Sarah: Welcome to The Future of Field Service podcast. I’m your host, Sarah Nicastro. Today, we are going to be taking a real world look at what slows servitization progress. Servitization has been a buzzword in the industry for the last few years, and we’re actually going to talk about why it’s a buzzword, and kind of what it really means. Since COVID has hit, we’ve had a lot of discussions around kind of speeding the journey to servitization. As customer demands are evolving, there’s even an increased need just in the last few months to really move to outcomes-based service models and to servitize manufacturing businesses, and really evolve with those customer needs, but it is a journey that seems to be fraught with challenges and takes quite a bit of time.
Sarah: And so, I invited our guest on today. He has a ton of industry expertise and experience and some really good perspectives on what some of the things are, the real world look, at how servitization progress gets slowed down. So, I’m excited to welcome back to the Future of Field Service podcast today, Greg Parker. Greg, thank you so much for being here.
Greg: Thank you, Sarah. It’s great to be here.
Sarah: Awesome. So, Greg, like I said, you have a lot of experience in service, so why don’t you tell our listeners a bit about your history in the industry and what you’ve accomplished in this space.
Greg: Sure. It really all started about almost 25 years ago, but it was in manufacturing at the time, and engineering, and that’s really where I got started off for the first five or six years. I made the leap into the 3D world of service and sales in about 2004. So, for the past 15 to 16 years, I’ve been working in a services-type capacity, in really all aspects of it. In the beginning, it was improving service operations, improving overall operations in general management, and then it kind of carried into sales engineering, then over directly into service operations; and then for three years or so, customer care, which is customer service, another aspect of service, as well as technical training; and then the last three to five years has been with portfolio management over our service offerings.
Greg: And so, really, it’s been a pretty broad aspect of the services world, but also been playing into the manufacturing and engineering space, as well.
Sarah: So you’ve witnessed a lot of this evolution firsthand, and I know you have some different experiences with the different companies that you’ve been with, in kind of leading the charge on the path to outcomes-based service to servitization, and so that’s what gives you the perspective and experience that I think will lend to a great discussion today.
Sarah: Now you most recently were with Thermo King, and I know you also have been at Trane and Ingersoll Rand. Am I missing any?
Greg: I was with Hussmann for the first 13 years of my career.
Greg: Yep, and then the next 10 years after Hussmann was with Trane Commercial, and then the last 18 months was with Thermo King.
Sarah: Okay, cool. All right, excellent. So let’s start by talking about why it is that companies need to embrace this evolution towards servitization or towards outcomes-based service, because I think that one of the very first steps in kind of preventing that progress from being too slow is the simple recognition that it is the future of service and it is a necessary evolution. So, what are some of the reasons why companies need to embrace this change?
Greg: Sure. Of course, I think that that depends on where you stand and who your customers are in your market, but generally speaking, we know that customers always have similar unmet needs. If you are simply manufacturing a product, and when that product leaves the factory, you’re done, then the customer has a lot more needs than just obtaining that product from you. They’re going to find a way to solve their problems, and the question will be, are you going to be a solutions provider for your customers, or will someone else be?
Greg: I think, in particular, if you are an OEM, you have a tremendous advantage to get into the services world, because you can really pull all the pieces of the puzzle together for your customers. Even if you’re not, it’s a great opportunity to provide those solutions, hit those unmet needs for your customer base, and it’s really an opportunity to explore what do your customers really want, what do they need, and then prioritize how you can provide that solution to them. That’s really the first aspect.
Greg: I’m going to say that there’s another one. There’s a second one, which is really centered around the financial piece. Consider downturns in the market. How about the times that we are, as a country, going through right now? In a downturn in the market, with many factories having to slow or even shut down, that dramatically impacts the revenue for your business, for your company, and services can be a more steady stream. Are there ups and downs? Sure, but either you will have the opportunity to offset those ups and downs, or it at least will be a level of stability to your business that you do not have today, and so, financially, it’s also a great move for a business.
Sarah: Yeah, very good, and I think that there’s kind of two different angles from which to look at what you just said. There’s the areas in which it presents a significant opportunity for the business, and a path to growth and a path to different revenue streams, and then there’s the other side of it, which is where it is a threat to your business to not go down this path, right?
Sarah: So I think both sides of those coin are really important, so that’s good.
