Why the Future of Service Depends on Putting People First

In this episode, from the Paris Live Tour, Sarah speaks with Jean de Kergorlay, Digital Buildings Services Director - Europe at Schneider Electric who has been with Schneider Electric for 34 years. Jean shares his unique perspective on how service has evolved as a part of business differentiation and strategy. While he fully recognizes the value and immense potential of digital, his opinion is that the future of our industry depends on our people.

Sarah Nicastro: Jean, thank you for being here.

Jean de Kergorlay: Thank you for having me.

Sarah Nicastro: Yes.

Jean de Kergorlay: It's a pleasure.

Sarah Nicastro: So Jean is the digital buildings service director for Europe at Schneider Electric. And we're going to be talking about your thoughts on why the future of field service depends on putting people first, okay? It's a good statement.

Jean de Kergorlay: I think it's a good way, yes.

Sarah Nicastro: Yes. Okay. So before we get into that, tell folks a little bit more about yourself, your background, your journey, and your role at Schneider.

Jean de Kergorlay: Oh my goodness. You see that I have some gray hairs, so it could be a long story. But no, in short, I joined the Schneider Electric now 34 years ago-- already, my goodness. And Schneider was my third company. So what is interesting is I think I worked about 20 years in the industry business. I started as a field services engineer during the maybe five years or so, first France, and then very much across many, many countries. And then, because this company gave me a lot of opportunities, and finally I moved to R&D, then product management, then whatever things. I don't want to be too long, but since the past 17 years now, I am more in what is new and entrepreneurial business in our company. So that means creating new businesses and especially in services, and mostly the past 12 years in digital. Because let's say, we had kind of an interesting problem to solve. Let's be clear, when we were talking about digital, it is not because it was trendy or kind of buzz word at all, we had a big issue that we had field services technicians, and maybe I shouldn't say that, but as a company we were seen or perceived at too much expensive by our customers. Oops.

Jean de Kergorlay: And as a fact, the idea was, okay, how can we maybe provide even more value, maybe less rolling the truck and going on site and thinking about, okay, what kind of data we could get from buildings. I'm very much in the buildings business, okay? Where you live, where you work, whatever, but it is the non-residential business I'm talking about, non-residential buildings. And it was interesting because when we started digital journey, it was more about how can we get some relief to our guys, that means getting before going on site, what is working well or not working well, having kind of a to-do list or whatever, and not discovering at the very last minute, what should be done on site.

Jean de Kergorlay: So this was the first idea. When I started this, saying, "Okay, have we something in Schneider?" No, not at all. And then I started working with some startups in the US, and this is where we started this journey, move for solving our own problems. And after a few years, we said, "Hey, by the way, could it be interesting also for not only us, but also for our customers?" So this is where the journey started a few years back. And what was interesting and I'm sure we will more talk about that later on is the more we were talking about digital as a word, the more we had resistance, reluctance from mostly the technicians saying, "Ooh, those kind of tools could make me losing my job. Maybe I will be replaced by some kind of AI or things like in the sci-fi movies."

Jean de Kergorlay: It was interesting because funnily, we started with the technology and very quickly we discovered, maybe the hard way, that it is all about the people, and finally digital or whatever kind of technology is only a tool or being tools. And in the end, you can have the best tools in the world, if nobody is using them or it, useless. This is where it has been a long journey now, the past eight years of transformation, and I would say not yet completed at all, that we are really now putting people in this. This is our focal point. That means, it's not a question about talking about digital or whatever, it is how could you make the best of your job using the right tools. That's it.

Sarah Nicastro: Yeah, good. I think transformation is a very misleading word. We talk about digital transformation or service transformation, but in reality, we're all on a continual journey. There's no finish line that you're going to cross, right? So it's not complete because it won't really be complete, you're going to learn and change, and then learn and change again, right? So you've been with Schneider 34 years, in service for quite a long time. How would you describe Schneider's view today on the potential of service for the business? Right, so I talked about how in my experience, when I started, it was a lot of cut costs and that has shifted to it being seen as more of a potential for growth. What is your company's view on that?

Jean de Kergorlay: I think if I compare even few years back, so I'm not going back to 34 years ago, but I think maybe many changes the past five or six years when any kind of service providers, and we have some of them in the room today, is when we realize that if we are only providing to a customer blocked hours, blocked days, and finally just ticking things, checklist or whatever, in the end, there is not that much value for the end user or for the services provider. So I think this is one point. I think the bigger change, maybe we realized in a very humble way that finally we have guys on the field, maybe they meet even more often customers that our sales forces meet on a regular basis. And they should be the guys, as ambassador, knowing maybe the best our company, and thinking, and being also in the shoes of the customers.

Jean de Kergorlay: What do I mean is, okay, what is important, what matters, what is at stake? And finally you are more looking not to execute tasks, but finally having a plan could be a yearly plan or half yearly plan or whatever, it is about, okay, what is at stake for those six month or for this one year? What do we want to achieve? Maybe reducing the number of complaints in a building, in a shopping mall, or making the patient more comfortable in hospitals, as an example. Finally, what are the business drivers of the customer I'm working for? And I think this is the big shift, moving from technical things, very important, very important, even details, moving from reactive to something more proactive. And finally, does it feed or not the business of my customer? And I think this is the big shift of those past five years. And as you said, learning, changing, learning, changing.

Sarah Nicastro: And I don't want to speak for you, but I think when you look at the opportunity you have to leverage service as a way to get closer to your customers, okay, that requires different types of relationships with your customers, less transactional, more customer intimacy, more trust those sorts of things. And I think that is the root of where this people focus comes from, because we can't expect our people to go out and foster those types of relationships without first fostering relationships with them, right? So going back to your statement at the beginning, the more you, at Schneider, have leveraged digital, the more you've recognized the opportunity to put focus on your people. Tell us a little bit more about that.

Jean de Kergorlay: I would say maybe one or two things. And I think, as you said, change transformation as a word, it could be only a word. Now there is [inaudible], that means we can have KPIs or whatever, and sometime in our companies or in mine, I will not that corporate today, we have many KPIs. But in the end, what matters? Point number one is we can have the best tools, once more if there is no adoption of those tools, those tools being used less, and you are wasting your money. Okay, so it's a basic statement. And very often it is because we are not spending the right time not to explain, because explaining is not enough, but to leave those tools with the guys. And it has been interesting because we have an interesting slogan the past five years now, 'from the technical room to the boardroom and the other way around.'

Jean de Kergorlay: And what is interesting is very often in the past, technicians talking only to the technicians in the technical room. I oversimplify a bit, but this was the point. What is interesting now is in the management chain, how things being escalated, and there is less and less reluctance now that what is captured on the field could be back up to the boardroom, and finally discovering that if I'm a facility manager for this customer, I'm spending more time in managing complaints from the occupants. And in the end, I try to satisfy the occupants, but as a result, I'm not executing my contract.

Jean de Kergorlay: So this is where having KPIs, having analytics, having whatever is a good way more often now to step back, what's the situation, facts based, and no more with the emotion. And I think as a Latin people here in the room, we can seem kind of good sometime to be very emotional and we just forget the facts. And I think data or digital is a way very often to come back to the facts and decide what could be the next step. What is the plan? And I think this is one of the key points.

Sarah Nicastro: So the focus on people, here's a question I'm curious about - do you think it's something that we had and lost or something that we never really had to begin with that we need to create?

Jean de Kergorlay: Maybe two thoughts about that. The first one, maybe we will come back later on, is that the scarcity in resources. Maybe this is something we can come back later, or do we want to elaborate now?

Sarah Nicastro: He knows the notes better than I do. Yes, okay, all right. Yes, no, that's okay. We'll come back to that part.

Jean de Kergorlay: Okay, perfect. And the other point is I think we lost it in the very simple way. I try to be more corporate, and sorry, I'm unable. What I mean is, no, I think we lost it. I think one more, those past 20 years, you saw that in the cost cutting things, in the whatever things. As a result, we kind of lost our mind, is what is the importance about the people doing really the thing... The doers, what I mean. And I think this is something we very much lost, and what I see that it is across countries, it is across type of customers, and we finally discover that, oh, this guy now getting retired, but he has all the knowledge in his head. And nothing, there is no transitions or no handover way of doing it, and in the end you lose everything. I'm sure you have experienced that somewhere in your different jobs here.

Sarah Nicastro: I think part of what happened is that as organizations became really focused on customer experience, which was part of that shift in the perception of service from just cost center efficiency to, okay, maybe this is an opportunity for a profit center, which means we need to be thinking more about customer experience. But that focus was almost a hyper focus to where the connection of employee experience to customer experience got lost a bit. And so I think two things I wanted to say, so the very first podcast I recorded was with Otis Elevator, and Tony Black, the gentleman that I interviewed, he used a phrase that has stuck with me, which is that their field technicians are the company's most treasured resource. And it's tough because with the scarcity, which we'll talk about next, I think a lot of organizations today know that they need to say those things, but they don't necessarily believe those things.

Sarah Nicastro: And so you're checking a box by saying, "Oh, we have a great company culture, we really focus on employee experience," and some are and some aren't, but from his perspective and based on the context of that statement for him, it was genuine. And I think that's a really important lens through which to look at the employee experience is thinking about how important a resource those frontline workers are.

