April 29, 2022 | 26 Mins Read

What is the Business Potential of Transformation?

April 29, 2022 | 26 Mins Read

What is the Business Potential of Transformation?


You may remember Joe Pine from podcast #19. He’s the co-author of The Experience Economy, Infinite Possibility, and Authenticity and author of Mass Customization as well as co-founder of Strategic Horizons LLP. On today’s episode, Sarah welcomes Joe back to discuss a column he co-wrote recently for HBR titled The “New You” Business which dives into the business opportunity of transformation.

Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Today we're going to be talking a bit about the business of transformation. I'm really excited for this conversation and excited to welcome back to the podcast, Joe Pine, who is the author of the book, The Experience Economy, and co-founder of Strategic Horizons. Joe, welcome back to the Future of Field Service Podcast.

Joe Pine: Thanks, Sarah. It's a pleasure to be here again.

Sarah Nicastro: Yeah, I'm excited to have you back. So you were on... A while back, I forgot to look at what number the episode was, but I'll make sure I put it in the show notes (Episode 19). But you were on to discuss your book, The Experience Economy, and this is something that we reference often as to countless others, talking about the evolution from commodities, to good, to services, ultimately to experiences. And great book, great conversation we had on the podcast the first time, certainly worth a listen. I don't think that we're saying in today's conversation that the experiences in any way irrelevant, rather looking at what's the next evolution of that continual.

Sarah Nicastro: And so you recently, co-authored an article for Harvard Business Review, discussing the fifth pillar of this continuum, which is around transformation. And I'm really excited to talk about this today, Joe, because we talk a lot on this podcast about transformation, as it relates to our audience, transforming their business to better serve their customers. Today we're talking about, as I stated earlier, the business of transformation. So moving beyond offering experiences to helping your customers transform. So can you just kind of kick us off by giving a bit of context and summary around, how did this fifth pillar come to be and what opportunity does it present to folks that would be listening?

Joe Pine: Yeah. Transformations have always been part of the formula, part of the progression of economic diet, from the original discovery of it back in the early 1990s. I knew that there was something beyond experiences, by asking the question, what's next? Always thinking about what's next. And what I realized is that if you design a set of experiences that are so appropriate for particular person or company that you're working with, exactly the right set of experiences, then you can't help but turn to what we often call a life transforming experience.

Joe Pine: There was an experience that changes us in some way. And I realized that was a fifth and final economic offering beyond commodities, goods, services, and experiences. We're using experiences as a raw material to guide people to change, to help them achieve their aspirations, in other words. And we all know we're all products of our experiences. We only ever change through the experiences that we have, and that applies to individuals as well as to corporate customers that you're working with and thinking about how do you... The core is, how do you help them achieve their aspirations? What do they aspire to become and how do you help them achieve that? That's your transformations.

Sarah Nicastro: So let's talk through a couple of examples, just to make sure this is clear for folks that are listening. So we're not talking about quality or convenience, or even the experience we're talking about helping customers realize the benefit and how that helps them transform. So I'm wondering, I know in the Harvard Business Review article, which everyone should go and read and we can make sure to link to that too. You walk through some different examples and there's examples of how this plays out in a consumer oriented business, as well as a business to business situation. Can you just give a couple of examples to help illustrate this for folks that are listening?

Joe Pine: Sure. Well, the key example we start with in the Harvard Business Review article, or which is called the "New You" business, is profiled by Sanford. And it's sort of funny, right after it came out, Sanford sells the company. So it's no longer profiled by Sanford, it's just Profile. But what Profile does is they focus on weight loss, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: So that's a personal transformation that many of us want to have at some point of our lives. Many of us want to have our entire adult lives, it seems like. And they recognize that you really have to have a commitment to be able to make this happen. That's one of the key things with the transformation, is the customer has to be committed. Otherwise, you're never going to make something like that happen. It's too hard.

Joe Pine: And obviously, people can always buy self-help books. They can buy diet books and they can do other things and try and make it happen themselves. But it's just very difficult and so many of us need help in that regard. So Profile's great system that, yes, it's based off of meal plans like WW, the former Weight Watchers and other companies have, they will sell you these meal plans, but the secret sauce is in the commitment to the program and the health coaching that they do as a result of it. So you go into one of their places, of course, and with the pandemic, you now have virtual consultations, but you go into one of their places, have this virtual consultation. And the first thing they do is, they do is what I call diagnosis. They want to know what are your aspirations? How much weight do you want to lose? What are the obstacles you run into being able to do and so forth?

Joe Pine: And then they explain the plan to them. And the commitment is that you have to have a once a week session with your health coach. And that once a week session is where you really go through any of those obstacles. You get the coaching requires, well, I fell down in this area. Okay, well, this is how we can help you and so forth. And at the end of it, they don't let you off this commitment or off of this coaching session, without a commitment, not to losing weight, not to a particular amount, but to the next session.

Joe Pine: So just keeping you going that session at a time. And that staying through it is what really gives the program, staying power. And they've got research that the commitment and combined with the health coaching allows people to use their system to lose more weight than with others. So it's a great example. And it's thinking more generically, you all of healthcare is about transformation, whether it's going for sick to well. Anyone that's a coach, whether it's a golf coach or a tennis coach, or a life coach, or an executive coach, or whatever it is, is in the transformation business as well. And you have coaching that applies to B2B as well in business and to employees within businesses. For example, BetterUp is a coaching platform that works with companies, particularly when they're in some sort of digital transformation, when they're going through the transformations that you're talking about internally to better serve their customers.

Joe Pine: And they provide coaching to their executives, to their managers and professionals and so forth. They have a system that allows you to input things that you're looking for, what your particular issues are. And then it has an algorithm that's able to find, well, here's three coaches that we think are best suited for you, but you of course get the final determination of which coach you want to have. And then you go through those coaching sessions. And again, like with Profile, they do a lot of teaching of these coaches. They're not just people that they find on fiber or somewhere, they help give them what they need to be able to handle the situation. And interestingly, BetterUp is now going to the individual market to not sell to corporate down below. Now anybody can go to them and be able to get an executive coach that's customized to their needs.

Sarah Nicastro: Yeah. It's really interesting. I'm thinking about an example of a conversation we've had on this podcast. So there's a gentleman named Sasha Ilyukhin, who works at Tetra Pak. And he was a guest on the podcast going back ways as well. But Tetra Pak, obviously their core business is packaging, equipment packaging, materials, and that sort of stuff. But they saw the opportunity because of the success they had in transforming their own manufacturing operations to help their customers do the same. Right?

Joe Pine: Yeah.

Sarah Nicastro: And so it's something where they are able to offer that same transformation. So sort of a step by step process, collaborating with customers to help their customers see the same success they've had in optimizing their manufacturing facilities. And one of the things that I think we can talk a bit about is, in that model, they accept risk.

Sarah Nicastro: It's something where, if we help you achieve this outcome, then that's how we make money. And if we don't, we don't. And so it leads me to one of the important points here, which is that embracing transformation as a business model means that you have to be willing to accept risk, and you have to be willing to put your customers success at the forefront of your mind, your actions, et cetera. So this is a big shift for companies though. So can you talk a little bit about why that can be challenging for people to sort of wrap their heads around?

Joe Pine: Well, I mean, it really is challenging, particularly if you're putting your income at risk, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: If the amount of money you get is at risk based on the success of your customers, then that can be very difficult people to wrap their minds around you, particularly what you recognize. You can't guarantee that success. If I'm selling a good like packaging or I'm selling a service like installing machines or whatever. I can say everything's under my control. I can guarantee this is going to be a debt, therefore you pay me for what I'm going to do. But when it comes to a transformation, there are no guarantees, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: A lot of people who go to Profile by Sanford and want to lose weight, they still don't lose the weight or lose the amount that they want. A lot of companies that go in and help their clients change what they're doing. And you think about management consulting in general is another B2B transformation business, that not all their customers are going to be successful. Not everybody can handle it.

Joe Pine: So it is a very different state of being almost, when you think about this, that you've got to have that attitude that's says, we're going to do everything we can to be able to do this. But one of the things it says is that you got to pick your customers carefully, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: I remember with Stanford, I did this diagnosis phase. They start with a diagnosis. Well, there's a phase zero you need to think about too. You'll use another medical term, which is triage. Triage, is like you're in a battlefield or a huge car accident, or a series of accidents and so forth. Doctors have to determine who can be saved and who can't be saved. And they focus the resources. Those that can because otherwise they're trying to help the ones that in the end will not be saved. There's going to take away resources and more people will die.

Joe Pine: Well, and the same thing sort of thing about the dire consequences of death in there is you need a triage of your customers, is that you need to be able to ascertain, is this client ready for this? Is this client able to achieve the aspiration of what... If we do everything we do, are they going to get that success that they're looking for? And therefore we get the payout and if not, then you can't do it on a risk basis. Right?

Sarah Nicastro: Right.

Joe Pine: You got to make that... You may still say, okay, I'll still work with you, but I'm going to do this, or I'm going to get you to the point where you to do it, and then we'll do it. But in some cases you can't do that because even though the customer's willing to give you money, you really don't think they're ready for it.

Sarah Nicastro: Right. Yeah. That makes sense. So the other element here is that this type of evolution relies a lot on the ability to build relationships and to develop trust. So talk a little bit about the importance of that here and how, again, that's far different from the world of commodities products, more transactional type of relationships.

Joe Pine: Right. And going from transactional to transformational really does require a high degree of trust. Because you figure out what transformations, you're actually mucking around inside of people. Right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: And it aims talking about a fiduciary responsibility that you have to do to the benefit of the customer. There's a more responsibility here too, that you do things that are to the benefit of that customer, that we've all heard. I don't know, heard stories, but we've seen movies for example, where psychologists actually are evil and they do things to their patients to get them to do stuff, because they're in that transformation business, they're inside their heads. The same way whether you're working with companies or with consumer. You're in inside their head, so to speak. And you've got to have gain that level of trust because they're not going to go out there. They're not going to change based on just what you say, unless they trust you and do it.

Joe Pine: I know that myself from like, I do golf coaching, I take coaching from professionals to try and get better. And there's where you start, you just don't have that trust. You just don't think that they're doing it the way that's going to help you. And then there's nothing you can do. It's not going to work. You got to gain that trust. That's one of the first things that when you get in with the customer that you need to work on, is show that your trustworthy, show that you have their best interests in heart, as opposed to just wanting to make money from them.

Sarah Nicastro: Yeah. You know, the other thing I'm thinking about, Joe, is, we've talked quite a bit on here about sort of the progression to delivering outcomes. And so it's not dissimilar, I think this is taking it a step further in ensuring the impact of those outcomes. Right. But I think one of the things that happens within our audience is there's sort of a limiting view around what we mean when we say outcomes. And so I had a gentleman on from Phillips he's no longer at Phillips. He is with a different organization, but Chris La Fratta, and the title of that episode was, is your view of outcome based service, limiting your success. Because I think, tying that add into this and what you say in this article is, thinking about it, a couple steps further in terms of not just how you deliver the outcomes, but how you work with a customer to enable those outcomes to change their business, their situation, their needs, et cetera. So it's a really interesting conversation.

Sarah Nicastro: Now, in the article, you talk about three steps to defining transformation. Can you just quickly touch on those?

Joe Pine: Sure. And the first is that you need to ascertain the jobs to be done. My jobs to be done theory's been around now for quite a while. I mean, it's origins are in the 1960s in fact, but it's understanding what are your customers hiring you to do. Is that when they buy a drill, is a classic example, what they really want is a hole, or hiring the drill to do the hole, like hiring a contractor to do the hole as well. You can hire your kid and pay them to drill the hole or whatever it might be. So what are the jobs you want to be done? And one of the things that I work with Dave Norton at Stone Mantel has come up with a great formulation and really meet on the bones around the fact that there are four distinct jobs to be done, functional, social, emotional, and aspirational.

Joe Pine: And often we just want the functional things done. If you think about going to a hospital, for example, the functional jobs you want done are, having a bed to be in the hospital, getting to the right places at the right time for the surgery that you're doing, even the surgery itself you can think of is very a functional thing of go going through that. But then you have all this emotions wrapped up in being in the hospital with your loved ones there, with whatever you go under generals to anesthesia, there's a chance of you dying. And if you don't administer to the emotional needs, then the job's not done and their social aspects as well of how do you handle the loved ones when they're in the waiting room, when they're [inaudible 00:18:00], how do you greet them?

Joe Pine: You think about the fact that during COVID where so many people were in the hospital and they couldn't even see their family, they couldn't visit them. I mean, it actually increased the number of deaths because you didn't have that social, emotional connection to them.

Joe Pine: And finally, aspirational is what is the real outcome as you say, which is exactly the right word. What is the outcome that they want done? And the surgery itself is only part of it because they're not whole until they heal again, until for example, you have hip surgery, you got her hip replacement. Well, you've got to... The thing is, new hip is not the outcome. The outcome is being able to walk or to play golf or to whatever it might be. And again, the job's not done until you hit that aspirational outcome of what they're trying to do.