Sarah: I think the other challenge I think of right away is just with the terms themselves, servitization or outcomes-based service. I think, generally speaking, it’s a term that signifies a universal and foundational shift in service, as service becoming a strategic differentiator and a path to revenue for organizations, but as you mentioned, that looks very different from business to business. So, I think one of the areas where companies get off on the wrong foot… once they’ve accepted that this is the path forward, I think there can be some real issues around clarity in terms of what the definition of servitization is, specifically for them.
Sarah: So, what thoughts or advice do you have on, within an organization, as you recognize the need to go down this path, clearly defining what that opportunity looks like for an individual business?
Greg: Sure. I think the first thing that I, in particular, think about is, don’t get so hung up on the word servitization, and you just really alluded to that, Sarah. It’s one word with a whole lot of syllables, right? If you haven’t heard it before, you probably would think that it’s some rocket science, but really, it isn’t. It is simply getting on that journey to provide service to your customers, and then, what does that journey look like? Well, that really depends.
Greg: So, when you brought up, it may look different from business to business, my thoughts there is, concentrate on the market that you are in. Understand your customers, your customers’ needs, and then identify what would be the best opportunity for you to begin that journey? Baby steps are totally okay, and a baby step could be simply, let’s offer extended warranties, or let’s offer repair services, but you also want to ensure that you just don’t remain at those baby steps.
Greg: I would encourage more like a long-range plan. So, what would year one look like? What would the first three months look like, for that matter? But then, what does three years out look like? We could say maybe five years, but the world certainly changes a whole lot in five years, so most of the time, I would encourage just get to three years, and then go from there and you’re probably going to be in good shape.
Greg: But I want to bring all this back to the fact that I could say, hey, do this or do that for any given company or any given advice, but it really depends on what market you’re playing in and your customer needs. My best advice would be understand your existing customers’ needs, but also understand your market, and there’s many ways of doing that. I mean, talk to your customers. You could bring someone else in to help you facilitate that through a third party, if need be, or you can simply go old school and write it down on a sheet of paper, and then start to analyze it for yourself, and then bring others in, vet those results; then, begin doing like a Pareto that would say, “Hey, what are the biggest opportunities?”
Greg: Lastly, let’s make sure that you don’t forget that you’re going to have some probably internal barriers, as well as the market may say, “Oh, there’s a best opportunity for me, and this is the biggest opportunity that my customers need,” and maybe that looks like, “Hey, I’ve got to provide an outcome-based service or a telematics or that sort of thing,” but internally, you’re not ready for that. Do you have the talent, the skills, the investment?
Greg: So, don’t get intimidated by that, either. Just draw a box around that, put it over to the side, and say, “Okay, at some point, we may or may not be ready for something like that, but we can still start our journey.” So, identify what has to happen internally for your company, and how you can create that best match to meet your customers’ unmet needs.
Sarah: Yeah. You and I were on a happy hour last week, and that’s actually kind of what initiated the idea of jumping on and having this conversation for a podcast, but Robin Butler was on with us, and I liked… what he said is, a lot of times, companies get caught up in the plan and lose sight of the outcomes, right?
Sarah: So it’s getting clear on, what does this journey look like for us, and what are some of the key outcomes that we want to accomplish, but then being very flexible in the plan for getting there, because that plan is going to evolve. To your point, it could be you need new talent or different talent; you need new technology, different technology; you need different processes; you need different sales and marketing expertise. I mean, there’s a lot of layers that come into this, and I think those layers can seem very daunting, but you need to set those objectives and then just be flexible in how you begin achieving them.
Sarah: I think that there’s… to me, I’ve been writing about this space and interviewing service leaders for about 14 years, right? And so, I think that we’ve reached a general point of consensus among the people I speak with within the industry that this evolution is necessary. Whether you’re a strictly service business that is migrating from break/fix work to more of an outcomes-based model, or whether you’re a manufacturer that is looking for your path to being more of a solution provider, I think it’s a journey that everyone has pretty much signed up for at this point.
Sarah: But where I see a lot of kind of disconnect is… I guess I would think of a few points. I mean, there’s the way that the technology providers in this space tend to talk about this journey, which is that it is the future, so let’s do it, right? Let’s get out there and make it happen.
