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Service Transformation: Lessons Learned and Opportunities Ahead

Six Storytelling Missteps That Risk Your Relevance to Employees & Customers

Creating CX That Fuels Business Growth

June 21, 2022 | 7 Mins Read

Live Tour Austin Highlights

June 21, 2022 | 7 Mins Read

Live Tour Austin Highlights

That’s a wrap! Sarah shares an overview of the final Future of Field Service Live Tour event in Austin, Texas, and tells listeners what to expect next.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Well, everyone, that is a wrap. Last week was the last of five future of field service live tour events for 2022. We ended the series in Austin, Texas and went out with the bang with another great event. So if you follow along the podcast regularly, you will know that this year is the first time we've taken the conversations we have here out into the real world to take this platform and turn it into a community. So we visited Paris, London, Frankfurt, Stockholm, and just ended in Austin.

Sarah Nicastro: So I just want to give you a little bit of a recap and talk about what you can expect next in terms of the content in the events and the future events. So we started the day with Max James. Max is an Air Force Academy graduate, pilot who was shot down twice in Vietnam, Fortune 500 entrepreneur, an author of book, The Harder I Fall, The Higher I Bounce. You might remember Max from an earlier podcast episode, 148, where he joined to talk about some of the lessons he shares in his book, and it was really fun to have Max join and hear some of those stories live.

Sarah Nicastro: He has a very interesting history and background and a lot of lessons that he's learned along the way that he's now not only put into his book, but came and talked with us about in person. So a lot of that was around resilience and talking about how resilience as an individual leader is necessary for resilience as a business. Talking about how leaders have to understand that failure is part of success. He talks about a cartoon that he shares in his book that is a knight who is very beat up, and the caption says, "Some days the dragon wins." And so we had a conversation with all the other folks in the room about how there have been plenty of days over the last few years that the dragon has won, but how we all have to keep on going and persevere to succeed.

Sarah Nicastro: So next we welcomed Sasha Ilyukhin, who is the SVP of customer service operations at Tetra Pak. And we had a conversation around Sasha's current focus on human centricity. We talked about the reasoning for that and the understanding that while customer experience is obviously incredibly important, that starts with the employee experience, employee engagement, employee satisfaction, and making sure that we understand that we're human, our employees are human, and we all need to relate to each other in a human way.

Sarah Nicastro: So Sasha talked through what that focus looks like for him now, some of the areas that he's working on, including engagement and recognition, mental health, how technology plays a role, how one-on-one communication and the impact that mid-level management has, all sorts of different things.

Sarah Nicastro: So I shared with the group that I think this is an area we'll see increasing focus on over the next few years, because I think that as we went off on our quest to provide the ultimate customer experience, sometimes we've overlooked the importance of the employee side. So that was a great conversation.

Sarah Nicastro: We then moved on to a panel discussion with Roy Dockery, who is the vice-president of field operations at Flock Safety, and Katy Chandler, who is the vice-president of learning and development at DuraServ. And we talked about everything related to tackling today's talent challenges. So again, if you follow along, you know that the talent gap is something that has come up in every city that we visited on the live tour. It comes up very regularly in podcast conversations. So we talked about the whole continuum of this, from how are we recruiting, starting with how are we clarifying exactly what we need for each role? Are we holding ourselves to outdated standards? How are we communicating what those roles look like in a way that is compelling for today's potential employees? How are we improving diversity of applicants and ultimately hires? All the way through to obviously learning and development, which is Katie's area of expertise, and talking about how, as we bring on people with more aptitude but less experience, how that evolves what we need to do in terms of training, learning, and development.

Sarah Nicastro: We talked about retention and everything that falls into that category and how sometimes when we talk about the talent gap, we focus a lot on the challenges around getting new people in, and again, can overlook the focus we need to put on keeping the good people that we do have. So it was a really interesting conversation as well.

Sarah Nicastro: Then we broke for a little bit of networking and lunch before we welcomed Sonya Roshek, who is the vice-president of field services at B+T Group. Sonya started her career in the military, then got into telecommunications, now running field services at the VP level, and has found herself often one of few if not the only woman in many male dominated spaces. So we talked a lot about the experiences she's had and what she's learned from them and what she would want folks who are focused on bringing more women into field service to think about from those experiences.

Sarah Nicastro: So I think it's a topic that is very layered and there's a lot of different things to address, but I always think that there is power in hearing an individual's story and thinking about what you can take from that and increase your perspective with.

Sarah Nicastro: We finished with Gyner Ozgul, who is the president and COO of Smart Care Equipment Solutions, talking about resilience, resurgence, and re-innovation. So we had a conversation with Gyner about his personal development as a leader over the past few years. His role has expanded significantly. Smart Care is growing very rapidly, and of course, that was all happening in the midst of the pandemic. So we talked with him from an individual leader perspective about how he navigated that. And then from a business perspective, we talked about some of the steps that Smart Care took during the pandemic to have business continuity. What the resurgence has looked like and some of the challenges that they face in that, including issues with supply chain and parts availability and how they're navigating that, and how they're resetting innovation. So how they are getting back to the longer term potential and view they have for the company that was set pre-COVID and a bit disrupted. So that was a great session as well.

Sarah Nicastro: After that, we had a group think where we came together and just talked about a variety of issues and allowed people to weigh in on one another's questions, and finished the day with some fun Texas style happy hour and networking. So it was a great day. All five were great. Someone asked me not too long ago which event was my favorite and I said, "That's a very unfair question." I do genuinely mean that. They were all different. Obviously that is the nature of having people share their individual stories. Each story is unique. So that was really a fun experience to hear so many different perspectives. And they all had different focus areas, different points of value.

Sarah Nicastro: I would say the common thread is really seeing firsthand it being reinforced how important community is. I think that service leaders tend to be very, very busy, often overworked, and sometimes overwhelmed, and taking just a day away from the day-to-day operations or the grind to sit down and engage with people that have the same challenges, that are working towards the same opportunities is not only comforting but inspiring. So it was an honor to be able to bring that to life in those five cities, and I'm very grateful for the opportunity to do so.

Sarah Nicastro: And what will happen next? So one thing is now that I am going to have at least a little break from travel, I can dig into some of the specifics of the content shared during the events and look for ways to share that with you all. So whether that's through articles or releasing some of the sessions as podcasts, I want to make sure that rather than a quick overview, you have an opportunity to get some of the detail as well. So stay tuned on the podcast and on futurefieldservice.com or on LinkedIn for that.

Sarah Nicastro: And we haven't completely briefed since Austin, since everything ended, but we have connected quickly as a team. And at least at this point, we do plan to do these events again in 2023. I don't know exactly what that will look like, but as soon as I do, I will certainly share with you. So if you weren't able to join us in 2022, hopefully you'll have the opportunity to do so in 2023.

Sarah Nicastro: So thank you again so much to the speakers that came to share their insights in each city, the attendees that came and engaged and connected, the team that helped me plan these events, Polly and Joanna, for the incredible work that they did on the logistics and execution. And of course, a huge thank you to IFS for sponsoring these events and allowing us to bring this type of community and thought leadership to these five cities without having to charge a fee for folks to attend.

Sarah Nicastro: So thank you all. Stay tuned for more to come at futureoffieldservice.com. Follow us on LinkedIn. You can also find us on Twitter, @thefutureoffs. And as always, the Future of Field Service podcast is published in partnership with IFS. You can learn more at ifs.com. Thank you for listening.

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Service Transformation: Lessons Learned and Opportunities Ahead

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June 15, 2022 | 20 Mins Read

Husky’s Move to Predictive Service

June 15, 2022 | 20 Mins Read

Husky’s Move to Predictive Service

Sarah welcomes back Tony Black, President of Service at Husky Injection Molding Systems, who was this podcast’s very first guest when he was with Otis Elevator. In his new role, Tony shares with Sarah the catalysts for Husky’s move to predictive service, what’s enabled the company’s progress thus far, and what the future holds.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today we're going to be talking about Husky's move to predictive service. I'm excited to welcome back to the podcast, Tony Black, who is currently the president of service at Husky Injection Molding Systems. Tony, welcome back to the podcast.

Tony Black: Thanks, Sarah. It's great to be back. There's a lot to talk about. I'm really looking forward to a good discussion today.

Sarah Nicastro: Excellent. So, for those of you that haven't followed along since the beginning, I know we are quickly approaching 200 episodes of the podcast. But Tony was actually my very first podcast guest, so episode number one, which makes it very easy to remember. And at the time, Tony was with Otis Elevator, and has taken on a new role since, and I'm sure been up to a whole lot. So Tony, before we dig into the predictive service topic, tell us a little bit about what you've been up to the last couple of years.

Tony Black: Yeah, sure. So after a long career at the Otis Elevator Company and a successful transformation of their service business, that's what we talked about the first time, I decided to join another really great company, and also a leader in their industry, Husky Technologies. And like Otis, Husky has truly enabled the industry through technology and innovation. And it's really part of the DNA of the company.

And so, I joined here as the president of the service business. And what I found was, we're already a really good service business with talent founded on high responsiveness, really strong global infrastructure of technicians and service centers, probably the best in the industry, and really close to our global customer base. But the real opportunity was to transform our service business with more predictive and proactive solutions, and really all centered around delivering on our commitments to our customers. And not only delivering on those commitments, but then maintaining those commitments through the life cycle of our product. So, that's what I've been up to the last few years. I'm really enjoying it and looking forward to talking to you more about it.

Sarah Nicastro: Good, good. So, moving to a more predictive model. So we're going to talk a bit about that. Before we do though, can you talk a bit about the drivers for the move to predictive? So, what are the customer needs that you're witnessing? What are sort of the expectations on service that are prompting Husky to evolve into a more predictive approach?

Tony Black: Yeah, I think, let me just tell you a little bit about our customers and how they operate, some of the dynamics that are happening. Our customers operate their facilities 24/7 for the most part. And they're producing very high volumes, we're talking in the millions per day or billions per year. So any performance erosion or unplanned downtime is really unacceptable. Just can't have it. So you kind of couple that need with complex technology, there's material changes happening in our industry, there are new customers coming into the industry, and then there's a skilled talent shortage as well. So you put all that together, and our customers have really come to us and said, "We really need your help to help us maintain our performance with all these dynamics happening, but please do it in a proactive way. We can't afford to do it the old way."

Sarah Nicastro: So, the predictive service offering at Husky is called Advantage Plus Elite. So tell us some of the details about what the offering is, how it works and how this kind of changes the way that you interact with your customers and provide levels of service.

Tony Black: Sure. So, Advantage Plus Elite, but we also call it We Call You. So actually, a lot of our customers just call it, We Call You, because that's what we do. And I'll explain how we actually do that. But it's a connected solution. It's powered by the technology I described, we call that NSM. And NSM is the analytics and the tools inside and developed by a full-time team of SMEs here at Husky. And they've identified, through their experience, the key variables to monitor, the tools to use to detect trends, and the dashboards to monitor, and then proactively see the potential issues, but also do this at scale.

And so we launched this officially about a year ago, a little over a year ago now. Since then, we've stood up monitoring centers here in Bolton, Canada, in Luxembourg, in Shanghai, Mexico, Japan and Brazil. They're all staffed with monitoring center specialists. And when those specialists, using the dashboards and the tools, detect a trend or a problem, potential problem, they issue a We Call You to the plant and they issue it in local language. And this is all done 24/7. And that We Call You, it explains the issue, and then the solution is also explained. But the ultimate solution comes in the form of, either we give the customer enough information where they can resolve it themself. That would be one use case. The second is, we actually are connected and we resolve it remotely. And then the third is, we send in an informed technician and sometimes even send the part in advance as well. In all of these cases, we then monitor the solution and verify that we've really found the root cause.

So our customers really see the value in this. In just one year now, we have over 200 service contracts across 20 countries. We've issued well over 2,000 We Call Yous, and there's a lot of value in those We Call Yous. We estimate, directionally, for every We Call You, about $10,000 of cost avoidance or of lost production capacity. Now, we balance the technology with Husky people, people power. Each contract has a dedicated program manager, and that program manager facilitates a weekly and a monthly 30 minute standup meeting with the plant to go over the prior week’s We Call Yous. They use a standard weekly performance report showing the trend of unplanned downtime, OEE, energy usage, and so on. And again, these things are critical because of the nature of the way they operate.

So with that weekly meeting, it's actually a weekly and a monthly, combined with the technology, our customers, they're hardwired into the Husky knowledge base, if you will, hardwired into our SME base 24/7. And that, combined with the technology, has really proven to be powerful, and our customers see a lot of value in it.

Sarah Nicastro: Yeah. Okay. Just a couple points to clarify. What does NSM stand for?

Tony Black: It's new service model.

Sarah Nicastro: Okay. And then second question is, so it's called, We Call You, but is it just a call or is it a video interaction? Is it an augmented reality interaction? What is the format of communication in that initial outreach?

Tony Black: So the initial communication with the We Call You is in the form of an email, or it can be different media to get it out. But it's in that form. It's a kind of a standard format that we use that is pretty concise. But then the follow up work can be an augmented reality call. It can be a connection to their system where we're actually troubleshooting and solving the problem remotely. But the initial We Call You, it's really a one page communication explaining the problem, showing the problem actually with the trends that we see, and then the probable root causes of the problem.

Sarah Nicastro: Okay. And then you mentioned that for every We Call You, you've noticed, on average, a $10,000 cost reduction. So that's a $10,000 cost reduction for the customer or for Husky?

Tony Black: For the customer. It's really a cost avoidance. So, for example, if the system, for some reason, is using excessive energy, and then there's a problem and we detect that early, that's a cost avoidance of energy cost. Or if the system is using too much material to produce the solution, just the volume, it really adds up quick, so that's a significant cost avoidance. Or if we prevent a shutdown, an unplanned shutdown, again, with those volumes, and our customers, even more so today are really at capacity, they can't make their volume and they can't sell the product that they need to sell. So they've lost that revenue, if you will, that they would be getting. So it's really significantly beneficial for our customers.

Sarah Nicastro: Okay. And then I wanted to talk a little bit more about the program managers. I like your point around the balance between technology and people. I think this is something that we see people trying to land on, what's the right mix? So I was at a conference at the end of April, and there was someone on a panel there that was very honest in saying, we went way too far into automation and AI and saw our customer satisfaction scores decrease because they were missing that human connection. So we know that both are important. It's important to use the technology to work smarter and have these more sophisticated capabilities, but it's also important to customers to still have that human connection. So I think it's really fantastic that you are aware of that. And from the very beginning, Husky is working to align those things really well. So the program manager though, did they exist before this program, or is that something that is new and intended to sort of build that balance between people and technology?

Tony Black: Yeah. It's a new role, Sarah. Actually, I'm thinking about what you were saying. So there's really, I would say, three new roles in this solution. There's the program manager, there's the monitoring center specialist, and then we have connectivity specialists who are not centrally. Actually, we try to have the program managers able to speak the local language so they're around, located in different countries. Some are in the centralized, but can speak the local language. We do have the critical centers for the monitoring centers, with the monitoring center specialists. And then we have connectivity specialists who are also located closer to our customers who can help get our customers connected, that initial connection, and get the contracts up and running.

But the program manager isn't, back to your question, it's a new role. Actually, it's really nice to see because it's creating new opportunities for employees inside Husky. We have a really strong group of program managers, a complete cross section of people with different backgrounds, all have good program management skills, but a real high energy group, good with customers, but also understand how to work with the SMEs. They're really, if there's a problem, and through our initial monitoring center specialists we can't get to the root of it, then we tap into the Husky SME base. And they know how to get that done.

So again, that weekly meeting, it's part of the people factor. Our customers love that weekly meeting because it's efficient. It's 30 minutes max, because they don't have the time for meetings. So 30 minute max, but if they kind of see what's happened in the last week, we give them suggestions on ways to continue to improve. And if there's an issue or a question, they get it answered right in that meeting. So, I was concerned, could we scale that? But with the tools that our NSM technology team is building, and with the standardization, we're scaling it. That NSM is actually developing modules of technology. We're on module six now. So those modules include analytics, but also tools to help allow us to scale. And so, as we develop more, release more of these modules, we can even do it more efficiently.

Sarah Nicastro: Yeah. So I think it's really interesting. And I want to give you the context so you don't think I'm trying to get you to answer a question that gets layered. But the reason I think this is so interesting is because when we started talking about the technological capabilities that allow a lot of what you're doing, remote diagnosis, remote resolution, customer remote resolution, et cetera. You ultimately get to a point where you are talking about less onsite work. Now, I think this is all very positive, but there's a couple of topics here that start to make companies uncomfortable because it just requires change. One is the business model shift. So if you've always billed customers for onsite time, then how do you evolve towards something different? That's one. The second is, you start to get into technicians fearing that their jobs are going away. And I always say, there aren't enough technicians. No one can hire enough technicians right now. We don't need to worry about people being out of jobs. It just changes the way the work is done. It's not going away. It's just shifting.

And so, I just wrote an article, I think, a couple of weeks ago about one of the opinions I have is that we obviously need to let go of some of the, well, this is how we've always done it, because that's what keeps people held on these challenges. So we have to kind of let that go. I think there could be a lot of value in segmenting service and even technician work. And so, to me, it sounds somewhat like this is where you're going, which is, let's say over time as this solution scales, and you can correct me if I'm wrong. I'm not putting words in your mouth. I'm just thinking out loud. Let's say, over time, you do have significantly less onsite work. But you, at the same time, are increasing this program manager work.

These customers want to not only have the relationship but, as you mentioned that's very, very important, the knowledge. So it becomes less a transactional, we come to you, we fix X, and more a partnership of, yes, if something needs fixed on your site, we'll be there. But we're providing you all of this value in the form of information and uptime. And they want, to your point, a human being to have that relationship with. So you have program managers. And then technicians, hypothetically, if they didn't want to be that people person, some will, some won't, they could be the connectivity specialist or the remote specialist that you mentioned.

