Sarah Nicastro: Welcome to the Future of Field Service podcast. I’m your host, Sarah Nicastro. Today, I’m excited to welcome to the podcast, Tim Baines of Aston Business School to discuss the Advanced Services Transformation. We all know that organizations are somewhere on the journey to Servitization and outcomes-based service, and we do a lot of coverage on those topics. Tim Baines is the Professor of Operations Strategy and the Executive Director of the Advanced Services Group at Aston Business School. And they do a lot of work and research on these topics that I think our listeners today are going to find incredibly valuable. Tim, thank you so much for being with us today. I appreciate you joining the podcast.
Sarah Nicastro: So, before we dig into some of the insights that you have with your research, can you tell our listeners a bit about yourself and the work that you do with the Advanced Services Group at Aston?
Tim Baines: So, my work is all about the Servitization of manufacturing. It’s all about helping companies who are coming from traditional product base to compete through services and particularly advanced services. And we use the term advanced services to really represent a cluster of high value, disruptive business models that manufacturers can adopt to help them compete inside the marketplace. My work in manufacturing goes back to 25 years. I started my career working as a technician apprenticeship inside manufacturing industry, and then moved slowly but surely through business and then into academia. So, all my work has been about manufacturing operations. Our research center was created specifically to really push forward the agenda of Servitization, both in the UK and internationally.
Tim Baines: I’d like to think of us very much as like the center of gravity for both the academic and the industrial community coming together to debate, understand Servitization and move forward with this innovation.
Sarah Nicastro: That’s very cool. So, you mentioned you’ve been in the manufacturing space for about 25 years. I’ve been in this role or a similar role of covering this industry for about 13. I came into this evolution about midway through your experiences, but it’s been very interesting for me interviewing service leaders and manufacturing business leaders day in and day out. How this has evolved, and what these opportunities are, and really how far we’ve come with a common understanding of why this trend is so important and how relevant it is to the future of these businesses. And then of course, as we’ll talk through today, really getting into the complexity of such change. And coming up with the plan for a successful journey.
Sarah Nicastro: So, I’m really interested to hear your perspectives today. So, I’ve had a look at some of the research you’ve done on Servitization in the Advanced Services Group. And as I mentioned to you before we kick this off, I think it’s excellent. I think it’s clear that it comes from a deep understanding of the industry, and it’s really quite easy to understand which I think makes it very helpful for companies in charting their own path. So one of the pieces of content that I had a look at is, what the Advanced Services Group has identified as four forces behind Servitization, two of those internal and two external. So I’m hoping to start, you can talk with us about those four forces and give us an overview of what they are.
Tim Baines: Sarah, if I can, I’ll just take you a bit of a step back first of all, just to comment upon some of the introduction you gave to Servitization. And if I may, almost explain why it’s such an important phenomena for manufacturing businesses. And the story goes like this, that, as a university professor, as a senior professor in a top university in the UK, one of our roles is to be almost like an authority and a custodian of this knowledge upon a phenomenon. And the phenomenon that’s interested me all the way through my career, is this manufacturing operations, on what does good look like? And I think it’s very interesting when you think about it from the perspective of an academic. Of course, we come across a lot of very senior business leaders that are engaged with business transformation, and they’re in the trenches, like they’re bringing about this change.
Tim Baines: As a professor, quite often you have the luxury of taking a step back and reflecting upon the trajectory industry as followed over hundreds of years. And it’s the very popular term and quite the idea of a paradigm for manufacturing. And we have coming out of Germany Industry 4.0 as a paradigm. And it might be shocking to some people to understand that not all professors subscribe to Industry 4.0 as a Fourth Paradigm for manufacturing. This is a very technological view of the evolution of industry. And there is another view, which is almost like the social changes which are taking place inside industry. It’s right behind what you’re seeing with Servitization.
