lot of navigating, finding the owners of different pieces of capability. I'm not saying connecting the capability was easy afterwards, but it was as significant piece to find, who owns what. We've got good service capability. We can make a call, go visit a customer, fix something, replace something, install something. All those basic capabilities are in place. It's about putting them in the right stack and connecting them now to a control tower that understands where everything is operating. A big shift for one of our first customers was getting thousands of alarms on new infrastructure that was running hot in places they didn't know, and so having us come and just simply take control of that and eliminate the alarms and identify the devices that are in danger of not working properly because they're environments were wrong was a really big, important improvement.
Howard Bowland: That capability to do that actually more or less exists. We've added that customer success management and a layer of advisory and evaluating pieces that. We've got some software or analytics developed with Mossrake to enable us to do metering, billing. Converting those readings into actual variable invoices for customers is itself a challenge, which we get done. So if I talk to my operations manager for this piece, she will say, "There's a lot of ... It won't really scale. We need a system-based solution," so we're ... Again, it's this agile method. We're making this thing work. The customer sees a good outcome. Inside, we've got people running around on treadmills, but we'll replace that with systems and automation and so on at the right times.
Howard Bowland: It's just keeping ahead of that curve. That makes it an affordable way to develop it. If we tried to develop all the capability and have it readied and put in place so that we could cut the ribbon it, it would be a much more challenging assignment to get the investment for it. That's a bit of a summary.
Sarah Nicastro: Yeah, and I almost wonder if, going back to some of the common challenges I hear of others struggling with, I wonder if there is more of the: Let's build it, then we'll develop the go to market, right? It's a delicate balance in the sense of you can't go out there selling outcomes you can't deliver on, right, so you have to be sure of that, but I think it's also nice in terms of how it can snowball your success, right? If we get the go to market right, find the right people, have the right conversations, and give them a good experience however that needs to happen, right, then we're getting success, and we build on that success, and then we build out the backend of everything. Yeah, that makes sense.
Howard Bowland: That's, again, why you have to have this ... It's really useful to have this passionate group of explorers, adventurers who are willing to do the painful thing on the inside to make this a success. Then we can develop the ... We can take that pain away internally over a bit longer period of time. But also talked earlier about the idea that we need to start with that MVP, the minimum product that can be useful, because building something that's ... If it took too long to build something that was more material, it may be we wouldn't get there. But, ultimately, the opportunity of ... Shifting this business model to other parts of the technology set is quite a logical extension, yeah.
Sarah Nicastro: Howard, you've talked about agile a lot and how important it was here to have the success you've had. How is it possible, though? What would you say are the keys to doing this in an agile manner?
Howard Bowland: Okay, I think you have to have a core group of competents, I guess. For us, that was mainly Mossrake and maybe a little bit internally. You could do it internally, but you'd probably have to stand up a few people that knew what they were doing. Then, getting people to enlist on the vision, the journey, and be ... You could simply assign agile people in an agile way to the team and say, "Your job is X or Y," but we really were defining a lot as we went, and so that wasn't itself even perhaps quite possible. Having people that are really excited about what we're trying to achieve and are willing to give that discretionary effort ... I had people, yes, I'd assigned, carving out some of their time, and other people who were willing to do it on top of their main job and nobody's giving them a relief from their main job.
Howard Bowland: They wanted to do that. Their desire to want to contribute and be part of it was really, really important. I think good clarity around not defining too much to do, some knowledge that gives us confidence that we know, generally, the direction, but we're going to go a piece at a time, and having people who are highly enthusiastic and agile and are invigorated by the vision I think are key ingredients to that. Then celebrating a bit of success, we obviously were making progress as we went through. That always helps the next sprint, if you've achieved something.
Howard Bowland: One other point I wanted to make: wouldn't underestimate how important it is, and I've talked about this, the importance of not taking no as the answer. So many times, Scott will attest to this, went out and said, "Can we access to that data? Can we do this?" "No." You've got to find the person that can say yes and get support. You could easily have stopped at various points because it looked like it wasn't going to be possible to do what we wanted to do. It was some incident contacts that I'd personally made when I traveled that turned out to be people that were critical, and it was just a little bit of luck that I'd bumped into them, and a bit of tenacity, as Scott points out, to make sure you can continue to look for the way.
Sarah Nicastro: Yeah, I'll tell you a funny story. My husband, one time, we were in the car, I don't know what made me ask this question. It's one of those questions a wife should never ask her husband, but I said, "Hey, babe, if you had to describe me in one word, what would it be?" Right? There's no right answer. You know that it's just ... It was a complete trap, but he said, "Tenacious."
Howard Bowland: I agree. Scott first coined this for me, I think, but tenacity, for me, is the balance between ... It's not stubbornness, which says, "I'm not going to shift from my position no matter what you say." It's actually about, "I've got a strong point-of-view about why this is my position, and I can be convinced when the facts bring that to bear," but getting through what can be a pretty challenging time, it's an important attribute, for sure, Sarah.