Sarah Nicastro: Yeah. I think about the aspirational one a lot as it relates to our audience, because I think one example that came to mind as you were talking through that is, around data and the ability. Some of our companies in our audience have to leverage data that they might be gathering on their customer's operations for their own use in a way that provides those customers insights that can really help them. But I think that where sometimes we limit ourselves is how far we take that vision. Customers aren't necessarily going to benefit from a company just dumping them a bunch of data and saying, hey, here you go.

Sarah Nicastro: I mean, if you can take that a step further and then think through, how do you make that data useful? How do you make it actionable? Is there coaching you can do to help them use the data? Is there education you can provide on what the data means, and maybe what other customer customers of yours in that ecosystem are doing with the data, then you start to get into helping them with their aspirational objectives in a way that can be unique differentiation. So it's interesting. Okay. So after change, the job to be done... Go ahead.

Joe Pine: Well, right. And then you're getting into the second step, in fact, which is define success along the way. So rarely can you go, like from here to boom, one life transforming experience, right?

Sarah Nicastro: Right.

Joe Pine: So that it will happen. Those are always serendipity, but it takes a series of steps along way. And what are those milestones that you have to go to. You talked about, well, you got to get educated, you got to be able to use the data. You got to be able to apply the data. How do you go through those and define success along the way is a key thing.

Joe Pine: And then you've got to identify the barriers that they have to overcome in order to be able to achieve that success. And often your past experience with other clients will enable you to recognize what those barriers might be. But every person, every company is idiosyncratic is in individual. And you've got to be on the look out for those and identify what those might be for that individual company.

Sarah Nicastro: Yeah. That makes sense. Okay. So that's how we can define what the transformation looks like. And then you go into talking about the steps to designing, offering to aid or create that transformation. So what does that look like?

Joe Pine: Yeah. So first of all, to recognize with the transformation, what you have to do is you have to integrate together of a number of different elements into one cohesive offering, into one solution basically. And it's really is a solution business. Recognize transformation are built on top of experiences. We only ever change our experiences, experiences are built on top of services, the activities that people do. Services are built on top of goods, the physical, tangible things, and goods are made out of commodities at the bottom level. So all of these happen and today, if you're not in the transformation business and the customers isn't buying that full transformation from you, then guess what, they're responsible for integrating all those solutions. Again, going back to dieting, I'm responsible for buying the dieting book, buying the meal plans, keeping track of my calories, doing all of those things, and guess what? I'm not all that good at that. And my chances of success go down.

Joe Pine: So how do you integrate those together? And it doesn't mean you have to some apply all of those elements so that you often can partner with other companies and be able to pick and choose and get them to bring together these elements, where they excel at things. So you've got to complete and total solution. You got to recognize one of the things that you don't have. And then when it comes to partnering, the second element here is also to partner with your customers, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: That it is a partnership that you've got to get them involved. Again, you've got to get that commitment. We have the old saying that you can lead a horse to water, but you can't make them drink, right?

Sarah Nicastro: Yeah.

Joe Pine: If the horse doesn't want to drink, it's not going to happen. So you got to partner with your customers and maintain that commitment all along, and understand that there's times in any partnership where they in the lead and there's times when you are in the lead, and that dance that you go through is very important. Another key element-

Sarah Nicastro: Sorry, Joe. Real quick. I was just going to say on partnerships, I know one of the learnings that a few people have shared here as they kind of progressed through the journey to advancing their service businesses, and so as you look at services to experiences to transformation, it typically means partnering with a different stakeholder within your customer base. So the person that you sell services to is not the same person you're going to sell transformation to. And so that's part of the journey for these folks is understanding what that stakeholder landscape looks like within their customer base and developing relationship with the people that ultimately are going to want to not only invest in, but to your point, be equally committed to the transformation.

Joe Pine: Right. If you think about a normal customer hierarchy, you may be selling services at this level, but if you want to sell transformation, that's going to be at a higher level. Right?

Sarah Nicastro: Yeah.

Joe Pine: Absolutely. The third thing is to provide customized support. You can't do this on a standardized basis. You can't have one offering one solution that fits everybody. No solution fits all. You've got to be able to customize it. It gets back to my initial work on mass customization back on their 1990s is where all of this flows from is efficiently serving customers uniquely. As an example, one of my favorite companies in that regard is Progressive Insurance, that they have tens of thousands of different policies. It's why you could name your price and they will design a policy that fits your price. But then where they really shine is when you have an accident and they come to your rescue and they, they, they make you whole. That's their business.

Joe Pine: The former late CEO of Progressive, Peter Lewis, said a number of years ago that we're not in the business of all to insurance. We're in the business of reducing the human trauma and economic costs of automobile accidents in effective and profitable ways. That's a transformational view. And it's all based on that customizing. And earlier you used a word about, you said the word insurer, that something happens. And I've got a little insurance model that applies to, I think in general to all service companies is insure, if you look at the definition, it means something bad happens, we pay you money. That's the service level.

Joe Pine: Yeah. Okay. Something bad happens, we pay you money. We got to do that. Offshore, is what Progressive really focuses on, is when something bad happens, we make you feel better, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: That's handling the functional job and pay you money, emotional and social jobs of ushering you, making you feel better. But that aspirational job of bringing you back to whole is ensure. How do we ensure you get the outcome you want? And that applies in any business that wants to think and be in the transformation business. And then it relates to the next point about supporting the full range of jobs to be done. Don't just focus on aspirational, recognize that you have all these others, and don't just focus on functional. Those are sort of the two end points that if you're not in the transformation business, you tend to only function on functional.

Joe Pine: If you're in transformation, sometimes you focus on an aspirational without taking all those into account. And the final thing is incredibly important. And it gets back to what you were talking about earlier, Sarah, about risk, putting risk at it, and that's charging for outcomes. And what people hire you for transformation, they want an outcome. And it doesn't matter the goods and the services you provide, doesn't matter the experience they have, unless they get the outcome they desire. But you need to make as a company, your income dependent on your customer's outcome, you to charge for demonstrated outcomes that customers achieve. And that's the one thing when we first said that back in 1999. We were sort of thought crazy regarding that. And now you see it happening more and more all over the place, where companies are able to actually charge that outcome. So they put a risk at it because they know that's what it's really all about, bottom line.

Sarah Nicastro: Yeah. Agree. Are there any other examples, Joe, that you would point to, as those who are embracing this next pillar of the evolution and doing it well?

Joe Pine: Well, one set of companies I've done a lot of work with over the last 20 years is in health care, particularly with hospitals. And one of the core reasons is that research shows that the better the patient experience, the better the outcome. And so there's a lot of companies are focused on that. And I've worked with them through a consultant company in particular itself called Starizon Studio, that did actually charge for demonstrated outcomes. So I'll use them as a mini example in here, is that when I worked with Starizon, we gave what we call the 25% transformation guarantee. That 25% of our fees were completely at the client's discretion. They could pay all of it, or they could pay none of it, based on whether Starizon did what we said would do. They got out of it, the outcome that they said they wanted. Some consulting service will say, well, let's give us a percent of market cap or give us a percent of cost reduction.

Joe Pine: We just made it totally at their discretion. And in all the years who was in business and we had two clients that ever did not pay at all. And so we worked to make them whole, we did additional work to make that happen. But one of the companies that we work with is Heartland Healthcare in St. Joseph, Missouri. And so there's a small hospital system centered around St. Joseph's. And what we came up with them is, what is your purpose? What is your raise on debt? Why do you exist? And they decide that what they're all about is live life well, right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: That became the organizing principle, the theme, the purpose of the organization, that they want their patients to live life well, and not just their patients, they want the community that they reside in. They want everybody to live life well, so they got to get more involved in the community. They want their employees to live life well, so they have the wherewithal to help their patients and community live life well and so forth. And so completely change it. They recognize that they're no longer in the healthcare business. They said, we're in the life care business. They change the name from Heartland to Mosaic. So instead of Heartland Healthcare to Mosaic Life Care. They completely redesigned their patient offices to be able to be warm, welcoming places that fit in with live life well. They added coaching and other things that they do, and they really began to think transformationally about how do we transform our patients, community, our employees, so that they live life well.

Sarah Nicastro: Mm-hmm (affirmative). Very cool. And so one of the final points I want to make sure we touch on is, just about every company that I have on the podcast, they're looking for ways to differentiate what they do from what any of the competitions do. And one of the strengths of the transformations business is that it provides value that is very, very hard for others to imitate.

Joe Pine: Yes.

Sarah Nicastro: So how increasingly important do you see this becoming over the next couple of years and why?

Joe Pine: Well, I think it'll be a longer timeframe before it becomes generally accepted to be transformations, but as you exactly say is that, business competition is a social differentiation. If you're not differentiated, then you'll become commoditized. Right?

Sarah Nicastro: Mm-hmm (affirmative).

Joe Pine: And for my entire career of helping companies, my Bogeyman is always commoditization. You'll become, you don't do this, you should be commoditized. And that's the case here as well, even... I've said that long about, goods and services are becoming mere commodities. So you have to stage experiences. Well, if you're in a business where customers are really looking for outcomes and here that applies to all B2B companies, even if you're selling physical goods to other companies, no company, once you're good, because they like the goods. There are a means to an end. You need to sell the end rather than the means.

Joe Pine: And that's the reason why you need to... One of the techniques we talk about in the articles is the old TQM technique of asked five whys, applies not just to, when something goes wrong, applies to, what does your customer want? We want to buy this. Why? Well, because of it, why? Until you get down to the core reason. How can you help them achieve that core reason that aspiration? And that's what will give you differentiation. That's what we allow you to escape the commoditization trap. And so whether it's one year, three year, five or 10 years, as you find yourself being commoditized, particularly as a B2B company, particularly as one in field service in other sort of service industries, is to recognize the opportunity that lays there in transformation so that you will be differentiated. And if you're smart, you will take advantage of the next one to three years before your competitors. You'll commoditize them because of your focus on being in the transformation business.

Sarah Nicastro: Yeah. I think that's a really good point. And another thing I would say, especially to your comment, you think it'll be sort of a longer transition, this also can... It doesn't have to be a complete 180 on how a business sells itself. It can be a diversification strategy. You mentioned earlier on that, if you're going to go into the transformation business, you need to be selective about who your clients are. So for a company who is well established, who has seen good success, selling services, even selling experiences, it doesn't mean you have to go all in on pushing transformation to all of your customer base. But looking at the opportunity of those clients who you feel would be a really good fit would have interest, would be committed.

Sarah Nicastro: It can give you an opportunity in the short term to really test this out and learn more about how it could work and just get some good experience with it, so that you can get ahead of the game. So I think oftentimes we think in absolute. And it doesn't have to be, okay today we're a service business or an experienced business, tomorrow we're transitioning to a transformation business. It can be, hey, let's start doubling in this. Let's start picking some select customers to work with and shape this out and learn from et cetera. So really cool stuff, Joe. I mean, I think it's a great article. Like I said, I'll make sure it's linked. I'll make sure the earlier podcast is linked as well. Any final thoughts that you would want to share with our listeners?

Joe Pine: Well, I love what you just said, Sarah, about, you can start small, you can start with certain clients and do that. But eventually, the key thing is to recognize what business you're really in. I think, first of all, you can shift from services to experiences for all of your clients. Even if you are delivering day to day services, well, the key with the experiences is how you go about doing what you do. That turns you any mundane interaction into engaging encounter. And then transformations, thinking about why your customers want those. And so that movement from what we do, to how we do it to why our customer wants and focusing on them and recognize that it really is becoming customer-centric in order to be able to affect this as an important thing in recognizing how you can benefit from transformations.

Sarah Nicastro: Yeah. I like that. So if services are the what an experience is the how, then transformation is the why. And I think that can really help organizations sort of map what this looks like for their customer base, and start thinking about it in terms of, 1, 3, 5, 10 year strategy. Really, really good. All right, Joe, where can folks find you if they want to look at the book or... Like I said, I'll put the links to the Harvard Business Review article.

Joe Pine: Yup. And I'll mention that we actually... Originally came out the book in 1999, we released it for the third time in 2020. You can find that easily on Amazon, Barnes and Noble, anywhere. You can find me on LinkedIn, if you want. And on Twitter, @joepine. And then our website is, strategichorizons.com, Strategic Horizons with an s.com, and there's information on me, our books, our certification classes, our onstage frontline training program and everything else.

Sarah Nicastro: Excellent. All right. Awesome, Joe. Well, thanks for coming back. I appreciate you being here.

Joe Pine: Thank you, Sarah. I appreciate the opportunity.

Sarah Nicastro: You can find 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 at ifs.com. As always, thank you for listening.