Tim Baines: And the story goes, something like this, that, if you go back to the very birthplace of what we recognize as an irregular manufacturing now. You go back, you know what the concept of a factory, what was the world’s first factory that we recognize? It was actually, Boulton and Watt’s manufacturing in Birmingham, UK manufacturing steam engines. And then you have Henry Ford coming along and creating something that we recognize as mass production. And that was the paradigm. And in the 1980s, and 1990s, and the 2000, we have this concept of lean. And everybody’s now thinking, “Well, what is the next thing? What are we going to do if Industry 4.0 comes out?” And Industry 4.0 impart, is part of actually, in which it’s an incomplete part, because everything we’ve seen so far, it’s been a combination of a reaction to both market forces and what you’re seeing in terms of technological change.
Tim Baines: And where you are today with Servitization, it’s really about a shift in our understanding of what it looks like to be a manufacturing business. Because the bottom line is, that for many industries, the model of production and consumption, make, sell, dump, that’s gone. The rich carbon based business models of the past in many industries, are on a very limited timeline. What’s happening, is society is moving away from the consumption of products, moving towards the consumption of service businesses. Developed economies like UK, like the States, they are service based economies. And Servitization is all about manufacturing businesses responding to the shift in the societal appetite for services over society’s appetite for products. And not just services which are about repairing a product, or providing spare parts for product, but services which provide outcomes.
Tim Baines: So when you think about the big picture that we’re seeing, Servitization to me is the shift towards this new emerging paradigm about what it means to be a manufacturing business. And most industries will get into that paradigm sooner or later. And when you think about the forces which are causing it to happen, it’s the same forces which have shaped the paradigms for manufacturing over the past 200 years. They are the pull from society coupled with the technological innovations. Innovation takes place as the interplay between market pull and technology push. And that’s what we’re seeing. Manufacturing businesses and a lot of service businesses are all being caught up in this, that they might not recognize it, that’s what’s actually happening.
Tim Baines: So when you think about service transformation side of business, two of the big macro pressures which are determining what’s going to happen, are these two sets of forces on the outside. There are others, but they’re the two which are first and foremost to keep in mind. That, change is inevitable, it’s going to happen, the only thing you have control over is to some extent the rate of which is going to happen. Does that start to set that context for you?
Sarah Nicastro: It’s one of the best explanations of Servitization that I’ve ever heard. I think it’s perfect. It makes total sense to me, and I think it will make absolute sense to our listeners. And I think that to your point, or at least if I’m understanding, one of the points you made is, as a business is considering how this journey applies to them specifically, it’s important to make sure that their next steps are not dictated only by the technological forces, but also by those market forces.
Tim Baines: Exactly. Yeah.
Sarah Nicastro: So really understanding that social and societal aspect of, what’s at a very high level driving this need for change. And I’m sure we’ll talk more about this today, but I do think that that is an area where people veer off course because you have these advanced technologies and they’re really exciting and they’re great enablers. But if you start to go down a path of leveraging them and deploying them without a clear understanding of what those market forces are for your business, and ultimately what your customers want from you related to those outcomes and those experiences, then you’re not looking at the big picture. So I think it’s a great explanation and that makes total sense to me.
Tim Baines: And what you’ve just described, I see that in businesses around the world, and it’s not a conversation where the technology is more important than customers and markets, it’s a conversation as both are important, it’s the meshing together. So, when we look at this change process, when you look at changes taking place inside a manufacturing business, and I’m referring to manufacturing businesses, but it’s not exclusively manufacturing businesses by any means, but let’s just focus on those for a moment. You’ve got a situation where change is going to happen either as a reaction where you are forced into, make a change because of the circumstances, or it’s going to happen, because you are looking forward and you are trying to shape the future for your business.
Tim Baines: And when we look at Servitization, when we look at those businesses which have really been at the forefront of their adoption of the more advanced services, and I’m thinking about some of the cases, people like Rolls-Royce for example, it’s probably the best example I can think of in terms of their development of… Well, people recognize power by the hour.