Sarah Nicastro: So transitioning into... I'm going to be so bad at keeping time today. But transitioning into the scarcity of resources, right? So this is putting even more focus on people because they're really hard to come by. So how does this factor in, and what do we need to be thinking about or doing differently, knowing that we need to kind of change how we're recruiting and hiring and training and retaining our talent?

Jean de Kergorlay: So I think a lot of things change. And once more, I'm coming to the digital side of things, because this is super interesting that point. Point number one, what we discovered the past few years is before we were more discussing with technical people, I mean, on the customer side. One more, we are now implementing digital capabilities, the more we are talking with IT people because of the cyber, because of whatever things, we are talking even more with the board at the C-suite level, and even more with HR. And I think this is important because finally it is, and when we are starting, even with historical customers, point number one, we established a digital road map with them. What does that mean? That means, what is your willingness really to change the way you work compared to before? If there is no willingness, let's stop, let's not waste our time. Point number one.

Jean de Kergorlay: Point number two, because there is some needs about efficiency, sustainability, whatever, the other point is, finally what is the age profile of your resources? And I can tell in quite 100% of the time, and even working with HR, when they discover the reality of their age profile, they're scared, saying, "Oops, oops, we have an issue." If I take in, let's say, field services industry, very much in the buildings business I would say at the moment, I'm just talking about what I know, just think in 2025, 60% of the existing technicians and engineers getting retired across countries. Sorry, not across countries, Europe, North America, a little bit different in Asia. So that mean it is kind of scary. And if there is no anticipation the way we are replacing those guys, there is a big issue. If I take our friends, our homeland friends, just think in our business we're talking about, there is about 1500 new graduates a year out of which 120 engineers. The market need is 10,000. Do we have an issue? I think so.

Jean de Kergorlay: So that means that digital may mitigate, but it shows even more how and why we don't have so many graduates, just because our business is not appealing at all. When I say my business, I'm not talking about Schneider, I'm talking about field services. It's not appealing. It's not attractive at all. Working with dirty hands, climbing on ladders, going things on ceiling, fixing things on cabling, so boring, and the younger generation is not at attracted at all. And this is where, when we add this layer of digital, finally either we are attracting new people having a new approach of this kind of business point number one, we are creating new job. Think about the customer success managers, if I would have spoken about customer success managers few years back, I think many of you will have told me, "Hey, for startups, good for startups, not good for me." Now it is key because it is not only executing field services, it is also how do we keep this intimacy, and finally strengthening the trust you were talking about. Sorry, I'm stopping because otherwise I'm too talkative.

Sarah Nicastro: It's okay. No, I think this is a really important topic. We don't have time to get into all of it, but show of hands, is there anyone in the room for whom talent, so recruiting, hiring retention is not an issue. No? Okay. I mean, I thought so, but I just wanted to double check before I start making assumptions. So, I mean, this is a topic that I create a lot of content on because I think it is one of the biggest challenges that you all are going to face this year, next year, in the coming years. And so I think there's a lot of opportunity to change, not to have that challenge disappear because there's just facts, there's number data facts. But we also can't just have a defeatist mindset of, okay, well, we're in trouble so we'll just keep doing what we're doing and cross our fingers, right?

Sarah Nicastro: I think there's a lot of opportunity to change how we recruit, hire, train, retain, and so that is a lot of our content. That being said, I'm getting time counts all over the place, but I do want to get to one more question, Jean, and it ties into the scarcity of resources. So you mentioned earlier on, digital, it is important but it is a tool, right? And so there can be resistance, even resentment, I think from the workforce sometimes related to digital, and a lot of that stems from a point you mentioned, which is fear that it will cost them their jobs. The reality though is that in a lot of cases, that's not the fact at all, right? I mean, there's more jobs than we can fill, and so I think there's a lot of ways to change that narrative so that that fear is removed. And I think that's part of what needs to happen in terms of retention. But in your experience with the resistance to change and some of the reluctance to adopt these tools, what has been most successful in overcoming that?

Jean de Kergorlay: So very quickly, maybe two things. Point number one, what we have implemented now the past two years, we discovered that we were delivering kind of good training for the technicians and the engineer, but technical tracks or technical curriculum, in the end, we discovered that we never shared or trained them or coached them or support them what are really the sales selling to the customers. And you know that sometime there is two sides of the story, what the sales guy is saying and what the services guy is executing. I don't know why, sometime there is a gap. So what we decided to do two years ago, and it has been kind of a big impact in the changes, is giving them sales training about this, point number one. Point number two, I'm driving at the moment, a super interesting initiative because... And this is in UK, just because the UK was more willing at the moment, let's say, to go to this initiative.

Jean de Kergorlay: What is the point? The point is super basic and simple. We have about 500 field services technicians in the UK, Schneider, I mean. What we are driving at the moment, because we have some resistance, it is what it is. And we have a very interesting proof of concept last year with southwest of UK in Devon and Cornwall, and we just worked with those technicians, and we asked them to identify the right time. Let's say the time where they think they're not providing the value they can deliver. It was kind of very basic sessions, very pragmatic, and in some cases going on sites as well with them. And finally they realized, or we all shared that more than 60% of their time was, I wouldn't say useless, it was very useful, but they were not delivering what they could deliver.

Jean de Kergorlay: And it has been now let's say a point there, now each [inaudible] of them introducing part of the digital tool only tackling those low value tasks. This is where now we are seeing the change, and this is interesting. One of the most, let's say the older guy, now driving, let's say, this old wise fox now driving the others say, "Hey, I've been able to do it. Hey, you young guys, hey rookies, now you can do it." We have now this transformation, kind of a snowball effect, which is not really led by the management or the top management, it has been done more in a horizontal way, acknowledging what the situation is, what can we do with what we have, testing the things, executing them, and then spreading the word. That's it.

Sarah Nicastro: Yeah. I think simplicity sometimes means there are things that get overlooked. And if you just think about, if you in your job, like if no one ever asked you what you thought ever, would you feel that you mattered to the company? No. So sometimes it's the simple things of just listening, and it doesn't mean you have to meet every need or address every complaint or anything like that, but just whether or not you treat your employees like a treasured resource or like a valued member of the team comes down to some really quite simple things. Okay, I'm going to get in trouble. So does anyone have a question for Jean? I'm not going to let you out of here before I make sure that if anyone does, they have a chance to ask. Anyone? Anyone? Yes.

Jean de Kergorlay: In English or in French, as you wish.

Speaker 3: It's a remark, it's less a question. You said [inaudible] right, that there's more customer studies than sales people, so [inaudible], but what about the trusted advisor role and [inaudible 00:25:50] and the fact that they are key in the sales [inaudible]? And what about helping them to be more sales oriented, customer centric? It's goes to the [inaudible] system as well, because most of those people have the same incentives. So I know that's difficult sometimes to have somebody very technical, to become a killer in [inaudible], how can we make them more active in the decision making process? Because they're doing it, the customer is trusting them more than our sales reps.

Jean de Kergorlay: Very often, they are... Yeah, exactly. And I think this is a great point and a great question. So just in short, and I'm just sharing what we are doing, and I'm not saying that we are perfect at all. Point number one, during the COVID period, we made kind of a weird initiative saying, "Hey guys, it's not because this is the COVID that there is no more service on sites so maybe there is another way to deliver services." I will not come back to the digital side of things, obvious, but point number two, by the way, we need also to grow. You may know that in our companies, we are not really a charity. We need to make money, let's be clear. And in the end, the idea was finally wound up having more sales coverage using our field services technician. Sorry.

Jean de Kergorlay: And finally, we decided to create what we call the field quotes initiative. No, no, no field quotes. That means we were asking our technician across countries to sell when they have an opportunity meeting customers. "By the way, can you upsell? Could be software upgrades, could be fixing... Let's say upselling few things." It has been a fantastic success. And then came the problem or the question about incentives, because either it could be, let's say, regulated or on the law of things, or it could change the way wages or salaries being done in some countries and the rules being very different.

Jean de Kergorlay: Finally in France, we decided, let's say, to run more kind of... How could I say that? Fitness or sport registration things, it was more appealing. We asked in the different countries what matters for them. Surprisingly, in none of the countries, the technicians told about money, they told about recognition. Sometime recognition was a nice word, even from our CEO. Thank you.

Jean de Kergorlay: And it was interesting. Finally, money matters for sure, but thinking about what is the culture that drives this recognition even more important. And it forces us as managers and leaders finally better knowing our people. Sorry, I don't want to be longer, we can have an off-site discussion after, but I think your point is super important.

Sarah Nicastro: Yeah. And again, I mean, recognition is something that in theory is very simple, but doesn't happen enough. I think there's also a lot of conversation around upskilling, reskilling, career paths, and giving people options to go in different directions. Paulie, we'll come back maybe in the fall and do another session. Okay, great. All right, Jean, thank you so much.

By Sarah Nicastro, Creator, Future of Field Service

Shortly before I left my post at Field Technologies, I wrote this article about the need to redefine the field service role. The need has only increased in the four+ years since I wrote that article, yet I don’t see a huge amount of effort being put into how we articulate and sell – in other words, brand – the field service opportunity.

If you follow our content, you know that recruiting and hiring is a primary challenge for 95% or more of our audience. There are many reasons for this, but one that we have discussed is that field service has a bit of a branding problem. There are two common responses when field service is positioned – one is cluelessness as to what it even means, the second is a misperception that it consists entirely of “dirty,” grueling, low-paying work. Either response poses a huge problem for companies looking to recruit talent at impossible paces.