April 25, 2022 | 7 Mins Read

Identifying the Root Cause of 5 Common Field Service Hurdles

April 25, 2022 | 7 Mins Read

Identifying the Root Cause of 5 Common Field Service Hurdles


By Sarah Nicastro, Creator, Future of Field Service

You know the saying nothing worth having comes easy? It applies to our world of field service, too. There are hurdles you’ll face on the journey of service transformation that will test your commitment, tenacity, and resolve. Those who dig in to understand these hurdles and overcome them are far more likely to succeed than those who take the hurdle at face value and become deterred from their goal.

Not long ago, I welcomed onto the podcast James Mylett, SVP, U.S. Digital Buildings at Schneider Electric, for an in-depth conversation on meeting the demands of modern leadership. The two-part discussion was full of valuable insights, but one point that really stuck with me is in part two where he discusses his tendency toward root cause analysis. Here’s a synopsis of what he shares: “I want to make sure that our team is focused on root cause analysis for problem solving. Like most organizations, when you think about a problem, everybody wants to go to ideation, and we don’t spend enough time first identifying the root cause of the problem. And so, my bias is to start at the problem and work backwards from that and put a solution in place that’s supported with data.”

Sounds totally sensible, right? It is, but here’s why many overlook a fairly simple but critical and sometimes arduous process. “It takes hard work to really dig in and to get the root cause. And it takes courage to face into the data when it doesn’t support what you thought the root cause was, and that happens a lot. It happens to me – I’ve got my mind made up that we should be moving in this direction but when we dig in the data doesn’t support my assumption. As the leader, I want to follow what the data is saying. The challenge is to not get paralyzed by the data, but it has to have role in the conversation.”

The pace of change today’s leaders face I believe compounds the tendency to skip or rush root cause analysis, because there’s pressure to think quickly and move fast. But hurdles like those I often hear below really cannot be overcome without an accurate, genuine understanding of what’s causing the problem. So, while root cause analysis may take a little time, challenge your thinking, and send you on a path different than what you assumed – it’s well worth it to ensure the path you take is one that will deliver outcomes. 

Hurdle: Leadership doesn’t view our company as a service business. 

Potential root cause: This is one I hear often from service leaders within manufacturing organizations who see the potential to servitize the business but face some resistance or differing opinions among senior leadership. We often talk about the importance of alignment and breaking down siloes, but to do that you first must understand why it is leadership doesn’t share the view of service potential. 

As with all these hurdles, there can be many different root causes. One common scenario is that if senior leadership has been in place a long time they can be very emotionally tied to the legacy of the business. This is natural and must be handled delicately – showing how incorporating a service focus into the core business strategy can augment and strengthen the company’s value proposition, not take the place of manufacturing excellent products. Ask more questions than you do give input and see if you can better understand the emotions around senior leadership’s views to influence how you articulate the role of service in the business.

Also keep in mind, though, that overall, the directions that things are heading is that not only do customers not care so much about products, but they don’t care so much about service. They care about what either – or both – can do for them. Taking the outcomes-based view here may help you in highlighting how the overall customer relationship needs to evolve rather than staking a claim on service alone.

Hurdle: We can’t get the investment we need to evolve service. 

Potential root cause: We all know evolving service is important, but chances are you are not speaking about doing so in a language that resonates with top leadership. You need to understand the objection, which means digging into the root cause. A few ideas come to mind. First, have you (or prior service leaders) made investments in technology to evolve service that have failed? This can be a huge deterrent in further investment, and it’s a tough topic to unravel because while you must deal with the realities of that failure, you also must express the opportunity cost of not rectifying what’s already been done. Finally, you need to be prepared to have a detailed plan for how you’ll avoid failure a second time.

Another potential root cause is related to hurdle number one, which is that perhaps top leadership doesn’t see the value in evolving your service offerings. This happens not only in manufacturing organizations looking to servitize, but in service businesses where some are happy with the status quo and don’t see the need to move beyond “what’s working.” In either scenario, looking outside of your organization for examples of success – viable, measurable success – can help address these objections. But only after you’ve dug in to understand them. 

Hurdle: Our employees resist change. 

Potential root cause: Sure they do! It’s human nature. And in the spirt of a little tough love, the aren’t resisting change – you are doing a poor job managing it. What is the root of their emotions? Is this the first major change they’ve faced in a very long time and it’s just completely uncomfortable? Do they feel they haven’t had a voice in the change that is underway? Do they feel not valued overall? Do they fear for their jobs? Are they burnt out or frustrated because they aren’t adequately recognized or compensated?

Your initiatives, whether a new service offering or a new technology investment, will fail if you don’t prioritize change management. It’s your responsibility to do so. Invest the time to understand the emotions, listen to the feedback, and show – through actions – you hear your workers, and you care what they have to say. Recognize the value of your frontline and treat them accordingly. Finally, know that another critical aspect of change management is ensuring they are not only understood but properly equipped for the change. This means an investment in education, training, and whatever else they need to be fully capable of what it is you’re asking them to do differently. 

Hurdle: We can’t hire enough talent to support our growth goals.

Potential root cause: This is a challenge for nearly every company today, but the fact that it is a measurable reality doesn’t permit you to shirk responsibility to do what you can to offset it or to set aside your growth goals for this reason. Besides the labor market facts, what are the other potential root causes for your struggles around talent?

Could it be that you are still relying on hiring based on experience? News flash, that’s an outdated practice that is a surefire way to remain short-staffed. Are you offering a compelling employee value proposition? Today’s workforce desires different things than the technicians you hired 20 years ago, and you need to step up to understand and meet those needs. How strong are your onboarding, training, mentorship, and career development programs? 

How engaged and satisfied are your current employees, and what’s your retention rate? If these numbers aren’t good, you absolutely have to understand why in order to identify where and how to improve. What’s your company culture? Talent is an area where companies really need to step up their efforts, focus, and investments to ensure they are positioning themselves to do well with what today’s realities are. The best way to dig into root cause here, at least the version you can impact, is to ask your employees and prospective employees for feedback. And listen!

Hurdle: We’ve already “transformed” and we’re the best at what we do.

Potential root cause: This statement bums me out. Sometimes I have folks who say, oh yeah, we moved from reactive service to X% proactive service contracts, so we’ve transformed and are happy with where we are. Not to discredit progress, but the potential for service evolution is so very big! It’s really a journey of continuous learning and improvement, which is just an operational process that’s foreign to many organizations. 

There are several reasons for potential root cause here. Could be a very simple lack of awareness of the real opportunity around service. It could be that leaders are weary of the effort transformation takes and want to stay in a state of complacency for a while. It could be back to number one where the overall focus of the business is on something else. Most likely it’s a company culture and mentality issue, where leaders are living in a reality of 10+ years ago where the status quo could work for quite a while. That isn’t our reality anymore – disruption is real, change is continuous, and competitors will evolve even if you won’t. Looking at how your business operates and what the mindset is around continuous transformation and evolution is really important. 

What hurdles would you add to this list? And do you do a lot of root cause analysis? I’d love to hear! Send me an email with any insights you’re willing to share. 

Most Recent

April 20, 2022 | 25 Mins Read

Overcoming the Barriers to Service Growth

April 20, 2022 | 25 Mins Read

Overcoming the Barriers to Service Growth


Hilbrand Rustema, Founder and Managing Director of Noventum and Marne Martin, President of the Service Management Business Unit at IFS join Sarah to discuss recent research conducted on service growth trajectories and what today’s biggest hurdles to overcome are in achieving service potential.

To access the research referenced in this episode, visit here

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today we're going to be having a discussion about overcoming the barriers to service growth. I'm excited to have with me today Hilbrand Rustema who is the founder and managing director of Noventum and Marne Martin, who is the president of the service management business unit at IFS. Hilbrand and Marne, thank you for being here with me today.

Marne Martin: Our pleasure Sarah.

Sarah Nicastro: All right, good, okay. Today we're going to be having a conversation that is building off of some research that Noventum and IFS recently co-created. We're going to talk a little bit about the research, but then we're going to dig into a discussion around, what the biggest challenges and hurdles are that companies are facing as we talk about this service transformation and evolution. Hilbrand, can you start us off by just giving an overview of what are the drivers that we're seeing in service transformation and growth. What is the why behind, why companies are looking to evolve how they're doing business today?

Hilbrand Rustema: Yeah, sure Sarah. First of all, I would say in industrialized high income countries, the manufacturing sectors they have already for quite a while, they've been under pressure. Price pressure on their products, whatever they make usually there's a lot of competition. They have already for a while, they started differentiating themselves with services. They used to be main product related services but now the competition on services is increasing and I think the fact that you now get more data from your equipment, you can develop a lot of insights, knowledge about how your end users are using your equipment and you can create all kinds of services that address the more, what we call customer business challenges. Things like process optimization, business optimization, as of changing elements in the business model to the benefit of your end customer business transformation services, helping them to really improve a whole function or a process and things like creating what we call this digital ecosystem, optimizing the value chain.

Hilbrand Rustema: These are all new possibilities that have come about and obviously, competition is not sitting still. There's a lot of these manufacturers that are digitalizing, they're wondering what to do with it and some of them are quite successful with this. Yeah, why are lots of manufacturers getting into this game? It's very simple. If they don't do it, somebody else will do it for them and that will put them behind in this, yeah. I think that's the main reason.

Sarah Nicastro: Underneath that though, I mean, yeah, if they don't do it someone else will but, the it is being driven by more sophisticated customer desires and demands, right? I mean, that's essentially, we're looking at almost a reality where not only have products become commoditized but I mean, now you hear people that they don't even want to talk about service. They just want to talk about the outcome, right? What can you do for me? What headache can you alleviate? What part of my problems can you take off my plate? The whole conversation has changed so the customer desires are at the root of this but, there's companies that are pacing far faster in meeting those needs and so everyone's in this race to make sure they're keeping up. Hilbrand, where would you say based on the research you've done and the work that you do with different organizations, where would you say most companies are on the journey?

Hilbrand Rustema: Well, we define some major steps in this research. We say, most companies, manufacturers, they start being reactive then they go into preventive services, have preventive maintenance contracts. A lot of the companies in the research, it's approximately 60%, they are into becoming predictive so using data to improve the type of services and not only predictive maintenance, but also helping customers to look at predicting volumes for example. And then they're going now towards proactive. Proactive services meaning, you are trying to anticipate what your end customers really need and there you look at the customer business needs.

Hilbrand Rustema: Now, the majority of the companies, the manufacturing companies, they have some level of digitalization and they're far into these predictive services and the real payoff is when they go to that proactive model. And there you go into these outcome-based services as you say or as a service business models, manage services, process outsourcing and this value chain optimization, the digital ecosystems let's say. That's where it's going and I would say, the majority is still in that predictive phase. It's really hard to successfully transform towards that proactive model. There are many reasons for that.

Sarah Nicastro: Yeah. And we're going to talk about this. Okay, all right. Marne, we talked about customer demand and how that's at the root if you will of a lot of this change but none of this would be possible without technology and digitalization. Talk a little bit about the role that digitalization plays in this journey to service transformation and service growth.

Marne Martin: That's an excellent question and I'll pick up some points related to manufacturing specifically in a moment but, digitalization is what enables asset and customer-centric businesses to thrive. We know that with our economies generally growing, with the supply chain issues, the increased customer demand, it's no longer an option to have a digital through line and be able to digitalize your processes one for scale, for resiliency, et cetera. Even if you look at verticals like telco utilities where the customer demand from retail customers or business customers is what's driving the revenue model, but then service is what keeps the infrastructure and the assets up, even there, there's a lot of investments in service related processes and say next generation technology to facilitate the uptime and the outcomes of what they're selling, right? Whether that's national resources, electricity, renewables, telco services, voice data, what have you. With manufacturing, it's equally as necessary that they digitalize their entire footprint, back office, front office, supply chain, customer experience, et cetera but you have the added complication that service becomes a business for them.

Marne Martin: And one, we know that for them to be most successful at scaling and growing that business, they need to have the data collection, they need to have the digital transformation sufficient to have integrated processes. Again, back office, front office, your field service workers and including the asset or equipment intelligence that they have. That is what I would call table stakes in this day and age. A lot of businesses, either regionally or globally, aren't at say a resilient and modern place related to their IT ecosystem and framework. Certainly, that is step one, that we partner with customers that, how they assess the problems that they have, how we find the solutions and the benefits too.

Marne Martin: Related to the point that Hilbrand made about how you transition a business to say, digitize business outcomes once you've made that investment in say your technology enablers, that's where it's really thinking about, what are the type of customer facing and operational folks that know how to migrate from a conventional or maybe even a somewhat more predictive business model because they have the data to start analyzing, becoming more predictive, to really thinking about their business being a digitalized, digitized business outcome model. And there they need people that know how to think that way, how to talk to customers that way. But it not only puts pressure on say backend ERP, also the field service management, the intelligence that you're getting from the asset, but it's also driving changes in how we think about even CPQ technology, right? How are we facilitating that crossover of say, getting the value from the asset, being able to be serviced in enhanced ways but also driving the customer experience in every interaction there is and driving the outcomes because you have enough data to become more outcome-centric and you can work that way.