Tim Baines: When you look at somebody like Rolls-Royce, I barely manage to see it, but I understand that Rolls-Royce were pulled into this space, and they’ve been pulled. And a lot of businesses are looking at people like Rolls-Royce, and they’re saying, “How did they do it?” Well, they got pulled into this space. But that doesn’t explain how businesses should do it, because it’s about how you shape the future can be informed by what people at Rolls-Royce are doing, but it’s not about following their path.
Tim Baines: And it’s about looking forward, understanding how technology and how markets can be combined, and how you can exploit those through these more advanced services. And the advanced services, we recognize them in various ways. Some people will talk about them as being outcome based contracts, or performance based contracts. So, I purposely used the term advanced services because I don’t want people just to think about it as a contract. It’s much bigger than that. It’s a collection of different forms of business models, which are high value and disruptive. And really speak to the shift towards an outcome based society, that’s what we’re talking about. Responding to an outcome based society.
Sarah Nicastro: Yes. I had a call recently with someone who was a service leader within an organization. And he was asking me some questions around, “Well, we’ve deployed IOT and no one wants to buy it. None of our customers want to buy it.” And I said, “Well, how are you marketing it to them?” I mean, are you telling them that you’ve deployed IOT, so you want them to buy it? Because one, they probably don’t understand what that means. And two, it doesn’t matter to them. That’s a tool your company has within its arsenal to provide an outcome to your customer, but that is not the outcome, right? So we could get into a whole discussion I’m sure about different examples and whatnot.
Tim Baines: We have a separate conversation that we ought to have, which is really about the form of those business models.
Sarah Nicastro: Yes.
Tim Baines: And about how you describe those business models, and how you make sure that the language you use to describe those business models, isn’t simply a replay of what it is that you do with that inspired your organization to deliver the outcome. Or it isn’t overly suggestive that says that, it’s always going to be a panacea, because that’s not true either. So, we’ll park it for the moment, maybe we should come back and speak about the business model specifically. I know you’re interested today in transformation.
Sarah Nicastro: Yeah. That’s a really good point, so I’m going to make a note of that and I’d love to have you back. And the other point that we should probably not dig into it in an effort to stay on track with what we’ve defined today is, you talked about these companies really are either going to be forced into this change, or they’re going to see this opportunity and be proactive about making this change. Right? And one of the conversations we’ve had a lot of this year is, how COVID-19 has played a role in that first idea of some of these companies that were lagging. In either accepting that this change is a reality or they had accepted it, but they were lagging on taking action on actually embarking on this journey, have been propelled forward.
Sarah Nicastro: And I’m really interested to see over the next few years, how that plays out in a spur of progress through this journey. So I would love to talk with you about that too. What?
Tim Baines: Yeah, we should embark on that section.
Sarah Nicastro: We would be here for a few hours obviously.
Tim Baines: It’s good.
Sarah Nicastro: So, I will write those two topics down and we’ll have you back soon. Okay. So we talked about the need to consider both the market forces and the technological forces that are leading to this. Tell us about the other two forces that play a role here.
Tim Baines: I think the way to think about this is, when we work with a manufacturing business to try understand what’s happening. First of all, you have to be quite clear, some people will talk about it as a shift from products to services. Now, we don’t use our language. And the reason that we don’t use it is that, we don’t want to suggest to a company that it has to abandon products and production, there’s a danger in that. People who are today in the production operations of a company, it can cause them anxiety. We don’t need to worry about that. So we don’t talk about shift, we don’t talk about transition, we talk about transformation. And we’ll talk about Servitization in simple terms, for a manufacturing company, building revenue from services rather than just products alone.