So, I just think it's such an important conversation to start looking at how companies are tackling those two big roadblocks everybody puts up, well, we can't do that because X. Well, you can, and ultimately you're going to have to. This is the future of service. The future of service is not field service, it's service. And we need to look at it more holistically in terms of what's the overall customer experience. So I just think this is a really fantastic and really important conversation to think about. If the onsite work decreases, that's fine, because these new roles are being created that allows you to take that same talent and give them different futures within the business. So that was a lot of words, but what are your thoughts?

Tony Black: No, no, I think you're spot on with that. I guess just a couple things that, for sure, I think it's a fallacy if you think you can just kind of have this magical AI and bots and automation, auto emails. Success there is going to be super limited. It's not going to work. It doesn't work. So the other thing I would say is, like you said, there is always going to be a requirement for a tech base close to our customers period. That is the reality. And so, the type of techs and the number of super techs you need, the mix is going to change, but that will always be needed. And again, what we're doing is we're creating more informed technicians. And techs like that, they like having that information. So that's one thing I would say, Sarah.

The other thing I would add again, and we're seeing it real time playing out, these new roles, they're being filled by technicians. Not just technicians, others as well, but there's a good mix of technicians who are really interested in doing this and they like it and they're enjoying it and they're growing. And this is really growing. So it's creating these nice jobs for our techs and others in Husky. But again, we still need technicians. So those that want to stay out in the field, we need them as well.

Sarah Nicastro: I just always want to put everyone at ease. It's like, okay. On the technician thing, there's ample opportunity. There's ample opportunity for onsite work, whether you call them program managers or customer success. And not just that, to your point, you mentioned three new roles that have come up as a part of this program. So I always just want to disarm everyone of, no one's taking jobs from anyone. In almost every conversation I have, there is more customer facing work to do than there are people to do it. So no one needs to be concerned that anyone's going to be out of a job. It's just a matter of being open minded about what it could look like in the future, instead of being tied to what it has looked like historically.

And then on the business model part of it, I always say that if you feel you can't sell a new business model to your customer base, you haven't defined what the value is to them. You're thinking about what the value is to your business, because if you can do it right, it benefits everyone. And I think knowledge is such an important word that you brought up, because it isn't just about delivering the service Husky's always delivered, but in a different way, it's about delivering more than what you've delivered based on the information you're gathering with analytics.

So it just seems like you really are onto the concept, which is, you're becoming a knowledge partner. You're not just having a weekly check in and saying, "Okay, well, we identified three issues. They were fixed before they became a problem, so happy days." You're also saying, "Oh, and we noticed this. Oh, and the data shows us this. And, oh, have you considered this?" That's where the big term everyone's working toward is trusted advisor. That's where that comes from. It's about thinking about not just what service can we provide, but what knowledge, what insights, what value can we share with our customers about their business?

Tony Black: Yeah. So it's truly a partnership when we kick off that first kickoff. The customer name's a champion that is a champion of this solution, they work in the factory. But those weekly meetings, a lot of times it's almost like a just in time training session, actually, very effective. More effective than any training I've ever seen, because it's really kind of point of need and very effective. And again, it's about the customer having access to the Husky genius, if you will, and the SME base. And that's why, again, as I say, it's a partnership. We do tailor the solution a little differently for a new customer versus an existing customer who's more experienced. As I said, we do have new customers in some new markets. And in those cases, we do provide more training. Even in addition to the analytics, we provide toolkits, spare part kits to get those new customers kind of end to end covered along with the commit and maintain portion.

Sarah Nicastro: Yeah. That makes sense. Now, Tony, how would you say that this and Husky's vision for the future aligns with industry 4.0?

Tony Black: So it's fully aligned. But what I like to explain is, it's really beyond in industry 4.0. A lot of what I've seen in 4.0 in a factory setting is about predictive around hardware, bearing life or a pump life or a motor life. The advantage plus elite solution does that. But the way I like to explain this is, we look at it like a pyramid. And if you think about the top of the pyramid, it's the product that we're making for the customer, our machine is making for the customer, and the master process on how that product is made. If you go down to the bottom of the pyramid, it's the hardware, those bearings and pumps and motors, it's the hardware that makes up our system. And then if you go up higher in the pyramid, then we have subsystems for our system. And then you go up higher, and you have controls and drives and tuning. And then eventually, at the top, is actually the product that we're making with the master process. That's the pyramid.

And then outside of the pyramid, there's a lot of external factors. There are things like shift changes that are happening, or temperature or elevation pressure, all these environmental factors that are happening. The NSM technology is built around really looking at the entire pyramid from the bottom to the top, as well as the environmental factors. So, I don't know how clear that explanation was, but that's why I think it really is unique, this solution, and really industry leading, because it's not just focused on the hardware, which is important, but there's a lot more that needs to be kind of monitored in a proactive way.

Sarah Nicastro: Yeah, that makes sense. I think there's a lot more discussion today around ecosystems, and not only thinking about, if you manufacture a certain thing. Like, not only thinking about that thing, but thinking about the world in which it operates. And sometimes, again, that can be scary because it can be more work to take into consideration anything outside of your own pyramid. But ultimately, that's where a lot of the increase in value comes from, because your customers have to think about everything outside of the pyramid. So if you are not thinking about those things and they are, you can only provide a certain level of value. If you share that thinking with them and can figure out how to help them with some of those external factors, or what have you, through insight, knowledge, et cetera, then you can significantly increase the potential of your own value proposition.

And it goes back to this holding tight to the legacy of the business. I mean, that's really what we all have to move beyond because the companies that are doing that intentionally or circumstantially are falling behind the companies that are willing to not stick to the way it's always been, or the good old days, or the past successes. So Tony, it's really interesting to hear the journey Husky's on. And I think there's a few points you have brought up that I think just hit the nail on the head in terms of what it takes to get this right. I'm curious if you had to share a piece of advice with listeners that have the goal of going down the predictive service path and doing it the right way, what would you tell them?

Tony Black: So I'll try to keep it really practical and pragmatic, that's usually the way I like to. I like to hear things that way. So we talked a lot about the technology and the people, I cannot emphasize that enough. That is just so important. And it is a change, so it's important to have those discussions with your organization and with your technicians to make sure that they understand that, actually, we're going to create job opportunities for them, career opportunities. We're going to give them new tools. Because our technicians, more than anything, they want to deliver on the promise to our customers. So if we can help them do that, they're happy and they're motivated and engaged. So, critical to balance that internally and externally.

The second thing is, I talked about the NSM. So my advice there to do that is to create an internal and fully dedicated advanced technology team to build those analytics and the tools that I talked about. Do it with your own SME knowledge. It'll be much more efficient. It'll move faster. It'll be much more impactful as well. Use Microsoft for your cloud, use companies who are experts in edge technology for your edge device. You don't need to go develop that. But my advice, again, is use your own. And it has to be a dedicated team of really strong SMEs. That's what we have. And really, it's instrumental. And it's been instrumental in, again, coming up with insights that really are impactful.

And then the third thing is really about just a lot of focus. As you kind of go down this path, it's really easy to start thinking about a lot of things that you want to do and can do. And what can happen is you just kind of get paralyzed and you don't really get anything done really well. So my advice here, very specifically, is just focus on several key insights. Just one good insight can provide enormous value for our customers. And it builds you. It builds a platform to expand on. So, don't worry about having 50 great insights. Have one and start. And customers will see value. It's a journey, right? It's a continuous journey. And you keep, as I talked about, we call it modules, but we keep innovating and adding insights as we go and as we learn. But we didn't wait. We started with that. Soon as we had a base, we started. So I would say, those are the three things I would recommend to someone.

Sarah Nicastro: Okay. All right. And last question for today is, when you think of the journey that Husky's on with this, I know part of the next steps are to continue to scale. What else do you think will come next? If you sort of envision what the future looks like, what comes to mind?

Tony Black: Well, when I look at our business, we have to apply this proactive and predictive kind of mentality and approach across the whole business. A big part of our business, and I think every service business, is spare parts. And spare parts are truly the lifeblood of service. So what we've also been working on is kind of applying this approach, we've developed analytics to help our customers understand what they need to stock. We developed online digital tools recommending value solutions to our customers when they search for a part. We've developed proactive maintenance kits. And we're working on really even enhancing our service centers to make sure we can have parts next day anywhere in the world. So spare parts, but applying the proactive and predictive mindset and tools around that, we're all over that right now as well.

We also have a very significant install base that ranges in age. And so, there's an obsolescence challenge with that. So we've built up a strong kind of modernization, upgrade, engineering organization to help our customers. Again, maintaining that commitment through modernization and upgrade packages. So those are a few of the things that we're working on in parallel with the advantage plus elite solution.

Sarah Nicastro: Okay. All right. Well, it'll be interesting to see how it progresses. I'm thankful that you came and shared your perspective and the journey thus far. There's some really important points that you've made that I'm glad that you have already taken into consideration. It'll make Husky's journey a bit better. And for those listening, hopefully it's some good food for thought. So thanks for coming back, Tony. It was a pleasure to have you again.

Tony Black: Yeah, it was great to be back. Thank you.

Sarah Nicastro: Yeah. 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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The Power of Relational Intelligence

June 8, 2022 | 24 Mins Read

The Power of Relational Intelligence

Sarah welcomes back Founder & Managing Director, Bandelli & Associates and author, Dr. Adam Bandelli, to discuss his new book "Relational Intelligence: The Five Essential Skills You Need to Build Life-Changing Relationships."

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today, we're going to be talking about a theme called relational intelligence. I'm welcoming back to the podcast today, Dr. Adam Bandelli, who joined us on episode 141. At that point, we were talking about Adam's last book and he just released a new book, Relational Intelligence: the Five Essential Skills You Need to Build Life Changing Relationships. So, we're going to talk a bit about that concept today and how it applies to you all in our audience. So Adam, welcome back to the Future of Field Service podcast.

Adam Bandelli: How are you, Sarah?

Sarah Nicastro: Good. Thanks for being back with me.

Adam Bandelli: No, it's my pleasure.

Sarah Nicastro: All right. So, what is relational intelligence? Let's start there.

Adam Bandelli: Yeah, it's a great place to start. So, relational intelligence is the ability to successfully connect with people and build strong, long lasting relationships. So, it's really about using five key skills that will enable you to strengthen the skills that you have with your people and teams, and really build great partnerships with your customers or your clients or the people that you work with.

Sarah Nicastro: Okay. Now the book, how did you come up with the idea for the book?

Adam Bandelli: Yeah, that's a fascinating question. So, I started my research back in my undergrad years since the mid-nineties. When Daniel Goleman came out with this book, Emotional Intelligence, Why it Matters More Than IQ. And it really started me on a journey at looking at different leadership skills and behaviors that make up for strong impact that companies have on their clients and their customers. And so, did my doctoral work really at looking at what are different aspects beyond emotional intelligence that contribute to how leaders build relationships with others. Found out in my research, that there were five key skills that connect to this and that these skills are behaviors that can be practiced and learned over time. And then I really spent the next 15 years of my career, focused on practicing and refining those skills, both with colleagues and with our clients, which ultimately, culminated in writing in the book last year.

Sarah Nicastro: Okay. So, the research that you did to support this idea or concept of relational intelligence, what did that research look like? Obviously, part of it is, your own experience and how you've used the concept yourself at your firm and with your clients. And again, for those that didn't catch the first episode, tell them a little bit about what your firm does and how you work with clients, so that they have an idea of how this would apply.

Adam Bandelli: Yeah, absolutely. So, our work is a leadership advisory boutique, and we focus really on three areas. One, is around senior executive selection. So, we help companies identify leaders for top roles and we'll do our leadership interviews and some psychometric tools to determine if they'll be a good fit for the culture. So, we do a third of our work there. Another third of our work is around leadership development. So, we do a lot around individual coaching, team coaching, high potential development. And then the third part of our firm, we focus on executive education and training. And so, we actually just built out our flagship program, which is called the Relational Intelligence Experience, which is a two-day immersive offsite where we bring leaders together. C-suite senior teams, and we focus on those five skills. They learn about the skills, they get to practice them real time. And then we give them tools to take it back into their organizations.

Sarah Nicastro: Okay. And so, going back to my first question, I'm notorious for asking two questions at once and it's such a bad habit, but going back to the first question that I had, what was the research that you did that sort of initiated this concept that you then on your own have proven out over time?

Adam Bandelli: Yeah. So, this is my doctoral dissertation back in 2006, where I initially researched, "What are the types of leadership behaviors that impact how people build relationships?" So, really how senior leaders build relationships with your people. And so, the five skills that we drew from the research, both in the academic circles and then practitioners, are establishing rapport, understanding others, embracing individual differences, developing trust, and cultivating influence. And of those five skills, we built an assessment to see what they actually measure and assess.

And then we went out and we found that those skills actually predict four real important things in organizations. One, is employee engagement. Two, is job satisfaction, so how happy are people at their job and doing their work. Three, is how committed they are to their organizations. And then four, most importantly, how can employers retain their talent? And so, we found that having good relational intelligence, or leaders who practice those five skills are able to drive those four outcomes for their business. So, that was the initial research around my dissertation. And then as I mentioned, I've put this into practice now with our clients over the last 15 or 20 years.

Sarah Nicastro: Okay. So, going back to the point you made about emotional intelligence, talk about how this is different, because I'm sure there are folks that would hear some of what you're saying and think, "Well, isn't that emotional intelligence?" Talk a little bit about what the differences are there.

Adam Bandelli: Yeah. So really, as I mentioned, relational intelligence, we define that as the ability to successfully connect with people and build strong, long lasting relationships. Emotional intelligence is really defined as the ability to understand your emotions, the emotions of others, and how to manage emotions effectively. So, the two concepts are really completely different. Now with EQ, the research that we've done, EQ can be used for the ability to connect with people, but it could also be used for self-serving and manipulative purposes.

So, we've all seen the type of leaders who are either narcissistic or machiavellian, who know how to use emotions to trigger other things in people, to get them to do what they want them to do or use folks as a means to an end. With relational intelligence, you cannot fake it, because it focuses on the long term sustainability of relationships with the outcome of developing the people around you. So, that's kind of the big difference between the two. Within our framework, the second skill, understanding others, you do need to understand your emotions to learn about people and be able to understand people. So, EQ has its place within relational intelligence, but the two constructs are completely different.

Sarah Nicastro: Okay. Another question I was thinking, as you were sort of explaining the concept is not necessarily how they compare, but I guess your take on the relationship or not, between relational intelligence and servant leadership.

Adam Bandelli: Yeah. That's a great question. So, servant leaders, I think, really focus on three things. They have a specific mindset that's around developing people. They have a focus on growing others capabilities, the method through which they do that is relational intelligence. So, servant leaders are intentional about how they build relationships with people. They're very skilled at initially connecting and establishing rapport with others. They're very good at being curious and inquisitive and learning about the people that they work with. They value and embrace diversity. That's a very important part of relational intelligence. Can you build inclusive cultures where people feel like their opinions and perspectives matter? And then developing trust. This is the most important skill in relational intelligence. Can you make yourself vulnerable and put yourself in a place where you can learn about others and grow with them? And then ultimately, and this is what ties it back to servant leadership. The last skill of relational intelligence is cultivating influence, Sarah. And that skill in and of itself is about unleashing the full capabilities of the potential of your people. And that's what servant leaders do.

Sarah Nicastro: Yeah. Okay. So, can you give us an example of a leader that you think has great relational intelligence?

Adam Bandelli: Yeah. That's a great question. So, I've worked with a leader now for two years in the technology industry and this leader, before we started using the concept of relational intelligence, a lot of folks will use, "Well, he or she is a great people person, or they're a master networker. They know how to connect with people." And so, this leader is someone who started his career as an individual contributor and really made relationships the focus of how he built out his business. Was a consistent performer year over year, but it was because the connections that he built with his customers. As he started to move into management, he started to take on different roles, responsibilities over people.

And so, he was very intentional about establishing rapport with his direct reports and really investing the time and being intentional about understanding and learning about those people. He's built a team over the years that is very inclusive. So, diversity is not just something he talks about, it's something that he practices, and it really shows up into this concept of diversity of thought. Is he bringing different people into the organization that have different points of view and are comfortable sharing it? And then as I mentioned, he's been phenomenal at developing trust. He has people that worked with him for 15, 20 years over his career. So, he takes care of his people. He operates as a servant leader and he makes development a priority for all the folks around him.

So, a number of people on his teams have been promoted over the years. They've taken on roles of increased scale, scope and responsibility. And so really, it was amazing when we started our coaching work together, he didn't know that he had this skill called relational intelligence. And so, as we talked through and unpacked it for him, it's something that I think he came to understand that he could put a language around it. And now, we're going to be doing an offsite in a couple months with his team. He wants to share with his team what these skills are and how they can bring it out in their leadership. And so, this is not only something that he does, but it's something that he wants to instill in his people as well.

Sarah Nicastro: Okay. So, on the flip side of that example, when you see someone who you feel is not good at relational intelligence, is that typically because of a lack of skill or a lack of effort? To me it seems like a big part of this, is intent. Emotional intelligence can exist, but not be put to good work.

Adam Bandelli: That's right.

Sarah Nicastro: Whereas relational intelligence to me seems like the intent, the decision to build these skills and put them to work for the greater good if you will. So, I'm wondering people that are not good at this, how much of it is them struggling with the skills themselves, versus not having the intent that it would take to want to do well at this?