Marne Martin: It's really a super fascinating time but, per Hilbrand's point, it's impossible to move even to predictive or from predictive to a true digital business model in a digital company if you haven't made the technology investments that you need to make. And then it's a question of, how you're changing say your revenue models and the people that you need to move that way. And that's often what we see a lot of customers when they review say a technology project, if they're forward thinking, they're thinking, okay, to get where we think we need to go, this is the technology we need. But they also have to think about, say the culture they need to change, the different types of people they need to recruit to help move them there into that new service model and that digital experience if you will that they are monetizing. I'll pause there because that's as much important related to what you do with the technology as the awareness of where the technology or the digitalized gaps are.

Sarah Nicastro: Yeah, for sure. I mean, depending on the industry and the company, I mean, but particularly when you talk to service leaders within manufacturing organizations like, it's a real identity change for the business for if they really want to get to the end of this continuum, right?. I mean, if they really want to seize the full opportunity, you're really talking about fundamentally changing the identity of the business and that, I mean, it's really, really layered and complex and I think it depends so, so much for those folks on what is the mindset of the top level leadership because I've seen stories of manufacturing organizations where the CEO of the company totally gets it and I mean, is excited about the evolution and to see the progress those companies can make versus an organization and I always feel bad for these folks where you have an SVP of service who is literally just running into a brick wall because the CEO is just stuck in the, "No, we manufacture products," mentality and it's really tough so, you're right. I mean, there's-

Marne Martin: I think your growth... You're 100% right about that, certainly. And if you think about change management and how you coach problem solving skills, I think that is super important. I know you had a podcast that focused on that, how you look at things in fresh ways and solve problems. I think the other aspect that doesn't often get addressed but Hilbrand and I have talked about it is that, when you build a more scalable model i.e, you have technology that enables you to scale and sell these new type of digital offerings, the pace of growth can sometimes be too rapid i.e, the new business model becomes more successful. We've talked a lot about POCs that never get rolled out, but the reverse is also true that, if you do have the right type of engaged say digital transformation dream team or whatever you call it, and then suddenly you create a new, highly scalable commercial model, that can put stress on the business as well because if you think about a lot of manufacturers, think about growth and what's possible still from a model built from supply chain or manufacturing dynamics.

Marne Martin: I have enough supplies to manufacture this stuff, my factory has this throughput.... Okay? And that's still permeating how they think about it. I have enough technicians therefore I can only do this many jobs, then that's my revenue model for my service business. But when you enable a different type of business that suddenly those say fundamentals aren't what are the most meaning for your growth, instead, you're thinking about, look, what do customers want from me? How can I price that? How can I deliver that? And that's what then drags along everything else. That is a hugely different way of thinking in these businesses. And most of the people that have gotten to a director, VP or C level in these businesses, didn't come up with that thinking in that scalable business. That was enabled by technology in the ways it can be today.

Marne Martin: And then you also see that a lot of IT professionals that obviously a CIO knows the value of buying technology and filling functional gaps, but thinking about how they themselves can evolve to be more scalable and nimble when the business has evolved alongside is another discussion that internally, thinking about how you form these digital dream teams and is really relevant because otherwise, it seems like companies make two steps forward, one step back, et cetera. And like Hilbrand said, it's really hard for them to continue say, moving up market into outcomes and experiences and embedding all of this into their day-to-day processes. If they aren't able to move in lockstep with all the various stakeholders and partners of important.

Sarah Nicastro: Yeah, okay. The research itself takes a look at this growth journey and what the drivers are, where companies are at, how that's impacting their business, those sorts of things. And so, we'll make sure that we link to that report in the show notes so everyone can go take a look at that but, we don't want to be redundant in the conversation today so we'll let you look at that. What we're going to dig into a little bit more is some of these layers of complexity that I think aren't super obvious when you look at this continuum on paper, right? You look at it and you think, okay, great. At predictive, here's what we need to do next, perfect. We'll just set a plan and we'll get there, right? And it's not quite that easy. We'll dig into a few and these are in no particular order. The first one, Hilbrand, Marne just spoke about the critical role of technology in all of this. I mean, you can't progress through this journey without investing in the technology you need to support it.

Sarah Nicastro: But one of the things that can happen is that, companies know that and so they start to make very rash decisions and they start to make big expenditures without really first understanding the value the customers want which is ultimately what they need to be working toward delivering. Talk a little bit about what happens there and what the advice is, how to be pragmatic in balancing those two things.

Hilbrand Rustema: Yeah. Of course, lots of these companies they are investing heavily in digitalization. Very often when we get involved, it is often out of a bit of frustration from that senior level management because, they've done all these investments and they don't see that return. Very common is that, they haven't really taken the time beforehand to really understand what problem are they solving with the solution that's called digitalization, yeah? Developing an understanding of what your customers really need and then particularly putting your service hat on, not just your product hat, yeah? Because if you are also then just open enough to go away from only that product-centric thinking and to really start thinking as how many features functions, and that is very traditional in manufacturing companies. And to really look at, what are the so-called pains and gains of these end customers and what are also some innovative business models that you can think of to addressing those, whatever the customer challenges are.

Hilbrand Rustema: And obviously while you do that, you have to look at your own capabilities. If it's something that you do not have within your own capabilities or you cannot quickly acquire as a manufacturing companies, it's very difficult to go and address as you either have to do acquisitions or start huge buildup of talent. You start with what is close to your own capabilities and that's how you evolve. It is more an evolution than a revolution. But we typically see, they haven't really thought that through. They may have thought that through but not created a complete vision of that future state. Let's say having said to each other, "Well, how do we want the business to look like in three to five years, considering that we now have a deep understanding of what our customers really need."

Hilbrand Rustema: And you cannot go and ask customers what they want because, these services that you may come up with, they don't exist yet so they don't know what to ask for. You have to look at, what customers need, think about what are the capabilities that you can bring forward or that you can develop to address it. And that usually results in entirely new business models. You have to think about not only the tangible value that you provide, the lots of engineering cultures, they always love to talk about KPIs and anything that's measurable but also to think about, what is the intangible value, yeah. Think of yourself as being an insurance company more than that you are a product company delivering tangible stuff, yeah? And to move away from the cost-based thinking, go more into value-based thinking, how do we add value to that customer and have the different definition of quality. At quality, it's no longer the product specification but it is, what's the customer experience? What did they anticipate when they thought about your company, your brand? And what's the real experience?

Hilbrand Rustema: Or, what do you want it to be? And talent, you would have to start thinking about not just the technical talent and excellence let's say that you can provide but it's more the, customer handling skills or the consultative skills that you need to figure out what your customers really need. And so, it's those sort of steps and then I usually say, you need three things to move things forward. You need to have that pretty clear vision including a definition of your service portfolio of the future, you need to have a good business case. You need to have an addressable market, it needs to look good, be profitable and you need to have a plan. And if any of these three things are missing, it's very difficult to move forward because the biggest, the most difficult challenge you're going to have is in the organizational transformation.

Sarah Nicastro: Right.

Hilbrand Rustema: Yeah, it's no longer the digital part let's say. That's-

Sarah Nicastro: And I think if you look at the organizational side or the digital side, it seems to me that the biggest challenge is really universal in both which is fragmentation. When you get into silos in either the vision, the strategy, the execution of a plan or on the technology investment side and not making sure that, you could have 10 different tools in place that all on their own serve a really important purpose but then you break the customer experience 10 times, then the end result is frustration, right? And so that's important but, you touched on a number of things I want to go back to and I was... I mean, you're really-

Marne Martin: Can I add two things in that-

Sarah Nicastro: Mental gymnastics! I'm trying to keep track of all of them in my head. Marne's going to test me further. Okay..

Marne Martin: We're going to do a follow up. We'll have to do a follow up. I think you hit on something there that's really important and it ties in with what Hilbrand said. If you think about now with the disconnected, you'll have customer experience that they try and layer in say within a department or within a use case, right? Moving to predictive means that often you have enough data and you have enough data scientists and/or people that know how to do machine learning, that you can move to a predictive experience. Bringing customer experience more into your processes, your integration, your interactions, thinking about how you have data, data scientists, machine learning expertise to bring to a predictive experience, that's still a stretch for a lot of companies but the level of change to do that is still closer to where most manufacturers and businesses are. That's why when you tie back, those of you watching to the research, we're going to publish from Hilbrand, you see more companies moving from what in that research is the first peer group to the second peer group because it's an easier evolution for them.

Marne Martin: Assuming that they do care about customer experience and they are able to hold their data enough that they can drive a predictive experience. If you start thinking about how everything becomes an embodiment of customer experience and outcomes and a digital business model, that's where you see the most challenge to having people that are more entrepreneurial. And for the most successful manufacturers in the world, we're talking about the huge global brands that we all admire, they haven't had to be entrepreneurial for a really long time and if they just bring in a chief DX officer or a head entrepreneurial officer, that's not going to be enough because of all the relationships that have accumulated and been built in these organizations over time.

Marne Martin: This is where the technology side certainly isn't a small thing to fix, but that is an easier thing to align and fix than the actual organizational change and making some of these companies more entrepreneurial so that they have the ability to do business plans, execute against them with the pivots and the flexibility needed whether it's, they found out some things are less profitable, some things are more profitable, some things grow faster when they actually start to sell them, et cetera. That really takes entrepreneurship skills and that's often an under talked about aspect in addition to everything else.

Sarah Nicastro: Yeah, no, that's a good point. Okay, a couple things I thought of that I want to go back to. One is, we had a podcast last year and it was titled, is your view of outcomes-based service limiting your success. It was with a gentleman named Chris La Fratta who was at the time at Phillips. I know he's no longer there, he's in a different role but, it was a really good conversation. And Hilbrand, it made me think of what you said about, you can't rely on your customers to tell you the vision because you're trying to create things that don't exist yet, right? And so it was a really good conversation talking specifically about he and how Phillips dug into really expanding the outcomes of their customers and hospitals that they could meet, right? It was a really interesting conversation.

Sarah Nicastro: And I think you're right. I do think I will always be an advocate of the voice of the customer and so I think that, while you can't expect them to answer the question of, what outcomes-based services would you like us to provide, right? I mean, I think you do need to be really close to having conversations about what are your biggest pain points, what are your biggest challenges? Because the answer to those questions is a really important part of sorting out, what could we do with our skills and expertise to help alleviate some of these challenges. And then of course, come up with ideas beyond that.

Sarah Nicastro: But the point I wanted to go back to is, one of the challenges I think companies face in doing that is that the relationships they have within their customers, that they are selling more transactional services to are far different than the relationships they need to develop to understand those challenges and then ultimately be able to sell advanced services, outcomes-based services to. How does an organization go about building different relationships within the customer base and really getting the level of insight and trust they need to be able to not only reimagine their value proposition, but then sell it successfully.

Hilbrand Rustema: Yeah, it's a very good question because it's actually one of the most often asked question I deal with. How do you make your outcome-based services or any advanced services? How do you make it really scalable, particularly, how should that commercial organization or customer facing organization look like? And you mentioned Phillips. I had the pleasure of being involved there in the transformation towards becoming organized around customers and markets rather than being organized around the functional silos. Silos is an implied word, but the different functions, the different product lines and the functions. At the very top of the organization, there needs to be a realization that, hey, the sales cycle first of all, doesn't stop when you have sold your product and even the product related services with it if you do that at the same time, that's great. It's just the start of a relationship.

Hilbrand Rustema: The whole life cycle, the customer life cycle extends beyond that and you have to start looking at, how do you make your customers successful, whatever they're trying to do, yeah? And therefore, you need to segment your customers. What are the different types? What are their objectives? What are they trying to do? And come with a service portfolio that addresses let's say, the bigger part of the needs. Don't try to do 100% because if you try to be all things to all people, that never works. You create a manageable portfolio that is standardized, completely standardized, but not in a rigid way. You have a couple of core propositions and then you have options that are in itself standardized as well. You create what we call standardized personalization. You create unique propositions for customers that you already know you offer the outcomes. You don't always start talking about what you need, because you should already have a pretty good idea if you have a certain type of customer in front of you so the salesperson should know.

Hilbrand Rustema: But then, how are you going to manage that success or set up your customer's success organization rather than just your sales organization? And that goes all the way through to whatever you see as the end of life of that customer. And that is obviously for many organizations, that there is no end to that at least that they wouldn't want that, yeah.

Marne Martin: Adding on to that, Hilbrand I'm curious your thoughts, because we've discussed this over time that, as manufacturers start selling digital business outcomes and become more of a value-added services, it not only changes the profiles of the people they have like we talked about and definitely the people in the field or the frontline workers change a lot, but they almost become in a way a technology seller like we are, right? Selling the problem solution benefit we know is how customers view high value buying cycles in technology and it's the same. If you think about manufacturers that are talking to their customers, they want their customers to feel that they're getting a high value selling cycle or a purchase and it needs to be tied to problem-solution benefit. There's also aspects when we sell technology, we're selling replacement and emerging technology.