The exciting news is that field service holds more potential not only for organizations but for individuals in its frontline roles than ever before. Further, the way we define, perceive, and incentives field service roles is rapidly evolving. What we need to do with this reality is seize the opportunity to work on a brand refresh of sorts so that we can convey not only what field service is, but why those looking for a new career opportunity should take note.

What’s the Elevator Pitch?

In the article I linked earlier, I focused on things companies should consider about making job postings more inclusive, ensuring the proper prioritization of soft skills, and reflecting on whether or not incentives are relevant and enticing for today’s target employee. These are all still valid points, but what I’m thinking about today is a taking a step back and considering how we articulate what field service is a bit better. We need a good elevator pitch.

At a friend’s recommendation, my husband and I have been watching the show Halt and Catch Fire. It was an AMC show, described by the network as, “Set in the 1980s, this series dramatizes the personal computing boom through the eyes of a visionary, an engineer and a prodigy whose innovations directly confront the corporate behemoths of the time. Their personal and professional partnership will be challenged by greed and ego while charting the changing culture in Texas' Silicon Prairie.”

As an aside, it’s a good show and worth a watch. But this article isn’t about the show! In an episode we watched recently, one of the main characters, Joe MacMillan makes the statement, “Modern society sits on a foundation of services we take for granted.” That is field service. Field service: the services across a variety of industries that are the foundation of modern society. For example, [insert your industry’s service and what it enables here].

From this simple elevator pitch that highlights the importance of this group of industries no one knows by name, we can then begin to explain how it has evolved and continues to evolve and what that means in terms of the potential that exists in today’s careers. This is the point also where we need to reflect on how we are positioning roles we are recruiting for, what we’re offering in terms of career progression, and how we describe benefits and incentives. But starting with a simpler description for what field service means I believe is an important step.

If you take the sentences I started with and consider how you would expand, you can begin to brainstorm all of the ways you can communicate the exciting things that have taken place in field service in recent years paired with what you’ve learned about what your target candidates value. Things not limited to, but along the lines of:

Explaining how equipment has transitioned from less mechanical to more digital
Discussing the role of the frontline as a knowledge worker, relationship builder, trusted advisor
Emphasizing career progression based on the ways we know service delivery is evolving in coming years
Ensuring communications are written in a way that appeals to and encourages a diverse set of candidates
Playing up important aspects like company culture, company and role purpose, flexibility, benefits and growth opportunities, and so on

Perhaps I am biased because I love this space and love what I do, but I think the positives to convey around what field service is and what it is becoming are abundant. I do think, though, that starting with a strong elevator pitch would help to create a greater awareness of not only what field service is, but the major role it plays in all our lives. What do you think?

Author, Advisor and Top 10 Global Thought Leader Frank Mattes shares perspective on some of the most common reasons that innovation fails and sheds light on the why, when, and how of scaling innovation to drive business impact.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I’m your host, Sarah Nicastro. Today, we’re going to be talking about how to scale innovation to drive business impact in service. I’m excited to welcome to the podcast author, advisor and top 10 global thought leader, as well as founder and CEO of Lean Scaleup, Frank Mattes.

Frank was a guest speaker at the 'Future of Field Service Live Tour' stop in Frankfurt. We had a wonderful conversation. It was one that the audience really enjoyed, because there’s so much importance to the points you made and the work you’re doing. It’s so really true when you think about some of the challenges that our audience is having.

Frank, what is your story?

Sarah Nicastro: Before we dig in, I gave your top level bio, but tell everyone a little bit more about yourself, and what you do.

Frank Mattes: Lean Scaleup, the term is the program. I mean, you want to scale up those big ambitions that companies have, thus creating and shaping their own future. Future-proofing their company, if you will. But, it turns out that this is not so easy to do. In my last five years, I partnered with leading companies and leading business schools, to come up with a solution to this 'Scaling-Up problem.'

It turns out, it’s quite easy to drum out ideas and do some small-scale experiments. But, when it comes to really make it big, this is where seven out of eight of big ambitions fail. The Lean Scaleup provides a solution to that. Co-created with leading companies, the London Business School, and UC Berkeley, to help companies solve that problem.

What is innovation?

Sarah Nicastro: We are going to dig into some of those specifics. Before we can talk about scaling, let’s talk a little bit first about how you define innovation. Many companies get a vision, they are excited to innovate, and then reality sets in. Or, they know innovation is an important buzz word and they want to innovate, but really they’re defaulting to more of just an incremental improvement. Let’s talk about the fact that we need to define innovation, and what it means. That there is some confusion around it.

Frank Mattes: Excellent point, Sarah. There’s so much noise about innovation, you called it a buzzword. So much activities going on, so many blog posts, and conferences, you name it, all around innovation. But, there isn’t a proper, commonly accepted definition on what innovation is. Isn’t that funny? I do have my own. Not saying that this is the only definition that you can use, but it combines a couple of very critical elements. It rings a bell with my clients. Just to give the audience an idea: my clients are the biggest German companies and on a selective basis, European or even global champions - companies like Philips, bp, Telefonica, et cetera.

The definition that rings a bell with these kind of companies, is to say innovation is capturing the value from meaningful insights via new offerings that change the order of things. Now there are a couple of things in here. Number one, it’s about capturing the value. It’s about value, and there is a customer who should appreciate the value. It’s not about 'new stuff' - it’s about value, and value is defined by the customer.

It’s also about simply just putting out some new stuff that has value, but it’s about capturing the value. Meaning, collecting the dollars and the cents of that value that resides within that new stuff that you did. We find this potential value via meaningful insights. There’s this old quote from Wayne Gretzky. When he was asked why he is so successful, he said, “Because I’m skating to where the puck is going to be, not where it is right now.”

If we look at it, Sarah, innovation is a game that you play with three to five years in advance. You need to think about who will be our customers in three to five years? What would be valuable to them then? What do I need to bring to the table to make myself attractive to these future customers?

The last point, new offerings that change the order of things, means new business models, new goto-market strategies, new strategies on working with the ecosystem to create the value, et cetera. we are talking about the big steps here. Changing the order of things, thinking outside of the box, if you will. If it’s in the box, if it doesn’t change the order of things, then we have incremental innovation. Hopefully that helps for the audience as well. Capturing the value from meaningful insights via new offerings that change the order of things.

Changing the order of things?

Sarah Nicastro: I think it is important to clarify that there isn’t anything wrong with incremental innovation necessarily. Right? But, the point is companies really need to define this for themselves and be clear on what it is they’re aiming for. What that means then in terms of what they need to change.

I wrote a blog a couple of weeks ago. Since late last year, I’ve been an avid Peloton user. We got the bike around Christmas. I have the tread, and it’s been great. It’s made my daily fitness routine far more consistent, and it’s been wonderful. A couple weeks ago, I was doing my morning workout, and one of the instructors said, “Everyone wants transformation. But no one wants to change.” I wrote a blog about that, because it’s really true here too. People see the examples of the companies that have done the hard work. Once they’ve achieved success, and they want that, but they’re not necessarily realistic with themselves about all of the hard work it takes to get that.

It was interesting to me, some of the parallels that are there. Now, with the vast conversations you’ve had with a variety of different businesses, different educational researchers, et cetera. What are the biggest drivers for innovation today?

Frank Mattes: Let me just reiterate before I come to the point, what you just said. I’m fully with you, and actually, if you look at the broad scale, companies are investing 70% in keeping their existing products and services relevant. Modernizing them, integrating speech interfaces and touch screens. Adding in one more functionality.

That’s perfectly fine, right? But, the point is that it still locks the company inside the box. If the box changes, then it becomes hard. This is why we need to think wisely about where and how to spend the 10% innovation budget. That’s the average for innovation that is aiming at changing the order of things.

Coming back to your question, what are the biggest drivers of today? I mean, let’s use an example that I guess we are all familiar with, cars and mobility, traveling from A to B, et cetera. What you notice is, number one, existing industry boundaries blur.

In the past you had your car makers, you had your insurance companies, you had the companies from the entertainment industry. These days you find big rumors saying that who once used to make iPods becomes a major player in the car industry. Now obviously there are many more industry boundaries blurring. There’s new competition out there. Companies that take an angle from area of expertise that your company does not have expertise in. Then there’s number two, future value pools.

There are enough surveys out there that say Gen Z or maybe even Gen Y, they’re not so much interested in owning cars any more. Probably like my generation or to some extent I think you’re quite young, so your generation is. They want to have the mobility, the service that they can book that takes them from A to B. This is a future value pool to get future revenue streams as in the car mobility industry. We’ll just stick to that one example. You need to be present there.

Number three is, existing business models lose their relevance. Let’s take an example: bp, one of my clients. They are currently still in the oil and gas business. They look for hydrocarbons, and take it out of the ground, refine it. Ship it to the gas stations where you’ll put it in your car. That’s the business model.

bp said that for various reasons, in ten years they will not base their business on fossil fuels any more. They said, we will sell electrons. We will go electric. We help our clients which would be big companies, regions, or even cities to decarbonize themselves and we want to be a major player in the mobility space. Because, in 10 years, the old business model has lost its value. Think about Nokia beaten by Apple's iPhone, et cetera. These kind of things.