Sarah: It’s more slow moving than I think anyone would expect, whether that’s the people providing the technology or the companies themselves. I think anyone would acknowledge that it’s not an easy transformation because it is very multi-layered, as we mentioned. You talk about, you need to understand what it is your customers are going to be willing to pay for, and then you need to start re-engineering your business in a way that will allow you to provide that from a product perspective, from a process perspective, from a technology perspective, from a sales and marketing perspective, from a service perspective.
Sarah: When you really start digging into what a change like this means, it becomes pretty easy to understand why it isn’t something that happens rapidly within the businesses. I think right now we’re in this weird sort of limbo between a general consensus of understanding this is the path forward, but a lot of lag in taking that recognition and turning it into actual, tangible progress, right?
Sarah: So, what are your thoughts on that?
Greg: Yeah, that’s a really great question, Sarah, and earlier in your comments, it made me think of… I think, at least my philosophy is, I’m a big believer in doing experiments. I totally agree that don’t lose sight of the plan, but also don’t just go with the plan. The experiments are going to be critical so that you know how to adjust, and it’s okay to do experiments, and it’s okay to fail at those experiments, as long as everybody is under the context that we’re going to try something out, and that’s the spirit of innovation. So, that’s the first thing that I would say is, don’t be afraid to go find those quick wins and to do those experiments.
Greg: But in terms of the lag and what may cause… hey, everybody gets excited, and then all of the sudden, things get stale, for whatever reason… I think there’s a lot of factors into that, and as I have, I guess, experienced that in both a mature service industry and a relatively immature service industry from both angles, I would say that, be careful to not do copy/paste. This is really a message to a leader, or those that are trying to spearhead or sponsor the effort.
Greg: If you think that you can go benchmark a company, and then just do everything that that company did, and say, “Well, this should apply to me. It worked for them,” that’s probably going to be a dangerous strategy. I do think that it’s really important to do benchmarking. I always do benchmarking, but you’ll have to take that into context. I’ve seen, I’ve at least witnessed, before where a company will take and say, “Oh, well, this company did it; they’re sort of in the same space we are. They did it his way. Let’s just do it that way.” What happens is you begin to lose sight of your customers, your specific market niche, and your needs, and what your own abilities are that I alluded to earlier, and when you do that, people get frustrated.
Greg: You may not be organizationally set up to do that. You might not have the talents, nor the technology to set up to do all of those things that the benchmark company that you just looked at did; and so, that typically brings forth pause, and then when pause comes forth, then people begin to say, “Well, gee, I don’t know if this is actually going to work or not,” and then the economy gets bad and you say, “Well, gee, I can’t place my bets into servitization anymore. We’re going to have to double down on our core business and make sure that we hone in on that.”
Greg: And so, that’s at least been some of the things that I’ve seen across the industry, and the second piece of that really boils down into leadership, too. You have to think about, do I have the right leadership? Is there a steady hand in all this? These things play together, and you don’t have to have all the best industry experts to do it, so I’m not really saying that. I’m simply saying that let’s make sure that your leaders understand enough about that path and that journey of servitization that they can support that, that they can be the ones that can be that foundation, because if the foundation cracks, then the house falls, so you have to be careful about that, too.
Sarah: Yeah. Okay, I want to go back to a couple of those points.
Sarah: First of all, I think the point you brought up about not being able to mimic anyone else’s success is a really important point, because in this industry, if you look at what I do, what Future of Field Service is intended to do, it is to share best practices. It is to share lessons learned and road maps and paths to success and all of that, and I think that is important, but to your point, on this journey, in particular, it is very tied to the two points you brought up: what exactly are the services and outcomes that your customers are willing to pay a premium for, and what are your unique characteristics and unique value proposition that you can bring to the market, and where do those intersect, right?
Sarah: To your point, that is not going to look the same for any one business, for any one industry. So, it is very much a unique path and a unique journey; so you can look to others for inspiration and for certain best practices and ideas, but that will never be a replacement for any one company doing the work of finding that intersection themselves. So, I think that is a very good and a very important point.
