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October 10, 2022 | 4 Mins Read

How Does Servitization Enable the Democratization of Innovation?

October 10, 2022 | 4 Mins Read

How Does Servitization Enable the Democratization of Innovation?

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By Sarah Nicastro, Creator, Future of Field Service 

Coming up on this week’s podcast, I talk with the Managing Director of Koolmill Systems, Alec Anderson. Now, I learned a lot from Alec during our discussion – and I don’t want to give that all away here because, well, then you won’t go listen for yourself when the episode comes out on Wednesday. But I do want to share some thoughts on one of the pieces of our conversation that stuck out to me, which is thinking about how Servitization allows for the democratization of innovation. 

To give a little background with minimal spoilers, it is important for you to know that Koolmill Systems is a company that has created a disruptive machine for milling rice. I will admit to you that when I first heard what Koolmill does, I had a preconception that hearing the ins and outs of rice milling from Alec may be a little boring – and I couldn’t have been more wrong. It’s actually very fascinating! 

Learning a bit about the rice industry wasn’t the only aspect of the conversation that was fascinating. What’s also interesting is Koolmill’s decision to go to market with an As-a-Service business model, which is also disruptive for its industry. There were a number of angles for Alec and I to discuss there, too, such as exploring the similarities and differences of a new market entrant selling As-a-Service versus the transition of a legacy business to the model. Understanding how the decision impacts Koolmill, its customers, and the environment certainly had my attention – but then Alec brought up how he views the decision to go to market As-a-Service as a way to level the playing field between huge players and the small businesses, as well as what he refers to as create a “virtuous cycle,” and I was intrigued.

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In rice milling, the significant capital expense of modern machinery is prohibitive to many businesses. “The current state of the art in the industry, that's probably around about 50,000 large millers globally, and they're very highly capital intensive. Not necessarily digitalized, but quite automated in many instances. But to run that kind of operation, you need a lot of money to buy the equipment in the first place. You need a lot of rice to keep it running, and you need a huge amount of infrastructure and power to support it,” Alec explains. “Now, there are around one and a half million SME processors globally who don't have access to those three requirements. So, they're kind of locked in to using antiquated and wasteful equipment. In fact, we were in Nigeria earlier this year, and they were running machines that were made in the 1870s, still driven by diesel. They're locked into what they have, or if they do replace, they replace like with like, because they don't have access to this high performance, state of the art, modern equipment, and we aim to try and change that.” 

With pay-as-you-mill, Koolmill’s cutting-edge machinery becomes attainable for each of those SMEs. “Offering these small operators cost certainty is an enabler, an empowerment,” says Alec. “It empowers these small producers now to compete on pricing and quality with the large producers.”

With modern milling technology now within the grasp of SMEs within their grasp thanks to Servitization, significant opportunity is created. “We see the opportunity for a virtuous cycle in three pillars: economic, social, and environmental,” says Alec. “In terms of building the social capabilities, we call it rural industrialization. This is where we can use that small rice mill, now equipped with cutting-edge machinery, as a focal point, as an employment generator, as a means of creating and retaining value at a local community. With pay-as-you-mill, we have the opportunity to transform their livelihoods.”

This angle on the impact of Servitization hasn’t come up in my previous conversations, and I admire Alec for wanting to make sure that as he creates a successful business, he is also helping others along the way. It isn’t uncommon for companies to get so narrowed in on their financial viability that they overlook the ways in which they can perhaps achieve monetary success and have an impact – it doesn’t always have to be either/or. This conversation with Alec about how Koolmill’s decision to go to market with their innovative technology in an As-a-Service approach is leveling the playing field in the rice milling industry has had me thinking about all of the other areas that Servitization could democratize innovation as well. I think this angle is one that is intriguing to explore. What do you think? I’d love to hear!