Marne Martin: And it's the same with these service companies, these manufacturers. If they're selling some things they sold before, but they're also selling some new things. And how they mobilize the type of stakeholders and buying cycles is something that they're often not used to when it's just a conventional service contract. There's skills that they can actually take from technology vendors like IFS, et cetera on how they think about mobilizing selling the customer success, business value realization as well, not just getting to the sale but the post-sale experience, which is all that Hilbrand was referring to. And that's where I think that sometimes they don't look for others say complimentary partnerships or industries where they think about selling and customer success that are relevant. It's a little bit like science that you have some of the greatest innovations and things when you have the intersection of sciences. And in a way, what we're now seeing is the intersection of conventional manufacturers with what are becoming digital businesses. And that's where it'll be really interesting to see not only how that drives service strategies, the implementation of technology, but really, how they change the art of selling.

Hilbrand Rustema: Absolutely. And maybe to add to that, the talents, they change so much that it's no longer can be found in one person. It's not that one salesperson or that one account manager. It is now becoming a multifunctional customer success team. And that team may change over the life or the relationship that you have with that customer depending on the skills and knowledge that you need. And I would say that is a very big challenge first of all, for manufacturing companies to think that way, to envision such type of organization. And indeed you can borrow a couple of pages from let's say the high tech IT industry where through the SaaS models, this is already common good let's say. This is something that is well known.

Hilbrand Rustema: One thing I have to add in the manufacturing business is that, it's a bit more complex also because you are still having to manage the physical supply chains and dealing with the spare parts. I mean, all of that stuff doesn't go away, it's just basics. And now you have the digital, the consulting skills, whatever you need, all comes on top of that. For some organization, it's mind-boggling complex to do this especially in a relatively short time.

Marne Martin: Sure. And we're seeing that there's certain high-level trends, circular economies, sustainability, et cetera, that are also driving say evolution when you look at, how people are positioning offerings, what customers value and frankly, managing supply chains. But as an example, going back to, you talked to me about technology investments, reverse logistics was often something that was never looked at in the past but, when you think about the complexity of managing spare part inventories, supply chain and this and that, obviously you have the forward aspects of supply chain and supply chain planning but, businesses are now finally starting to put enough attention and investment into reverse logistics. How embodying this digital business model also comes with a different approach around the fundamentals like Hilbrand talked about, not just, how are they designing from a PLM perspective what they're manufacturing but how they're thinking about refurbishment, re-manufacturing, can they pull rare earth metals out of the old equipment that's retired or can they reuse spare parts?

Marne Martin: All these sort of things aren't new things but they're now starting to get more attention. And frankly, they're more needed alongside what are becoming digital business models. That's why I said before that, there's always the traditional areas that we're trying to improve, make more profitable, more streamlined, better customer experience but then there's also, the emerging technology, the emerging business models and how businesses reconcile this in the way that has the least amount of friction is the most rapidly scalable. These are the businesses that we'll be betting on in the future, right? If you think about the next 100 or 50 years or whatever, the businesses that one, stay in business and two, rise to the top either as public or private companies will be the ones that figure this out and the ones that don't, will be the ones that lag behind.

Sarah Nicastro: Yeah, okay. We're going to run out of time but to close us out, why don't you both share, it could be a challenge you feel like we didn't get to that you want to discuss, it can be your best piece of advice to those listening related to this journey. Hilbrand, do you want to go first?

Hilbrand Rustema: Yeah, it's a big question. I would start with what I said at the very beginning, whenever a company considers A, what we call a service transformation, make sure that you really understand what your customers need, start with that. Think of this as a very big transformational change. Think about, how your culture, your supporting organizational structure, your skills, what needs to change there, have a good understanding of it. Manage it as let's say, a transformation. It's not just a project let's say. The third thing is, you figure out your business model before you do the big investments. Meaning, have a good value proposition, knowing how to sell it and figuring out how to deliver it in a scalable way because that's the only way you're going to make some money. Then in terms of implementation, yeah, start small, pilot, do this until the moment that your customers that you're piloting with, that they tell you, now you got it right. And then you start scaling it up, yeah? I think these are probably my most important tips let's say.

Sarah Nicastro: All right, sounds good. And Marne?

Marne Martin: Hilbrand's tips are absolutely accurate. I would just say that, with understanding the benefit and what you're trying to achieve obviously is number one because, we've seen businesses spend many millions of dollars, tens, maybe even $100 million dollars and not get the benefits or the transformation that they were looking from either a change management initiative with or without technology investment. So definitely having that crystal focus on, what you want your business to look like on the other side and what you want your relationship to be with either the customers you have or the customers you want to have related to your Tam has to be that north star, that guiding light, et cetera. I would also add that I feel sometimes I already made the point about entrepreneurship but I feel sometimes that businesses need to be a little bit more courageous. I'm not arguing against anything that Hilbrand said but, I also see businesses that are so risk adverse that they one, don't know how to properly assess whether a POC is scalable or was successful or not and then two, sometimes they don't take the opportunity fast enough, right?

Marne Martin: And a lot of that is, say you're a complex global manufacturer in 100 countries. Okay, so you had a successful pilot in maybe your smallest market, your biggest market, something in between but how do you then capitalize on the opportunity to go faster and be more courageous while meeting the business challenges you have day-to-day? That can be a whole discussion and obviously there's a lot of business consulting and management consulting and a lot of stuff that goes into that but, I would just add again, thinking about what the business and customer relationship you want to have on the other side and then making sure that you have enough courage and entrepreneurship in a business if you really do want to change business on the other side because if you just want to incrementally enhance your existing business, that's certainly possible and certainly there's ROI in that too. But if you really want a different business or an evolved business on the other side, that takes a certain amount of entrepreneurship and courage.

Sarah Nicastro: Yeah, that's a really good point. It makes me think, I'm just referencing related content. If people want to go check it out, we did a podcast with a gentleman named Dan McClure last year and it was really digging into how people often mistake incremental improvement for innovation. People convince themselves that they want to innovate but then they default to incremental improvement because it's what's comfortable, it's what's safe and it digs into that conversation which is a really good one. Okay. Well, thank you both for being here. Like I said, I'll make sure that we link the full report in the show notes so that everyone can go check that out but appreciate you coming and spending some time with me.

Marne Martin: It was great, Sarah, and thank you Hilbrand as well. I really appreciate. It was fun to do this with you.

Hilbrand Rustema: You're welcome, thank you.

Marne Martin: Bye Sarah.

Sarah Nicastro: Bye-bye. We'll link the full report. You can also find more by visiting us at futureoffieldservice.com. We're also on LinkedIn as well as Twitter @thefutureofFF. The future of field service podcast is published in partnership with IFS. You can learn more at ifs.com. As always, thank you for listening. 

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April 18, 2022 | 5 Mins Read

Addressing Mental Health is Critical to Your Talent Strategy

April 18, 2022 | 5 Mins Read

Addressing Mental Health is Critical to Your Talent Strategy


By Sarah Nicastro, Creator, Future of Field Service

We know that the talent gap is the number one challenge businesses are grappling with at the moment – but are you ignoring the importance of better addressing mental health as part of the solution? If the frontline workforce is in short supply, turning a blind eye to the ways your existing employees are becoming overtaxed and burned out will only exacerbate your talent headaches. 

The impact of COVID and the realities of the Great Resignation are putting mental health conversations at the forefront for more business leaders, which I see as a positive. Learning how our employees and prospective employees are struggling, what they need, and making an effort to provide better support isn’t a philanthropical venture, it is progressing our treatment of people to the way we should be treating people. 

I remember on episode number one of the Future of Field Service podcast, Tony Black who was then with Otis Elevator said, “Our field technicians are our company’s most treasured resource.” A statement like that is great to say, but meaningless unless you are taking actions that prove you genuinely mean the words. 

Bringing these conversations to the foreground not only normalizes a topic that shouldn’t but still does hold some stigma, but it allows business leaders to begin the process of brainstorming what needs to change. The Service Council and ProntoForms recently hosted a session on mental health, which featured insights from various companies on what issues they are seeing and how they are taking action. 

During the session, it was shared by Darcy Gruttadaro of the Center for Workplace Mental Health that younger workers are particularly at risk for combatting mental health struggles. “There’s been a quadrupling and tripling of anxiety and depression starting from March 2020,” she says. “The hardest hit age group is 18- to 29-year-olds, so if you have young employees in your workforce they are at great risk.” 

The Challenges of Mental Health in Field Service

There are a number of variables that make mental health in field service difficult to address. First, there is that stigma remaining related to the topic and it takes commitment, time, and effort to eliminate that and normalize the conversation. Second, there are aspects of the job that do cause stress and strain that are entirely unavoidable – so sometimes companies feel as though their hands are tied. And finally, as stated during The Service Council’s session, mental health is challenging to assess and track. 

“Looking at it holistically…we are in COVID, people are not in their best form, so there are some factors there. Even if you can’t see it in data, you have to accept that mental health and wellness is impacting behaviors,” says Alisha Eilers, Segment Safety Manager for North America Manufacturing & Service at Hobart Service. Alisha is absolutely right that even where we don’t see data around these issues, we have to understand they are there. This recognition allows for more proactive measures in addressing issues before they become notable events. 

I recently hosted a Focus Group with the Future of Field Service Advisory Forum, which is a group of IFS customers who come together regularly to share insights and build collective knowledge, where we discussed human centricity and mental health in detail. Some of the additional challenges that surfaced in that conversation are that overtime and utilization levels are at all-time highs, the restrictions and logistics of navigating COVID have caused burnout, the nature of all-remote work breeds isolation and disconnect, and it can be difficult not to adopt a defeatist attitude with so many employees leaving the workforce. 

What hopefully gives you a sense of comfort is that the challenges you may be experiencing are shared by many others. What hopefully is sinking in, though, is what that means in terms of the importance of addressing this topic more strategically, more proactively, and more thoroughly. 

Tactics to Improve Employee Mental Health

So, how do we do that? Like all complex topics, there’s no simple answer or one-size-fits all approach. However, here are a few thoughts from my Advisory Forum, myself, and some former podcast guests that are a great place to start:

  • Realize that the only way to normalize mental health and get your employees to open up is to lead by example. In this podcast with Linda Tucci, Global Sr. Director of the Technical Solutions Center at Ortho Clinical Diagnostics, she discusses how she prioritizes mental health in her leadership and how that has had an impact on her teams being more open with her
  • In addition to leading by example, recognize that the efforts to incorporate mental health dialogue into the workplace are better served in frequent, subtle doses versus a once-a-year flailing attempt at a guest speaker or dedicated day. In this podcast with Jordan Argiriou, Director, Service Solutions APEC at QIAGEN, we discuss how he’s normalized the discussion by genuinely caring about his teams, getting to know them better as people, and adding casual conversations to each interaction
  • While leading by example and incorporation into daily interactions are important, so too is a formalized objective around making progress in mental health as part of employee wellness. As such, companies from my Advisory Forum are creating programs, putting this focus into leaders’ individual objectives, and discussing in every one-on-one
  • Be cognizant of the damage one toxic leader can do to your organization. Particularly when you have a manager who is in charge of all-remote technicians that don’t interact with one another or other leaders often, if that manager has toxic tendencies, they can isolate their entire team and really thwart any well-intended efforts you have
  • Remember the immense value in ensuring your frontline employees feel relevant, valued, and recognized for their contributions – as one leader in the Forum said, “so often, the simple is lost.”
  • While it can be challenging, if you have employees choosing to leave whether for a change of occupation altogether or a similar role at a different company, avoid the defeatist attitude, celebrate their contributions, and wish them well. This shows you value your employees as human beings and not only for their contributions to the business, and it leaves the door open should their situation change
  • Find ways to combat isolation that frontline workers often feel. Many ideas were shared in the Forum, from face-to-face team events at least once a year to small gifts to FaceTime calls at random to check in to ride alongs to personal notes in the mail and many more. The key point is that there is always, always a way to personally acknowledge your workforce and make them feel part of the bigger team and mission

What would you add to this list? I hope you’re thinking about it, because I do believe this topic is so very important to better address. As Jim Woolly, Director of Service Operations at KONE Canada said during The Service Council’s session, “If we can get this right, think of the tremendous impact. Think of mindfulness and bringing meaningfulness as part of our employment strategy. People are asking now: how do you take care of me?” We all need to become better at answering that question. 

To access the full Service Council session, visit here

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April 13, 2022 | 7 Mins Read

Live Tour Paris Highlights

April 13, 2022 | 7 Mins Read

Live Tour Paris Highlights


Sarah reports in from her travels with the three key topics discussed at the first Future of Field Service Live Tour stop in Paris.

Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. I'm excited to be reporting to you that the Paris event just finished. We wrapped our first stop of the global live tour in Paris. The event went really, really well. And it was very exciting to see Future of Field Service come to life in the in-person forum. So I wanted to share some of the key takeaways with you all, and thought I would do a solo podcast this week to share some of the big topics of discussion. So I had four great speakers join; Jean, Roel, Jean-Claude, and Laurent. So thanks to you all for being a part of the event. I'm happy to have you there with me. And we had a great audience as well. There was a lot of discussion, and there were some key part that came out that I want to recap with you all.

Sarah Nicastro: We did record some of the content, and we are planning to make some of that available in its entirety in a bit. But in the meantime, just to share some of the content from the day, I thought I would just do a little recap. So I'm going to go through three key points that I think are very relevant that came up. The first is the talent gap, which I'm sure is no surprise to anyone because we talk about that a lot. And we all know it's a very big challenge. What was interesting about the conversation at the event is that the talent gap came up, not so much in what I would say is the typical sense, which is talking about how we modernize our recruiting, and hiring, and retention processes to make them more effective for today's landscape, but rather how we do need to do that..

Sarah Nicastro: But the conversation we had at the event was around how we marry that with different strategies and tools to offset what we need to do from the labor perspective. So part of that discussion was around making sure that we have connected assets, and we're leveraging data and insights, as well as automation to ease the burden on the frontline workforce. There was a huge conversation around remote service. And I did write an article about that specifically. That should be on the site that ran on Monday. And the conversation around remote service had a lot to do with the fact that that can really be one of the key ways that we navigate the issues that exist with talent by making sure that we are being smart about how we diagnose, resolve remotely when we can, but are more prepared for what we find when we go on site.

Sarah Nicastro: So, essentially making sure that we are maximizing the utilization of the resources we do have by not wasting their time. So that was an important point. The other thing that came up related to this topic from a strategy perspective is will we need to look differently at how we segment or categorize types of frontline workforce. So traditionally, you have a field technician and they're sort of a one size fits all type of person. And that's really the way the job's been built. As things change, what we talked about is do you segment that in a way where you have the technical worker who does the actual mechanical work? Do you have someone who is more responsible for the data and the insights? Someone who then is responsible for more of the relationship and the trusted advisor status?

Sarah Nicastro: So in the future, will there be more of a need to revisit how we look at those roles and break them out into different aspects? So that was the first, I think, really big topic of discussion. The second was around the fact that we need to realize, and I guess, evangelize that service transformation needs to be viewed as business transformation. So, in situations where it isn't, and we had some folks that shared openly about their challenges, those organizations are really seeing incremental improvement versus true innovation. Because the recognition of the opportunity that service presents just isn't there. And so, it really holds those organizations back from making the progress that they need to make.

Sarah Nicastro: So this has to do with a few things. I think the first is really leadership. It's an opportunity that needs to be recognized at the top for it to get the support that it needs. And we had a really big conversation that was very interesting around, how do we sell this? And a conversation about the historical way that a lot of companies do business, which is based heavily on short term results. And how do we, obviously, not ignore that, but allow space to innovate and look at more of a longer term payback. And so, I don't know that there was an easy answer that came out of this, but some folks did share things that they've done in terms of piloting innovation in a small area of the business to prove it's worth. And then look at scaling and expanding that.

Sarah Nicastro: Different strategies for looking at metrics that do emphasize, if not the opportunities that exist, the challenges that exist in service that help leadership understand the need to make a change, things like that. But I think that really we need to be, as an industry, looking at how do we explain, summarize, and sell the service proposition as a business proposition, not a service proposition. Because I think that's something that companies are getting hung up on. So that was the second big area of conversation. And the third was around people. And so, obviously, we talked a lot about technology. And we all know that technology is a very critical tool, certainly in the digital age. In the age of data and information, you really cannot do business today without making sure that you have a strong technological foundation. But everyone, I think, agrees that people need to come first in everything that we do.

Sarah Nicastro: And so, that is both customers as people, and our customers leading the change and the innovation that we're driving. And there was a good amount of discussion around that. Are we doing these things because we think they're what's needed, or we see others doing them? Or are we doing these things because they are going to help our customers solve business problems? So customer intimacy, and then the idea of change management and certainly employee engagement. That was a huge part of conversation related to the talent issue. Do our employees feel valued? Do they feel recognized? Does our frontline workforce feel as important to our organization as other titles? And so, that perspective, understanding what it is that today's talent wants, and are we changing the way we need to be able to give that?

Sarah Nicastro: We talked about career paths and opportunities for growth within the business, and a lot of those things. And then we had a conversation around the interaction between customers and the frontline workforce. And if the future of service, as we move towards civilization and outcomes, depends on companies achieving that trusted advisor status, then are we treating those employees like the valuable knowledge workers that they are? Are we making them feel valued and empowered to build and nurture those relationships? And giving them the upscaling they need to do that. And revisiting the roles to see if it makes sense to segment technicians who are capable and are interested in doing those things versus those who are not.

Sarah Nicastro: So all in all, people are still at the heart of what has very much become a technology business. And I think that's something that no one in the room will forget anytime soon. It was a big part of the discussion. So those are three of the main things that came out. You can stay tuned. I'll certainly be doing more coverage on the content from the event. And as I said, we did record the sessions and we do plan to, hopefully, share some of the content with you in its whole form. What we did was interview-based sessions, so a lot like live podcasts so they would be a perfect fit to share on this platform. So stay tuned for those.

Sarah Nicastro: In the meantime, this was the first of five cities on our tour. We have London coming up on May 5th, Frankfurt on May 19th, Stockholm, May 24th, and Austin, Texas on June 14th. So I would love for you to join us. The feedback on the event was very positive, which made me incredibly happy. And I am looking forward to great events in the upcoming cities. So if you haven't taken a look yet, you can find the agenda for each location and all of the information on registration by visiting the website and just looking under Live Tour. So thank you for listening, and stay tuned for more. And we hope to see you at an upcoming city soon. Visit the website 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 at ifs.com. As always, thank you for listening.

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April 11, 2022 | 3 Mins Read

The Remote Service Wave is Coming – Are You Ready?

April 11, 2022 | 3 Mins Read

The Remote Service Wave is Coming – Are You Ready?


By Sarah Nicastro, Creator, Future of Field Service

We’ll release a podcast this week with my summary and highlights from last week’s very first Future of Field Service Live Tour stop in Paris, so I am going to keep this specific to just one topic. The event was great – it was really exciting to see this platform come to life in in-person form. One of the topics that came up more than I was expecting it to was remote service. 

The audience either already had a remote service strategy in place or were in agreement that it is a “must” in the near term. Roel Rentmeesters of Munters spoke with me and shared the story of how the company first deployed Remote Assistance to aid with Covid restrictions but is now expanding the technology’s use into a standard remote-first service approach. He did comment that feelings about the use of remote service changed after restrictions were lifted, with technicians questioning more its use than when travel wasn’t permitted. However, he and other attendees agreed that – emotions or not – it is an inevitable part of the future of field service. 

Why? A few key reasons came up. First, customer expectations will demand it. Response time is critically important, across industries and businesses. But while customers demand faster and faster response, organizations face the impossibility of scaling up in labor to meet those demands. Thus, remote service helps to bridge that gap. It provides the ability to respond quickly, and sometimes resolve issues remotely as well. This improves customer satisfaction, but it has the added benefit of helping companies eliminate costly, unnecessary onsite visits. 

Remote Service Alleviates Frontline Burden

One of the benefits of remote service is that it helps organizations to make better use of their resources – which we know are scarce. This is the second reason that its expanded use seems imminent. Companies can use remote service to remotely assess and diagnose issues, so that trips on-site are lessened, either by remote resolution or by more accurate preparation to maximize first-time fix. This improves efficiency whilst helping reduce the burden on the frontline worker which is a problem almost every company in attendance is looking to solve. 

The other way remote service helps address the talent gap is as an internal tool. One of the scenarios that was discussed at the event is that a technician who is no longer interested in traveling, but has valuable experience, can use Remote Assistance from the back office, or even home, to aid a number of less experienced technicians working in the field. This gives companies the advantage of extending the lifespan of their most knowledgeable and experienced talent while getting “greener” technicians in the field faster for hands-on experience with expert support. 

Like with anything, it isn’t all rainbows and butterflies. Some employees have resistance toward the technology, either because they feel it is burdensome or because they feel it puts their jobs at risk. It was shared that some customers can also have reservations, perhaps because they feel the technology will be cumbersome to use or for security reasons. Finally, the evolution puts organizations in the position of having to sort out just how service delivery changes in a remote-first approach. What does that look like? How do processes change? Resources? What investment is required?

While not without some questions to answer and change to manage, remote service was spoken about at the event as a given – and I believe that is with good reason. Are you ready for the wave?

Stay tuned for Wednesday’s podcast to hear more about the event!

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April 6, 2022 | 23 Mins Read

TSIA on The State of Field Service in 2022

April 6, 2022 | 23 Mins Read

TSIA on The State of Field Service in 2022


Sarah welcomes Vele Galovski, Vice President, Support and Field Services at TSIA for a conversation around the findings of his latest State of Field Service benchmark research.

Sarah Nicastro: Welcome to the Future of Field Service Podcast, I'm your host, Sarah Nicastro. Today, we're going to be talking about the state of field service in 2022. I'm excited to welcome to the podcast today, Vele Galovski, who is the Vice President of Support and Field Services at TSIA. Vele, welcome to the Future of Field Service Podcast.

Vele Galovski: All right, thanks, Sarah. Appreciate it.

Sarah Nicastro: Yeah, thanks for being here. So, before we get into our conversation today, tell our listeners a little bit about yourself, your background, your role at TSIA, that sort of thing.

Vele Galovski: Okay, great. I've been at TSIA, the Technology Services Industry Association for just about the last nine years. Which, crazy to think about that someone would keep me employed for that duration time. But what we do at TSIA is we help our members accelerate their revenue performance to help them scale, and help them with their profitability. And we do that through education, assessment of their performance with our benchmarking, we understand what drives those good performance metrics. So we get very prescriptive with our best practices. And then we also develop frameworks to help align organizations, and we're going to talk about that today. There's a lot of alignment necessary when you go through a transformation. So that's kind of what I do here.

Vele Galovski: My background, before I came here, I had 20 plus years of executive experience in companies large and small. I worked in companies as big as Bank of America and Xerox Business Services, and as small as some mid-stage startups selling cloud solutions to oil and gas industry. Just going up and down the oil patch. So, I've been on both ends of the company corporate spectrum, and I think the one thing that's in common with all of those positions is I've really helped to drive transformation. How do you change your business? What do you have to do differently? And we'll talk about it, it all starts with the customer. If the customer ain't happy, ain't nobody happy, right.

Sarah Nicastro: Mm-hmm (affirmative).

Vele Galovski: Align your company along those lines.

Sarah Nicastro: Great. Now, I'm sure a lot of our listeners are familiar with TSIA already, but if any aren't, who are the members?

Vele Galovski: It's a Who's Who in the industry. We got our start over 15 years ago in Enterprise IT. So, you can look at that and the cloud companies, we've got companies like Oracle, like Cisco, like Hewlett-Packard Inc, and Hewlett-Packard Enterprise as members. As well as some big cloud companies like Amazon, Salesforce, and so on. Now, probably about six, seven years ago, helped stand up the industrial equipment and healthcare technology verticals here at TSIA, because what we started to see was everything that was happening in tech, is now happening to industrial equipment companies.

Vele Galovski: This digital transformation is just rolling right through and disrupting every industry it hits. So, in those areas, we do have a bunch of instrumentation companies, like PerkinElmer, like Emerson, like Rockwell, and now TSIA has over 30% of our members from the industrial equipment and equipment manufacturing space. So everybody's full gear, in terms of "Boy, what does this mean for us and what do we have to do?"

Sarah Nicastro: Yeah, okay. Good, all right. So you recently released your State of Field Service 2022 Report, which is a lot of what we're going to talk about today, pulling some of the snippets from that. Before we really get into those specifics though, if you listen to what we're going to talk about today, if you look at the report, there's a lot of change at play right now. And so, I think there is... You and I have talked about the view that complacency is just not an option. So give your thoughts on why that is, and then we'll dig into some of those specifics.

Vele Galovski: Yeah, great question. I think everybody always believes that their business model is going to withstand forever, and just keep on moving ahead and make a good product. And that will change everything, that will rule the day. But, when everybody talks about digital transformation, the one topic that's always missed, I think in this discussion of digital transformation, is what we call democratization of the marketplace. So I'll use the auto industry in an example, I think we can all relate to it. Car companies, what do they like to do? Make, sell, and ship. Let's get cars, let's put new premium features in, and the dealers go out, and what do they want to do? They want to sell extended warranties, financing, rust protection here in the Northeast.