Sarah: The other thing you brought up in terms of leadership that I think is another really good piece of advice is, I think to really make progress on this journey, I think you need both visionaries… so, I think you need people that understand why this path is so important and can create a vision for how to bring a business to this endpoint… but I think you also need some strong operational expertise, because I think another area where this gets really slowed down is… if you think about doing the work of determining that intersection between customer demand and company expertise… so, you do that, and you have this vision for where the company can go and how it can evolve into servitization, but there’s a lot of muck that you can get bogged down in, in wherever you are; whether it’s A to Z or F to Z, or however long you need to go to reach that vision, there’s a lot of real process and operations-related work that needs to be done, and in my experience, I don’t think that those visionaries are often really good at the execution work, right?
Sarah: And so, you need to marry those two pieces of talent, I think, to ultimately achieve success. You need visionaries that can really think outside of the box and be innovative and do some of that work to determine where you are headed, but then you need people that can turn that into process and strategy and a plan for how you can get there, so I think that’s another really important point.
Sarah: The third thing you mentioned that I wanted to go back to, and see if maybe you could talk through an example of, is the idea of experimentation. You simultaneously need to be working kind of your three year plan… what’s the vision and where do we want to go… but you need to be getting those small wins along the way to kind of build that momentum. So, I don’t know if you can think of an example to share of, what would an experiment on this path… what’s an example of what that could look like?
Greg: Sure. I should probably give a couple. So, one would be more operationally, because a lot of times, when we think about service, we think about the experiments that we need to do on the day-to-day or to repair a break/fix, and then the other would be more around our offerings. But one example would be, in one of my past roles, we had a number of locations that were really afraid of the idea of doing triage with express service, so in some ways, that is a service offering. It wasn’t positioned as a service agreement, so to speak, but just a way of doing business.
Greg: The thing about that is, when you think about that, it really changes the flow of the operation, and so changing the flow of the operation gets kind of scary when you’ve been doing something for, who knows, five, 10, 25 years the same way. One of the success points that we’ve seen in the past is, why not just experiment with introducing that? It doesn’t have to be full-blown out of the gate. Perhaps you can try it from the hours of 10:00 to 2:00, and therefore, it might be a lighter part of the day, and begin getting your service coordinators, your folks that are handling that flow, accustomed to it. Then, where you see the wins, make sure that you highlight those wins. Track your progress. Have some form of measurement that would say, did I do better today versus yesterday? And so, that’s one type of experiment. I mean, there’s many that could be out there.
Greg: In terms of service offerings, I would say that, consider a company… and this is probably more on the immature side… that has a service agreement business, and maybe that service agreement is a preventative maintenance; so, you are doing preventative maintenance once a quarter, and you have this great idea that on my journey, on my road map, I want to provide more full comprehensive services and comprehensive service solutions. Maybe it’s a monthly type of service or bill that you’re doing for customers.
Greg: Again, you don’t necessarily have to jump completely off into the pool and do that right away. There are ways to where you can evolve that preventative maintenance service agreement into more of a comprehensive-type service agreement just by adding a few features and functions, maybe changing the way that the billing is; instead of doing it once a quarter, maybe that’s the first to once a month. But perhaps you may want to be looking at, “Well, for preventative maintenance, I want to do more remote services.”
Greg: Again, this is for those companies that may be a bit more mature, and one experiment there is, why do I have to do a quarterly inspection? Why not just do the inspection when it needs it, or when the sensors say that it needs it? Why replace a filter that really hasn’t become dirty in three months? So, those are some experiments that you can do with your customers, and make it your own.
Greg: So, that would be a bit of advice. Of course, I’d give some examples of the industries that I’ve worked in, but brainstorm to where you can do your own experiences.
Sarah: Yeah. Very good. I think it could be helpful, maybe, to just talk through… again, a very generic example, but of servitization on a maturity curve, because I think it can be unclear for some, so just a couple points, depending on the business.
Sarah: So, you begin as a product manufacturer; then, you may shift to the addition of warranties and after-market service; then, you may add preventative maintenance; then, you may migrate to more of an SLA and outcomes-based model, and then I think, the kind of final progression that we see in terms of servitization is to offer product as a service, or to your point, be seen as more of a solution provider than a product manufacturer.
Sarah: So, that’s kind of just one example of what this would look like kind of on the evolution from start to “finish.” Are there certain areas within that maturity curve that you think companies typically get more bogged down in than others?