Sarah Nicastro: Yeah. I always say I don't mind if the answer isn't what I want it to be as long as I feel like I've fully stated my case or have been heard, right? That's ... Okay, so on the agile topic, Scott, what would you add in terms of for folks looking to do this in an agile way? Any other keys to that that you would add to what Howard mentioned?
Scott Weller: I think the software industry has now embraced agile for so many years that it's not seen as a random walk. Even in this case, applied to a different kind of problem, agile doesn't mean just winging it. You have to have a sense of where you're trying to get to. You have to have a fundamental vision and a belief, as Howard mentioned, and then that guides you. Even though, on any given day, you might be working on pricing, or you might be working on a revised channel program, which itself takes several steps to mature through, but you know where you're going. It's just a matter of accepting that you won't have a completely finished product on day one. You've already stated that. You've got a minimum product. That's going to be good enough to have a conversation with the customer about ... And even sell to them, in a pilot sense.
Scott Weller: And customers, just like you said you might want to come along as an adventurer next time Howard does this, there are customers who want to be part of that too. They're quite excited about being pilot customer number one or at least in a pilot program because they themselves are that kind of person, that kind of mindset. It is a bit of luck, finding the right people on your team, finding the right consulting partner, or finding the right first or second customer, but, really, those are the things that you can never count on. They do happen, but, really, having the strength of a great vision is so key to this, and then being willing to learn along the way. That, I would say, is the second secret to success.
Sarah Nicastro: Yeah, that makes sense. I think it's you know your objective. You just don't know every step you're going to take to get there, right?
Scott Weller: Right.
Sarah Nicastro: So I think, as a mindset, just in life, that concept prohibits so many people from moving in a direction, right? They want to see the whole map of not just where they're getting there, and then, if you don't have that, you just stay stuck, right? I think it makes sense to go about it that way, especially because, on these journeys, there's so much to learn, so the more up-front work you put into doing the way you think you need to do it, and then you start doing it and realize you weren't quite right, then you're out all of that time and effort, rather than, to some degree, learning as you go along.
Sarah Nicastro: That being said, I ... Sorry, Howard, we're you going to say something?
Howard Bowland: A little anecdote around enlisting people. I remember, as we're going through this process, here at Schneider, we have a very good intern and graduate program, so I was able to pick a few people. People, in fact, working in my organization wanted to be part of it. I was at a town hall. We have these town halls every quarter. Pre-COVID, of course, we're doing those face to face and had an audience of people. I was thanking people as we were making some progress on this journey, and I named a few people and thanked them. Even Ben, who's on the call here, was one of those.
Howard Bowland: Then, in the second row, there was this couple of interns there that I could see their faces drop because I hadn't mentioned their names, and they'd worked on the project a little bit. So this triggered in me, "Oh, yes, of course, there's also X and Y," and their faces lit up. It just triggered for me how excited they were about working on something innovative. They were interns and graduates that had just joined this company, and that kind of journey was really a big motivator for them.
Sarah Nicastro: Mm-hmm (affirmative)- Yeah. It's a good point, too, on acknowledging the progress and the hard work, right, especially, to your point, in the early phase of this when everyone's going above and beyond to chip into this new mission. You want to let know you appreciate that sacrifice and that extra time and all of those things.
Sarah Nicastro: Okay, we said this a little bit earlier, but this was done in a way within your region that it was almost like a pilot for Schneider Electric, right? It can be adopted by other regions, globally, et cetera. I think, though, I want to talk about that concept in the sense of why that approach may work better for other organizations than trying to do a global, wholesale shift.
Sarah Nicastro: Then I think it makes me think of the agile conversation in the sense of the criticality of documentation, right? I would think one of the things that makes the agile approach work is keeping such good track of: Here's what we did. Here's what we learned. We're going to incorporate this. Now here's what we did. Here's what we learned. Right, it's you're doing that for the purpose of being successful in your region, but you're also doing it with the intent of documenting this so that it's replicable across the business. Talk to me a little bit about the idea of doing this with it in mind that it can be done across Schneider, not just in a specific region.
Howard Bowland: I'll go first. Yeah, quite right. What was interesting ... First of all, I was able to secure some funding globally. As part of that, of course, I felt that it was important that this be repeatable and we document our journey, as well, as you say, to make ourselves successful. That with important to do. As we went on this journey as well, we, I'd say, strengthened our existing process documentation for just our regular bricks of service capability. We were able to leverage on some of that, but actually just discover that, in fact, that wasn't as probably robust as it should be as well, so able to add to that.