Number four is the trend towards servitization. People don’t want to buy products. They want to have a solution to their problems, wants and needs - they want help in completing their job-to-be-done. If we stick to that, these services like Uber or Lyft, that you can simply call or rent a mobility vessel, as some of our clients call it. They do not call it cars anymore. They use the term mobility vessels to really stretch the imagination to the foundational function.

Last but not least, I see sustainability getting more and more importance. Innovation is not only about financial success anymore. It’s also about the ecological impact that it generates. There are also studies out there that show that investors value a companies that put out their part in decarbonizing the world.

Behind that, Sarah, you find in many instances, 80 or 90 percent or so, Digital. The potential’s of Artificial Intelligence, Big Data, remote monitoring of assets, predictive maintenance, et cetera. But it’s not exclusively tied to digital. Rather, I, in my view, in my discussions with my clients, I look at the changing order of things. Then work your way backwards. What does it mean to technology and the digital opportunities out there?

Sarah Nicastro: I think the changing order of things is a very good point. It’s where a lot of people get stuck. But, I think it’s also an important point to not start there. At least in my opinion. Because the same way you said they call them vessels instead of cars, because they don’t want to limit themselves to thinking in a singular or a mental image.

I think one of the things, at least the companies I talk with, struggle with is, they think about that changing order, and it makes them think small, because they start thinking about what it will take to get to that real disruptive innovation. That changing order seems so big that they back away from it. I think worry about that, not last, but I mean, don’t think about that initially, because then it will limit you from thinking about what the value is that you could potentially bring to market.

It takes courage

Frank Mattes: That’s an excellent point, Sarah, because it takes courage - apart from the right thinking tool and management systems, the right culture et cetera, and all the points that we might be touching later on. It takes courage to leave a little sheet of ice where the company lived comfortably over the last 30, 40, 50, maybe even 100 years, and venture out into the wild. Into the unknown, because some leaders recognize that the little sheet of ice is based is getting smaller and smaller by the year.

They are on a burning platform that’s also a terminology that’s used pretty frequently. If you don’t take your future into your own hands and future-proof the company, the forces of the market will determine your future. In many cases this will not be the better option.

Sarah Nicastro: Right. Also, just a side note, I never, never take notes during a podcast, but you probably saw me doing that, because I had some thoughts that I just could not … I was afraid I would lose them if I didn’t write them down. It’s a good sign. When we were at the event in Frankfurt, you said people aren’t short on ideas. They’re short on outcomes. Let’s talk about some of the roadblocks that get in the way of the ideas ultimately delivering the outcomes.

Frank Mattes: Your audience and my clients are companies, from SMEs up to very large enterprises. They have built their organization as a machine executing the same processes over and over again. Over the years, they have fine-tuned what they need to do, doing that flawlessly and most efficiently. There’s a lot of expertise in there, creating, delivering value at scale and earning the margins.

The problem is, when these companies set up their innovation ambitions, they found an innovation center or a digital lab, or an incubator, accelerator or a corporate venture builder - there are several concepts and terminologies out there. But, for the sake of simplicity, let’s say there's a little garden where smart people can think about the future.

You see that there are two systems. On the one side you have your day-to-day operations. Where customers log in their orders, which are then processed. The supply chain does its work, and the stuff is being shipped and serviced out in the field, et cetera. That’s a day-to-day business. And on the other side, you get those crazy ideas. There’s no problem in that.

The problem arises when you try to make those bold ideas that should change the order of things big. Why is it so? Because the management system that you have, that you need for that day-to-day business is about efficiency, productivity, short term views and no risk. Risk is not a good thing if you want to have those processes. Now the people who have been playing out in that innovation playground, come out and say, “Let’s make this big. Let’s build a factory. Let’s build processes. Let’s recruit new people to sell that new stuff.” This really conflicts with the management system that you have for the day-to-day business.

This is basically the point where it all stops if you do not have the right precautions, systems, probitions in place. It stops at the point where you demonstrate, still in that innovation “playground,” a Minimum Viable Product or a Proof Of Concept. When you want to go beyond that, when you want to achieve scale, you need to have a different thinking. This different thinking is heavily geared in basically all of the companies towards the running day-to-day businesses with a monthly, quarterly, annual horizon or so.

What is the fundamental issue?

Sarah Nicastro: Let’s talk a little bit more about this then. I understand the conflict. What needs to change? How do we … And we talked about this at the event, and we talked about, and I don’t want to make you give the same example. But, we talked about the red and the blue. I remember, and using that to illustrate.

No organization can just rush to solve that problem. There’s no way to just, “Okay, we get it. Hey, Frank. We understand what you said, and yeah. We got it. We’ll go fix it.” It’s far more layered than that. When you think about this incubator, garden, playground, it’s almost like then the machine’s over here, and it’s like running into a brick wall. It doesn’t fit. To scale, we have to figure something different out. Let’s talk about what is needed to bridge that gap to solve that problem.

Frank Mattes: Thanks for that reflection on what we discussed in Frankfurt, because I think also that my experience, Sarah, that this language helps a lot in understanding, framing, and then ultimately, obviously addressing the problem. The fundamental problem between the pressure of the NOW, while at the same time, the ambition - and in many cases the necessity - to create the NEW.

The language that I introduced that rings a lot of bell, is about the red shirts and the blue shirts. There’s a famous book out there. It’s called Blue Ocean Strategies that was written some 10, 15, 20 years ago. The two authors said, “Well, if you’re battling with the usual suspects, your known competitors for the same customers with the comparable value propositions using the same channels. Maybe even the same suppliers. A lot of similarity in here. Basically, that’s a shark’s tank.” There’s a lot of blood in the water in here, because it is a shark’s tank. These companies work in what the authors called red oceans.

On the other side, wouldn’t it be great if you could find a space out there where there’s little to none competition, where you have a superior, completely unique value proposition? Where you do not have to compete. Where the value proposition is so strong that the customers approach you, basically # lowering the Costs Of Customer Acquisition. This is what the authors called the blue ocean.

In order to discuss the issue that we just touched, Sarah, it’s helpful to say the day-to-day operations, these are the people working in the red oceans. I call them the red shirts. The guys in the “innovation playground,” try to find the new value pools - these are the blue shirts.

Now, the big point in understanding and trying to work out a solution product of the Scaling-Up problem is to say that this is not about good and bad. You need both. Actually, the red shirts, they sell the products, they provide after sales service, etc. to win and to secure the revenues that would fund that search and implementation for creating the NEW. If there are not no blue shirts out there, if it’s just red shirts, chances are that with a perspective of five, 10, 15 years or so, with all the big drivers of innovation that we discussed earlier, the red shirts will find themselves out of the business, because the customers have moved on.

We need both. That’s the conclusion, right? You need to own the business NOW and in the future in the NEW. You need to future-proof the company, if you will. This piece of awareness, Sarah, I found in many companies, this is what gets the juices flowing, the spirit flowing. My clients say, "Now I understand. It’s not about good and bad. It’s not about the blue shirts doing innovation theater. And it's not about the blue shirts saying, “the red shirts, they do not get innovation.”

They are living in different systems that were designed for different purposes. That run differently that need different people even, different culture in here. But yet you need both to future prove the company. Then we can come to that million dollar question in the truest sense of words. Okay, now that we understand there are blue shirts and red shirts, and we need both of them - How can we make them work together?

Does the whole company need to change?

Sarah Nicastro: I have two questions based on what you just said. One is, and maybe this will lead into how they work together. One is I feel like I remember talking at the event about percentages: how many red versus blue and what that should look like. That was one question. The second one is as a company, let’s say a company gains this understanding, appreciates the need to set this up and not think of them as competitive but collaborative. As the innovation needs to scale, so basically as the blue idea needs to come into the red machine, is the goal for the blue team to pass off the concept to the red to operationalize? Or is the goal for the blue team and the red team, eventually, at some point to become one?

Frank Mattes: These are good questions and obviously they are interrelated. The fundamental thing is and that’s also the trick, and then the philosopher's stone if you will of future-proofing the company. The trick is to say, “Well, we need to do this in the way that we monetize, that we leverage all of the good things that we build up in our last 30, 40, 100 years of our corporate history. If you look at it, there’s so much there of corporate assets and corporate capabilities that could be the foundation of that future. The NEW with new value pools and new revenue streams.

Let me give you some examples for this corporate assets and capabilities. Obviously, the company has customers, right? It’s got a reputation in the market. People trust the brand if you will. It’s got access to delivery and supply chain channels. It knows how to manufacture products and services. It’s working with the regulators, and it’s got tons of experts in the various functions. It’s got a lot of patents, IP, etc. It’s got transactional data that you can use to train artificial intelligence models. Et cetera, et cetera, et cetera.

In my book, I have two pages of potential sources of those unfair advantages, as I call them. That’s the kind of thinking you need to put out there. Also, Sarah, that’s where I see many companies struggle. They set up that innovation “playground”. They tell those typically smart, young people with the espresso machines and the beanie bags, et cetera, “come up with something really great. Really new.” But, typically that is not connected to the day-to-day operations where the company operates in today. It’s almost like, in that situation, Sarah, as if the company would try to create a startup out in the wild. It’s a greenfield - it’s not a brownfield. But actually we’re talking about a brownfield situation.