Vele Galovski: And when you look at it, what do customers want? Customers want to use that product to get from point A to point B. And so they end up buying a product, that when you really think about it, sits idle for 22 out of 24 hours a day. So, is that the best use of my capital? Is that the best way to do this? So now, out of nowhere, or out of a completely different place, come these ride sharing apps. Things that are focused on the customer need to get them quickly, easily, safely from point A to point B. And guess what, they don't care about building or selling cars. They don't have huge factories to keep in motion and supply chains and all that other stuff.

Vele Galovski: So what ends up happening is, an entirely new set of competitors comes into a marketplace. And if you just sit idle and wait, you're going to be surprised. And you're not looking in your rear view mirror, your side view mirror, you're not looking at all this. And the example's kind of abound, you've got Amazon doing prescription delivery. You've got Google getting involved in manufacturing execution systems. Once again, they don't care about making the pills. They don't care about making whatever in the assembly line, but they all care about, "How do I use data to inform better performance and to do stuff, that doesn't require all that CapEx, and the transfer of the asset."

Vele Galovski: So, I'd like to coin this idea of complacency in terms of a race. When everybody's a tech company today, will these other new entrants learn your industry faster than traditional OEMs learn technology and data? Who's going to win that race, and if you're complacent, you don't stand a chance. Right?

Sarah Nicastro: Yeah, that makes sense. And so these customer needs, and the way that they're being met in a lot of consumer ways, a lot of the things we have access to day in and day out, is one area that's sort of driving the shift in business model transformation. The other is digital, so digital is the enabler of transforming these traditional business models.

Sarah Nicastro: That being said, digital transformation is one of those things that is tough, because there's different definitions, there's all sorts of layers to it that really make it something easy to understand on paper, far harder to execute in real life. What are some of the things that you think make digital transformation harder in reality than it seems on paper?

Vele Galovski: Yeah, it's one of those things, every time I hear something like that, it makes me think of a Will Rogers quote, "It ain't what you don't know that hurts you, it's what you know that ain't so." And I think there's a lot of people out there that talk about digital transformation and think it's something that it's not really. But to your question, the idea of what makes it harder for specifically manufacturers, and it's hard for everybody, but for manufacturers, think about it, the technology is on site. So when a customer buys the asset, and they operate it on their facility, as a manufacturer, I don't know how it's being used. And didn't have feedback, and knowing what we have to do different is important. So not knowing how it's being used is challenging, and that's different as opposed to some cloud consumer type application that was built in the cloud.

Vele Galovski: The second related piece of that is that the technology's not connected. So the capability exists, we've been talking about smart connected products, sensors can really replicate the physical properties of that product. But only a third of the install base is actually connected, where you're getting meaningful telemetry coming back out of that. And so, that's another inhibiting factor that makes it a little bit more difficult.

Vele Galovski: And then the third thing that we see is that the technology was sold by the channel. And everybody uses the channel, which is a great thing to expand distribution, but who bought it? Where's it installed? Are they using it? Who's using it? Is it still there? And all those questions need to be answered, and without the telemetry, without the connectivity, it makes it really difficult.

Vele Galovski: And then I think, the last thing is focus. Many people, and this is where the Will Roger's quote comes in, they think that digital transformation is all about automating processes. And then everybody gets really disappointed that, "Man, what happened? I thought this was going to change my world. What's the deal here?" And so we felt like we had to redefine digital transformation. We needed a new definition out there, which we've introduced over the last few months.

Sarah Nicastro: Okay, so tell us about that, and what you refer to as the digital transformation north star.

Vele Galovski: Yeah, it was a couple of our conferences ago, we do a number of different sessions, and I had a coffee session with Frederic Godemel, the EVP of Power Systems at Schneider Electric. And during that session, I sprung the digital information north star on him, "Frederic, with this new data that you're able to collect today, with this new data I can X, and no longer have to do Y." And so one of the things that he really liked about this, and that we hopped on was from his perspective, they can now remotely monitor distribution systems, and collect that data. And as a result of that, they can provide reactive optimized performance and reliability recommendations, and they no longer have to put somebody on site to operate, and shut down, and lock out live electrical equipment, and do that to begin to assess the system.

Vele Galovski: So, by using this definition, instead of just making it easier to see what's in the panel box, what he's able to do now is eliminate the task completely, and to monitor it remotely. And to keep it safe, and to provide good recommendations. So this idea of a north star focused on eliminating completely, as opposed to just automating, I think is really what people have to begin to look at and say, "This is what digital transformation is not about. Not just speeding things up and showing me what's in the panel box faster."

Sarah Nicastro: Mm-hmm (affirmative) Yeah. So we say the term work smarter, not harder. This is working smarter, not faster, right? So using digital not just to move faster, but to look at what work can be eliminated, and how you can accomplish tasks differently.

Vele Galovski: Yeah, and I think that the other aspect is, when we do digital transformation in this manner, we're talking about eliminating tasks. We're not talking about eliminating people. What we want to do, is we want to use this to automate the mundane, why use people to do things that are so easily eliminated and provided, and let's use people to do things that only people can do. Build relationships, assess situations, provide some additional value add. If all we ever do is focus on the idea of, "Automate something, make it faster." We really haven't fixed the system, and I think you'll continue to be disappointed. So that's why we came up with that north star, that's what you got to look at.

Sarah Nicastro: Okay. And you break digital transformation into two waves, so tell us what those are and why you segment it that way.

Vele Galovski: Yeah, wave one is the old definition, and the old definition is very product focused. And I think it's an important stepping stone in the whole program. So when you think of wave one digital transformation, let's make it smart, let's capture the right things off of that piece of equipment. Let's make it so that we can collect the data, let's see if we can become predictive of what's going to happen, and can we prevent it? Can we take proactive steps? All of that is really important, but that's not the beginning and the end, it's very much the foundation that you're building off of. So we call that wave one. Important, lot of work, lot of investment, but it's only wave one.

Vele Galovski: Wave two, which is going to be the big deal, is how do we take that wave one capability, and turn it into a focus on improving the customer's business outcome? And so you got to move further and further away from your product, which is really hard for a lot of equipment manufacturers because that's all we ever focused on is the product. And now we're saying, "No, go beyond the product. How do you interact in the customer's workflow? How do you participate in the ecosystem? What skills, what knowledge do you have that can influence the ecosystem, and start to help them get more value out of your product and your company."

Vele Galovski: And get paid for it, we're not philanthropic organizations. We're nice people, but we don't do it because we're nice, we're doing it because we think it's the best way to make money.

Sarah Nicastro: Right, okay. That makes sense. Now, you have a book coming out around what you call digital hesitation. So I'm sure you don't want to give it all away because we want people to get the book, but give us an idea of what you mean by digital hesitation, and what purpose this book is going to serve.

Vele Galovski: Okay, well it comes out-

Sarah Nicastro: And apologies to everyone for my sniffles. I told Vele at the beginning I have a bit of a cold, so sorry if I'm sniffly on this episode.

Vele Galovski: No, not a problem. I'm glad we're able to continue on. So, the digital hesitation, it's really a play on digital transformation. It'll become really obvious on the cover, where we cross out the transformation piece and put the hesitation over it. Because everybody talks about digital transformation, they say they're doing it, but few are committing to it. They hesitate. So, the simplest view of digital hesitation is really a half-hearted attempt at transformation. So that's kind of what we're positing out there. And if you really think about it, if we were to tell you that 40% of company revenue was being wasted by not fully committing, would you do it differently? Would you fully commit?

Vele Galovski: And if you think about it, we've got all these organizations very well established, and because of our half-hearted attempts... We create customer success organizations to help customers use the product. We need support organizations, which 36% of every case that comes in to support is, "How to use the product that we just bought." We have field service organizations that have to go on site to figure out what's wrong with the product before we can fix it, just to get to level.

Vele Galovski: And if you were to look at it and say, "Man, I'm spending 40% of every dollar that I earn propping this stuff up," would you hesitate? Or would you say, "Man, maybe I got to look at this a little bit differently." And that's what the book is about, the book is calling these items out, and then going into every single part of that digital customer experience to look at what can we do differently. How do we change from go to market, to onboarding, value realization, all the way through to renewal and expansion. So it really looks across the whole thing.

Sarah Nicastro: Now, would you say that digital hesitation... What you see happening is more companies committing to wave one and not wave two, or hesitating altogether?

Vele Galovski: I think everybody dips their toes in to wave one. Everybody does it, but the lack of vision going forward hamstrings a lot of these companies. I don't know, tell me a company that doesn't have some type of sensor on their product, right? There used to be a lot of dumb pieces of equipment out there, dumb meaning it stands by itself and it does its thing. Everybody's got sensors, even a car. I use that example again, a car has more lines of code than a Dreamliner now. Everything's loaded up, so everybody's kind of engaging in it, but they do hesitate. They stop short because it's like, "Well, how big does this thing get. What do we do with it?" And that's what we want to do, is just expand the definition and the thinking to go where the customer is ultimately going to pull you.

Sarah Nicastro: Yeah. Now, I know this is a loaded question, but if you look at what will it take to eliminate that hesitation, and to help companies see the wave two vision, and make more progress in converting digital transformation efforts into business model change and revenue growth... Because I think one issue I see though, is that people confuse the two. People think that just through digital transformation, they are changing their business model.

Sarah Nicastro: And the reality is it gives you the ability to do it, but it doesn't do it for you. And that's where I think people get stuck, because, like you said, they're, "Well wait, we connected all of this stuff. We have this data, why didn't it change the world?" And then it's like, "Oh, there's this whole other set of change that has to occur." So, what is it that's going to get more organizations to see the potential of going all-in on wave two?

Vele Galovski: I think, fundamentally its leaders have to lead, and you have to look at it. And it's hard, because if I've spent my entire career making it up to the C-Suite because I'm the best CapEx product seller, product development engineering manager out there, now all of a sudden I get here and you're telling me the rules have changed? Wait a minute here, I only got three years to go, I got five years to go. Whatever, I'm going to ride this one out.

Vele Galovski: So first of all, it does take leadership because this is a company-wide thing. I think another piece is you got to commit. You can go back to the Iliad, burn the boats. You can go back to Sun Tzu, knock down the bridge, force your folks to change and to make that happen. And so that's another way. And then I think, unfortunately, some places are just going to fail. You're going to have some big failures out there that may encourage other people to move.

Vele Galovski: So, some of those are things that have to happen. And what we try to do in the upcoming book, Digital Hesitation, is really to talk about some of these factors, and really just articulate it that says, "You got to lead, you got to burn the bridges and the boats." And don't be on the heap of history, "Congratulations, you got there, but are you going to be the one who drove him under, or are you going to be the one that saved the place?"

Sarah Nicastro: Right. I think the point you made saying, "This is a company-wide thing," that's a very important point, because what I see with the people I interview is unfortunately, there's a lot of organizations that are approaching this in a very siloed manner. It's the service function that is trying to drive this change, and it just doesn't work. It doesn't work, unless you're talking about acknowledgement of the overall identity of the business, the value proposition that the company's customers want, and a cohesive look at what it takes to get there.

Sarah Nicastro: And so I think that that's definitely one of the biggest challenges that I see play out time and time again, is there's pockets of really innovative thinking, and change-ready folks, but they're fighting against legacy that maybe doesn't see it at the top. And that has the change too.

Vele Galovski: Just a quick comment on that, I see one of my unofficial charters, at TSIA, is to help these field and support organizations be meaningful contributors at the corporate table. And to give them the data, and the confidence, and the backing to say, "This is what we're doing, and this is what you're asking me to do. And these are the things that have to come into play." So, without that, a lot of people rightfully struggle. We've talked about it, we've seen it in the past, this idea of people have talked about shift left for a dozen years. And so the reason I got on this particular unstated mission was a guy comes to me and says, "Okay, I've been tasked to eliminate 40% of my dispatches in the next year and a half."

Vele Galovski: Because the CFO did a spreadsheet exercise and says, "Wow, dispatching on site with a spare part is really expensive. I want to do that remotely." And I'm like, "Oh, okay, great." Well to shift left, I go, "What percent of your install base is actually connected, and giving you telemetry so that you can resolve it remotely?" 2%. I'm like, "Dude, you better update your resume, because you're not going to make that goal."

Vele Galovski: And that's sad because, I think a lot of field and support people really put their heart into it, and want to do the right thing. But it's a matter of, "Hey, if we're not connected, and we're not doing this the right way, this is not all on my shoulders." And that's why it's important to get the whole picture out there.

Sarah Nicastro: Yeah. Now that being said, what is the role of field service in all of this?

Vele Galovski: I've put it out there that says, sooner or later the industry is going to figure out that I need service revenue. Sooner or later. So, who are the people who know the customer better than anybody else in the company? Field service. They go on site, they've seen good implementations, they've seen bad implementations. They know who uses the product well, who doesn't, and what really works. So what I tell field service organizations, I said, "Get ready, because you know, this is going to happen."