Howard Bowland: As part of this journey, there was a systematic approach to building out the blueprint for how to do this and document that, and that was a key part of what Mossrake brought to us, what our team worked on, and we've created that repository of documentation and learnings and insights, as well as what's in paper, it's actually in writing as well, which has been really useful to keep us on track and will be useful as other regions of Schneider, for example, might want to replicate what we're doing here.
Scott Weller: Yeah, as you say, one of the key deliverables from our work together, Howard, is this operational blueprint, which covers every aspect of the value chain, and then, on top of that, the operational description for actually how the run what's effectively an engagement with the customer. As a service ends up looking like a consulting engagement that just doesn't necessarily have an endpoint. All of that is what, in our conversations with other countries and regions within Schneider, that's the foundational element is that operational blueprint. By the way, when we talk with them, we never characterize this as, "Okay, it's a slam dunk. Now that Howard's done this in Pacific zone, you can do this anywhere. It's just a couple of weeks, and you can go start selling."
Sarah Nicastro: Sure.
Scott Weller: It's quite involved, and every company is different. Schneider tends to be a lot more, I would say, operationally independent. Of course, they share systems and so on, but the regions and the countries tend to have a lot more autonomy than we see in other multinationals, so that just means that there's a bit more work to land something like this because the nuances, the difference in processes, the different tools and so on that have to be integrated to make this work is a little bit of a restart. Certainly not a true restart, but there are the nuances that have to be accommodated.
Sarah Nicastro: Scott, is this approach of starting in a region and almost using that as a pilot for a multinational, is that a common approach? Is it a suggested approach? You, as the person that does this with other businesses, what is your take on that as others are listening?
Scott Weller: Well, it's certainly the way we did it back at HP, and we do it. We've done it with Howard, and we're working on a couple of other clients as well. There is ... I would say the beauty of this is being able to do this in a microcosm, where if, God forbid, it were to fail for some reason, the risk to company is small. The reputational risk, primarily, but even operationally, even financially, the risk is very small. It lets you learn, because inevitably you're going to learn. No two companies are the same. No two as-a-service offers are going to be the same, so you have to allow for that.
Scott Weller: Being able to de-risk it and particularly a lot of companies, when they think about moving to this model, they start thinking about, well, stakeholder perception. If you think about yourself as a dividends-value company, moving to a model like this may really upset stakeholder perception, so it gives you time to succeed, learn, and really be planful about how you want to pivot the company around something like this in a way that you can talk to your stakeholders about, you can talk to your employees about. It's really, we think, is really the right approach.
Sarah Nicastro: Yeah, that makes sense. Howard, what would you say is the biggest lesson you've learned in leading this transformation at Schneider?
Howard Bowland: Yeah, I think it's something we talked a bit about earlier. I think it's the change, the management of change. Don't underestimate how persistent you need to be, the importance of clarity in the vision on bringing people on that journey. Yes, there's particular challenges around the go-to-market or the sales process or quoting or operationally, but that management of change across the stakeholder group, across the people that you need to do something is really critical. Understanding ... It's not, as we know, it's not one-shot thing about explaining it one time or ... It's about making, particularly, when we're going through developing MVP, making smaller achievements over time, it's continuing to bring people on that journey of change and have a coherent program of work around that. That, for me, is the most critical thing to get right. It leads to identifying what I've said earlier about getting the right customers with the right sales conversation.
Howard Bowland: If I think about transferring this to, just to comment on that, another geography of Schneider, to me, actually, the operational capability is the most easily translatable. All the bricks that we've got here largely are elsewhere. In fact, I think you could almost run it out of a more central operation. We, for example, run here out of Sydney, and we have customer sites in New Zealand and all over Australia, or they could be in another country. Well, they are in another country, New Zealand, right? But the customer interface, the customer success management, the things that Scott talked about, about the advisory, the engagement with the customer, obviously the pre-sales and sales engagements are the really critical pieces that you've got to have localized.
Sarah Nicastro: Mm-hmm (affirmative)- Yeah, that makes sense, and I think part of that change management puzzle is the volunteers you had, right? As you have people from the business who are opting in and doing it because they think it's a great idea, a cool journey, a new challenge, whatever their personal reason is, then others see that, right, and then they see them excited about where you're going, and that builds. I think that those two things help each other out, right? You build some traction through the folks that are involved and engaged.
Howard Bowland: That's not to say that there aren't a few stakeholder groups or individuals which we haven't quite converted. What happens, of course, is you get the passive resistance or the undermining that you can't see. We talked about it earlier. If somebody is much more comfortable with positioning their traditional offer, they'll find every way they can to do that, even if the best thing for the customer and for us is actually a different engagement. Then the payoff for the company ... The payoff for the customer is clear, I think, although that's often more difficult to translate to them. The payoff, obviously, is that we know ... Instead of selling the customer some assets and getting 10 or 20% of that value in related services, you're talking about five- to 10-year engagement where the customer is probably going to pay 1.5 to 2X for that because they're getting the value out if it. Scott alluded to this a little bit, so at the beginning, it's a challenge, but the flywheel takes over as you scale, and it creates a lot of good things.