Tim Baines: And we’re interested in a particular type of services, and these advanced services. So we’re about a business which makes product looking to expand itself, not just to deliver services which support the product’s condition, but to deliver services which ultimately deliver the outcome that a product enables. So we’re about providing the shift from selling, gas boilers to how it is to selling kits to service. A shift from selling air conditioning units, to selling cooling as a service. From selling automobiles and cars, to selling mobility as a service. That’s the shift that we’re talking about. Now, when we look back, and we do quite a lot of work where we’ve looked at manufacturing businesses and included in our mix of manufacturing businesses, we’ve studied are companies that you will know, and people like Rolls-Royce, Caterpillar, Goodyear, Alstam with opening up MICS, we’ve done case studies in all these companies, and we’ve looked back at the journey they’ve been through and we tried to rationalize it.
Tim Baines: When you think about the contribution that the research community makes to this conversation is, it’s all about providing the frameworks which help people to understand what’s going on is, we providing for them the skeleton, which they can then dress them in a way which reflects their organization. We’re providing the bare bones of, this is what the change looks like. So looking back, when we try and make sense of what we see, we see an organizational transformation, because that’s what it is. It isn’t just about selling a few services, it’s about an organizational transformation because it’s the organization which delivers the services, they don’t just appear. So it’s about an organizational transformation from production to also providing services, especially with these more advanced services in organizational transformation. The success, and the rate of that transformation is being determined by forces, which you can group into four categories.
Tim Baines: Two, we’ve already spoke about, the market pool, the customer’s appetite for their services and the technology push. If you go to a group of customers and they really want these services, they’ll pull you into this space. If you’ve got lots and lots of technology and it’s everywhere, you’re going to spot the opportunities. So, the interplay between the market pull and technology push, are very, very powerful. A set of forces all about where you are in a value network. So, if you as an organization are dealing directly with the customer, would be interested in acquiring these more advanced services from you. You’re going to find it easier to gain traction and likely more successful than an organization that is much, much further down the value chain.
Tim Baines: So an organization which is perhaps developing an engine, which then goes on to a gearbox, which goes into a generator, which is sold through a distributor specified by an architect, ends up inside a building, which is rented by somebody, that becomes a more complicated situation. So, where you are in the value network affects you. Almost like culture, the conditions inside your organization. If you’ve got a management which is committed to this, you move faster. If you’ve got a management which is skeptical, you move slow. It’s very interesting. Even during COVID-19, people react to change in different ways. And we have seen, one of the businesses we’re working with in this space, are very… Up until recently, we’re starting to incubate some of these things, there’s more advanced services.
Tim Baines: COVID-19 hits, and this particular business as kind of abandoned its plans to move into services, move back to pushing boxes. And when you say, “Why?” Well, the managing director of this business, he’s looking forward to his pension, he’s only got another 18 months in the position. So he is making sure that his business fulfills those needs he has to make sure that his pension part is there. So, that’s an indication of the internal culture inside the organization. Even people like you and I are going out there and absolutely advocates for this, and believe it, and he might even believe it in himself, or when he’s thinking about his own pension part, it’s a different story. So you’ve got these two sets of forces, which are more about the positioning of the organization, both externally and internally, which are affecting it. And what really, we think that all the shape, the rate in which an organization progresses can really be determined by those four sets of forces. Does that fit with what you’ve seen before?
Sarah Nicastro: Yes. I think so. And I think that, really those organizational forces are what either propel a company through or really get them stuck in the muck, you know?
Tim Baines: Yes.
Sarah Nicastro: And so, yeah. It’s very interesting. Okay. So, we talked about the four forces. Now those four forces are leading companies through phases of this journey Servitization. There’s four phases that you’ve identified, so can you tell us what those four phases are?