Greg: Yeah, that’s a great question. I think there’s two areas, Sarah. One is, it’s quite a bit of a change when you are going from the break/fix to a type of service agreement, whether that’s a preventative maintenance type of agreement or a more full-service agreement. That change is a change in philosophy. It is a scary thing for some people to say, “Well, gee, maybe I won’t make as much money,” or, “Perhaps I have to change the way that I’m billing in the back office for something like that,” or, “How do I market myself for that sort of thing?”
Greg: So, there’s a bit of sometimes fear involved in making that leap, and that’s usually where we see the biggest hump to get through, and so, in my experience, again, it’s been bringing them back to, “Let’s try some things out. Let’s try to do it. Don’t be scared to try. If you have fears, let’s write them down and let’s see how we can draw a box around those fears and minimize your risk, but let’s move the ball forward.” So, that’s one area; so, I think it’s moving from that break/fix to more of a service agreement type, or step, I would say, in a maturity curve.
Greg: The second piece is when you are trying to move up the ladder to outcome-based service, or even product as a service, and I think that these two can play together in terms of why there would be a pause or maybe a struggle there. The struggle is going to be because a lot of times, customers are not used to buying your services in that way. So if you’re going to outcome-based service, you have to convince a customer to purchase it from you, and sometimes doing that would require a higher level of stakeholder in your customer’s organization. So, a CEO or a Director of Operations may totally get it and may say, “You know what? That makes a ton of sense for me. I’m going to increase my up time of my equipment if I do this. My risk is minimized.”
Greg: But if you’re having that same conversation, if historically, you’ve been selling to maybe a middle management-type layer… great folks, but they don’t have the same priorities or have the same purchasing criteria that perhaps someone higher in the organization may be. So, you really have to target that strategic account and say, “How am I going to propose an outcome-based service appropriately, such that I am ensuring that my customers are getting the win that they deserve, and that I know that I can provide?” Because if you don’t, you’re going to have folks in the middle saying, “Hmm, not for me. I don’t even know how to buy that from you.”
Greg: So, that’s one thing that I’ve experienced, has been a struggling point for businesses.
Sarah: Yeah, that’s a really good point, and it makes me think, if you look back through the maturity curve, and sort of pinpoint different aspects of that evolution, you can begin to see where different layers of the business come into play. I rambled off earlier some of the different aspects of the business that this shift impacts, from R&D and product to operations, to IT, to sales and marketing. So, to your point, it’s also something that’s another, I guess, barrier or common challenge that comes up that we didn’t touch on earlier, which is… if you’re a service function within a business that’s trying to servitize without the buy-in of the broader business, it’s never going to work, you know what I mean?
Sarah: It’s not something you can do in a silo. It needs to be a cohesive, strategic decision, and that’s because, to your point, it impacts so many different areas of the business, and you really have to have that alignment in order to progress through that maturity curve.
Sarah: I alluded to this in the beginning, but one of the things that I’ve been seeing in the conversations I’ve had since COVID came into play is, how this crisis can really speed companies’ paths to servitization, and I think that’s a result of how customer demands have changed in the last couple of months. I’ve talked with a number of different businesses that have said, quite frankly, right now, their customers will not make cap-ex expenditures; they want to maximize the lifetime of their existing equipment, because they don’t want to make new investments right now. They are putting a lot of big projects on hold, big investments on hold, and so, there’s actually been quite an opportunity for businesses to come in on the service side and be creative about how to servitize and how to offer new ways for companies to accomplish those goals.
Sarah: We’ve seen, really, some significant growth there, and I think that will continue. I think it’s kind of a way to spur these companies forth in that journey a bit, to maybe the next step or two, to really meet demands that have changed quite significantly over the last couple of months, and I was just curious to get your thoughts on that.
Greg: Yeah, so I have a couple thoughts on that. In my experience with service, it’s a small fraction of the investment that you would have to put forth to get either equal or greater results from, say, investing in designing a new piece of equipment. So, there are many things that you can do for $10,000, $20,000 that can get you a hundred to a half million. That’s been my experience time and time again, and so, I think with the environment that’s changed, you’re exactly right. Leaders should explore that, because again, you could take just a small investment and produce great results.
Greg: Sometimes those investments are in the form of IT or software. Sometimes they’re in the form of just getting the support that’s needed to push the ball across the goal line, but they’re usually not dramatic. They’re not dramatic expenses.