But then in that greenfield situation, the company will never win if it’s a smart idea, against venture capitalists. If the two of us get together, we’ve got this great idea about the super duper podcast, right? We would go outside and ask some venture capitalists if they would fund us, and then we take it from there. The company can never win that.

Now coming back to the point that you raised. Quite often you’ll hear the battle cry, the company needs to become more innovative. They’re putting out the posters, train those catalysts or coaches or whatever they’re calling. They run their annual great big idea programs, et cetera.

You know what I mean?

Well, I do have a different point of view, and that comes exactly from that thought that you … It’s really about leveraging what has been created in the past. Leveraging those corporate assets and capabilities for an unfair advantage. Three of my clients said, “Well, Frank, we don’t need 100% of our staff to be really innovative. It’s only 4%, 6%, and 12%.” That’s what those three companies said. 4 percent was an automotive company, 6 percent was a bank and 12 percent was a TelCo. You only need a fraction of people who understand what those blue shirts are creating, and how this could be translated into the machine of the day-to-day business.

Sarah Nicastro: You’re saying four, whatever the percentages was, that’s how many red shirts need to understand the mission of the blue shirts? Right? That’s not how many blue shirts you have, but it’s how many go betweens. People that could wear both shirts essentially.

Frank Mattes: Yes. Yes. Blue shirts, you have a couple of dozens maybe, or a couple of hundreds if you talk about real large companies. But those 4 percent, thanks for clarifying that, Sarah, is really the number of red shirts that need to be able to understand what the blue shirts are doing, and translate it into the process the logic, the machine of the red shirts.

Take an example. The car maker for instance. You’ve got the blue shirts thinking about mobility services and stuff that play out in those mobility vessels - they call them cars today. But at the end of the day, this car and the device that sits in the car that does the magic in here, needs to be constructed. This is heavy engineering, and you want to manufacture it with a six-sigma quality, right? This kind of translation work, this is 4 percent. Four percent only.

What is leadership's role?

Sarah Nicastro: How powerful are those four people, first of all? I mean, that’s just incredibly critical to the success of all of this. It also though, leads me to my next question, which is, none of this works without leadership that gets it and understands.

Often, I see individual, functional leaders, a VP of Service or what have you that really see this, and they really understand it. But, they are reporting to a top leader who is just clueless when it comes to what this all means. What it really takes, et cetera. I mean, what would you say about the role of top leadership in this? What to keep in mind, related to that?

Frank Mattes: One thing you need to have those red shirts that need to understand the blue stuff as we just discussed. But 20 great companies and two business schools are saying, Sarah. We need more. Number one is you need to have look at the end-to-end process. From the first thoughts about where should we innovate in, to the meaningful idea, to checking - validating as they say - this idea to making that decision 'Let’s make it big' - you need to look at this end-to-end process in the right way.

It touches, as I think we already eluded to, to different management systems. Different people, and if you dig deeper, different cultures, different KPIs, et cetera. Looking at the process is really an art. It’s not a straightforward thing that you do for many operational processes, be it in production or be in service in the end.

Now, to address the leadership, well, let’s come back to that in a second. Number three turns out that in order to solve that red, blue conflict, which is not a conflict about people. But, a conflict about systems. You need to establish a collaboration model. You need to define what is to be done in that transitional phase. It is a phase, when the blue shirt gradually hand over the responsibility for scaling up, and then actually running it at scale to the red shirts.

This is basically where the scope of the blue shirts ends, and it’s good because you’re getting into really detailed stuff, and on running the machines on the establishing of six-sigma quality. This is not what the blue people are about.

Sarah Nicastro: I mean, also the blue shirts need to keep looking for what’s next, right? I mean, they don’t go away necessarily. They’re continuing to look for those innovation … I mean, that’s another understanding of all of this is we’re in a time that this is all continual, right?

Frank Mattes: Yeah. But now, let’s come to leadership. Methodology, the process, the culture, the collaboration piece, and number three, the leadership. Obviously leadership plays an essential role in here. You can have the best process with all the jumps in between, all the validation, all the technology, you might even have a set up a collaboration model. But once leadership doesn’t support it, it all cracks. If you look on our website, leanscaleup.com, there’s a visual where we say out of the many cog wheels that run in the day-to-day business, leadership is that cog wheel that takes it out and creates that environment for the unfair advantage.

It’s a leadership task, and Sarah, in my view, it’s THE leadership task, to answer the question, how can we win today? How can we win the now? While at the same time, future-proofing the company, creating the NEW. Everything else delineates from there.

How can we win today and be safe and win in the future? It turns out that you basically need to have, as they say an ambidextrous view. You need to look at the red shirts and the red system and what’s going on in today’s markets. We also need to look at three to five years into the future. How are customers shifting? Let me give you an example. Let’s remain in that mobility example in here.

One of our customers is a big truck company. They are seeing that in three to five years, their customers will not be the logistics companies any more. Actually, it will be the customers of today’s customers. They will organize that fleet of autonomous vessels and run their operations. The truck morphs into an element of logistics-as-a-service.

, and you name it and that stuff, right?

You see that and you need to make the change while being confined to today’s requirements. Your shareholders expect that you safely deliver the revenues and the margins. Your current customers say, “Don’t you dare to speak to my customers. Because these are my customers, not your customers, and these kind of things.

What you need to do is to arrange an overarching system where you say, “Well, we have some red elements in here, but also the blue elements.” For instance, if you up your great idea, and you want to take it to scale, some of these milestones during Scaling-Up need to be in the red shirt manager’s systems. If they do not see the benefit of supporting the Scaling-Up, they will not do it.

If you do have to arrange that kind of working in blue KPIs into the red shirt system, you might end up with a C suite saying, “We want to be innovative. We take on the challenge. We want to create a future.” But it’s basically stuck in the middle management level, where the functional experts and the owners of those assets and capabilities that we spoke earlier are sitting. It’s about really that leadership taking that red shirt/blue shirt view, the ambidextrous view.

Sarah Nicastro: It’s exciting stuff, but I can see why it feels daunting to some. I mean, it is a lot. It’s a tall task. But, to your point earlier, I mean it is really, really imperative that companies figure this out. That’s just the reality. All right, Frank. Go ahead.

Frank Mattes: And, and … Just one more point, Sarah. I mean, there’s stats out there. There’s stats that tell you how long is the average life span of a company that made it to the S&P 500. It’s not just Frank. You can look at the stats, and from those stats I would delineate my recommendation. You need to start about how to blend together the now and the new.

Words of wisdom

Sarah Nicastro: All right, Frank, so any other thoughts, advice, words of wisdom related to today’s topic that you want to share with folks before we wrap up?

Frank Mattes: Definitely. I mean, we started off with the Lean Scaleup, so I heavily would recommend to read into the book to absorb what those 20 companies and the business schools have worked out. I feel lucky to be part of that journey. Basically, get an inspiration on how to solve that system problem. But, I’ve got also, when I thought about this, Sarah, two or three minor but very powerful things to bring to the audience. Not to asking for changing the company from Tuesday to Wednesday. But, rather small steps, philosophies if you will. Changing the mindset.

Number two, is let’s look at one of the most successful business build ups. Companies that builds basically new businesses at scale and at pace, Amazon. Right? Jeff Bezos when he was still CEO said, “Our success correlates directly with a number of small experiments that we’re doing.” If you are very careful and you shop on amazon.com et cetera, you even see that the website changes by the day. They put a button up here, and they change the coloring there, et cetera. They want to continually look at how can we basically find clues of what might be really bad. Not just the optimization. The incremental stuff might really be better.

Also, a third piece of advice, Sarah, would be if you’re trying to tap into the unknown. If you want to really think outside the box, obviously that is territory that the C suite and the senior management of that company is not very much familiar with. Right? They know their home base if you will, all right? But they do not know the new.

There’s one concept that I recommend my clients to go with, which is a very, very powerful concept in tapping out into the wild. It’s called the skin-in-the-game concept. There’s so much studies that you can read in thinking about what the future would look like. You can speak to so many potential customers out there. What they need and what they might be willing to pay for.

At the end of the day, it’s about that they put something of value on the table. Skin of the game, right? They devote that time, and a team to co create a minimum viable product with you. They put their reputation on the line by conducting webinars to promote that new product or services. Always ask yourself, is this just theory or is someone putting real skin into the game?

Where to learn more

Sarah Nicastro: That’s a really good point. Okay. Frank, thank you so much. Wonderful conversation again. As Frank mentioned, it’s leanscaleup.com. Correct?

Frank Mattes: Yes.

Sarah Nicastro: Yeah. That’s the website. I know from the event in Germany, you had some great slides and illustrations. Obviously, Frank has written the book on this topic, so there’s some wonderful stuff. I would encourage all of you to go and check it out, because this was just the tip of the iceberg in terms of Frank’s insights.

Sarah Nicastro: So, Frank, thank you so much though for coming and spending some time with me. I appreciate it.

Frank Mattes: Thanks for having me.

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 at ifs.com. As always, thank you for listening.

By Sarah Nicastro, Creator, Future of Field Service

If you missed my recent podcast with Tony Black, President of Service at Husky Injection Molding Systems, it is worth the time to go back and listen. Tony relays firsthand the company’s recent efforts to create and rollout a new, predictive service model. As you know, I believe strongly in the value that comes from sharing our journeys and perspectives. While I’d never assume that Tony’s retelling of Husky’s path and lessons learned can serve as a blueprint for anyone else, I do believe there are nuggets of wisdom in these stories that can make a real difference.