Tim Baines: Yeah. Okay. So, it’s interesting. You can approach the conversation about this transformation from different angles. Quite often, I would actually start to talk about first and foremost, those almost like stages of organizational maturity and then think about the forces. We’ve spoke about the forces first and now we’ll talk about stages of organizational maturity. It doesn’t matter, it’s just really… For people listening to us today, I guess it’s just a flag at this stage that, you can think about the transformation from two different perspectives. And this stages of organizational maturity is the second phase, the second way of thinking about it. So people will come and they will say, “Okay, I’m interested in Servitization. But I don’t know what it is, I don’t know what type of services I might offer. Well, I need to go buy in a more senior executive. Which customers should I pilot with? How am I going to get paid for it? What investment? What will I do with technology partners? I’m going to have to have a new organization, what will I do with existing products?” They’re overwhelmed. Okay.
Tim Baines: Very often when we start a conversation with people about Servitization, they’re absolutely overwhelmed. They’ll say all those things too. They’ll typically say something like, “Should we have a separate organization for services?” And we’ll say, “You might, but you don’t need to worry about it yet. You can push that forward.” And that’s what this transformation journey is all about. It’s about saying, “Look, there’s lots of these decisions that you’re going to need to make. A lot of decisions leading to actions.” But you need not worry about all those things upfront. When you look retrospectively at the businesses which have been successful and had success in this area and map it out, you will see they’ll go through four phases.
Tim Baines: And when you start to think about the decisions and actions relative to those four phases, the whole thing becomes simpler. And the four phases that typically they will go through are, the first phase of exploration, where they’re thinking about whether Servitization is relevant to them, they’ll be asking questions such as, “Are we’re going to make any money out of it? Do we need senior management support?” Et cetera. That’s this exploration phase. If a company is successful, it’s exploration, it will mean that they’ve built up a conviction inside the company there is value in Servitization for them. Now, engagement is where companies start to experiment with different business models based around services. The whole conversation based about, what is a business model? And what’s a revenue? And what’s a service delivery system? It’s a separate conversation to have, which we haven’t got time to go in here.
Tim Baines: But the engagement phase is about unpicking what that business model looks like, going to customers, understanding pains and gains, bringing it all together, testing it, piloting it, reviewing it. And it’s all about the organization demonstrating to itself that there’s value in this stuff. Once the organization has really got to that stage, we’ve got evidence. We believe it, we can see it with evidence that there is opportunity here. Then the organization moves into scaling, and scaling as you can imagine is all about rolling out new customer value propositions, new business models in different regions. Once it gets through scaling, it then will move into a phase of exploitation. And exploitation is where it’s looking for efficiencies, so it’s delivery. So if you take an organization like Rolls-Royce aerospace, quite a lot of what you see at Rolls-Royce will be an exploitation phase.
Tim Baines: What’s the initiatives or where the efficiencies will be about ensuring effectiveness of their value services. Whereas if you take companies that we have worked with in the past, companies that you might not be so familiar with, but we’ve worked with people like, Initiator and stuff like that. They’re much more of this exploration phase where they’re trying to see whether there’s an opportunity for them in this space. But in terms of these four phases there of exploration, engagement, expansion, and exploitation, the value of thinking about it like that is, you can look at it and you can say, “There’s conversations which are typical to this phase, and that’s where I am. So I only need to focus on these and I’ll get these things right before they’re moved to that phase, and then to move to that phase, and then to move to that phase.”
Tim Baines: And your progression through these phases is not really prescriptive. I wouldn’t go to a company and say, “The first thing you must do is, A then B then C.” Because of course companies situations change. A framework like this is helpful to give a structure to what’s going on, but it doesn’t prescribe. It doesn’t say, “You must do this, and you must do that, and you must do the other.” Because of course, the entry points differ, companies differ. So I just said a lot there, is there anything particular that you’d like me to dig into or clarify?
Sarah Nicastro: So I think it makes sense. And I think what you mentioned at the beginning, that sense of overwhelm that companies often come to you with, this framework helps minimize or reduce that overwhelm, right? If you can say, “Here’s where you are, so let’s just focus on this box first.” Right? And these specific steps that commonly happen in this phase, and before you worry about this end of the journey. So I think that makes sense. And I think that one of the points that I always bring up to folks is, I think this journey applies to businesses of many sizes. Obviously there’s different scales, but those societal and social themes that you talked about really are trickling down from the largest companies all the way through.