Adam Bandelli: Yeah. It's a great question, Sarah. So, there is a skill versus a will thing. I can give you two perfect examples. I have a leader I've been coaching for the last year who lacked the skills. He had the interest in wanting to build relationships with his colleagues and his peers, but he didn't know how to establish rapport. He didn't know how to show up and be curious and understand people. And so, in our coaching engagement, we really focused on how to help him to identify ways and behaviors and things that he could do and practice immediately. So take this second skill of relational intelligence, understanding others. It's comprised of having good EQ. So, could he understand and have the self-awareness to process his own emotions, the emotions of others? It focuses on being a good, active listener. So, could he actually sit there and let people speak and give them a time to share their points of view?

It focuses on being curious and inquisitive and showing empathy. So, putting himself in other people's shoes and asking questions versus just telling people what he thinks they need to know. And so, again, with him, it was more just giving him the skills and the toolkit. He had a desire to strengthen the relationships with the people around him. I'll give you another example of a leader, I worked with two years ago. This was more of a will thing, where he felt that he was, "the smartest person in the room," quote, unquote. He was brought into the organization to help shift an analytic strategy for the company. And when he came in, he had sharp elbows. He would go into meetings with his colleagues and peers and tell them what he wanted to do and what his agenda was. He didn't ask questions. He didn't take time to establish rapport.

And so, I was brought in to start working with him when some of his managers and folks above him said that they were getting feedback, that he wasn't partnering well with his colleagues. And so, when we sat down and started talking through the skills of relational intelligence and embracing differences of other people and developing trust, he felt like he didn't have any issues or problems. That it was his peers who had the issues and he didn't want to make the changes and stuff. So unfortunately, he ended up getting fired from the company, but it really shows you this skill versus will thing. If someone's not willing to practice and put these things into place, it could lead to detrimental relationships with your colleagues [inaudible 00:12:33].

Sarah Nicastro: Yeah. That makes sense. That being said, though... so leave him aside, the gentleman that got fired, and if we go back to the first two examples, so you said there was this person you worked with that was naturally quite good at this and just didn't have the terminology around it. And then there was this other person who had some deficiencies, but had the will to want to improve. So, would you say there are people for whom this comes more naturally than others?

Adam Bandelli: Absolutely. Yeah. So, you look at certain things, certain factors. I think a desire to develop the people around you. So, natural servant leaders, I think, more than authoritative or top down leaders, they're going to be more skilled at using, developing, and honing relational intelligence without a doubt.

Sarah Nicastro: Okay. All right. So, we talked about the five... you mentioned the five skills. Is there one that you feel is most critical and/or is there one that you see people struggle with most often?

Adam Bandelli: Yeah, absolutely. So, I think the one that is most critical of the entire framework, is developing trust. And we define that as the ability to be vulnerable and take a risk to be exposed to the actions or behaviors of others. Most important skill, because it really comprises different pieces. First, to develop trust of other people, Sarah, you have to now understand, and we call it in the book, the mirror test. You have to understand your own wiring. What makes you tick? Before you can go out there and start building relationships. Then, it focuses on this idea of the bank account of trust. Are you continually making deposits to grow a relationship with someone else? A withdrawal will definitely damage a relationship. A large major withdrawal will destroy a relationship and end it very quickly.

So, there's that piece. But then there're the parts that make up trust things like how competent is someone, how committed are they? How consistent? What is their character? So, those factors all come into play. That's the most important skill I think to learn. The most powerful once it's put in place, is cultivating influence. And so, this is the ability to have a positive impact on the lives of others. It's the most powerful one, because this is how servant leadership is shown. This is what takes place when leaders put people in culture first, before driving results. And what we have found is this leads to higher levels of employee engagement, retention of talent, and job satisfaction. So again, those are the two skills. You have to be able to develop trust, to really use relational intelligence. And if you do it in the right way, the outcome will be that you'll develop and grow the people around you.

Sarah Nicastro: Now, is there one that tends to be the trickiest for folks or does it just depend on the individual?

Adam Bandelli: It depends on the individual, but I think the idea of diversity, embracing individual differences, this is the third skill of relational intelligence. A lot of people view diversity in different ways. So, I can think of the analogy... we do this with our clients. The idea of diversity is like being invited to the party, where equity is more about you're being allowed to dance at the party. Where inclusion is you're being able to help plan the party. And so, how leaders view inclusion, whether it's looking at different diversity types, race, gender, ethnicity, sexual orientation, culture, whether it's that piece or whether it's, "How do we bring people to the table and make it feel like it's inclusive?" And this idea of diversity of thought that that's in place. So, this is probably the one skill in the framework that can be the most tricky, depending on how people define diversity and inclusion.

Sarah Nicastro: Okay. That makes sense. You've alluded to this a little bit, but I want to dig into it a bit more, which is the impacts relational intelligence could have on some of the challenges we're facing with the great resignation. So, can we talk about how it could help when we think about the impact it has on employee engagement, employee satisfaction, retention, and why that is?

Adam Bandelli: Yeah. So, I just wrote an article for Chief Executive Magazine about a month ago, which focuses on this specific topic. So, why are people leaving organizations? They're leaving for pay, title, promotion, and the options that are available right now, but they're also leaving because of the relationships or lack thereof that they have with their leaders. I can think of a perfect example of two of our clients right now. They're losing people consistently because folks aren't being developed. You look at Gen Z and Millennials, their needs and their kind of desires are very different from Gen X and Baby Boomers.

And so, because people are not intentionally building those partnerships with their direct reports, giving them opportunities to scale and to grow and to take on new responsibilities, you're seeing a lot of folks leave the businesses that they're in. That's part of the big contributing factor. So, relational intelligence is a solution to the great resignation in the sense that if people, these leaders who'll come from different generations, if they're intentional about building relationships and intentionality and authenticity, Sarah, is really the under threading that goes through all relational intelligence. Can you show up for your people in a genuine and authentic way? And by doing that, invest in who they are, invest in developing them, and then ultimately help them to drive those things we talked about, like engagement or retention of talent.

Sarah Nicastro: I think authenticity is a really important point, because people smell bullshit a mile away. I mean, that's just true.

Adam Bandelli: That's right.

Sarah Nicastro: It's just like you mentioned the point about diversity, equity, and inclusion. You would be hard pressed, I think, to find a leader today that would go on record saying, "Who cares?" Because they know they can't do that, so it's at least something that from a PR perspective, everyone needs to seem-

Adam Bandelli: Check the box.

Sarah Nicastro: Interested in. Yes.

Adam Bandelli: Check the box, yeah.

Sarah Nicastro: But whether or not they really care about inclusion-

Adam Bandelli: That's right.

Sarah Nicastro: Is like you said, back to the through lines of intent and authenticity. Is it an issue they actually authentically care about? Which means that they either care so much about others that altruistically, they care, period. Or they really truly understand the value to the business they're running of actual inclusion. And not just as a surface level exercise, but in reality. But I think authenticity to me is sometimes it can be scarce. I feel like I'm someone that reads people really well. And so, I kind of have like a natural filter for people who are just spewing words versus people that actually believe what they're saying. And so, to some degree, then this is something you can't fake, right?

Adam Bandelli: No. Yeah, like I mentioned at the start, this is part of the difference between emotional intelligence and relational intelligence. You can't fake relational intelligence, because it focuses on this bucket around authenticity. So, if you're not authentic in how you show up for your people and you don't... again, going back to developing trust. If you don't show a degree of vulnerability... I'm working with a leader right now, who's phenomenal at doing this. She will share stories from her history and from her background and from her experiences, to really connect with her people. She has someone stepping into a new sales opportunity. "Well, here's a time where I failed in a sales opportunity. Here's a time where I succeeded and here's what I learned from it." So again, she's authentically showing up and being vulnerable for her people, and she's enabling them to have the trust and say, "Okay, I can make mistakes or I can learn from them. And if she's coming and giving this into the relationship, I'm going to give my best for her."

Sarah Nicastro: Okay. So, I'm going to go off on a little bit of a sidebar, and hopefully it's okay to say this, but Adam asked me to take an assessment of relational intelligence, which we haven't talked about yet. So, I have no idea how I did, but what I want to bring up here is the example you just shared, because I do think, this is where some of these concepts get a little bit tricky and nuanced. Because some of the questions in the assessment were asking like, "Here's the scenario, how would you react?" And so, the example you just shared about sharing a personal story, that can be powerful. It can also be off putting, because I think before you do that, you need to have mastered the art of active listening and building trust, because otherwise your personal anecdote reads as nothing more than ego.

Adam Bandelli: That's right.

Sarah Nicastro: You know what I mean? So, that's where I struggled with using that as a response. Because as default, I don't know that someone necessarily wants to hear that, unless you've kind of built some foundational elements, but again, just taking it back to the example and the story. It gets a little bit tricky because yes, leaders who can be vulnerable and share things about themselves openly, I think that's a very powerful tool. But then you risk crossing the line of like me, me, me and, "Well, when I walked to school uphill, both ways and I lost this deal..." So, it's tricky. Obviously, that's where emotional intelligence comes in and you have to be able to kind of know your audience and all of those things…

Adam Bandelli: But there's a reason why the skills kind of go in a certain order. So, we're talking about trust and vulnerability. That's the fourth skill in relational intelligence. So authentic leaders, established rapport. They have an ability to create an initial positive connection with other people. The first couple times they're with folks, the eye contact, they make body language, how much they're leaning in, how finding common ground and similarities. Then we talked about understanding others. This is being intentional about putting in time to get to know someone on a deep level. If I'm taking time to get to know you, Sarah, I'm not going to pull examples and things that may offend you, that may be off putting. And then this idea about inclusion. I'm not just talking at you all the time. I want to hear your opinion. I want to hear your point of view. So, when I share an example from my experience, you know it's coming from a good place, and I've invested enough in the relationship where you understand, and I understand you, and we can have those kind of genuine moments.

Sarah Nicastro: Yeah. It's just funny because in my mind, I'm thinking of like, Joe, the authoritative leader, who's picking up your book thinking like, "Oh, I should try this out," and starts with, "Well, listen to my story." Again, it's goes back to intent. Are you sharing that story because you want to talk about yourself or are you sharing that story, because you see how contextually it could help you connect and help that person in some way? All right. So, we talked about the great resignation. The other thing I want to touch on Adam, is I had shared with you that for our audience specifically, a lot of them are in sort of a transition or an evolution with their customer base, where they're moving from more of a transactional business model to something that is more relationship based, more ongoing, more outcome focused. And so, how would relational intelligence be something that organizations can also leverage with customer relationships?

Adam Bandelli: Yeah, that's a great question. So, I wrote the article for Future of Field Service a couple weeks ago. It really focuses and dives into this, so I would encourage your audience to read it. But again, these skills are not just about applying and connecting with your colleagues. It's with people that you work with or your customers as well. So, are you taking time to learn about your customers and not just learn about what they want to buy from you, but actually learn about what matters to them? What's important to them? I think of this saying, "We don't do business with companies. We do business with people and business is always human." So again, are you really investing to know what your customers want? Are you taking time to understand their needs, understand where they're coming from?

That takes a good amount of EQ. It takes a good ability to be an active listener. It takes empathy. Do you value customers who come from different places? You have customers who are men, women, customers who are different ethnicities. Do you value that? And then do your customers know that you have their best intentions? I think that's a really difficult thing. If you go to more of a transactional model, your customers can see through that very quickly. And the work that we do at my firm, we have clients for over a decade because the clients that we work with, the people that we coach, know that we generally and authentically want to see them grow and become the best versions of themselves.

So yes, their companies or their organizations are paying for these engagements, but the people that I coach that I meet with and see every other week, they know that I'm there for them. And so again, what I would recommend or what I would say to your audience, who does that and is involved with customers is, again, it goes back to this piece around intentionality. Are you being intentional in developing relationships? And can you be strategic about them? You may try to get the quick sale today, but could you rub someone the wrong way and not get the business six months from now? Or are you really learning about what they need today, try to address that need, but also build the relationship for long term longevity as well.

Sarah Nicastro: Yeah, that makes sense. Okay, so for leaders that want to get better at relational intelligence, what do they need to think about learning or practicing? Obviously we're going to tell them where to find the book, but besides that, what do they need to have in mind to focus on this?

Adam Bandelli: Yeah. So, I think there's a couple of different things that we offer now at our firm, and people can do these on their own as well, but taking a relational intelligence test. So, you took the one for us a couple weeks ago. We're building out a whole practice now, where people can go online, take the assessment. It'll give you a kind of baseline understanding of where you are today. You can also get an executive coach or work with someone to kind of give you some self insights into how you connect with people and how you build relationships. So, I think that's kind of... get a baseline of where you are today. And then I think a lot of the other things you can do besides read a book, is go through some training on it.

So, we're developing, as I mentioned, our Relational Intelligence Experience, which is a two-day immersive program that people can go through to learn about the different skills, like developing trust, cultivating influence, but people can do that on their own too. There are a lot of different training programs you can take, that talk about things like developing trust or managing conflicts. So, I think it's really three things. It's understanding what the idea is, is being able to get a baseline of where you are today and where you might want to go, and that could be taking a test. It could be working with an executive coach or a life coach. And then the third piece, is really deepening your understanding by doing some training and development around it.

Sarah Nicastro: Now, what about organizations who want to conceptually communicate this idea to their teams and help with developing some of the five skills?

Adam Bandelli: Yeah. I think again, the big piece I would encourage outside of getting the book itself, is really they can visit our website and see some of the content we have to talk through it. We've written a number of articles about it from different angles. So, customers dealing with direct reports, dealing with mentoring, and you can find that all on our website bandelliandassociates.com. But I think the awareness is a big piece. So, we're working with an organization right now, and they're trying to scale this down throughout the organization. And so, we're working at the top of the house to take their leaders through these behaviors, but then they're going back to their teams and they're practicing some of these skills. So, I would encourage your listeners who want to practice and learn this, to kind of get an understanding of them. They can pick up the book, they can go to our website, but then also start to model and practice these behaviors with their people.

Sarah Nicastro: Yeah. It's really interesting to me, this idea that even though the world we're living in, doing business in, continues to move at a more rapid pace. I think there's this philosophical almost not regression, because that's not the right word, but like we've become so transactional, that it's going out of vogue. I think individuals and businesses are recognizing that the loop we've been in that's just quarter by quarter, short term, deal by deal, higher by higher, it's not serving us. So, we need to take a longer term view. That doesn't mean sacrificing short term results. It doesn't mean not paying attention to today's business or whatever, but-

Adam Bandelli: You can do both.

Sarah Nicastro: This idea... and you have to. I don't think that we're going to get back at least in any short term, to that focus of just boom-boom-boom. I think that investing in relationships that we have with our people, with our customers, with those that we interact with, and thinking about that longer term nurturing of those relationships is super important.

Adam Bandelli: And what we've seen with the pandemic has really exacerbated this, is that people have not been able to have that human face to face connection. And so, we're coming out of time, where we're coming out of that finally, hopefully, and people haven't been connecting, they haven't had that. We're being much more transactional. We're doing things like this through Zoom. So, it can become very kind of quick and easy, get a sale, do this or that. It's a totally different experience being in the same room as people and being able to shake hands and eye contact and engage with each other. And so, we're at a time right now where things like relational intelligence are really important. People need to be intentional and they need to be authentic. They need to embrace inclusivity.

These are all really important things that they may have not been important four or five years ago. They definitely, probably weren't as much a decade ago, but as we go forward, if we want to engage and keep our workforce, whatever generation that is, but we have the newer, younger folks coming in, that's the way to do it. You talk about hybrid work models that most companies are doing now. At our firm, we firmly believe that people should go into the office two days a week at a minimum, just to have that face to face human connection with their colleagues. And then this is the idea where we look at kind of AI and automation and things that are changing. The idea of what a good leader looks like is changing. It's no longer just managing processes, it's managing and building and developing people.

Sarah Nicastro: Yeah, for sure. Awesome. Well thank you for coming and sharing. As Adam said, you can find information on the book and some of the content and tools that go with it at bandelliandassociates.com. And that is B-A-N-D-E-L-L-I A-N-D associates.com. So thank you for joining. Thanks for sharing this with us. And I hope to see you again soon.

Adam Bandelli: Sounds great. Thank you.

Sarah Nicastro: Yes, take care. You can find more by visiting us at futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter at the future of FS. The Future of Field Service podcast is published in partnership with IFS. You can learn more at ifs.com. As always, thanks for listening.

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Live Tour Frankfurt & Stockholm Highlights

Sarah shares a synopsis of the topics discussed at Frankfurt Future of Field Service Live Tour stop on May 19th and the Stockholm stop on May 24th.

Sarah Nicastro: Welcome to The Future Of Field Service Podcast. I'm your host, Sarah Nicastro. Today, I'm going to be doing a bit of a recap of the last two of the European future of field service live tour events, which were Frankfurt and Stockholm, and happened over the last week or so. So for those of you who maybe haven't been following along, we have been doing a live tour of this podcast this spring. There's five cities that we have on our tour schedule. We started in Paris, London, Frankfurt, Stockholm, and our last event is June 14th in Austin, Texas.

Sarah Nicastro: So I just got home from a trip where I did both the Frankfurt and the Stockholm events and thought I would give a little bit of a summary of those here. Again, we have been recording the content of the live tour sessions as we've gone along. And once we have an opportunity to review all of that and get speaker approval on what we can and can't share, we'll certainly be releasing some of the content in its full form, but in the meantime, I will share with you some of the highlights. So first up was Frankfurt. That event was Thursday, May 19th.

Sarah Nicastro: And that day was in a really neat, but very, very hot venue. There was no air conditioning, and it happened to be a very warm day in Frankfurt. So it was toasty, but it was a great event. So we started the day off with top 10 global thought leader, Frank Mattes, talking about scaling innovation and some of the ways that in traditional businesses the operating structure and the way the business is set up really work against innovation.