Vele Galovski: There's going to be this balancing act of utilization versus the service levels, and what are you going to do when you're on site? Are you going to get in, get out, get to the next job? Or are you going to fix the problem, but then start adding value when you're in there? These are capabilities that need to get implemented right away. Make it okay for people to do that adoption and expansion when on site, give them the skill sets that are not only technical, but are looking at the process, because we want to influence the business outcome. Give them some of those skills, teach them what it means to uncover leads, to build relationships.

Vele Galovski: All those things have to happen, expanding beyond that core charter of fix stuff. And when you start to build those capabilities into that charter, people are going to say, "Oh my God, this is what we have to do. Who can help me?" And they're going to look around and the only person that's going to know what's happened is that field service person. That manager or that leader, and they're going to say, "I'm the pedal to put to the floor, I got that."

Sarah Nicastro: Yeah. Now, can you give folks sort of a high level overview of your Field Service Maturity Model?

Vele Galovski: Yeah, sure. One of the recognitions that we all have in field service, we don't have infinite resources. We can't focus on everything all the time, so what we do at TSIA, we help them focus their scarce resources with our benchmarking process. And that benchmarking process is looking at not only your performance, we put that on the Y axis, and we say, "How are you objectively performing against the industry?" And then and we also along the X axis, look at what's your adherence to industry best practices? Just like any good consulting organization, you got to have a two-by-two.

Vele Galovski: So as an example, if I have high performance and I'm in the upper-left hand quadrant, but low adoption of best practices, this means I'm getting good results, but it's probably going to be pretty hard to scale. And maybe we're getting it just out of pure effort coming out of those engineers, and it's going to be hard to do that. So our recommendations is we look at the performance that you want to maintain, and we start to show, "Hey, these are the industry best practices that will maintain that performance, and help you improve at scale." So, that's a theoretical discussion. As an example, in that upper left-hand quadrant, those are the people that have great customer satisfaction. People are doing a wonderful job, in spite of poor product performance, in spite of not knowing what's happening until you get out there. So those companies in that upper left-hand quadrant, don't regular have formal input into the product team on serviceability.

Vele Galovski: Those percentages are so much lower. So they're doing well, but they're not getting any help. The companies that move over into that upper right-hand quadrant, meaning they're adopting certain practices and still maintaining those results and can scale, those are the companies that, as an example, have formal input to the product team on serviceability. What were the causes of all these break fixed incidents? How can we do reliability? What should we be monitoring? Here are things that work well, if we can incorporate these data streams into our product, we can do X, Y, and Z. So that's what we look at when we do that type of assessment, and say, "Okay, good performance. You can scale doing these things because you're not doing them today."

Sarah Nicastro: Right. Which really is representative of service being better incorporated into the overall business strategy, business decision making, business operations. And so it's similarly representative of the need to ensure you're not having that function operating in a silo, right? So that's interesting. So-

Vele Galovski: I got a bunch of these little things, Sarah, as you know. But I talked about being a contributing member on the corporate table. And someone told me this a long time ago, and I never forgot it. And they said, "You have to be at the corporate table. Field service has to be at the corporate table because, if you're not at the table, you're on the menu."

Vele Galovski: I think you can fit it in with exactly what you just said, that if you're not given this feedback, if you're not part of this whole enterprise approach, guess who's going to get blamed for poor uptime? Guess who's going to get blamed for bad satisfaction? Guess who's going to get blamed for that? You're on the menu, and it doesn't work that way. We all have to work on this together, and that's a great example of what I mean by being a contributing member at the corporate table.

Sarah Nicastro: Yeah, that makes sense. Now, over the next 12 to 18 months, what are some of the of biggest... I don't know, I don't really love predictions. But what are some of the most interesting things you think we're going to see in field service over the next 12 or 18 months?

Vele Galovski: I think that what you're going to see, and I use like Enterprise IT to be a predictor of future because they've been dealing with this for about six to eight years. And now a lot of the manufacturers and everybody else are starting to deal with this today. And so what's going to start to happen, I believe, are time and material engagements are going to hit the road. It's too hard to do cost plus, it's too hard to scope out how many people you need, it's too hard to predict what's going to happen with the revenue, and so on. So I see time and materials, which have essentially disappeared from enterprise tech, also going away from industrial equipment, healthcare, even though a lot of people use it today.

Vele Galovski: That's going to shift from time and material contracts to annual recurring revenue contracts, things like here's a support and maintenance contract where I'm going to guarantee resolution time. Not response time, but resolution time, that's another trend that's going to start to change. And then customers, we see hints at this today, they're going to start putting clawbacks into contracts. It's like, "Wait a minute, you promised me this, and if you don't hit that level, we're going to start the clawback."

Vele Galovski: We're just going to put more pressure on the enterprise to get to connected, to get really good at what they're doing. So over the next 18 months I see less time and material. Oh, by the way, who wants to play in that space, anyways? Because anybody with a tool pouch plays in that space, and it's hard to maintain the margins people want. So I see time and material going away, I see more annual recurring revenue type contracts coming in. I see focus on resolution time, instead of response time, i.e. closer to business outcomes. And, I think that there's going to be more and more penalty clauses and clawbacks for lack of performance there. So if you think of that, it's a lot of pressure, right?

Sarah Nicastro: Yeah, yes it is. And that's what makes our jobs interesting. So, that's-

Vele Galovski: And I thank you for bringing it up to everybody. 

Sarah Nicastro: Yeah, it is a lot of pressure, but like we said at the beginning it's not really optional anymore. All right, so, last thing is I want to have you tell folks you have a live event happening in May. So tell our listeners where it is, when it is, how they can find more information so that they can check that out.

Vele Galovski: Everything you want to know is at TSIA.com. You can look at the conference tab there, everything is there. It's going to be in Orlando, May 16th through the 18th. It's going to be an in-person and hybrid event, we did our first in-person event in October in over two years, and we did that in Las Vegas. That was also hybrid, so we felt that this is a good model. COVID's changed everything, so we've adapted. And we're going to be doing that as well here in May. I referenced Frederic Godemel from Schneider Electric, he's on the main stage for us this year. Talking about that digital transformation, and what they need to do, or what they have done within a traditional equipment manufacturer. Well over a hundred years old, what have they done to transform?

Vele Galovski: So, that's going to be a great talk. And then we're going to have what we call pathways, seven pathways that you can register for and attend things on, like digital customer experience. How do you accelerate annual recurring revenue? How do you navigate the transformation? So, it's a great event, we're expecting over 1,000 people in-person at Marriott World Center in Orlando. So we're excited about the event. I'm excited because it's on the East Coast, and I'm excited because I love Disney world.

Sarah Nicastro: Yeah, there you go. That sounds good. So everyone that isn't already engaged with TSIA's content, you can find all of that, like Vele said at TSIA.com. You can check out the State of Field Services Report, you can find blogs that Vele and his team write, different research that you can take a look through, and information about the event in Orlando in May. So, that's excellent. Well Vele thank you for coming, and spending some time with me today. I appreciate it.

Vele Galovski: Yeah, thanks for having me, Sarah. And I hope you feel better, I couldn't tell.

Sarah Nicastro: Well, good. It's nothing major, I wanted people to know that if they heard a lot of sniffles, it was just my little cold, so all as well. All right, so thank you again. I appreciate you being here with me.

Vele Galovski: Thanks, Sarah. Take care.

Sarah Nicastro: You can find 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 at IFS.com. As always, thank you for listening.

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April 4, 2022 | 5 Mins Read

Relational Intelligence on the Frontlines: How to Develop Great Partnerships with Your Customers

April 4, 2022 | 5 Mins Read

Relational Intelligence on the Frontlines: How to Develop Great Partnerships with Your Customers


By Dr. Adam C. Bandelli, Founder & Managing Director of Bandelli & Associates and author of RELATIONAL INTELLIGENCE: THE FIVE ESSENTIAL SKILLS YOU NEED TO BUILD LIFE-CHANGING RELATIONSHIPS

Sir Richard Branson, the legendary entrepreneur and business leader once said, “look after your staff and they will take care of your customers.” In a year when we are coming out of a global pandemic and reuniting with our people and teams face-to-face, in many instances for the first time, Branson’s quote resonates now more than ever before. Frontline employees are often the face of our businesses and organizations. They are the ones that have the greatest impact on our customers. They represent a company’s brand and the products and services that are sold.

If frontline employees are to be successful in driving your business forward, they need to learn many different skills. It is important for them to understand the mission and vision of your organization. They need to know the values and principles that your company is built upon. They must have a deep understanding of your products and customer service offerings. They need to be bold and ambitious to drive the business forward and help the company achieve its financial profitability. Most importantly, they need to build great relationships with your customers. The types of partnerships that generate repeat business and create the word-of-mouth buzz around the benefits of working with your organization. To do this, frontline line leaders and their employees need to learn and practice what I call relational intelligence. 

Relational intelligence is the ability to successfully connect with people and build strong, long-lasting relationships. Our research at Bandelli & Associates has found that when frontline employees are intentional about building great relationships with their customers it leads to many productive outcomes. Employees who consistently practice relational intelligence have more satisfied customers and repeat business. Not only that, when frontline employees develop trust with their customers word-of-mouth referrals spreads quickly. The bottom line grows when your customers know that they matter, and that you not only value their business, but you value the relationships you form with them as well. 

So, what are the five essential skills of relational intelligence and how can you put them into practice with your customers?

  1. Establishing Rapport: This skill focuses on the initial stages of communication between your employees and their customers. It’s the ability to create an initial positive connection with people. There are many factors that come into play when establishing rapport. Making a good first impression matters. The words you use and “how” you use them can draw customers in or push them away. Finding common ground becomes critical. You can do this not only by asking questions and listening, but by using eye contact and nonverbal behaviors to show a genuine interest in what customers are saying. You cannot progress to further stages of developing lasting relationships with people if you don’t take time to establish rapport.
  2. Understanding Others: This skill is about being intentional in putting in the time and effort needed to get to know your customers on a deep level. It is about using EQ to understand your own feelings and the emotions of others. It’s about being a good active listener. It’s about being curious and inquisitive. Relationally intelligent employees ask probing questions to learn about the background, history, and experiences of the customers they serve. They are empathetic and can put themselves in other peoples’ shoes. Understanding others does not happen overnight. It is an ever-evolving process that must take place over time. The investment you make during the early stages of a relationship sets the foundation for retaining lifelong customers
  3. Embracing Individual Differences: This skill is about acknowledging and accepting that everyone comes from different backgrounds and experiences. It’s having a favorable reception towards customers who think, act, and behave differently than you do. It’s about appreciating racial and ethnic diversity. It’s acknowledging the differences of how men and women think and what their buying needs might be. It’s choosing to embrace peoples’ sexual orientation. It’s understanding that cross-cultural differences and spirituality/religion impact how you interact with the world. It’s about showing people common decency and treating others the way you want to be treated. Relationally intelligent frontline employees know how to tap into this to create stronger partnerships with their customers. 
  4. Developing Trust: This is the most important relational intelligence skill in any employee-customer relationship. You must earn your customer’s trust. You demonstrate trustworthiness by showing competence, honoring commitments, and consistently exceeding customer expectations. Once trust is developed, customers let their guards down and they open up more. To sustain trust over time, employees must continually nurture the customer relationship. Deposits into the bank account of trust must be made on a regular basis. Withdrawals can have a negative effect on the relationship. If you break trust with a customer, you will lose their business.
  5. Cultivating Influence: This is the most powerful skill of relational intelligence. It is the ability to have a positive impact on the lives of others. It’s about always putting your customers first. It’s not about trying to get the sale or win the business. Do you genuinely care about improving the quality of your customer’s life regardless of the product or service that you sell? Do you value the relationship enough to do what’s in their best interest and not your own? Can you think beyond this sale to the one that could take place a year from now if you invest further in developing the relationship? Great relationally intelligent frontline employees are strategic in their customer relationships. They do not sacrifice tomorrow, or the quality of the customer relationship, to get a quick sale for their monthly quota. The funny thing is though, if you can think strategically while investing in strengthening the relationship today, you will hit your monthly quotas. In fact, you’ll cultivate customer relationships that can span a lifetime. 

Great frontline employees don’t just sell products and deliver services, they create an experience for their customers by using relational intelligence. This is the defining factor that makes great employee-customer relationships work. If your people are intentional in how they build relationships with your customers, your business with thrive and grow. 

Adam C. Bandelli, PhD, is the Managing Director of Bandelli & Associates, a boutique consulting firm focusing on leadership advisory services and organizational effectiveness. He is the author of the book Relational Intelligence: The Five Essential Skills You Need to Build Life-Changing Relationships, which will be available everywhere books are sold in May. Follow Dr. Bandelli on Instagram at @official_bandelliassociates to learn more. You can also visit the firm’s website at www.bandelliandassociates.com for information on other leadership topics and to learn about their consulting services.

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