Sarah Nicastro: And so when you think about that, that means that at some point, a company like Rolls-Royce has developed a team specific to, this Servitization stuff. But in some of the midsize and smaller companies, oftentimes it’s someone that’s leading this charge at least initially in addition to doing their “day job.” Right? And so that overwhelm can be crippling to making progress because it just seems insurmountable. So I think something like these phases that talks about, like you’ve said, it’s not prescriptive, but it’s based off of interacting with a lot of different companies and observing those commonalities. It gives people some areas of focus to ease some of that overwhelm. So I think that makes good sense. Go ahead.
Tim Baines: No, I was just going to add, it was interesting, because if you look at that roadmap, that framework, and it’s published in academic journals and it’s on our website, et cetera. That came from this research, which observed these case studies of businesses. And I use companies like Caterpillar, and Goodyear, Rolls-Royce because you’d be familiar with them. But we also study small businesses just like you’ve said. And we work a lot with small businesses. Small businesses because of the committee, incredibly agile. And it’s very good. So, one of the businesses we work with is a company. It’s a British company, it’s looking to sell its product in China, and it, well, sorry, it’s not looking to sell its products in China, it’s trying to break into the Chinese market. And to do so, it’s saying, “Right. We’re not going to try and sell rice milling machine, we’re going to sell rice milling it to service.” A small company, relatively sneaky, but it fits exactly what we’ve seen.
Tim Baines: That’s one of the tests to frameworks like this is that, they have to be relevant to businesses large and small, and they help you just get this clarity about what it is that you’re trying to do. I mean, some of the, I’m sorry. It’s interesting when you look back at some of the management literature. So the frameworks that people use in everyday business operations, frameworks like SWOT analysis, they’re just valuable, straightforward, simple frameworks. And they’ve been around for many years and it’s that type of framework, which I think is most helpful to businesses, not something which is too convoluted, it’s too complex to understand.
Sarah Nicastro: Absolutely. So I was curious to ask, Tim, right now, based on the interactions you have and what you’ve witnessed in the market, in those four phases, where do you see the majority of organizations today?
Tim Baines: Exploration and engagement. Absolutely. We have two businesses that work with the research center. And one is a consortium based around large businesses, and the second is a consortium based around small businesses. The large business consortium tends to have a few number of businesses, but we tend to have a more deeper intervention with those. And we do this, it’s called the Advanced Services Partnership. We work with these businesses because we help them and they help us to understand the process of Servitization. And when you look at these businesses, these businesses, they’re great companies to work with, because they’re genuinely committed to this, and they’re pushing ahead with it.
Tim Baines: And when you look at them, invariably, they’re in the exploration engagement phase. And when you look at where they sit compared to their peers in the marketplace, invariably they’re ahead of the game. We first started to work on Servitization, my first paper on Servitization was late 1990s. And when we started to do some of our very early research and publications in the late `90s, early 2000s, we were using this term Servitization, and the common question people would say to me is, “How’d you spell it?” And they were, “Do you spell it with a z or an s?” And everybody in the UK was trying to change it to an S. And I would stand up and say, “No, it’s a z, because it’s American phrase, it’s an American word.”
Tim Baines: I also then went into history and said, “Actually, the American language is a true representation of the old English then the quarantine.” But that’s a different story. So the use of z’s was actually English language previous, anyway, long story. But use it with a z. And we had a whole conversation about Servitization and radius, well, this word, what does it mean?
Tim Baines: And then you say to people, it’s where we’re competing through services.” And they say, “Oh, we do this already. We sell spare parts.” And then you get into a canvass. Now, today, people don’t come to me and say, “What’s this thing called Servitization? How do you spell it?” We’ve moved beyond that. So we are in the expert, we get in, slow but surely through exploration. But they’re the conversations they’re having is, “What’s the business model look like?” And then I’m saying, “Be careful in your mind, there’s difference between business model and revenue model and service.” Et cetera, et cetera.