Sarah Nicastro: Frank shared some really, really interesting insights on how companies are working past that, so that they don't sort of default to the tendency to do what they've always done because the business is set up to support that versus innovation. So it was a really interesting discussion to start the day. Next up, we had Christina from ANDRITZ join. She leads the companies smart services projects. And we talked about some of the things that come up when you're trying to take a manufacturing business with a lot of history and evolve into a service business.

Sarah Nicastro: And so, we talked about some of the vision she has for the type of smart services that ANDRITZ's customers could be interested in and how she's working on bringing those things to life but also some of the challenges that arise in doing so. We then had a session with Mark Ringwelski who's with REMA TIP TOP about their move to outcomes based service and how they're working toward delivering outcomes and uptime for their customers. And Mark talked a lot about the work they've been doing to put a foundational system using IFS in place to sort of build this future upon.

Sarah Nicastro: We talked a lot with Mark about the work that he's done in the business to spend a lot of time with frontline getting their input for not only the new technology, but the vision the company has and where it's headed and how helpful that has been for them with managing change. Next up, we had a session with Rainer Karcher of Siemens and Tiago Charréu of Atos and talked about the intersection of service, collaboration, and sustainability. So it was a really interesting conversation and one that I was thrilled that both gentlemen agreed to come and share because while field service specifically is a bit out of both of their direct wheelhouses, we chatted a bit after the event about the importance of bringing the sustainability message to pockets of folks that maybe aren't thinking primarily about that.

Sarah Nicastro: So we talked about how some of the technologies that are becoming more prevalent and enabling different ways of collaborating have a positive impact can have a positive impact on the environment. We talked about how servitization ties in with sustainability and the circular economy. And we talked about some of the overall trends in sustainability and the growing criticality of everyone paying more attention to the topic. Next up, we had Sonja Haavisto from Cimcorp and we had a session on communication and the role of the employee experience and employee engagement in meeting customer experience and customer satisfaction goals. And then we had a session with Dietmar Schmitz of Eickhoff talking about the organization's evolution and transformation of service, putting foundational technology in place to sort of evolve with what customers need and how their businesses are changing and what that means in terms of what Eickhoff needs to deliver in its service.

Sarah Nicastro: At the end of the day in Frankfurt, we actually did a really cool sort of think tank session. So we created a circle of chairs and people kind of spoke freely about their challenges and gave one another advice. And it was really, really neat to see that happen. So it was a great event. And then on Tuesday, May 24th was the event in Stockholm. And so we had a good amount of people join us there for that event. For me personally, this one was important because I've shared in a blog on future of field service that my very first day on the job at IFS, I flew to Stockholm for a user group, customer user group event, and having left a role that I was in for almost 12 years, I was a bit emotional about that.

Sarah Nicastro: I was a bit jet lagged. I was a bit overwhelmed and I felt not myself, if you will. And so for me, coming back to Stockholm these three and a half years later, and bringing the future of field service tour there was something that made me very happy to do. So the Stockholm event, we started with author Dan Toma. He has co-authored two books, the corporate startup and innovation accounting. And we had a conversation about the differences between digital transformation and innovation, some of the complexity with both, some of the things that organizations need to be thinking about as they work on either of those two things and both of those two things. And Dan shared some really great real world examples of the points that he was making. So that was excellent.

Sarah Nicastro: Then we moved on to Rafael and Kristoffer of Electrolux and had a conversation about the service transformation that is underway at Electrolux and how that affects the three points that we often talk about: people, process and technology. So we dove into each of those in some detail and talked a bit about how change in each of those three areas is coming together to evolve how Electrolux delivers service, what service means to its business, and what its customer experiences look like. After that, we had a session with Pekka Nurmi Cimcorp, who talked about modern IT, and sort of thought some of the traditional beliefs of IT that are maybe a bit outdated. So some of the things that were certainly true 10 or 15 years ago, but maybe companies are still holding onto those beliefs when in reality, the technology and the ecosystem has changed a lot. So that was a really interesting session.

Sarah Nicastro: After that I was joined by Berit Hallgren of Tetra Pak. Berit is leading a team who is working through Tetra Pak's service transformation project. And she is leading a cross-functional team that is responsible for sort of aligning various stakeholders and making sure that transformation goes smoothly, as smoothly as transformations do and delivers results for the business. Berit has been with Tetra Pak for 30 years and has had a variety of different roles. So it was a really interesting conversation to be able to ask her how she's grown within the company, how the company's perception of an approach to service has evolved, and based on a lot of experience, what her advice is for success with service transformation.

Sarah Nicastro: And then to close the day in Stockholm, we had Roel Rentmeesters of Munters join and talk about the company's servitization and remote service journeys. So that was a very interesting conversation as well. Both events were really, really great. I had someone ask me at the end of the Stockholm event if they had all been very different, and each event was different. Each event had a different feel. Obviously each event had different speakers, which meant that the topics all varied a bit, which was good for me because it kept things interesting. But there was also a lot of commonalities. I think if you are a follower of this platform, this podcast, our content, that's what we find a lot is that there are some universal challenges, some universal opportunities that are very shared, regardless of what particular industry you're in, what geography you're in.

Sarah Nicastro: And I think that was certainly reinforced through some of the common themes that came up during each of the events. I was also asked if I had a favorite, which is a very unfair question. And no, I didn't have a favorite. They were all my favorite because they were all fantastic in different ways. I think, I just feel very grateful. One to have had the opportunity to visit each of those great cities and meet some new people and see some that I've had relationships with for quite a while, and really just to see how this podcast and this platform can become the basis for a community.

Sarah Nicastro: I think that in each location, the people that joined were so very happy to be able to have these open discussions with one another and to be in person and talk about their businesses and their challenges openly with peers. So it was really, really great to see that happen. So not a favorite. They were all my favorite. And I'm looking forward to the last event, which is coming up in Austin on June 14th. And hopefully, we'll have the opportunity to do a live tour again in 2023. So if you're in the US or fancy traveling and you would like to join us in Austin, you can visit the website to find the agenda and the information for registration. Would love to see you there. Hopefully we're going to go out with a bang and have a wonderful last event.

Sarah Nicastro: So big thank you to each of the speakers that joined in Frankfurt and Stockholm and all of the people that came to be a part of the discussions and be a part of the audience. So thank you all for taking part in the future of field service live tour. If you want to find some more of our content and/or stay tuned for some additional content coming out of the events, please visit us at futureoffieldservice.com. The future of field service podcast is published in partnership with IFS. You can learn more at ifs.com and as always thank you for listening.

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Clarifying Digital Transformation vs. Innovation

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Clarifying Digital Transformation vs. Innovation

Dan Toma, Innovation Thought Leader and award-winning author of the Corporate Startup and Innovation Accounting, as well as co-founder of Innovation Advisory Firm OUTCOME, talks with Sarah about the differences between Digital Transformation and Innovation and why/how the terms can be erroneously used interchangeably.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host Sarah Nicastro. Today, we're going to be clarifying the difference between digital transformation and innovation. I'm excited to share today's conversation with you all, because this is something that I noticed myself maybe using these terms interchangeably a bit more than I should. Recently had a learning on that and excited to share that with you all today. Welcoming to the podcast, Dan Toma, who is an innovation thought leader, award-winning author of two books, The Corporate Startup and Innovation Accounting, as well as co-founder of Innovation Advisory Firm OUTCOME. Dan, welcome to the Future of Field Service podcast.

Dan Toma: Sarah, thank you very much for having me.

Sarah Nicastro: Yeah, thanks for being here. Okay. So before we dig into it, tell our listeners a little bit more about yourself and your journey.

Dan Toma: Sure. My background is actually in entrepreneurship. So when I was 19, I founded my first company, software development. And then I was obviously attracted by the idea of startups, building products, building digital products in particular. And I was just were working with other people's startups, with accelerator programs. My startups, first two startups really failed. Now I am probably at the fourth and now this one seems to be going somewhere. So I'm approaching everything with the entrepreneurial mindset, if you want. But at one point in my life more by chance than by design, to be honest with you, I was head hunted by a large organization and actually they were a company and telco business. They wanted to get more blood from the startup world into their ranks. So they head hunted me and I've spent about three years with them.

Dan Toma: And that's actually where the first book, the Corporate Startup, was born because I was essentially seeing a big need and I was actually trying to solve my first problem to begin with and then probably create something for other people to follow. The idea was that large organizations were, and in particular, the one I was working for, terrible at building digital products. They were essentially building it backwards from what we were used to doing in the outside world, in the startup scene.

Dan Toma: Essentially they were starting from a business plan. Financing the whole thing they want and then probably after six months, they would put a prototype in the hands of a customer only to learn that doesn't work. Which was the exact opposite of what we were doing in the startup, where we were starting with a prototype, asking some people if they like it. And then maybe go to ask for some financing from some investors. So you saw where I was living in and I said to myself, I need to do something about it. I started blogging. I started speaking at conferences and that's how the Corporate Startup was born.

Sarah Nicastro: Okay. All right. So the Corporate Startup is the first book. Now I met Dan through the second book, Innovation Accounting, and that book is new. And so I have a copy of it. And Dan, I shared this with you. I'll be honest. Accounting is not my jam. So I got the book and I thought, "Whew, this is going to be a little heavy for me." It's such a good book. The content is great, but also the layout and the design and the way the whole thing's done is really good. But it actually urged me to buy the first book because there was reference to a lot of points that I just thought were super, super important for our audience. And so, as I was, as I was reading Innovation Accounting, the one point that really stuck out to me is this point about distinguishing digital transformation and innovation. This is where I said, I realized that there have been times where I've used those terms interchangeably and while they can maybe in some ways be connected, they're not synonymous. Okay, so can you define for folks each? So digital transformation and innovation?

Dan Toma: Sure. I can give you my working definition if you want. This is probably not going to make it in any dictionary anytime soon, this is just my working definition. The idea is the following: on digital transformation, what your company's essentially doing is putting the digital skin and digital interface to a legacy product. If that legacy product is called risk management for loan applications or something that has to do with a pen and paper process that now can be run more effectively and more efficiently through a digital channel, that's essentially digital transformation. However, in digital transformation, you are not necessarily creating any top line growth to your organization. You're still going to sell the mortgages. Now you're just selling them via an app that does the risk assessment in 15 minutes versus is three days, whatever. I'm just giving a random example here. So we are just becoming more efficient in our core business through digital transformation.

Dan Toma: That will be my, my definition. Now, if we want to build top line growth, if we want to expand beyond our current court day, if we want to look into, let's say banking for, I don't know, inhabitants of Mars. Again, totally random example. That will be probably more towards the innovation side. So innovation is creating top-line growth, is helping you explore areas that fall outside of your today's core and digital transformation is essentially making your core today more efficient, and it's helping you survive with today's core longer into the future. So your core won't die tomorrow or next year, but probably in five years, 10 years, or longer. Organizations need both, unfortunately.

Sarah Nicastro: Yeah., no, I agree. And so in the book, I just thought this was so well said. So innovation is the crew of new value. Digital transformation is around keeping existing business models and processes valuable in the digital age, which improves customer satisfaction and lowers operational costs. Now I think where it can get confusing for folks is the improving customer satisfaction part. But this is where the distinction gets important, because are sort of incrementally improving on what you've always done or are you creating something net new? And I think that it isn't uncommon for people to think of or refer to the two terms interchangeably. So to your point, companies need both, but what are the reasons you think people can sometimes confuse the two or consider the synonymous when in reality they're different?

Dan Toma: Right, well, it's common for people to use the terms interchangeably or use them as a synonym, to some extent, because in all fairness, digital transformation is to some extent incremental innovation. We're just taking something that we've been doing and making it slightly better. That's the nature of companies today. That's the nature of what they do. Continuous improvement, seeking continuous improvement and doing continuous improvement on their for business. This is what they are known for. Look at the look at the automotive industry. They're building every year on the experience and on the success of the previous year. They're just making the new model a bit more fuel efficient, and giving it a bit more flavor in terms of high tech features and so on and so forth. But essentially it's the same car as the year before.

Dan Toma: Especially if you look at it from a business model perspective. It's just like, I'm going to the Toyota dealership and I'm buying a Toyota, that's it. It doesn't different any way from the Toyota that bought five years ago or a year ago, or the one I'm going to buy next year. Now this is why the confusion, because some people believe that innovation is a one size fits all type of word. And you can just use it for everything. I think that one of the big lessons learned for us, and I think it's actually in chapter one of the book, whenever you want to start doing innovation, the first thing you want to do and you need to do is to define what innovation means for your organization. Because different people can mean different things whenever they say innovation. Some people might refer to innovation as being digital transformation, and they will not be necessarily wrong in thinking that, but some people might be, let's say thinking more about the disruptive side of innovation. Flying cars. Again, let's take the automotive company example.

Dan Toma: Some people might think that yes, pay per use or pay per minute for a car might be innovation. Or a flying taxi, or an autonomous vehicle might be innovation. Whether some believe that if you just take the, I don't know, hybrid engine and make it a bit more fuel efficient for next year is innovation. And actually everybody's right. This is why it's very important in your organization to have very clear definitions and very clear boundaries between various types of innovation, digital transformation and innovation, or different parts of the spectrum of innovation. Because essentially the way you are defining these, is going to inform how you approach them, the tools you use, the processes you use, the indicators you put in place. Speaking about innovation, accounting. We can't hope to measure in incremental innovation or digital transformation with the indicators that we propose in the book for breakthrough transformation and vice versa. This will not work. This is why it's very important to define because from the finishing, you can draw actions and you can draw all the other things.

Sarah Nicastro: So as I think about how your content to our audience specifically, I think that where some of the, I wouldn't even necessarily say confusion, but some of the interchangeability of the terms comes in is because for a lot of folks within our audience, the reason that they are digitally transforming is to enable new business models, i.e. innovation. And so that's where I think the intersection is. But I think the definitions you lay out, I think could be very helpful for people to think through that lens. Because I also think that sometimes companies think if we digitally transform, we can just innovate. Like it's just a cause and effect type of situation. When in reality, it takes a lot more strategy and concerted effort, so...

Dan Toma: And capability and skill.

Sarah Nicastro: Right.

Dan Toma: The skill that you need for digital transformation, the capabilities you need for digital transformation are not going to be sufficient once you're trying to innovate. Let alone talent. If you are trying to hire somebody and that particular person has an amazing track record of helping organizations digitally transform, it doesn't mean that that's the right person for you to build, let's say, flying cars again. It's not going to be the right person for disruptive innovation. You need different skillset, different personalities, if you want. So this is why I always say guys, make the distinction before you start investing.
Sarah Nicastro: Yeah. So, all right. So we talked about the working definition of each and some of the areas where they intersect. Now, you said companies need both. Okay.
Dan Toma: Yes.

Sarah Nicastro: So that makes sense. But what are your thoughts on how a company should determine which to focus on at any given moment or how to prioritize or do organizations just have to become comfortable doing both in parallel?

Dan Toma: Well, to some extent, utopia would be if an organization can do both at the same time. We're talking about ambidexterity. You're able to operate the core business while at the same time inventing the core business of the future. But that's utopia. I'm not saying that it doesn't exist. I'm not saying that organizations that do this don't exist. On the contrary, there's a lot of examples. I'm a big fan, for example, of New Pond. They are an organization that's always searching for new while at the same time operating the core business and digitizing the core business. And there's so many the other names I can think of. Now to your question. How do we decide which one do we put first? And how do we decide which one do we focus on?

Dan Toma: Well, it really depends on your organization. It depends on your industry. Obviously you have to build a roof in the summer, not in the winter. So if the seas are still calm, I think you should definitely start investing in innovation. If you believe that you have a strong market position today, if you are profitable, by all means start investing innovation because innovation will definitely cost money. It will go from failure to failure initially, before you will see any form of success. If on the other hand, you are under pressure from competitors, from the industry landscape changing, from any other things that might cause the ship to rattle if you want. Then probably digital transformation should be prioritized. Prioritize what's happening today, what's happening in front of you in the next, I don't know, 12 months, 18 months, five years max. You don't have the luxury at that time to start thinking about flying cars and going to Mars and all this innovation stuff.

Dan Toma: However, if you are, as I said, when you have a market position that allows you to start thinking about the future, you are the leader in your market, the market is pretty stable. You've been winning in that market with that particular competitive advantage or particular competitive advantages that you have, then by all means start to investigate innovation today. It's better to invest sooner than later. Don't get yourself to a point where you really, really needed innovation. And there was nothing in the pipeline. Take, for example, the cases of companies that we've seen struggling at the beginning of the pandemic. Most of them weren't digital. Most of them, they didn't have any other revenue stream besides walk-in stores. And the walk-in stores were like literally overnight closed. And think about airline agencies, airline companies.

Dan Toma: They were so used to operating aircraft and they had absolutely no revenue coming from any other source, besides I'm taking this plane and moving it from airport a to air point B and I'm making a profit because there is people there. Well, all of a sudden there weren't any people. So I'm just wondering why haven't they invested earlier or sooner into teleconferencing solutions or something that would essentially mitigate against the potential scenario where the core business no longer exists or is being slowed. There was a very interesting infographic. I actually encourage the listeners to go look it up. When at one point in 2020, Zoom's valuation was bigger or equal than the valuation of all the U.S. based airline companies combined. So I was like, okay. So I'm just wondering how many CEOs of those airlines were pitched by a junior staffer, a conferencing tool at one point, or at least the idea of let's invest in Zoom.

Sarah Nicastro: Right.

Dan Toma: That was a really funny seeing that infographic.