I talk to many leaders who have passionate visions of how their company’s service model and service delivery can evolve, but struggle with execution. As such, what I want to do here is give my take on some of the points from Tony and I’s conversation that I think serve as important food for thought for others looking to take their visions to reality.

#1: Predictive Is (or Soon Will Be) Essential to Remain Competitive

Husky’s introduction of its predictive service offering, Advantage Plus Elite, was a direct result of looking to meet modern customer needs. “We’re already a really good service business with talent founded on high responsiveness, really strong global infrastructure of technicians and service centers, and really close to our global customer base. But the real opportunity was to transform our service business with more predictive and proactive solutions, centered around delivering on our commitments to our customers and maintaining those commitments through the life cycle of our product,” says Tony. “Our customers operate their facilities 24/7 for the most part and produce very high volumes. Any performance erosion or unplanned downtime is really unacceptable. Coupled with complex technology, material changes happening in our industry, and the skilled talent shortage, our customers have come to us and said, ‘We really need you 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.’”

Whether you call it predictive service, proactive service, outcomes-based service, Servitization or XaaS, the through line is that customers today care far less about your products and even services and are beginning to demand uptime and peace of mind. Companies like Husky who are taking this demand seriously and evolving to meet today – and tomorrow’s - needs will leapfrog the competition that continues to embrace the status quo.

#2: Service Maturity Requires Digital Adeptness and Automation

You can’t achieve baseline acceptable service performance today without a reliance upon digital tools, let alone a predictive or outcomes-based approach. The level of sophistication that Husky is aiming for – that any company looking to progress along the services maturity continuum is – cannot be achieved by scaling manpower alone. It requires a strong digital strategy and proficient use of technology, as well as a reliance on automation.

“Advantage Plus Elite is powered by technology we call NSM. NSM is developed by a full-time team of SMEs here at Husky. 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,” explains Tony. “We launched this officially a little over a year ago. Since then, we’ve stood up monitoring centers here in Bolton, Canada, in Luxembourg, in Shanghai, Mexico, Japan and Brazil all staffed with monitoring center specialists. When those specialists, using the NSM detect a trend or a problem, potential problem, they issue a ‘We Call You’ to the customer’s plant in local language. And this is all done 24/7. That ‘We Call You’ explains the issue, and then the solution is also explained. Sometimes this alone gives the customer enough information to resolve the issue themselves. If not, we connect and aim to resolve it remotely. The third option 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.”

#3: People (Human Centricity) Must Balance Technology

While Husky’s offering relies on automation, Tony was sure to emphasize the critical role people play in the success of the company’s new service model. This is a point echoed in many of the conversations I have – we know that for customers, it isn’t just about the guaranteed uptime or performance, but also the relationship. Customers want human touch and a level of knowledge and insight that helps differentiate the company further than simply predicting and proactively resolving issues – this is where the ‘trusted advisor’ term we hear so often come into play.

“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,” explains Tony. “That weekly meeting combined with the technology allows our customers to be hardwired into the Husky knowledge base 24/7. That combination has really proven to be powerful.”

#4: Remote Service Does Not Threaten Service Jobs

When we start discussing the role that connected assets, remote monitoring, augmented reality, and artificial intelligence play in service today – and how their role is rapidly expanding – it often causes tension or angst among the frontline workforces. They fear technology will replace their jobs. That is absolutely not the case, and an important initial step in managing change is to ensure they understand and truly believe that.

Will there be less on-site service work over time? Of course, but it remains an important service delivery model even with a remote-first strategy. In new models like Husky has introduced, any reduction in on-site work is balanced by ample opportunities for new service roles. “It’s a fallacy to think you can just have this magical AI and bots and automation, auto emails. There is always going to be a requirement for a tech base close to our customers, period,” emphasizes Tony. “The type of techs and the number of super techs you need, the mix is going to change, but they will always be needed. And again, what we’re doing is we’re creating more informed technicians.”

What’s exciting, though, is how Husky’s story illustrates the way a mature service model will create new service roles that can be filled – in part – by service technicians who no longer desire to be on-site. “There are three new roles with the introduction of this solution. There’s the program manager, there’s the monitoring center specialist, and then we have connectivity specialists who are located closer to our customers,” says Tony. “The program manager role is 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. These new roles are 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.”

#5: Execute Before Expanding

A final point Tony made in the conversation is around keeping your focus as you begin your transformation journey to a predictive or outcomes-based model. As he says, it can be tempting to get wrapped up in the potential and try to take on too much too soon, but it is best to keep things simple at the start while managing the internal and external change.

“Focus is important. As you 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,” says Tony. “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 innovating and adding insights as you go and as you learn.”

In this session, from the Stockholm stop of the Future of Field Service Live Tour, Sarah talks with Roel Rentmeesters, VP of Services at Munters, about the considerations in creating a remote service strategy. Roel discusses how to navigate resistance to change, how remote service factors in to Servitization, and how delivering outcomes requires an evolution of service delivery.

Sarah Nicastro: All right. So Roel and I have had variations of this conversation many times, but it's always a pleasure.

Roel Rentmeesters: It is.

Sarah Nicastro: Yes. Okay. So, we're going to talk about the balance of working toward innovation, a bigger vision of change, while meeting the demands of the present day business. Okay.

Roel Rentmeesters: Yep.

Sarah Nicastro: So tell everyone a bit about yourself, what you do, what Munters does and then we'll get started.

Roel Rentmeesters: Good. So I work for Munters, it's a Swedish company. We do climate solutions for mission critical processes. So everything that's related to humidity control and temperature control in critical environments is what we do, and of course, we try to do this in a sustainable way, meaning that the way our energy consumption, et cetera, for our units is controlled and help the customer in their processes. And I'm leading the services organization. It's been five years that I work for Munters, my background is however in IT where I've done field service for the last 20 years, which is actually good, because the way IT has developed their service management from call centers and network operations centers and systems to control this, is very standardized using Itel, and I think there's a lot that we can apply from that IT industry in our manufacturing world. So, that's where I am in Munters, and it's really interesting.

Sarah Nicastro: Yes. Okay. All right. So, at Munters, there's this opportunity to servitize the business, as there is for many manufacturers, also probably a fair bit of resistance to that amount of change. So, when we talk about service transformation, I think, particularly for those who are in manufacturing, looking to servitize the business, you're really talking about fundamentally an identity change of the business, and that can be challenging, so how would you describe the opportunity for Munters to servitize and what are some of the things that are driving that opportunity?

Roel Rentmeesters: Yeah. I think servitisation is fairly new in Munters compared to in other industries. We started, I would say, seven, eight years ago, I heard a colleague say in 2000 already, so we are quite new and we are, well, we have been really a traditional manufacturing company, so we build big boxes in our factories, we sell them and sales and service was a support organization, and that changed a bit, I would say 2015, or just before that, the first thing we did was change the service organization, where before it was residing into the BU's and it was pure support, we moved it into a separate business area, and that really made a transformation happen, so separate sales from the service organization, so that they don't abuse each other and started that revenue generation in service, it was quite successful and we are still quite successful in it.

Roel Rentmeesters: So, we have 15% growth in the last years of service, but still mainly in our traditional services. So it is the commissioning, it is a break and fix, it is a preventive maintenance and particularly the upgrades, so how can you maintain your units? And that's where we still are a bit today. So we have not yet evolved into real connected devices and advanced services that need to be delivered, but that is something that we need to do in the next step, and that is what is part of our roadmap right now.

Sarah Nicastro: I was just going to say, Roel was at our Paris event, which was our first and we talked quite a bit there about the journey of servitisation and the continuum, and so the phase you're at, I think, is a phase where organizations tend to reach a level of complacency, because they understand the benefit of focusing more on service and really the opportunity of the end vision, which is to actually servitize, but then they achieve a certain level of success in really that incremental improvement type of thing, and then say, "oh, great. Well, we've succeeded, so let's move on to this next thing", and that goes back to the level of change we're really talking about. So, it presents an opportunity for Munters, what are some of the aspects from the customer perspective that are making service more important, or a bigger opportunity?

Roel Rentmeesters: Yeah. You can clearly see that today in the markets, customers want more than a product, they want product with the services around it, and packaged, and they want to go into moving CapEx to Opex, lease concept, where it embeds the whole service, and they also want to have more than just a box and you repair it when it's fixed, they would like to have a sustainable outcome that you guarantee 99 of X percent of the time, that thing is delivering what it needs. Customer wants to say, "these are my requirements, and you just make sure they are fulfilled", so less down times, more guarantees and even using technologies and softwares where you can certainly even influence their environments, if you have a view on their entire production process, and you have sensors that are beyond your own device, you can do a lot of analysis in the customer environment.

Roel Rentmeesters: And one of the areas that we have it's in the food industry, it's called food tech departments. They have sensors in the entire production from the egg, up to a filet of a chicken, and they can say, if you give more water or your air quality, or your airflow is like this, what is the influence on the filet that comes out in the end? Does it take longer? Is it becoming bigger, too big to produce, so they can pinpoint what is influencing your process, and we can do the same, if a door opens, and there's a lot of external air coming in, you can say to customers, "well, this is influencing your production, why don't you have your deliveries at night?" As an example, because we see the peaks in our unit saying, "oh, something is changing in the environment, making that I need to work harder, I use more energy or I even can't guarantee the outcome performance anymore."