Tim Baines: So we start to unpack that, and then we’ll talk about pains and gains. So they’re entering that, they’ve an interest in business models, but of course we’re talking about a subset of business models. So they’ll go and get, for example, the business model canvas, which is a great tool, but it’s a very generic tool. It’s like using SWOT’s analysis, great tool, but it’s too generic. So we’re talking about the subset. And so there are tools out there which help specifically with that subset. And that’s where companies are, they’re poking at it. Today, of course, lots of businesses immediately are concerned about COVID and such like that. And they want to innovate the way out of it.
Tim Baines: And you’re saying to them, “Yes, let’s innovate. Let’s innovate the business model and let’s innovate the business model towards services.” And that’s the way to break out of it. Most businesses I would say, Sarah, their exploration, early stages of engagement.
Sarah Nicastro: Yeah. I think that makes sense. And that’s very much in line with what I would see from talking with a lot of these companies as well. The one observation I had when I was looking through the framework is, while it’s a much smaller sample of businesses that have reached the exploitation phase, the one thought I had that I was curious to get your thoughts on is, those companies that are leading this charge, that have worked their way through those four phases, and they have successfully reached the exploitation phase. So you mentioned some of them by name, it seems to me that this would not end, right? Like it’s not, “We reached exploitation, we’ve crossed the finish line, let’s put our feet up and have a cocktail.” It would naturally revert back to exploration. Because in my mind, once companies have understood the criticality of this journey and they’ve experienced walking through it and going through those phases and understanding those forces and developing value propositions and successfully turning those into service models and whatnot, they would naturally continue to look for those next opportunities. Do you think that’s an accurate observation?
Tim Baines: Yes, Sarah, you’re exactly right. That’s exactly what happens of course. If you take a step back and you see these four phases, and of course, those four phases are true of whether you’re developing a service, an advanced service, or even just worrying about products. And this is the secret is that, the reason that they stack up is that one of the things that we did as a group of researchers, one of the things that’s important to do is to go back to theory. Theory has to apply press amongst industrialists. Very often they’ll say, “Don’t give me theory type of words like in practice.” And I think really what they’re saying is, “Look, don’t be too abstract. Make sure that what you’re telling me is relevant to what I’m doing.” But theory is helpful. Because theory tells us, how different variables relate to each other.
Tim Baines: Theory tells us in a very abstract way, how things change. On the pins, the model that we’ve talked about today is, the theory of business growth. And business growth goes through phases and often the people will scroll up the badges perhaps going through five phases of incubation. Explaining the basics by all those types of things. And then we rationalized it to whether it’s four, seven, six, it doesn’t matter. It’s the fact that it’s the business growth. And the way business growth happens is that, you start off, you go through a period of relatively smooth changes, you’re starting to get to grips of what’s is you really doing. And then you go through a period of very rapid, very disruptive change. Then it settles, and then you move on and there are rapids that they’d wrap around changing and then settles and move on.
Tim Baines: And this is Grey phase, the process is called punctuated equilibrium. Equilibrium punctuated by these… And you go through, then move on. And that’s the basic theory, it’s equivalent to Einstein’s theory of relativity, it was a social science theory. That’s his basic theory, which from independence has changed. And that’s what you’re actually seeing. You’re seeing the theory explain it. So when you say to me, “Tim, is this model true of all? When we think about, a business it’s moved, it’s developed, it’s exploiting these things.” Yes. And then it’ll move and we’ll think about the next one. Yes. And it moves off what’s called the services staircase. Separate conversation that fits with our business model conversation.