Sarah Nicastro: Yeah, yeah. And I think you mentioned the utopia is to be able to do both of these things in parallel. And while that might not be realistic for everyone, I do think that we need to be challenging ourselves more to think about innovation and how that fits into the business. And because you see a lot of those thoughts and ideas and practices just getting pushed, because it isn't the thing right now, but that's the whole point. So, I think it's something that companies that aren't doing both simultaneously need to be the thinking about how they can make more room for innovation without sacrificing the current business. I think honestly, segueing to the next point.

Sarah Nicastro: One of the things that prevents companies from maybe integrating this, this being innovation, integrating innovation better into the business is that it's difficult to measure the success of. So that's what the whole second book innovation accounting is about. Talking about how some of the standard ways that we measure success do don't fit innovation. So obviously we don't have time to get into all of the details of that book, but can you sort of give an overview of why those standard practices don't work for innovation?

Dan Toma: Sure. Again, Innovation Accounting is the book that, to be honest with you, I always wanted to write, but I had to write the Corporate Startup before writing Innovation Accounting. First of all, I was not mature enough. I didn't understand innovation as well back then, as I understand it now. This is why it took probably five years to start thinking about Innovation Accounting against for writing that. One of the interesting things about the world that we live in is that the value of tangible assets, if you want, the value, not in terms of their monetary value, but their value in terms of your business is going down. They are becoming the commodity. If we want, Dan and Sarah can start an airline tomorrow. It's not a big competitive advantage to buy an aircraft or to buy a parking spot at Heathrow or something like that.

Dan Toma: That's becoming a commodity. Why we will never win against British air or Southwestern or Lufthansa is on operating the airline, operating that asset. And obviously with digital companies, this is getting even more interesting. Think about Twitter. Think about Spotify. Think about Netflix. What is the value of their physical assets? Well, the servers, the desks, the computers, that's fine. I mean, everybody can buy that. What people can't buy is the culture within, within Spotify. What, who can't buy and replicate is the algorithm that Netflix is using to suggest all those videos for you to watch. What we can't buy is the customer centricity of Zappos. We can buy the desk that Zappos is using. We can buy the computers people are using whenever they upload products online on the platform, but we can't buy that culture. We can't buy their approach, their process.

Dan Toma: And as I said, with digital companies, this is even more interesting because the amount of physical assets that they have is sometimes very low, but their evaluations is probably higher than a company that has a lot of physical assets on their books. Why? Because us as society, we value them differently because we look at them through the problems that they solve, through how much they are being used, to the network effects that they have baked into their business models. And this is why innovation and standard accounting don't go well together. Because in innovation, we are essentially trying to build things that are not that heavy on assets and financial accounting, in particular is looking at the value of a company or value of an idea through the number of assets it employs. And actually with innovation, we're doing the exact opposite.

Dan Toma: We want the employee as little, assets as we can. Take, for example, Airbnb or Uber. How many cars does Uber have? Well, zero because they don't own anything. And the same goes for Airbnb. How many rooms do they own? Unlike Hilton, which they only have millions of rooms around the world, Airbnb doesn't. And this is why the two systems, if you want, innovation system and the financial accounting system were not meant to go hand in hand, this is why we struggled. As I said, for quite some time to build a complimentary system to financial accounting, that's able to account for digital innovation. That's able to account for early stage innovation, even more interesting to account for early stage innovation when you have an acute absence of financial data. If we started a startup tomorrow, we are probably not going to be profitable for the next quarter or for the next two years.

Dan Toma: And in some companies, take Tesla, for example, or FedEx or Amazon, they weren't profitable for the first five years. We need to have a system that allows us to say, "Yes, this idea is going to be successful, but in the future, not now, let's not discontinue it." Otherwise, we might fall into the classical corporate trap where we value everything through the lens of financial accounting, and guess what we're going to do? We're always going to prioritize the core business and investment in the core business. And we are going to do that by always putting on the back burner innovation and innovation ideas until we actually need them. And when we need them, we're going to be sitting there and looking at our ourselves and say, "Okay, so where's our innovation that should have saved us now?"

Dan Toma: Well, it's nowhere to be found. Why? Because we just used the wrong metrics whenever we had to take investment decisions. I always give this simple example. I try to dumb everything down. Whenever I'm explaining this, I always say, well, if we take our kids and take them to a swimming competition, they have their own benchmarks for their age bracket. We are never going to evaluate a 10 year old swimmer or a 15 year old swimmer for the performance of somebody that just won't medal of the Olympics, because it's just impossible for a 10 year old to compete with a 20 year old and be able to hit the same benchmark.

Dan Toma: This is why for every age group, we have different benchmarks. So if we do that in sports, if we do that with athletics teams, why don't do this with business? Why not do this with innovation? Why do we compare an idea that was essentially founded three months ago or three weeks ago, or three days ago with a core business that we've been having for about a hundred years? We should never do that because we're going to be super disappointed by what we have in front of us, what we've learned. And as a result of that, we're just going to invest in the core business.

Sarah Nicastro: Yeah. And to your point, failure is a natural part of innovation. So then what happens is these companies reach that first failure point panic and jump ship. And so the book is it gives some really good perspective on why we need to be thinking about this differently and what those more reasonable and worthwhile metrics are. So I'm going to ask you a couple of pretty unfair questions, because I'm really asking you to sort of scan the memory banks and give us a nugget out of a whole lot of knowledge. But so thinking about digital transformation specifically, what would you say is the biggest myth or misstep that you would caution folks against with digital transformation?

Dan Toma: I would say that probably the biggest mistake organizations make when they want to do digital transformation is thinking that they only need digital transformation. That after they do digital transformation, everything will be fine. There will be no more competitors. There will be no more fires to fight. Everything will be sunshine and rainbows. And another mistake that they make very much connected to this one, is that they think that digital transformation is a destination and it's not a journey. I've been seeing that. Once we're going to become a digitally transformed, like really? What does that make? What does it mean? It's a journey. It's not a destination. And again, stop thinking that you only need that.

Sarah Nicastro: Yeah. I wrote an article not too, too long ago about the term itself. Should we just start calling it something different. Like the digital continuum or the digital journey, or I don't know what else. I think I threw some other options out, but yeah, the word transformation, I think gives companies the connotation that it's step, step, step, complete, and it's just a false reality. Okay, so same question, but for innovation. What is the biggest myth or misstep you see related to innovation?

Dan Toma: I think, again, from my experience, one of the biggest mistakes I've seen organizations make is that they focus too much on the technology side. They believe innovation equals technology, and they only focus on technology. They ignore customer experience innovation, they ignore channel innovation, they ignore business model innovation. They just believe that if they're just going to invest in blockchain or invest in AI, that will be enough. My question to them would be okay, you invested in this amazing AI technology, what do you do with it? What is the product that you were building? What is the value that you were creating for an end user with that AI?

Dan Toma: Just saying that we acquired and we're going to sell it to our customers is not enough. And that's not innovation. That's at the very best some low key entrepreneurial mindset, but that's definitely not innovation. I think too many organizations focused too much on the next shiny technology without actually remembering the fact that the technology needs to work in an ecosystem. It needs to be built within a product that people would like, and people will benefit by using that particular product, so on and so forth. So stop thinking technology, think wider than technology, think business modeling, think customer experience, think customer engagement. Think channel.

Sarah Nicastro: Yeah. Good. So I thought of one other question, Dan, which is you mentioned that you were, you were head hunted and you went to work for this telecom and they wanted you specifically because of your entrepreneurial background. And so I think kudos to them for understanding that they needed more of that to innovate, but obviously you got in there and were like, "Whoa, whoa, whoa, what did I sign up for?" So I think the idea is a good idea. I think the idea of recognizing that if you are relying solely on your legacy to innovate, that could be significantly more challenging. It's sometimes very helpful to have outside perspective, outside ideas, outside talent. What though is the key to companies creating a better culture for innovation to exist? And I realize that's not an easy question to answer, but if you had to give some initial advice for people on, okay, if you recognize you want to create more innovation and you want to bring people into the business to do that, then you know, start doing x or not doing y.

Dan Toma: Right. It's definitely a difficult question and I'm not hoping to have the right answer here. I mean, it's probably one of the questions that's been puzzling thinkers for years now, decades. I would venture definitely venture here, a suggestion. First of all, you should really make a point out of the fact that you really want to grow for innovation, meaning that you are heavily investing in innovation and not just investing dollars, but investing time. Make sure that your leadership speaks about innovation on an ongoing basis. That they champion innovation with every opportunity that they have. And that innovation really sits on their agenda. Literally sits on their agenda. Like they have time booked in every week, every day, every quarter to just focus on innovation. And then the other point would be start improving your innovation process, because process will drive culture.

Dan Toma: And if you want to have a new culture, if you want to attract people with a different mindset, build a system that will force some old people to realize that probably innovation is not for them and will force HR to start recruiting for innovation. It's a very good point. You brought up and this reminding to me of some work I've done with an insurance company out of Germany, I'm not going to name names here, but the idea was the following: the head of the innovation lab, this was the lab passed with building beyond core experiences, beyond core solutions. Bear in mind, this company was 150 years old. So something like that. And some people actually, I think were 150 years old as well. And this guy was tasked with running the lab building, building the insurance of the future, think beyond core.

Dan Toma: So on and so forth. The problem for him was that in spite of the new lab that he had, the new processes that he used, all the thought leadership that he brought in, the problem was that HR was only hiring people that had insurance written on their CVS. People that worked with other insurers in the region, sometimes even brought them from abroad. And he said like, "I can't innovate with these people because these people can only think insurance in the way that insurance has been fought about for the past 100. And I don't know, 50 years, I need to have people that come from automotive. I need to have that come from the music industry from entertainment, from travel, people that think differently about insurance, because they don't have that legacy."

Dan Toma: Obviously it was very difficult for him to do that. And obviously he was fighting an uphill battle with HR. But the point I'm trying to make here is that if you want to really become an innovative organization, make sure that you have a strategy, make sure that you speak about innovation, make sure you champion. And by all means, make sure that HR is on board with you. Because if HR is not on board with you, if HR is not helping you recruit the right talent, it's not helping train the people that you already have. You won't be getting very far.

Sarah Nicastro: Yeah, no, that's really good advice. And I was thinking about that because like I said, I think the idea is good, but you have to understand that you can't bring one or two great people on and expect them to transform the whole business. There has to be a structure behind it. And I think the HR point is a really good one. And I think it also ties back to Innovation Accounting, because the other challenge is are your expectations realistic for what that journey is going to look like? They could have brought you on to innovate. And then, like I said earlier, you hit the first failure and they panic and send you on your way. Because they don't have the understanding of what that's going to take. So all very much tied together, all really interesting. And I really appreciate you coming and sharing, tell folks where they can find the books, where they can learn more about you and how to stay in touch

Dan Toma: The books, you can find them on Amazon. We're just starting delivering in the U.S., I think as of last week or two weeks ago. So amazon.com is a great source for the book. Just type the Corporate Startup or Innovation Accounting.

Sarah Nicastro: Have them here.

Dan Toma: Ah, here we go.

Sarah Nicastro: And it's, like I said, they're really, really well designed. I don't know. I thought that the layout of them was really cool. There's some workbook type stuff, there's different exercises to do. And it's something that, like I said, just knowing myself, I wasn't expecting it to be as engaging. And so yeah, they're definitely worth ordering.

Dan Toma: Yeah. Thank you very much for that. And if you want to stay in the much with me, LinkedIn or Twitter are the best places you can find me. So on Twitter, you can find me with the tag danto_ma and on LinkedIn, just type in my name, Dan Toma and I'm going to pop there with the books as the cover.

Sarah Nicastro: That's cool then. All right, Dan. Well, thank you so much. I appreciate you being here and really enjoyed the conversation and your content and hope to have you back again sometime soon.
Thank you very much.

Sarah Nicastro: You can find more by visiting us @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 @ifs.com As always, thanks for listening.

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Reinventing Recruitment and Retention for Today’s Labor Market

May 18, 2022 | 30 Mins Read

Reinventing Recruitment and Retention for Today’s Labor Market

Sarah welcomes Arran Stewart, the Co-Founder and CVO of blockchain-powered recruitment platform Job.com, who has been featured in in Forbes, Inc., Reuters, Wired, Fortune, and Nasdaq, among others, to share his insights on hiring, recruitment, and job market trends.

Sarah Nicastro: Welcome to The Future of Field Service podcast. I'm your host, Sarah Nicastro. Today we're going to talk about reinventing the recruitment and retention models for today's labor market. This is not our first podcast on this topic and it's something that we'll be talking about a lot this year as it is one of the biggest challenges that the folks that I speak with are up against. So I'm excited to welcome to the podcast today Arran Stewart, who is the co-founder and chief visionary officer of blockchain-powered recruitment platform, job.com. Arran's insights have been featured in the likes of Forbes, Inc, Wired, Fortune and many others. So Arran, very grateful to have you here with us today for a chat.

Arran Stewart: Thank you so much, Sarah. It's a pleasure to be on your podcast.

Sarah Nicastro: All right. Great. Okay, so before we get into the meat of it all, tell our listeners a bit more about yourself.

Arran Stewart: Well, so I'm originally from the UK, from London, and I live here in the United States in Austin, Texas. I've been in the what I describe as the recruitment technology or rec tech space for sort of the last 15 years. I have a very deep passion about utilizing technology to remove friction from hiring and has had sort of dedicated my career to looking at how do we make things better for the labor force, for employees? Specifically, my side is always about finding the best talent and putting them in great companies, but that often spills into some of the topics that we're going to talk about today where it's like what do companies need to do in order to attract and retain that talent? And how do we provide that consultancy to them that it's way more than a job description, it's way more than just the offer of a job these days.

Arran Stewart: Talent is scarce. Good talent is even more scarce and it requires a lot more thought process, but our mission at job.com and what we tell everyone is that we're here to help as many people feed their families and pay their bills as possible. And I live by that and stick by that. So that's me just in a nutshell. I'm married, five beautiful children and very blessed with that too.

Sarah Nicastro: Now, how did you and your family enjoy the move from London to Austin?

Arran Stewart: Yeah, that's a fabulous question. So kudos to my wife because when we moved, we had a young family and actually at the time my wife fell pregnant shortly after moving to the United States. As you can imagine, culture change, mild culture shock left a lot of family support behind that sat around my wife. My life didn't change very much because I was so busy working, traveling, kind of growing the business that is job.com. We have 15 offices across the US. So she really was the trooper and kind of made it happen. So kudos to her. But it was challenging, but it certainly was worth it. And I'm delighted to report we're very happy here.

Sarah Nicastro: Good.

Arran Stewart: Which is good.

Sarah Nicastro: Yeah, that's a big, big change.

Arran Stewart: Oh yeah.

Sarah Nicastro: And of course a lot has happened in the last few years on top of it all. All right. So we're going to go through some specific questions that I have, Arran, but before we do that, can you just sort of give a synopsis of your view on what the current state of affairs is related to the labor market, what's happening with the great resignation and kind of just sort of a state of things if you will.

Arran Stewart: Yeah. So I've been quite active on this topic and also have written several articles on it because there's this big title of great resignation, or I think the pandemic provided an opportunity of great reflection for a lot of the labor force. And I think that time of reflection and challenge has meant that many of the talent pool that would normally be more accessible or were more accessible pre-COVID are now more difficult to find for a number of reasons. I think people are more conscious of potentially their financial worth, their compensation worth. I think they're more conscious of health and their loved one's health. And there's still a level of uncertainty there. As we know, a lot of financial assistance was inputted into the economy to help people during that time, which is great, but at the same time removes the level of urgency like they would normally be.

Arran Stewart: And also there was a realignment of talent as well. So especially in the sectors where you might be front-facing, like you might be out in the field, you might be in front of customers, or you might be in front of whether that's B2C customers or B2B customers, and that opportunity was taken away for some time because of the pandemic. You are skilled labor and in that time, you may have retaken your transferable skills into other markets, which has caused these pockets of shortages of talent across various markets and hiring requirements. And I think culminating all those things together has really impacted things.

Arran Stewart: We also have seen that... And this is statistics, right? And I actually think this is a great shame, but where we saw families have to kind of huddle in together, we've seen 2.1 million women potentially not come back into the labor force because they learned to live on a single income family and they went and looked after the children and now have decided that they wish to stay looking after children. These are statistics and facts, which we need more women in the labor force. And these are just all factors that add together that now have created this hiring environment we're seeing now.

Sarah Nicastro: Yeah. Now you mentioned that it was a time of reflection for a lot of folks. So I've heard the great resignation referred to as the great awakening. Do you think that is a good kind of descriptor of where some people's heads are at?

Arran Stewart: Yes, I do. And I also think that... And this isn't necessarily by any fault of any employers, but there was a huge knee jerk reaction that happened during the pandemic if we all remember like Q2 and Q3 of 2020, which was just barbaric in some respects, but companies weren't particularly loyal necessarily to all of their employees, especially those ones that may have been in positions that would suddenly not be in demand right now. And in order to protect the company, they may have shed large volumes of those loyal labor force. So that's given those markets at least 18 months to sit there and kind of reflect on their worth, how they've been treated, actually, how they're viewed upon by their employers because they were so disposable at a time of difficulty, and now I think in some respects, there's an element of backlash that may have come from that too in a positive and a negative way.

Arran Stewart: The positive way being people have had a chance to really think about their career prospects and what they want to do with their lives. And maybe they've realigned. Great because you want people to be happy, but at the same time, other people may just feel a little bit sour about the whole process and be like, well, I'm not just going to come running back to you because you were so quick to maybe ditch me. And I've certainly heard those sort of micro cases talking to job seekers and candidates in the job market as for job.com, we do focus groups and we've heard that time and time again.