Roel Rentmeesters: So that's why we need to go, it's more than a box, it is things around the box that we need to deliver and customers want it, and they want also fast response times, they want to avoid even technicians going on site, that's something that you specifically saw during COVID where people were afraid of having foreigners coming into their environment. So they want different ways to deliver service than you're doing traditionally today by sending out your technician with his parts and his screwdriver.

Sarah Nicastro: So, I don't create models. Okay. We'll leave that to Tim Baines at the Advanced Services Group, but if I were to just make the continuum quite generic, so you start as product manufacturer, service as a cost center, then you move to the phase of identifying more opportunity of service and its revenue contribution, and so putting more emphasis on it, which is really where you are today.

Roel Rentmeesters: Yeah.

Sarah Nicastro: Then you would move toward true servitisation, which is, you're not selling products and services, you are selling the outcome.

Roel Rentmeesters: Yeah.

Sarah Nicastro: Okay. And then the point you brought up is a very good one is that there really is a fourth phase of this journey for those who choose it, which is, if you connect devices in the way you would need to servitize, you also, in certain industries or applications, often have access to information that your customers find a lot of value in.

Sarah Nicastro: So this is where you can bring that insight, data, knowledge into the value proposition to achieve that trusted advisor business partner type relationship.

Roel Rentmeesters: Yep.

Sarah Nicastro: Okay. So let's talk about the point you made, which is maybe in the future of field service, we go into the field less.

Roel Rentmeesters: Yeah.

Sarah Nicastro: So during the very early points of COVID, Munters recognized the opportunity to deploy remote assistance, which is an augmented reality tool, because the realities were, you had technicians that could not travel, et cetera. Now this is something that had been on your future roadmap, so it had already been a consideration, but you recognize the opportunity to get right to that. So tell us a little bit about that journey and getting it deployed initially, and then we'll talk about how, now that travel is possible and things have normalized to a degree what that means for that solution.

Roel Rentmeesters: Yeah. It was an interesting time. So, like you say, I had been looking into remote management solution before and I wanted to use this mainly internally. So we have a third line support organization for our service technicians, and we thought, "how can we have a better interaction with them, guiding them, using mixed video, two signals being sent?" And I've been looking into different solutions, and then in the World Conference in Boston, from IFS, there was a third solution that I saw, but we would be rolling it out at some point, smaller scale, it was not so urgent, it would come and then COVID hit us. So I was in Italy when the first patient came on the cruise ship in Italy, and I was with my president and we said, "if this thing's hit it's Europe or Chinese technicians were already sitting at home, they could not travel anymore."

Roel Rentmeesters: We were like, "yeah, how are we going to guarantee service to our customers?" Because this preventive maintenance is really key in our units, otherwise they break down and you get problems in your production. So he said, "why don't we roll that thing out, you have been looking for, why don't you roll it out faster?" And so I contacted IFS and I said, "I saw this solution, I like it because it integrates with your field service management solution", meaning that if you have service calls and you would use this the time you spend it to whom you called, there would be a lot of registrations done from the video link that you put in, so I liked this for a future concept, and so IFS was responding very positively to this, we got 20 licenses for two weeks that we could test for free.

Roel Rentmeesters: We liked the solution. We gave it directly to our Italian engineers who were immediately stuck at home to start doing a service with our customers, then we bought the licenses, and I think within a couple of weeks we had rolled it out for 200 technicians worldwide. A very intuitive, easily to use solution, it is, it contains already training packages inside the application, you don't need an app to be installed on the customer environment, so you can just use his web browser that he has on his phone, and just a simple tablet, something with a camera, you can use it and you can interact with your customer. We asked our technicians to train, to use it before. So they started calling each other using the solution and playing a little bit with it, and then we organized seven training sessions where they could dial into, came in with concrete questions, because they had been playing with the system, and so within two weeks we had rolled it out for 200 technicians in 15 countries.

Sarah Nicastro: So, the need for change management is minimized when there is no option for business as usual.

Roel Rentmeesters: Yeah.

Sarah Nicastro: And it was impressive that you were able to recognize the need, move quickly, get it in place, and that helped you with business continuity during those lockdowns, but now that things have changed to be somewhat more normal, it gives you the opportunity and/or challenge of looking at how does the opportunity for remote service fit into the broader service delivery strategy.

Roel Rentmeesters: Yeah.

Sarah Nicastro: So what are your thoughts on that today?

Roel Rentmeesters: Yeah. First I need to say, we saw a significant reduction in the usage of the system, because our technicians and our customers still like you to go on site, often they have this relationship as well, so it's not just anybody who is picking up the phone and doing this remote session with your customer, and in the end, technicians will always have to go on site, will always have to do field interventions, commissionings, and trusted advisor, as you mentioned, customers still like this, but it doesn't mean that this is not a solution that you can use and still use for the future. You need to have a good business model behind it, is what we talked about earlier today. You can't sell, "we deliver remote managements", you need to sell a response commitment, you need to sell a fast response commitment, proper diagnose, faster potential resolution.

Roel Rentmeesters: So you need to have something behind it, an offering and a usage behind it. So we're building up our 24 by seven service towards customers, and that will be for me, twofold. It is connected units in the future where you can interact with the unit directly, it sends you an alarm or an alert, and you do something with the unit directly, or you use a customer that calls you at night and is standing in front of that device, and you do either your diagnose, help him maybe do certain things. So that is something that I see definitely as a business case and an offering for customers. Also, when you go into outcome based services and you want to reduce that downtime, you cannot permit yourself to send a technician who goes on site, maybe has to travel for two hours, does a diagnose, comes back, orders a part, goes for a second time to fix it, you don't have that luxury anymore at that time.

Roel Rentmeesters: So you really need to have solutions that can help you reduce the downtime, and don't forget, at the same time, that technician that maybe does this one visit during the day, if he's on duty to do remote management, he can maybe serve 20 customers that day, so from a value proposition for your customers, you have a different model.

Sarah Nicastro: Yeah.

Roel Rentmeesters: Look at it also for warranty claims. Warranty claims it's a pure costs. So again, if you need to send a technician, you spend the time, you spend the costs, we now impose actually that, when a customer comes with a claim, the first thing we will do is set up this remote session, so we will diagnose with him before we really say, "okay, this is a potential claim", and we continue further with our root cause analysis and all these things. And the last thing is internally we use it, our technicians still use it between each other. The third line support is still using it, they haven't stopped using it. So there is definitely use, but I can feel that my technicians, they still like the interaction with their customers on site rather than doing the remote sessions.

Sarah Nicastro: Yeah. And I think part of the resistance around remote service is that people think remote only instead of remote first, and so it's interesting if you go back to the outside in view and putting the customer first, having these capabilities and making sure that, if it's a quick and easy resolution, they're not waiting two hours or four hours for someone to arrive just to flip a switch or what have you, and/or when you do send someone on site, they know what they're going for, so they can make sure that they're achieving resolution the first time. So what's interesting is, when you're at the phase of this continuum that you're at, it is tricky, because there's a focus on service, you've achieved some good results in terms of improving service revenue, but you haven't yet servitize.

Roel Rentmeesters: No.

Sarah Nicastro: Okay. And so, from a customer perspective, a lot of times that service is still perceived as billable hours, face time, time in person. When you servitize, the potential for self-service and remote service increase exponentially, in the sense of, you're no longer having to justify the reduction of cost of service to your customers, because you're only responsible for the outcome, and so, the difference between that phase and the next and the role that remote service can play are pretty significant. Now that being said, the one other point that I do see a lot of people having success with is, using it for training of new technicians. So we haven't talked about this a lot today, but in most of the cities that we've been to, most of the conversations I have, there are real challenges in recruiting and hiring and retaining frontline workers.

Sarah Nicastro: And so using remote assistance, augmented reality, as a way to have, one, very experienced technician mentoring five or six, or whatever new technicians in the field allows you to speed their time to value when they come on board. So there are some really strong uses, it's just a matter of, like we talked about, the technologies here, the business model and everything else is here, and so when you have the capability, but that's not yet connected to your go to market strategy, that's where some of that friction comes into play.

Roel Rentmeesters: Yeah.

Sarah Nicastro: Okay. So we talked earlier about people process technology. So in your position, you are responsible for all three, right?

Roel Rentmeesters: Yeah.

Sarah Nicastro: Which do you find the most challenging?

Roel Rentmeesters: The people one is the most important one to start with. Today, we are running initiative inside Munters, where we look into the entire end to end process and the systems that need to support that end to end process. So it's not just in the services organization, it is throughout the entire organization. It's a huge project, but we define that, if we want to move into that next stage for servitisation, the basics needs to be in place, you need to have a steady field forest, you need to have really good processes and you need to have the systems and the technology to support your way of working and systems is not one, it's not one ERP that does it all, you need to integrate it all, so technology is amazing, but bringing it all together and having it support your entire end to end process is a challenge.