Sarah Nicastro: Yeah, it goes back to the point that's been made a few times about just being persistent and tenacious, right? Some of this is just people need to see it in action, and it takes time to convert the people most resistant to the task underway. You just have to keep at it and not be easily deterred from the mission. Okay, last question that I want to ask both of you, is ... Scott, I'm going to start with you. What do you think the future of outcome-based service holds?
Scott Weller: Well, in many ways, we're at the beginning. When you can only point to a few of the bigger companies doing this, as I mentioned at the beginning, that are well known, when so many products that are part of our everyday lives on the business side, as well as the consumer side, are still transactionally bought, transactionally dispose of, we're not really focused on the value that they create in our lives. We're focused on, okay, how do I get this thing? How do I take care of it? Even our phones require us to pay attention to updates and so on, but I think the world is going to move to this model, and you see it in the strangest places sometimes. But I think every technology-product company is going to eventually move to a model like this. It's just a matter of time.
Sarah Nicastro: What's a strange example?
Scott Weller: Well, I'm still surprised that people are willing to let their car leave their driveway and let somebody borrow it for a few hours for a fee. To my mind, that's very strange, but that was the last one I saw. Apparently, that company is doing very well.
Sarah Nicastro: Interesting. Okay, yeah, it is very interesting to see how it pops up and where it pops up. I agree that it is really the early stages. I think the fact that this is a topic of conversation among so many organizations in service right now is indicative of where we're headed, but, to your point, there are a lot of people on the journey. There are not a lot of people that have really crossed a finish line yet, right? I think there's a lot of learnings and a lot of growth to come.
Scott Weller: Yeah, that's right. I think that one of the biggest inhibitors is a question of identity. If you've grown up in a company that's product ... We call it product first or product leaning, your whole identity is about we make cool stuff. That is, I think, probably the biggest challenge, the biggest, let's say, inhibitor to moving to a model like this, where you've got, really super-smart engineers now feeling like they're part of the supply chain. They're not the forefront of the model anymore.
Sarah Nicastro: Right.
Scott Weller: But I think, somehow, we have to come to grips with that because the human element of all this, both on, as I said, on the supplier and the customer side, have to be addressed. We can't pretend it's not there. In any case, yeah, as you say, it's the future.
Sarah Nicastro: Yeah, it's interesting because it shifts from, "We make cool stuff," to, "We help people," right?
Scott Weller: Right.
Sarah Nicastro: Then, when you think about what that means in terms of all of these layers of change we've talked about today, but particularly in terms of skillset and those interpersonal skills and being able to interface with customers, being able to move upline in customer engagements, being able to nurture longstanding relationships. All of those things, it is interesting to see how you start to skew to those things becoming increasingly important, and then there was probably a whole other conversation of: How readily available are those skills compared to some of the traditional skills that we would be talking about having as a priority within either product manufacturers or even service organizations, right?
Sarah Nicastro: Yeah, it's a very interesting conversation. Okay, Howard, what do you think the future of outcome-based service holds?
Howard Bowland: As the demand grows, the focus on developing the technology will be focused around making it as-a-service capable already and less about color and shape and lights and customer user features. Making cool things that have got great features would be replaced by, well, it doesn't matter if it's a black brick in the corner if it's got all the attributes we need to make it scalable, for example, and accessible and so on. The product design and development that has good outcomes as its first thought would change the way they evolve. It would change the way you manufacture, potentially, and the costs of those things, the consumption of products, which is the second one, which I think is the sustainability push. While you're making products that perhaps are designed for as a service, they consume less on their input side because a lot of the smarts is maybe remote and so on, and you might have built them now to have a variable capacity that you didn't do before.
Howard Bowland: You also move to, "Actually, you don't have to worry about the life cycle, Mr. Customer." You're no longer over-provisioning it. You're going to get what you need just when you need it, and we're going to take care of it when the time is right, so cradle to cradle. We're certainly seeing, here in this zone, the very strong shift towards ... It's not just revenue growth, cost reduction, risk reduction, it's sustainability as well. I think it's going to help deliver on that sustainability promise for customer. That would be the two things.
Sarah Nicastro: Absolutely, good. Well, thank you, Howard and Scott, for being here with me and sharing the story. It's very interesting story, would love to have you back maybe in six months or so and hear what else you've learned because you guys are on that agile path, and you've learned a lot so far and are having great success, but I know you'll continue looking for those learnings and incorporating them into what you're doing. Thank you for being here and sharing, really appreciate it.
Scott Weller: Thank you.
Howard Bowland: Yeah, thanks for the opportunity.
Sarah Nicastro: You can learn more by visiting us at 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 by visiting IFS.com. As always, thank you for listening.