Sarah Nicastro: Yeah. So going back to... So you mentioned you do focus groups and I just have to assume based on the nature of the platform, you have a good amount of data. So when we look at the job seeking/recruiting end of things, what is it that you see today's candidates prioritizing in the job searches they're doing, at this point, their interviewing of the potential employers?

Arran Stewart: Yeah. So just for transparency, and I'm not sure necessarily always how relevant this is to every sector and field, but the biggest one is the opportunity for hybrid work conditions, et cetera, et cetera. That is always the biggest one or remote working. That's saying that's only applicable to some industries and some jobs. Outside of that, compensation is a big topic because there's so much press in the market and so much pressure from the hiring side. Job seekers aren't stupid. And so they're like, "I know you really want me. How much are you going to pay?" And rightly so. And there's been a lot of, I guess, reflection alignment on that because there is still concerns around healthcare and maybe the impact of what this sort of virus can have. I think it's starting to dwindle a little bit now, but it's certainly was a lot more a few months ago.

Arran Stewart: People want to know that they have a benefits package, a good benefits package. If I'm putting myself out there at risk potential role that might be front-facing, I want to know that if I fall sick that my bills are covered and that these medical bills are covered for my time. So the benefits side of things, and then there's just other competitive... I'll talk about it because it's worth talking about that everyone's now also jumping on this four-day working week concept as well. Like, hey, maybe I could work only four days a week and earn same amount of money if I'm just as productive. All of these areas and components. People are looking at a sort of like potential sort of attraction. The things that make them want to be attracted to a particular role outside of maybe a company, their culture, where the business is going, the leadership behind that company, which can also play massive factors into whether or not a business is interesting. And then just looking at normal the traditional stuff like what do other employees say about that particular company or like Glassdoor or stuff like that.

Arran Stewart: So that's sort of like a very holistic overview of some of the things I think that people are looking at as like their top strategies for maybe choosing a company or what they're going to do, who they're going to go work for.

Sarah Nicastro: Okay. Now, if you look at the employer side of that equation, generally speaking, we have to generally speak because we're not digging into like a specific industry or that sort of thing, but how well do you feel companies have evolved or stepped up to the plate to adjust to these new and different expectations and/or what is the work that remains to be done?

Arran Stewart: Yeah. Great question. So I think there's a lot of talk about it. So an awful lot of talk like there always is. And I would pay kudos to some of like larger businesses, leading brands that are always expected to kind of lead from the front, especially in the competitive landscape for hiring, but I do think that when I look at just from our side as a business, maybe more small to medium size businesses, they're not necessarily always equipped to cope with such a drastic change in a sense of the costs, the realignment, the culture change, the strategy change, and also maybe they're not quite as in tune with the macroeconomic factors that are impacting them so much. Sometimes that can be the case.

Arran Stewart: So I think some companies are absolutely killing it and they're doing a great job and they're seeing that reflected in how they're getting good talent and retaining it, and then I'd say the tail end, the sort of 80% to 85% are still very much wanting in their strategy and are still yet to really, really now embrace those strategies for a competitive hiring strategy.

Sarah Nicastro: So for those companies that are doing a lot of talk but haven't yet taken a lot of concrete action for one reason or another, what's your best piece of advice on how to attract more talent?

Arran Stewart: Yeah. So I think that wherever they best can, whether they've got internal hired managers, HR, or if it's a smaller business and it's kind of owner manager hire kind of scenario, or if they're using third party agencies, part of your recruitment process should consist of try. You give feedback to candidates, but try and get feedback from candidates on maybe why they didn't accept the job because a lot of the time, you might get a great candidate to a point of like first interview, second interview, or they drop off and ghosting from candidates is a huge problem right now because they've got so much options in front of them, but where you can build a relationship and you can learn from your market that you're trying to hire, ask them what was it that made us not as appealing?

Arran Stewart: And try and use that from the bottom down to feedback to maybe more senior ranking members of the company to realign the strategy around benefits, packages, attraction methods, work conditions, work style, all these different components that might then readjust, realign the dials in your hiring and recruitment strategy that will make it work for you.

Arran Stewart: I think that's probably the best way. Listen to the candidate. That's the best. The source of truth is right in front of you. You can read as many articles as you like, you can look at as many bits of information as you like. Go talk to the source. They'll tell you. And if you see a trend, then you know that's what needs to change.

Sarah Nicastro: Yeah. I think that's really good advice. I think it's interesting like... So I wanted to go back to your point about one of the biggest desires being flexibility, right? And hybrid work, et cetera. And obvious, for a lot of the roles that our audience would be thinking about or struggling most with, and I'm mainly talking about frontline field technicians and service workforce. That's difficult to do in the sense that a lot of these companies are providing service all the time, right? And so they can't have people just working from home. They can't have people that decide where they want to work and when, et cetera. And so acknowledging that that's a reality. I also just want to say that for those companies, it doesn't give you a free pass to not at least spend some time getting a bit creative-

Arran Stewart: Absolutely.

Sarah Nicastro: About what the historical model is and are there any ways to evolve that that would meet some of those demands? Right? So you mentioned the four-day work week, and again, we're talking about in our audience, it's a variety of geographies, a variety of industries, a variety of sizes. So there's no way to say to whom that might be a fit, but maybe there are instances where if you did rotating schedules, a four-day work week is completely plausible, right? And that might be something important enough to some of these candidates that it makes a really big difference in the recruiting process.

Sarah Nicastro: So I think one of the calls to action I think for our audience is to think outside of the box a bit more and don't just stay so stuck in what worked five or 10 years ago as your norm that you're unwilling to reflect on what is possible, right? So I think that's important.

Sarah Nicastro: And the other thing is a lot of the... We're going to talk about company culture a bit later, but a lot of the organizations that I'm talking with because I do different focus groups as well, we've been talking a lot about how in both recruiting and probably even more importantly, retention, it's important to have a more human feel to all of this. And I think that's really a big effect of the pandemic, right? And so how you said, not only have employees recognized their worth or their value, but they want to be treated differently. And so there's programs that you can do to help with that, but you can't overlook the personal, one-on-one, human to human interactions. I think that's a big factor in how someone interviewing would feel about your company or how someone in role feels about their value as an employee. So, yeah. All right. So go ahead. [crosstalk 00:18:16].

Arran Stewart: No, I agree with you. I completely agree. And I love your statement about looking at the past five to 10 years ago and thinking that you can continue to operate like that. The labor market has moved. It has shifted, okay? The pandemic has had such a major impact across many different verticals and industries, but the labor market has moved and unless you move with it, you're going to... A company is only ever as good as the people it employs. Fact. And if you don't move, then you might find your business is not as competitive as it was five or 10 years ago for sure.

Sarah Nicastro: Yeah, it's a really important thing to get a handle on. And to your point, I feel for the 80% to 85% of companies that you said they know it's a problem, they're talking a lot about it, but they're just not making a lot of change and yes, it's challenging, but it's incredibly important, right? And so, again, on that line of thinking, I think you're better off trying some different things and seeing what works than just falling out in the discussion mode, right?

Arran Stewart: Yeah, that's it. So we've had these conversations with clients, right? So the feedback is, well, I'm not entirely sure what to do and I'm not sure what exactly will work. And I'm like, but we are confident what you're currently doing right now isn't working. Okay? So you can't really be any, any worse off. Like you are not getting a talent you need, you've got huge supply chain shortages. You've got to think about how you change what you're doing in order to continue to get the labor that you need. Otherwise, if you don't, you'll be kind of, I don't mean to be nasty, but you're going to be out of business. And that's a fact. So yeah, no, again, I agree with you.

Sarah Nicastro: Yeah. Okay. So let's talk a little bit about retention. Okay? So that's kind of the other side of this coin, right? So I would surmise that a lot of things that are important to new hires are also important to existing talent. However, there are kind of some different layers of complexity here. Like you mentioned the compensation conversation and people interviewing knowing that these organizations need talent and the competitive advantage that gives them. But then you have companies who are bringing in new talent at a rate that far exceeds what they're paying their existing talent, which creates a whole nother challenge of how do you handle that? Right? So that being said, when you look at retention, could you give any insight on what some of the biggest factors you see are that are impacting employee turnover?

Arran Stewart: Yeah. So it does depend a lot as well on seniority and salary level as well. Like you will see in more of the hourly work labor that if they're offered even a very small marginal difference on an hourly basis at another company, that they will just go. Okay? They'll just shift because they're trying to maximize, and understandably, they're trying to maximize their time. Companies need to have very, very clear strategies behind reviews, reward, providing recognition for success and achievement, not just like, well, that's your job. Get on with it. People look for recognition and they look for it frequently. I think the days of like, well, we'll do an annual review. It's like, they'll be gone well before.

Sarah Nicastro: Right.

Arran Stewart: Okay? Like, well, no people don't put up with rubbish for a year now. Okay? They don't. You need a quarterly review. You need to go in so that they immediately set these micro goals of, hey, great to have you. Fantastic. Great to have you in the business and you kind of start climbing them up this ladder. So you try and offer them the best opportunity, the best package, the best flexibility that you can in the beginning based on that level, based on them as a human, but you should constantly be able to add to that, add more, okay, small pay increase, slightly better benefits, and you can have some more flexibility in your work style, or you might be able to choose some other benefits or pay for a gym membership, you name it, right? All the things under the sun that can be done to make someone feel valued.

Arran Stewart: And then I think the one that is personally I believe is the biggest and I try it myself as one of the owners of job.com is culture. Culture keeps people. It does, right? Even if they're not getting paid as much as maybe they would at another company, but if they're at a place that they just love working at, they love the values it stands for, they love the way they're made to feel at their job, maybe they have that feeling where they're not constantly on a life S edge, but you know what, it's family first at this company and just little things that make you feel like, God, I really believe in the values of this business.

Arran Stewart: I maybe could earn a little bit more somewhere else, but I'd be miserable. And I think culture is a huge retainer. If you've got leadership in the company leading from the front, I think it really helps create a culture of loyalty, determination, et cetera. So I think of all of that list, I would probably choose culture as actually one of the biggest things outside of maybe compensation and benefits. So that's for sure.

Sarah Nicastro: Okay. So I want to come back to culture because I think there's a couple things to talk about there, but going back to a couple of the points you made. So I think one that's really important, particularly for our audience is these companies that I talk to everyday, they have field technicians in their existing workforce that have been there for 20 or 30 years, and they are the generation, the personality type, whatever it is that they just show up, they do their work, they work hard, they go home and they do it again and again and again. That is not the norm anymore. Okay?

Arran Stewart: No, it's not.

Sarah Nicastro: And so the expectation though of these companies that that's even remotely feasible, it has to get wiped out because to your point, I think one of the biggest focus areas for our audience needs to be the development of these career paths, right?

Sarah Nicastro: Because otherwise, you are constantly playing catch up with yourself because you might get to the point where you learn what works recruiting wise and you can offer a high enough wage or whatever it is to get people in the door, but if today's talent doesn't know where they can go, they'll go elsewhere, right?

Arran Stewart: Oh yeah.

Sarah Nicastro: And so I've seen companies that have done some really cool things even with visualization of that career path. Like literally helping talent visualize where they can go and what it takes to get to this point and this point. You know what I mean? And different choices or whatever that looks like for the business. Like the more you can start communicating that upfront, the better off you are keeping this pool that you're hopefully learning how to create. So I think that's really, really important.

Sarah Nicastro: The other thing is most of the roles we're talking about, they aren't roles that have historically been very recognized and rewarded, and that has to change as well. Everyone wants to feel that they're playing a part in something, right? And so if you are taking your top salespeople on this trip every year and then you treat your frontline service people like they can come and go, then that's what they'll do, right?

Arran Stewart: Yeah. Of course. Yeah.

Sarah Nicastro: So I think that's really important as well. Now, company culture, I feel like this is... I agree with you that it's very important. I also feel like it's very hard to bolt down what makes it good? Okay? Because-

Arran Stewart: Well, it's subjective, isn't it? It's a subjective thing for people.

Sarah Nicastro: And it's another area where companies know it's important. So they say that all the right things regardless of whether or not it's real.

Arran Stewart: They'll do it.

Sarah Nicastro: Right?

Arran Stewart: Yeah, yeah.

Sarah Nicastro: And so that's a challenge. Okay. Because you're going to be hard pressed to find a company that says company culture, we don't give a shit. They know they have to care. So how would you say, like what are some of the specifics that you think make for a strong company culture?

Arran Stewart: Well, so culture can help define the sort of talent that you're looking for, right? So it actually acts as a filter. So in some respects, people come there like, "Yeah, nice company. It's just not really me. This isn't who I am." So that actually does help as a filter, but I think what I'm seeing, and I don't know like... I think one of the best examples, I don't know if you ever see him on LinkedIn. And sometimes I agree with him, sometimes I definitely don't agree with him, but that's Dan Price. Do you ever see him on LinkedIn? He's very pro like how he drastically reduced his salaries of the CEO of his business to then provide a minimum salary level of $70,000 in the company. And out of that, he found that statistically, more people had children, had families, et cetera, et cetera, and then they provided like this better maternity and paternity leave, et cetera, et cetera.

Arran Stewart: He's built this kind of culture of almost a cooperative culture within his business even though it's not a cooperative business. It's a traditional one. I think that that can provide... It is very difficult because trying to get everybody to swim in the same lane on viewpoints, et cetera, can be very difficult, but I think you can pick almost holistic culture points that I think we'd all adhere to like people matter. You just said something there about taking the salespeople on these trips every year and then the frontline people, they're just like they're just the frontline people. It's like you've got to treat people the same the whole way through the chain of the business, all levels, from the most junior to the most senior because otherwise, oh, it doesn't matter. They're not as important.

Arran Stewart: Well, they're the foundation to the company. You know that, right? So if they fall away, it doesn't matter how senior you are. You haven't got the talent underneath you to do it so to speak in hierarchical senses. So yeah, I actually think that it's a great question, right? I actually struggle a little bit to answer that with any major conviction with like a that's a rock solid answer. This is the answer to your question. It's still a little bit woolly, which is kind of reflective of culture. It's very woolly.

Sarah Nicastro: Yeah.

Arran Stewart: It is.

Sarah Nicastro: Do you want to know why I think that is though? I think it's because it's so incredibly dependent upon leadership.

Arran Stewart: Yes.

Sarah Nicastro: Like I think in so many ways, the leader or the top leaders of a company really define the culture, not what HR will say on paper or whatever, but like what it actually feels like. On the flip side though, I think that going back to a point you made about reviews, I agree with you that people don't like ambiguity, okay? People actually thrive on information and knowing what's expected of them to achieve and being able to deliver that, right?

Sarah Nicastro: But I do also think that the idea of 360s and the idea of the employees being able to provide feedback to management is so, so important because I think one problem can be the top level leadership. It can just kill a culture. You can have put out some good PR saying whatever you want to say, but that will make it not a reality.

Sarah Nicastro: The other thing I've seen happen though is where you have senior leaders who have really good intentions and then middle management that kills it because they're between the leaders that want to have this impact and want that frontline worker to feel important and empowered, but if those middle managers aren't bought into that, aren't capable of that, aren't committed to that, it doesn't translate, right? And so that's where I think that... We did a podcast last year with a gentleman from BD, Eduardo Bonefont, and he talked about how they have implemented employee NPS within the company and a lot of the efforts they do around just really listening to their employees and making sure their employees understand that they care what they have to say. But the reality is in doing that, you have to be willing to get rid of leaders that aren't sitting with the type of culture you want to have.

Sarah Nicastro: And so, I don't know, it is a really tough thing to bolt down, but I agree it's also one of the most important, which just makes it very, very complex to tackle. I feel like culture just has more to do with the people than the policy. Do you know what I mean? Like you can check boxes or say what you want to say, but at the end of the day, I feel like it's your leaders from the top to the rest of the way down that are really either expressing that or not and making it somewhere people want to be or not. So, yeah.

Arran Stewart: No, no, no, again I think everything you're saying is correct. And culture should be from the leadership, right? People buy into leadership. It's part of our culture as human beings. We always look to... Hence why we have government sense why we have public figures and we have people that are famous because we look to them as for inspiration. We look to them because we value the way that they live their lives, the way they operate, the way they conduct themselves, the way they communicate, which also could be like a massive impact.

Arran Stewart: Yes, I know firsthand that middle management can pose a problem when it comes to cascading culture down all the way through the hierarchy because let's say not necessarily they don't always believe in it, but maybe that's just not their culture because you do. You hire people... I mean, it's so difficult to like, I know there's all these assessments and psychometric assessments, et cetera, et cetera, but when you hire people, every human is pretty much a one-off. You find people similar to you, but most of the time we're all completely unique one way or the other. And that means that makes it kind of difficult to find a completely uniformed team of people who will all adhere to a certain culture, live the culture, breathe the culture, install it throughout everyone within the business.

Arran Stewart: Also, one other thing that happens is external life factors. So I've seen this firsthand as well with other people in the past, like companies that have been a part of certain boards of if one of the personal life circumstances changes for one of the leadership and you have to like... Someone falls sick, someone has an issue at home, someone's going through a divorce, someone's going through something, it actually cascades through the business and can destroy the culture of a company. And that's unavoidable. It's unavoidable to kind of predict that there'll be no external tragedies or any issues that go on in this human's life. So there'll maintain a perfect culture forever more. It's as fragile as the human itself. So yeah, it's other things to sort of take into account.

Sarah Nicastro: Yeah. Yeah. It's all very, very interesting. All right. So that being said, what would you say your number one piece of retention advice is?