Greg: I think the one thing that I have seen over the past three or four months since we’ve been going through this crisis is, people are now willing to try things, because they have to. Consider we’re doing this today. We did the last one in person. We would always rather do it in person, but we have found ourselves some ways to make this work… through videos, through Skype… and yes, other people have done it before, but the majority of people in life have not, and it’s forced the equation a bit.
Greg: How does this apply to field service? Well, think about technical support. Think about all the things that some people like me, like you, have been talking about for almost 10 years, with augmented reality, with artificial intelligence, with being able to provide support for technicians. How about remote services, intelligent services? All of those things require the types of technology that today, we are… I would say, in a more mass scale, people are beginning to use.
Greg: And so, that sometimes forces people to get a bit more comfortable with things. I would never have preferred it to have occurred this way, but certainly, as a result of the economy being down with the COVID situation, it has required some people to work differently, and I know people that have came to the office every day for many, many years, and the day that the office shut down and they had to work from home, they were really just lost. It required a lot of setup, it required a re-thinking of how am I going to work, and I read an article that you put out not too long ago about that very situation.
Greg: These are some things that we can apply into the soup of, how do we do service and make that more of a reality? So, I do think that it has accelerated the process a bit, and we probably won’t even know it for a few more months to come, but as we look back, maybe a year from now, and we would say, “You know what? Because I did that Skype meeting or Teams meeting or Zoom meeting, or now that I had the opportunity to experiment with remote services, my texts are a bit safer. I can provide real-time support to them.” Those are the type of things that I think may become an outcome of this unfortunate situation that we’re in.
Sarah: Yeah. Yeah, I think service organizations are in a unique situation right now where both customers are more willing to do things differently as a result of what’s happened, and so are employees, right?
Sarah: And so, it is a time that I think there’s a window of opportunity to make some significant progress with change more quickly or more easily than you could have six or 12 months ago. So, it will be interesting to look back and see.
Sarah: Last question for today: just any other thoughts or comments or advice you have on key aspects of what it takes to achieve servitization success?
Greg: Yeah, so as I reflect upon that, number one is look at your customers’ unmet needs. Make sure that you understand what it is in your market that people are thirsty for. What is it that… the problems that they need to be solved? Do you have the ability to solve them, and if you don’t, what type of things would you have to do? Map those out. You don’t have to shoot for the moon in the beginning, so map it out. What would be some easy wins, a targeted approach, and consider it like climbing a set of stairs; so I’ve got to take step one and then step two… whatever that may be for you, but it needs to start in your market with your customers and make it your own.
Greg: I do encourage benchmarking, because you can learn a lot from that… best practices… but again, come back to making it your own. That would be certainly one thing, and I think that also keep in mind that sometimes this shift can be significant, so I think that that really depends upon your approach, but it is a significant change, but you don’t have to make it to where it’s unfathomable. You can make it where it’s obviously something that you can do right away.
Greg: I would also not get discouraged with all of the hype around, you have to have certain IT solutions, you have to have all the latest and greatest stuff that’s out there. Those are certainly important enablers, but you have to apply them for where you are on your journey. So if you’re just getting started, if you’re just a product manufacturer, and you want to take that first leap, you don’t have to go spend millions of dollars in IT. Work your process out, make sure that you can do some things and try some things, and then understand where those things come along the journey. It’s where to play and how to win, and how do I get there? Those are the top things that I would say upfront.
Greg: I would put a bow on that, and I would say whatever you do, track your progress. It’s important for you and for your people and your customers to see the wins, and if you’re not tracking the way that you should, make those adjustments. That’s really important. Identify your own KPIs. Make it visual. Put it on a board. Put it on a computer screen for people to see. Know where you’re winning, and know what adjustments you need to make to ensure that you are on a winning path.
Sarah: Yeah. That’s really good advice. I appreciate that, Greg. I always enjoy speaking with you, and I really appreciate you joining us today and spending some more time with us, so thank you again.
Greg: Thank you. It’s been great.
Sarah: You can check out more of our content on servitization, outcomes-based service, how companies are managing COVID-19, and much more by visiting us at www.futureoffieldservice.com. You can also find us on LinkedIn and Twitter, @thefutureoffs.
Sarah: The Future of Field Service podcast is published in partnership with IFS. You can learn more about IFS Service Management Solutions by visiting www.ifs.com. As always, thank you for listening.