Tim Baines: It moves up that staircase. However, it does make an assumption there. And the assumption is that, the business doesn’t forget, and businesses do forget. If you go to some businesses who are actually advanced in this space, and you say, “How did you get here?” They’ve forgotten. They’ve got some excellent examples of more advanced services, but they’re in isolation. It was created because we had a particular customer, who pulls into that space, we formed a group of people, We pulled this all together, we made it a success. We’ve been running it for 10 years and all those people there have now retired. Businesses do forget. So I think it’s important to keep that in mind, but you are right. Servitization is innovation. We gave this name Servitization to describe the innovation of an organization. It comes right the way back to where we started our conversation today.
Tim Baines: The root of what we’re talking about, is coming up with a picture of what an organization in our world, the manufacturing organization looks like to compete in the world in the 21st century. We know what an organization looked like, that manufactured model T-Fords. We know what the organization looked like, which manufactured steam engines. What does the organization look like that manufacturers services? That’s the question that you dealing with, with all this?
Sarah Nicastro: Well, Tim, I could ask you many, many more questions today, but I know we’re almost out of time. And so, I would love to have you back soon. I think there’s at least the two conversations we mentioned earlier to dig into, and I also think it would be interesting to have a conversation around, what are the common missteps? Where do companies veer off course? But let’s have you back and dig into those if you would be so kind. And I also wanted you to tell our listeners, the Advanced Services Group is having a World Servitization Conference in September, which I’ll be a part of, and I’m so excited for. So, can you tell folks a bit about that and where they can sign up and find some information?
Tim Baines: Yeah. Well, first of all, Sarah, thank you for the conversation today. I too have enjoyed it, thank you. Right. So, part of our activity at Aston is very much about cultivating international community around Servitization, academic community, and practitioner community. And for the past 10 years, we have run something called the Spring Servitization Conference, which is a prestigious academic conference, research conference in this space. And that’s moved around Europe and it’s done extremely well. This year, the academic community has a great platform for having a conversation on Servitization. But the industrial community doesn’t. The industrial community doesn’t have the same platform, which is, how can I put it? Is a neutral platform where people can come along and see what manufacturers that are leading the space are doing, learn from them, and not feel pressurized necessarily to buy something or to take on some consulting or whatever.
Tim Baines: So we wanted to create this platform for the industrialists to have an equivalent conversation to the academics. So we’ve created the World Servitization Convention, it’s on the basis of what we’ve done before. This year, of course it’s virtual, but it’s been dealt with a lot of care. We’ve gone out and acquired a platform, which gives us an experience which is as close to the experience that you would have as if going to a physical event. So we’ve got a whole platform of keynote speakers and we’ve got 25 businesses exhibiting what it is that they’re doing in this space. And there are leaders that are executives will be there, and they’ll be talking about, their shift, their business models, there’ll be time just to have a conversation with them. And it’s going to be as close to having a physical exhibition as we can get using digital technologies.
Tim Baines: So it’s in September, we’ll post you the links there after this. And if people would like to come along to that, it’s targeted manufacturing community, and IFS is sponsoring you this, and yeah. We’re delighted they’re supporting it. So if anybody listening to this podcast would like to come along, send your link, register for it, just come and listen to people that are actually doing that. The purpose is all about forming the industrial community to advance Servitization.
Sarah Nicastro: I’m looking forward to it, I really am. We’ll make sure we post the link in the show notes, which will be on the podcast episode page. So, we’ll make sure we do that. Tim, it was a pleasure having you today, I really appreciate your time and I look forward to having you back very soon. So, thank you again.
LINK to World Servitization Convention information (September 14-16, 2020): https://www.advancedservicesgroup.co.uk/wsc2020
Tim Baines: Thank you, Sarah. Bye. Bye.
Sarah Nicastro: You can find more content on Servitization and other topics by visiting us at www.futureoffieldservice.com. You can also find us on LinkedIn as well as Twitter @TheFutureOfFS. The Future of Field Service podcast is published in partnership with IFS, you can learn more about IFS service management by visiting www.ifs.com. As always, thank you for listening.