Arran Stewart: I truly believe that you should do regular reviews and always look to recognition and reward. You should build a recognition and reward culture. Celebrate small wins and define what those small wins are and make it publicly known that that human being achieved that throughout the company so they feel like they have been recognized. We all crave a level of status no matter what it is. A status amongst our peers, recognition amongst our peers. And when that is recognized by leadership and now I'm kind of ordained as a human being that has some value within this organization, look here, this is what they've said about me, I think that's so powerful to self-actualization and making me want to be part... I love this company. They make me feel great when I'm at my job because it's like how many clients did you manage to visit this week? Oh, we have targets, but I've got one-off target. Outstanding effort. Brilliant effort this week.

Arran Stewart: And I know companies try and do it with things like employee of the week, employee of the month. I think you can be a lot more creative than that. And I also think that rewarding people can be very simple in a sense like, hey, did you know that you're being taken out for lunch today by the boss? And you're like, "What? I'm just a such and such job title." "Boss is taking you out specifically for lunch today because you've reached your sick month marker, your nine month marker, your 18th month marker." You're like, "Oh my God, that's outstanding." And they'd love to hear about what your views are at the frontline so you can learn more about what they need to do to improve. That makes people feel great. It does.

Sarah Nicastro: Yeah. And it doesn't have to happen all the time.

Arran Stewart: No.

Sarah Nicastro: Like one of those interactions goes a long way.

Arran Stewart: You are bought in. You're like, "I've been heard. I've been heard." Because sometimes it's like you are not doing my job, you don't know really what it's like. You're staying some ivory tower somewhere. So that's the feeling sometimes, right? And understandably so. And it doesn't have to like these sorts of things, I'm pretty certain that leaders of companies eat lunch every day. Why not use your lunch to eat with one of your lower in the hierarchy, employees, reward them and learn more about what your business is doing from the top up? It will make them feel empowered and special. And that costs you nothing because you can have lunch anyway. So that's just, I think, the sort of things that you can do to kind of really install that.

Sarah Nicastro: Yeah. I think that's a good point. The other thing that came up in a conversation I was having the other day, you mentioned earlier on that the pandemic really had a lot of people reflecting. And so some people decided that for whatever reason, they wanted to do something different and to take a different path. And one of the things that came up in a focus group I was doing on some of these topics was some frustration around that, but also just I guess a need to just accept that some people are going to want to go in a different direction.

Sarah Nicastro: And so there was two points that came out of that. I think one is as the companies within our audience evolve and transform, there are more and more new and different roles that are needing to be filled. So how can you maybe allow people for change within your own organization? And that goes back to sort of that career path type thing. The more you can kind of structure and communicate what the different opportunities are, perhaps you could keep some of those folks if you instead of being resistant to them leaving the position they've been in, welcome them to try something different within the company.

Sarah Nicastro: But the other point that came up was if there really is someone that wants to move on, don't feel the need to keep that quiet or have a negative overtone. Celebrate them and keep that door open because perhaps they'll want to come back or refer someone else in or whatever. So don't be bitter about it. Be supportive. And that goes to your point of people are important and treat them like a human, not like a resource that you're upset that is leaving. So I thought those were two interesting points as well.

Arran Stewart: Yeah, for sure. You should always try to have everyone leave well from your company because that's when the most damage happens because one, if they don't leave well, they most certainly have friends and colleagues in that company who they will then instinctively kind of in some circumstances almost poison because they're just like, "Oh, I can't... This is the problems. This is why this place has gone to the dogs. It's so good." And that can have a real negative connotation.

Arran Stewart: The other part to it as well is that they tell other people and they also might leave reviews on platforms like new Glassdoors. Yeah, they had five amazing years. The last few years went to... Sorry, last few months weren't too good. I've left and now I'm going to make it seem like I never liked working there in the first place. And it's like, well, why were you there so long then? So that definitely should always try and have people leave well. That's for sure. Yeah.

Sarah Nicastro: Now, Arran, what do you think the next 12 to 18 months hold? What do you think people should be preparing for?

Arran Stewart: Well, that's a great question. I think that... Well, it is very subjective, very much someone's opinion, but I think we have some level of economic correction potentially coming. Everyone's talking about this. We also have a lot of uncertainty as well because I feel like we went out of the oven into the frying pan from pandemic to now worries about Russia and what they're doing to Ukraine, but also that kind of unrest between East versus West, which I think actually also really impacts people's thought processes, consumer confidence, which then relates down to confidence in work, confidence in consuming, confidence in spending money.

Arran Stewart: So I think the challenges are here to stay. I think they're here to stay for a good couple more years until we kind of get through a few of these issues until we can start to see more of a heyday toward tiring again, maybe a realignment of salaries expectations and the norm. And then suddenly it feels like we're all back to normal again. And yeah, I'm not having too much time, so much hassle hiring people again. It seems to have of kind of balanced itself out, but I still think the next 12 to 18 months are going to be a challenge for sure. A significant challenge. Yeah.

Sarah Nicastro: Yeah. Any other comments or closing thoughts for folks?

Arran Stewart: No, I think, one, it's been a fantastic podcast. So thank you for having me on. I think we've covered some really, really important topics here. And then honestly, yeah, I feel like I've kind of covered everything that we've sort of talked about that I could give with a level of confident knowledge about. So now I appreciate you and appreciate the time and the questions.

Sarah Nicastro: Yeah. Now is there information people should have on how to use job.com?

Arran Stewart: Yeah, sure. So the immediate reaction when you hear the URL is you think we're a job board. We're actually a staffing agency, a recruitment agency. We do the full end-to-end hiring process, but we describe ourselves as a data-driven digital staffing agency. Everything's used through tech process automation. What does that mean to you if you are hiring? It means we can get you talent quicker because we remove a lot of the low value tasks that recruiters have to do. And lots of our clients, they really take the benefit of all the things that we offer in a technology stack that augments humans, not displaces them.

Arran Stewart: We believe in people, but we believe people can be better with technology if they're paired together very well and they provide a better hiring experience for the people you're looking for because one of the most... From the moment someone applies for your job, they're also judging you as a company. And if they suddenly feel like they've been in some ridiculously long, poor communicated hiring cycle that's taken a long time, they kind of enter in bad and they kind of enter in already a little bit burnt on the journey. So you need to be very thoughtful about how is your hiring process? And who you use your hiring process reflects on your business and your brand. And we always try and tell our clients that, and that's maybe one of the risk. That's why you might want to use job.com.

Sarah Nicastro: Yeah. That's a very good point. Okay. Well, Arran, thank you so much for being here.

Arran Stewart: Thank you.

Sarah Nicastro: I enjoyed our conversation and I'm happy to have you.

Arran Stewart: Thank you so much. Real pleasure.

Sarah Nicastro: You can find more by visiting us at futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter at @thefutureofff. The Future of Field Service podcast is published in partnership with IFS. You can learn more at ifs.com. As always, thanks for listening.

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Live Tour London Highlights

May 11, 2022 | 10 Mins Read

Live Tour London Highlights

Sarah reports in from her travels with a synopsis of the topics discussed at the second Future of Field Service Live Tour stop in Paris on May 5th.

Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. I was thinking before I got on to record this that I often dive right into these episodes without thinking about the fact that while some of you join on an ongoing basis, we do have new folks that join us each time. So let me just take a quick pause and kind of explain what I'm going to talk about today.

Sarah Nicastro: So this episode is going to be a bit of a recap of the Future of Field Service Live Tour London, which was yesterday. Well, I'm recording this Friday, this will air next week, so it was last week for you all. And so just to explain that a bit, so Future of Field Service, this podcast that you're listening to, the platform that you're engaged with has been a content resource, a thought leadership resource for the service community. I would say service, not just field service. We talk about a lot more than field service, for the last three plus years. So we write at least one original article every week and produce one podcast episode each week that air on Wednesdays.

Sarah Nicastro: So this year for the very first time we've been able to take what has been a content platform with Future Field Service, and turn it into really the basis for community. By taking the show on the road, if you will, and visiting five cities across the globe. So we had our first event in Paris a few weeks ago. London just happened on May 5th, and then we have three more events coming up. We're visiting Frankfurt May 19th, Stockholm May 24th and then Austin, Texas on June 14th.

Sarah Nicastro: It's been really, really fulfilling for me to see the way that this platform enables people to come together, and connect and to feel a sense of camaraderie and to share insights, and perspectives, learn something new. It's been very, very fulfilling for me to be able to see that happen. It's something that I had a vision for when Future Field Services first began, but with COVID and all sorts of different things, it just hasn't been realistic to happen until now. So I'm very happy to see it coming to life, and if you're listening to this and you haven't taken a look at the live tour agendas and schedules, please do so at the website futureoffieldservice.com, and join us if you can. They've been great.

Sarah Nicastro: So a few weeks ago, I did a recap of the Paris event and today I'm going to do a short recap of what we covered in London yesterday. Each city has speakers unique to that area. So the content at every single location will be different and just as we do at Future of Field Service, as our norm, it is centered around what the service leaders in that area want to discuss. What's important to them? What are they learning? What are they working towards? What are their wins? What are their challenges? So yesterday we had a great day in London. We were at the Arboretum, which was a very cool venue near Charing Cross, I believe. So we had a great lineup. So I'm just going to walk you through a couple of key themes or takeaways, and hopefully we'll have an opportunity to do more of a deep dive on some of the content as we go along.

Sarah Nicastro: So the first session yesterday was with Tim Baines, who is the head of the Advanced Services Group at Aston Business School. Tim is someone who I met for the first time in person in London, but have talked to many times and appreciate his passion for the topic of servitization, as well as the wonderful insights that he collects and shares with the world. So Tim talked about servitization, and how servitization is something that is not only applicable to those in manufacturing. But how it is really a mindset, a journey of organizations that are looking to provide an outcome versus a product or a service. So ultimately shifting our thinking around what value we can provide on an ongoing, and often as a service basis that our customers will be willing to pay for. He also talked about the four phases that organizations go through as they are on the servitization journey. So the Advanced Services Group works with a lot of companies that are in this process, and they take a lot of those learnings and findings and sort of create tools and resources that organizations can use. Not necessarily to use as a blueprint, because I don't think such a thing exists, but to sort of get a sense of what to expect and what organizations typically go through. So that was great.

Sarah Nicastro: And then immediately following Tim's session, we actually welcomed James Galloway of Baxi Heating in the UK, as well as Iain McKechnie, who is also from the Advanced Services group. So Baxi is one of the organizations that the advanced services group has worked with directly on their servitization journey. And Baxi is in the process of introducing heat as a service here in the UK. And we had an interesting conversation about where they're at on that journey. I believe James said that he would place them in sort of between the second and third phases that Tim covered of what that journey often looks like. And so they are in the thick of it, if you will, and definitely learning a lot, experiencing a lot, testing, trialing and engaging with their customers. So we talked a lot about some of the shifting and thinking that's necessary. Some of the change management that's necessary, and really just the way that it changes the entire value proposition for the customer, which requires a lot of adjustment within the organization in thinking and process, et cetera.

Sarah Nicastro: So it was really interesting. One of the reasons that Baxi is on this journey is because a lot of the regulatory changes that are happening here related to becoming more carbon friendly and sustainable, will make Baxi's traditional business at some point impossible. So they need to shift how they're providing heat away from gas over time. And so that is part of the catalyst for their evolution. And Iain spoke a bit about how sustainability is impacting a lot of companies interest in servitizing, and some of the ways that servitization creates more sustainability sort of naturally, if you will. Some of the things about it that lend themselves well to becoming more sustainable, both from a customer perspective and the organization that is providing the service. So that was really interesting.

Sarah Nicastro: We then welcomed Mike Gosling from Cubic Transportation who spoke about their journey to outcomes based service. So Cubic Transportation provides manufactures, services, and provides all of the equipment that you would use to buy tickets and get on and off of public transport here in London, as well as other cities across the world. So Transport for London is Cubic's a customer here in London who I guess most notably owns and runs all of the Tube, so all of the public transport here.

Sarah Nicastro: And what happened with Cubic is interesting. So in the first few conversations, we were talking about some of the drivers of the journey to outcomes. And for Cubic, that driver was essentially Transport for London coming to them and demanding that Cubic shift its model from break/fix to guaranteeing uptime. Luckily Cubic had already been on a digital transformation journey that made that demand possible. And so Mike spoke about sort of what that shift required. What's interesting is that I would say generally it's two major things. One of those is that they rely heavily on automation. He's said before that there's really no way to scale up manpower to be able to deliver outcomes. So they are relying on IFS planning and scheduling optimization, which is an AI based dynamic scheduling tool, that they have had great success with in automating a lot of the outcomes process to make it possible.

Sarah Nicastro: And they've actually grown since moving to outcomes without having to hire additional technicians. What's interesting is that while technology has been a really big part of it, the other big part is on the human side and the change management side. And Mike spoke a lot about the things that they've done, that he's done, and that they have a business have done to overcome legacy thinking, and to really get everyone on board with what it takes to be successful in the journey.

Sarah Nicastro: We also had Neil Taplin who is with Genius Sports, join us. He had to join us remotely, he wasn't able to be with us in person. But he did talk quite a bit about... So Neil has previously been in field service and operations in companies like Virgin Media and Arteva. And about a year ago, he transitioned into Genius Sports, which is a bit of a different industry than he has typically been in and a different flavor of field service. So he talked a lot about the work that Genius Sports does documenting and providing data to organizations on all types of different sporting events, all across the world. And what that looks like in terms of capacity planning and scheduling and all sorts of things. So he talked about some of the parallels in what it takes to achieve field service excellence, both in a traditional environment, as well as in more of a unique situation like the sports world. Certainly again, the tech human balance was a theme and the power of data and all of the opportunities that exist around using data both internally, externally as a value proposition.

Sarah Nicastro: We then ended the day with two panels. The first was with Robin Butler of Waterlogic, and Karl Lowe from Edwards Vacuum. And that was a discussion around really setting a strong foundation for service transformation. They both have experience in multiple organizations, leading transformation journeys in service, and they themselves have some different and unique perspectives on what that looks like in different businesses. So I asked them at the end what their biggest takeaway would be, what their biggest piece of advice would be. Robin shared a story about how, at one of his previous organizations, he took a very hands off approach to the technology selection. He felt that he could rely on IT to handle that part. And so he really delegated that and later regretted it. So it doesn't mean that you need to micromanage that, but certainly that partnership between the business and IT is very important. And Karl who at one point early in his career was a technician himself, talked about the importance of always remembering, to think of and listen to the frontline technician perspective, which is super important.

Sarah Nicastro: The last panel we had was with Newland McKelvey of Fujitsu and Nicolas Teyssot of Fives Cryomec. And during that conversation, we talked about the skills gap, which is a huge conversation. And so we talked about the need to not focus on hiring on experience, how that's virtually impossible to do. How you need to look for more creative ways to hire, how you need to take the responsibility to train people up. Nicolas spoke about their focus on hiring based on soft skills, and providing some of the more mechanical and technical skills. If they find the people, they feel like are a good fit from a soft skills perspective. We talked a lot about different ways, both for them, and then with participants in the audience of how people are focused on increasing diversity in their field force. We talked about the importance of defining career paths and giving new hires a vision from the very beginning of joining the organization on where they can go with the company.

Sarah Nicastro: We talked about how important it is for talent today to feel that they're joining an organization that has a purpose, where they're contributing something bigger than just the job itself. And I think Newland made the point of, we want to be able to give people a career, not just a job. So really shifting our thinking around what we want from our field technicians, what the role looks like, how we find those folks, what traits are most important, and focusing also a lot more on the employee experience. So that once they are a part of the organization, we can continue to have them be there. We also talked a bit about the role technology plays in automating certain menial or manual tasks, things like augmented reality and how that can help get people up to speed and increase time to value of new hires. We talked about how remote service can take some of the burden off of the skills gap by eliminating unnecessary onsite visits, so a whole lot on that topic.

Sarah Nicastro: We closed the day with some cocktails and networking. We got a lot of good feedback on how happy people were to be in person, to be having these conversations and to have the opportunity to get together. So it was a great day and I'm super thankful to all of the speakers that joined and made it possible as well as the team that has been helping organize these events, which has just gone seamlessly. Which takes so much stress off of my shoulders, so big thank you to them as well. And like I said earlier, we would love to see you at one of the three events that are left. So Frankfurt May 19th, Stockholm May 24th, Austin, Texas on June 14th. Take a look at the website, if you would like some more information as always, that is futureoffieldservice.com. You can also find us on LinkedIn and Twitter. 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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Reimagining Industry Growth Amidst Supply Chain Uncertainty

May 4, 2022 | 18 Mins Read

Reimagining Industry Growth Amidst Supply Chain Uncertainty

Sarah welcomes Dan Varroney, President and CEO of strategic consulting firm Potomac Core and a sought-after expert on economic performance with appearances on CNBC, Fox, Dow Jones, MarketWatch, Bloomberg, Forbes, and the BBC. He’s recently authored new book Reimagining Industry Growth: Strategic Partnerships in an Era of Uncertainty and talks with Sarah about the need to evolve how we think about and approach partnerships in business to meet modern needs.

Sarah Nicastro: Welcome to The Future of Field Service podcast. I'm your host, Sarah Nicastro. Today we're going to have a conversation about reimagining industry growth amidst supply chain uncertainty. I'm excited to welcome to the podcast today Dan Varroney, who is the president and CEO of a strategic consulting firm called Potomac Core and an expert on economic performance. Dan has been on CNBC, Fox, Dow Jones, Bloomberg, Forbes, and many others. He has recently authored a new book titled Reimagining Industry Growth - Strategic Partnership Strategies in an Era of Uncertainty. Dan, welcome to The Future of Field Service podcast.

Dan Varroney: Well, Sarah, thank you very much. It's a pleasure and an honor to be here with you today.

Sarah Nicastro: Thank you. All right. Before we get into the discussion at hand, tell our listeners a little bit more about yourself and your journey.

Dan Varroney: Sure, absolutely. Well, I've had a remarkable career starting out in the trade association universe for almost three decades and 23 years of that career was with the national association of manufacturers. It was an absolute joy to work with small-medium and large companies on issues that help shape a favorable economic environment for all those companies and all those manufacturers. I left about oh, 16 or 17 years ago, and in my final role, I was a senior manager on the senior management team. I ran the grassroots advocacy. The membership component and I helped the then CEO recruit a senior-level executives to the board of directors. Following that, I served as the first-time president and CEO of an association known as association for corporate growth. Following that, I went to work for Newt Gingrich, where I ran his American solutions, policy, and advocacy organization, also very fascinating work. 10 years ago, actually, in May, I decided to finally give into my entrepreneurial approach and to say, I'm going to open up a company.

Dan Varroney: What I wanted to do was to open a company that was going to be a strategic value. That would have a value imperative that represented the marketplace. After the great recession, I saw a number of significant changes happen. There were fewer people in the C-Suite decisions about whether or not to engage in outside activity would be based on the direct and immediate return to the bottom line. Is it helping us save money? Is it helping us make money? Is it shaping more favorable business environment and created a strong research component? That research component helped industry trade associations first realize and recognize the industries awake at night challenges. The long-term business outcomes that they wanted to achieve and understand how aligned or how connected they were with those challenges. From that, be able to build a strategic industry plan that leveraged the trade association as a strategic business unit. A strategic business unit that over the long-term could make the industry more durable and better position for growth in the marketplace.

Sarah Nicastro: Great. All right. One of the things I wanted to talk about is in the book, you talk about the fact that volatility isn't a new concept, but the immediacy of our awareness of it is. Let's talk a little bit about that and why it's so relevant.

Dan Varroney: That is an absolutely perfect way to start this conversation. When I started my association career in the 80s that like many of us, it was a talk radio or it was the newspaper. Cable news was just coming into being. Now there's Twitter and all of the other social media platforms. The minute something happens in one part of the world, we know about it immediately, and it has impact immediately. What that's done is it's created what I call an Era of Chronic Uncertainty. We never know when the next shoe is going to drop, but we're confident the next shoe is going to drop. For example, if you and I were to say, did either of us envision five years ago that there would be a military conflict in Ukraine, a global pandemic, runaway inflation, and on and on it goes. The answer here is we wouldn't have imagined it. Here's one thing we did know that when the global pandemic hit, we knew about it immediately. We know about everything immediately, and what that's done, Sarah, is that it's changed the way every business executive thinks.

Dan Varroney: We're all wired differently now, and we're wired differently because we know that when change happens, we know about it more quickly, and we have to respond far more quickly.

Sarah Nicastro: Do you perceive that awareness as a good thing or a bad thing?

Dan Varroney: I'm going to answer it this way. It is what it is. It is what it is. I think what it's done is, it has forced an evolution of leadership and communication skills. Good communication skills, soft communication skills are more important than ever. We have to be able to connect and communicate with one another. We have to be able to leverage those soft communication skills to build alliances and partnerships that will help us get through whatever challenges comes next. We're in a new era, and that era is a call to action for leaders who have soft skills. Who have strategic skills that can see five feet in front of them and 50,000 feet around the corner?

Sarah Nicastro: All right. Another thing that you talk about in the book is that those who do best are those who view change as an opportunity. That's something that I would say is a persistent theme in this podcast and the content we create. What I want to ask you is, do you have a sense of what shapes that perspective? What is key to the mindset that change is an opportunity, not something to be in opposition to?

Dan Varroney: Also, a great question. What's interesting, during the pandemic, I'd say the first six to 12 months, I had a number of conversations with executives who said, I'm looking forward to things going back to the way they were. That struck me as disconnected because this is the definition of a Black Swan event. This was intended to change. The way we look and the way we think and act and react about everything. Nothing would ever revert to what it was. I mean, look at it right now. I mean, look at how things have changed. There are 4 million quits in the job market in the month of February. There are over 11 million job openings. Some of the things that are driving that is it's forced people to reevaluate their lives. Some people said the way we're going to respond to what's happening in the world to chronic uncertainty is we're going to shift the way we see the world.

Dan Varroney: Others are embracing the opportunity and saying, this is the time to really put our foot on the accelerator and go all the way to the floor and say, we are really going to leverage this opportunity and that change. What I learned as I was writing the book is that those industries that saw it as an opportunity that built upon their partnerships seemed to fare better, and they had history of doing that. When I looked back so recent examples, I have the ability, as many do, to trace back to things like 9/11 or to the great recession. How to what extent did people say this was a horrible situation, but we rallied and saw this as an opportunity. Those who do, thrive. Those who don't. Don't do very well at all.

Sarah Nicastro: Yeah. It's a really interesting question. I mean, you can look at it by which industries embraced the opportunity best. You can look at it. Which companies, which individual leaders, but it's certainly inevitable. Resistance is futile. All right. The book is just discussing the need for and value of partnerships. One of the things you say that I really like is communities fair, better than individuals. Talk a little bit about what you mean by the community approach in this sense and why it's helpful particular early at the point we are today?

Dan Varroney: Because we're in an Era of Chronic Uncertainty, you can never have enough partnerships. Those partnerships give you a sense of perspective. They extend your reach. They give you a level of durability you wouldn't have had otherwise. What you find interesting, and I'm going to talk about the book in just a moment, but to give you a sense of it. What you might find interesting is that at the start of the pandemic, I started a brand new CEO group called the strategic guidance lab. These are 55 trade association CEOs from every possible industry, and we utilized this platform, meaning Zoom and other social platforms to stay connected to one another or telephone or whatever it was, but we found a way to stay connected. We built a community that said that we would rely upon each other. We would trust each other, and we would utilize it to learn from one another and share knowledge. It worked out exceedingly well.

Dan Varroney: Actually, it worked out, especially well for me because, at the start of the pandemic, I began to write my book, and I was able to leverage the community that I helped create to do that. What I found interesting in the five industries that I wrote about in my book. By the way, I looked at a number of different industries is first and foremost, these were industry leaders that said, we understand the value of company-to-company, strategic partnerships and now what we want to do is try a different iteration of that between an industry and a trade association. They did that because they learned from their own experiences in company-to-company partnerships that you can far leverage each other's strength and minimize and mitigate your own weaknesses. You can get to markets in places you're not currently in. You can leverage strength, talent, technology, and resources that you don't have. An example that would be in a strategic partnership. Again, I'll get to the case studies.

Dan Varroney: An example of what I mean is, look at Starbucks and Barnes & Noble. Starbucks is an experienced company. It's not a coffee company. It's based on building communities. Its motto is outside in, focused on the marketplace and creating a third place between work and home. Barnes & Noble is a book store. It's a bricks-and-mortar bookstore. What this partnership did is, it created an opportunity to bring the Starbucks experience into the Barnes & Noble bookstore. When we walk into the bookstore, it's the smell of fresh coffee brewing. It's baked goods, and it is a third place, but between work and home, it's very comforting. We can meet friends or family or neighbors there and have coffee, or we can go and get a book and sit and read a book or a newspaper or a magazine. What that's done is it's created a boon for Starbucks. They're able to sell even more coffee and further extend their brand.

Dan Varroney: Barnes & Noble has been able to extend its brand into Starbucks, and some more books attract more people into the bookstores. It ended up being a win-win. What I'll add to that point is this, that Barnes & Noble is one of the few remaining brick-and-mortar bookstores, so that's an example of a strategic partnership. When you look at an industry today and the challenges that they face not just domestically but globally, how can they build a strategic partnership with the trade association and position it as a strategic business unit?

Dan Varroney: What I detected in each of these case studies, I interviewed five or six business executives from these industries. Did a good bit of research on these industries is that they needed a strategic partnership to help shape the external environment on pre-competitive challenges and utilize that. Leverage it as an opportunity to also promote the industry, position the industry in respective marketplaces and make industries more durable for the long term. All five are powerful examples, but the deeper I get into it so for example, the recreational boating industry, because of its massive ecosystem so these communities are ecosystems. They're every, every, every entity in its value chain. It had a partnership through the National Marine Manufacturers with the recreational boating and fishing foundation.

Dan Varroney: At the shutdown, the industry literally went to their strategic partner, the National Marine Manufacturers Association, and said, "Hey, we need your help. We're all stuck inside. We can't go anywhere or do anything, but we know now from the Centers for Disease Control that we can go outside. We can enjoy the outdoors." The National Marine Manufacturers Association and the recreational boating and fishing foundation did a targeted digital promotion campaign. Interestingly enough, what the result was is that there were double-digit year-over-year sales growth because people just flock to the outside. They bought boats, and they engaged in outdoor recreation and boating. What was fascinating is, and I'll go back to an earlier data point. Leaders in the industry said they never expected to see that sales or top-line revenue growth after the end of the great recession. Because of this strategic partnership, they far exceeded that.

Sarah Nicastro: Yeah.

Dan Varroney: That's absolutely critical. Absolutely critical. Similar thing in the frozen food industry. Back in the day, it was French fries, burgers, and pizza. Now you can get Thai food, Mexican food, Chinese, you name it, frozen Italian food. What their strategic partner organization did, the American Frozen Food Institute is they partnered with another industry organization called the Food Marketing Institute. They generated data and research and it's called the Power of Frozen campaign. They literally identify among consumers through consumer companies called IRI to identify what types of frozen foods that consumers are looking to buy. They share that data with the retail stores. That was especially meaningful at the start of the pandemic because everybody had to stay home. As we all know, we all had to work, so if you're a single parent, a working couple, you needed to provide three meals a day at home, and frozen food was a healthy, healthy, tasteful, alternative double-digit sales as a result of that effort.

Dan Varroney: Strategic partnerships absolutely matter. Trade associations are evolving into strategic business units for the industry. They do have the ability to shape the external environment on environmental issues, tax issues, trade issues, and they're making a difference.

Sarah Nicastro: Can you share another example or two of the case studies that you reference in the book?

Dan Varroney: Sure, absolutely happy to do that. Who doesn't like baked goods? Who doesn't like baked goods?

Sarah Nicastro: Not me. I mean, meaning I do like them. I try not to eat too many of them, but I definitely like them.

Dan Varroney: Understand. Chapter four is the chapter on the baking industry. As we think about the baking industry, the baking industry has always had a number of challenges. I want to share their challenges and their strategic partnership from the opportunity of the pandemic. At shutdown, the Centers for Disease Control and the Food and Drug Administration said, lockdown, everybody, go home and stay there. This is a dangerous disease. Except they forgot something. They forgot that we still needed to eat. The American Bakers Association through its own ecosystem comprised of organizations of the Food and Beverage Industry Alliance. This is absolutely fascinating, by the way. This is an ecosystem that starts from the farm and goes all the way to the fork. Leaders of the Food and Beverage Industry Alliance convened on a Zoom platform, and they said so they forgot we still need to eat.

Dan Varroney: They leveraged all of their contacts. They got the CDC and the FDA connected on media platforms similar to this, and they said, so we still need to eat. We'd like to work with you to develop worker safety protocols all the way and up to the logistic of delivering the food into the retail stores. They were successful, and as a result, we were all able to eat during those months of quarantine and shutdown. It's a very, very powerful story but a strong reminder of the importance of strategic partnerships and why they're important in an Era of Chronic Uncertainty.

Dan Varroney: Just another example from that. There's a new CEO of a multi-billion dollar company who had just gone on the board of the American Bakers Association and not a believer, so it shut down. He called up the CEO of the American Bakers Association, whose name is Rob Mackey, and said, "Hey," at nine o'clock at night and said, "The state of Michigan is going to shut down my company tomorrow, and I need your help." What would happen was the American Bakers Association and the food and beverage industry Alliance was able to get the industry designated as critical infrastructure. That was part of what needed to be done to keep the industry open and keep the American people eating. They got them to complete the paperwork, and they were able to stay open in Michigan. Same thing happened in the State of Ohio, and low and behold. They were able to stay open in the State of Ohio.

Sarah Nicastro: When we think about the power of these partnerships, as it relates specifically to supply chain uncertainty, how can it help safeguard organizations in that way?

Dan Varroney: I think all of your questions have been spot on, but you nailed that one, and I want to share why. There's this notion that the cracks in the supply chain just happened, and what I've learned through some research and getting ready to do additional research and write a white paper. Here's what I'm learning as I go through this. There were cracks in the supply chain before the pandemic. Here's what I really learned is that we were in a just-in-time manufacturing mode when we really need to be in a just-in-case mode. They were no fail safes. There are no alternatives. No fail-safes and no alternatives. Then the other thing is that when I look at how solutions are being developed, they're being developed on a company by company basis, and with a challenge of this magnitude, it needs to be industry-based solutions.

Dan Varroney: The entire higher supply chain must and should come to the table. I'm defining this part of the conversation as a serious call to action. They must come to the table through their industry trade association and focus on the pre-competitive solutions that will address the cracks in the supply chain that can develop. Fail-safe alternatives that can make sure that five or 10 years from now, we're not back in the same place. I swim in a swimming pool, a couple of miles from my office, and one of the pools, the heater broke, and they need panel circuits to fix it, circuit boards. Because of the supply chain issues, it could be weeks. When you think about that in this day and age, it sounds ridiculous because it is, because it is. When we talk about reassuring or near reassuring, there is enormous leverage by bringing the supply chains together. It can be created through the trade association. The trade association can be the leader in the convener.

Dan Varroney: It can be the neutral integrator to bring all parties together and focus on pre-competitive solutions. Whether they be legislative, whether they be regulatory, whether they be executive action-focused, whether they be state-focused, community-focused, whatever they are, but the time is now to get this going. I absolutely respect and appreciate the administration coming up with additional funding to support poor expansion and so on. What we're looking for is collaboration that leads to innovation, and the innovation can be achieved by bringing these communities together, bring these communities together. A very visible manifestation of that are the mRNA vaccines. Look at the collaboration, the private-public partnership that came together, and look at what was achieved as a result of that. We are looking for massive collaboration through a neutral convener, and that would be an industry trade association where all elements of the supply chain come together and say, what innovation can we develop and what pre-competitive solutions do we need to develop and implement.

Sarah Nicastro: Explain what you mean by pre-competitive solutions.

Dan Varroney: Sure. We live in a country that has laws, and these laws are absolutely important and they're all about remaining competitive and no one can take advantage of anyone else, and they're about antitrust. At trade associations, they're attorneys in every room at every meeting. They read antitrust statement that says we can't discuss pricing. We can't discuss competition, and nobody talks about their customers or anything in those conversations. Pre-competitive is as follows. Think of things around environmental regulations, things around workforce or workplace regulations. An example of a pre-competitive issue would be, so we know there's a trucker challenge. There's an hours of service regulation that limits the number of hours that a truck driver can drive their vehicle. Doing things like waving that is a pre-competitive solution. Coming up with ways to mitigate environmental challenges or temporarily postpone regulations as we build bigger solutions would be pre-competitive solutions. Tax incentives to encourage additional investment in innovation, pre-competitive solution.

Sarah Nicastro: Okay.

Dan Varroney: Tax incentives to allow expensing and write-off of purchases of new equipment for those industries that want to onshore is a pre-competitive solution.

Sarah Nicastro: All right. We're talking about the value of these strategic partnerships, but there has to be some that don't go as planned. What are the characteristics that a company should be considering if it wants to look at strategically partnering to achieve some of the benefits that you've talked about?

Dan Varroney: In the book, I write about the characteristics and traits of successful strategic partnerships. Clearly, we don't break any new ground, but you want to enter into a partnership where you share the same values. There's a level of business acumen on both sides. You both understand what you need to do. You know that you need to act in an informed way and not at the drop of a hat that you're collaborative. In addition to that, you're setting up terms and conditions that you've got governance that says this is the way we're going to conduct the strategic partnership. These are the metrics and key performance indicators that we're going to utilize to understand how effective we are or we aren't.

Dan Varroney: Partnerships do and will fail when people don't come to terms on the front end. How are we going to work together? How are we going to communicate? How are we going to judge our effectiveness and our success? Your chances of being successful are far greater if you define those terms upfront and you understand that you really see things in a similar way, not exactly the same way. Because you want to bring skillsets to the table that you don't have, and they have and vice versa, but defining the terms and conditions of what it's going to be and how it's going to work.

Sarah Nicastro: That makes sense. All right. Dan, thinking about what we've talked about so far and the call to action, as you said, that you want to lead people with. What other thoughts or advice would you want to share?

Dan Varroney: I understand, I absolutely understand, and I'm very sympathetic to the fear and all the challenges, but this is the best possible time to see this is an opportunity to transform and evolve and take full advantage of what's next. Customers in every industry, users and end-users, and the end-users or the end-user are seeing the world very differently. Coming together through these strategic partnerships to understand what that is and to help the end-user and the end-user end user be successful will help position every industry to be more durable and more successful over the long term. We need to be thinking about when the next shoe is going to drop and being ready for it. These strategic partnerships will help achieve that, but now is the time to transform. Now is the time to grab the baton of the future and go for it.

Sarah Nicastro: Good. Let listeners know where they can find the book.

Dan Varroney: Absolutely. You can find it at potomacore.com. There are links to it. You can order it on amazon.com. It's Reimagining Industry Growth. You can also find it at Barnes & Noble online and in the store. You can find it at Books-A-Million, and it's available immediately.

Sarah Nicastro: All right. Good. Everyone check out the book, and Dan, thank you so much for coming on and sharing. It was great talking with you. I appreciate your insights.

Dan Varroney: Likewise, this was a great conversation. Thank you for the opportunity.

Sarah Nicastro: Absolutely. 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 @ ifs.com as always. Thank you for listening.

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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.

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