Roel Rentmeesters: We've been busy with this for two years now, there's 250 people working on that project. We're about to start a pilot in end of January. So all three are a challenge, but the people are the most important one, and we've discussed it already all day long, if you don't have the buy in, if you don't include the users in this process, get their business requirements, help them see the testing, the end user testing, change management to communication, if you don't do these things, then you can have the brilliant technology and the best process, if they don't understand why and what it brings for them, they will not use it, and you will fail in such a project.

Sarah Nicastro: Yeah.

Roel Rentmeesters: So for me, people are the most important ones.

Sarah Nicastro: Yeah. I agree. Okay. So what would you provide as your biggest lesson learned?

Roel Rentmeesters: I wanted to say that change management, and I think it's something that is very cumbersome today in Munters also, because the team is working so hard on trying to get this thing to work that I think they forget about the communication, they forget about the inclusion, another thing I want to say is, break it into pieces. If you have a long term vision like servitization and it's a lot of things together, it's your process, your system, how do you connect your devices, what is the customer value you want to bring for it? It's a lot of things, you need to chunk that down and work in sprints and clear agile way, like we said before, because if you want to do it all, you're bound to fail as well. So break it down and make sure you communicate properly and do your proper change management.

Sarah Nicastro: Sounds so easy when you say it. All right, any questions for Roel?

Audience question: What is your biggest challenge, do you think, going into servitization?

Roel Rentmeesters: We've been talking for five years to connect our units and none of them are connected. So, I think the problem is a little bit the silos that we were working in, we had, I analyzed 20 initiatives that started in local organizations to say, how do I connect our units? So what are the sensors? Where should we put them? And they're all really good, but they were local little things that were done.

Roel Rentmeesters: They form a good base for what we want to do now. So we are about to start the digitalization and connectivity, we call it digital services project, and this time we're going to try to do it right. A bit like the concept you've set up where you bring different departments together and stakeholders together, you don't use only internal resources that have been in the company for a long time, but you bring in new blood with new ideas, you have a longer term vision of what it could be, but you break it down into pieces to say, okay, this and this, and it doesn't need to be low hanging fruits, just, what is it we can really do? What could bring benefit and value? And then it's communication. So that for me is key to make it happen, so to go to this next stage, and that's where we are not today.

Sarah Nicastro: I was going to say too, the customer connectivity that's required, one of the challenges I see is, Berit, it goes back to your point of bringing in sales and marketing to the conversation, because what happens is, you're going to customers saying, "we need connectivity", and they're saying, "no, it's our data." So it's leading with the need, not the value to them. So it isn't about the value it brings you to reduce truck rolls, because they don't care.

Roel Rentmeesters: No.

Sarah Nicastro: But if you can ask the question framed in how it will help them, what capability it gives you to serve them better, I'm not saying it's an easy fix, but I think that's the starting point of getting to a different response.

Roel Rentmeesters: Absolutely. Yeah, absolutely.

By Sarah Nicastro, Creator, Future of Field Service

At the Future of Field Service Live Tour event in Stockholm, I was joined for a session by Berit Hallgren, Program Director at Tetra Pak. In her role, Berit is focused on driving the company’s strategic focus on service operations optimization. Berit has been with the company for more than 30 years and is an experienced change driver with vast experience in project management and people management.

Berit’s demonstrated history of driving large, global business transformation projects within supply chain and services was clear in our discussion as she spoke to the many layers involved in achieving success with change at scale. As surfaces in many of my conversations, we touched on the fact that so much of a company’s success (or failure) with service transformation comes down to people. But Berit also shared some tactical tips that have helped her over her career ensure that a massive transformation progress through its phases to ultimately deliver the intended impact. Here, she shares her five considerations for successful transformation.

#1 – Be Clear on Your Why

First and foremost, be sure you know why you’re doing what you’re doing – when the bumps in the road appear, and they will, you need to hold to your why to keep things on course. “Be clear on why you are doing what you’re doing,” says Berit. “What are the problems you want to solve? Because if that is not clear, how can you communicate to your audiences?”

Make sure your why considers the needs of all relevant stakeholders. For their current program, Tetra Pak began with a thorough analysis. “So, the first thing we did was an analysis. I brought together a team with finance, HR, market experience, service experience, and project management experience and myself,” explains Berit. “We did a detailed analysis to understand what are really the areas that we need to transform and how do we make that happen? Our objective came out through that analysis.”

#2 – Know Exactly What You Want to Transform

A vision of your ideal finish line is not enough to get you there, however. “And then, you need to determine what are the areas you want to transform in the end? It must be very clear for people, so they understand we are not going everywhere. We are going in these specific areas,” says Berit.

For Tetra Pak, the analysis resulted in four objectives and four levers, or ways in which the company will meet its objectives. This is clear and consumable, helping the company stay focused on the purpose of the journey and making the “how” simple to understand.

“It’s exciting to have a clear vision of where we want to go, but we need to do that in a step wise journey. Always putting the customer first and putting the employees first as well. That's really what excites me – what we can bring to our customers, to our employees, and also to the company with this whole transformation and the new opportunities it brings for the future,” says Berit.

#3 – Get Outside-In Perspective

I believe this is a consideration that companies often fall short on, because there is immense value in outside perspective. “The outside in perspective is super important as well,” says Berit. “That I would also really advise. Successful companies can tend to focus more on themselves than on the customers and the outside input, but there is a lot of value that can come from doing so.”

Getting some outside-in perspective can also help you to benchmark where you are and where you desire to be to help guide the transformation. “Being able to show to the organization, ‘This is where we want to go. This is where we are.’ That becomes really, really powerful,” adds Berit.

#4 – Communicate Change in a Personalized Manner

It’s critical to communicate effectively around change but doing so in a personalized manner is the key to that communication being impactful. To do this, you have to know your audience well and communicate the aspects of the transformation that are relevant to them in a way that resonates. “‘What's in it for me?’ You need to be able to explain that for the customer, for your employees, and for the company as well, because it's not the same message to all of these people,” explains Berit.

Often a company develops one narrative around its change and uses that message with the masses, but this impersonal approach doesn’t take into consideration what matters most to each intended audience – which limits the ability to gain buy-in and commitment the way a personalized approach will.

“We have a clear communication plan for all of our projects, of course. Change and communications work closely together. We have a change manager for the program because if you don't take change management seriously, there is a huge risk for failure,” says Berit.

#5 – Have Courage

This was my favorite point of Berit’s, simply because it was so clear that it is a trait she exemplifies that has helped her track record of success over a long career at Tetra Pak. “And finally, have courage. That's probably one of my stronger skills. I'm persistent, ‘So, okay. It didn't go this way. Let's try the other way.’ Because you need that when you drive a big transformation. You have to be persistent, because it will take time. There will be challenges, but it will happen if you have decided it will happen,” she proclaims.

Rainer Karcher, Global Director of IT Sustainability at Siemens, joins Sarah to discuss why service-based business should be prioritizing sustainability, how to do so, and what the future holds related to regulatory pressures, customer expectations, and investment decisions.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today we're going to be talking about why and how service should be prioritizing sustainability. Now, I'm excited to welcome to the podcast Rainer Karcher, who is the Global Director of IT Sustainability at Siemens. Rainer, thank you for being with me on today's podcast.

Rainer Karcher: Thank you very much for having me, Sarah. Pleasure being with you.

Sarah Nicastro: Rainer was one of the speakers at the Future of Field Service live tour event in Frankfurt. We had a great conversation, so great that I asked him to come and join me here on the podcast to talk about some of the key points that our audience needs to be thinking about when we think about sustainability.

Rainer, I think at the event we talked about the fact that not everyone eats, sleeps, and breathes sustainability in the way you do, but we all need to be prioritizing, becoming more mindful and more proactive about it right now. It's a very urgent thing. We're going to talk about that a bit, some of the reasons for that; but more specifically, some of the things that are particularly relevant for service as it relates to prioritizing sustainability and making a positive impact on our environment. Before we dig into that, tell everyone a little bit more about yourself.

Rainer Karcher: Thanks very much. I'm based in Munich here in Germany, and as you already introduced, I am responsible for sustainability within IT in particular at Siemens. this is a global role which is focusing mainly on three different pillars in regard of sustainability, which is already describing a bit the definition of what I look at and how I look at it. First of all, it is the sustainability slash Green IT. Making ourselves, making all the services, what we provide to Siemens internally, which is around 300,000 employees worldwide, as more sustainable and as less environmental impactful as possible.

The main pillar of the second pillar is to drive the ambition targets of Siemens as a company with IT digitalization data analytics. So, this is the it for sustainability pillar. The third one then is the IT to society aspect. So wherever digitalization can support societal aspects like education and supporting with equipment donations. So, this is then the third aspect, which is part of my role. I'm doing that together with a small little team. To drive the company, this is, I said, already a governmental role so I'm the one defining the strategy for the company and trying to then involve all the operational units and the responsible respective service owners who is then adopting and just translating what I come up with then into actions and into measures.

Sarah Nicastro: Good. This is a topic that you are very, very passionate about, which means that you also spend a good amount of your time coming to events like you did in Frankfurt and speaking here on the podcast. Even when it's a bit outside of your day-to-day, you have taken it upon yourself to educate and evangelize the importance of the topic. What makes you so passionate about this topic? How did you initially get interested, involved, and ultimately to the point where you've made a career around this?

Rainer Karcher: Thank you very much for asking that question, Sarah. It is always, to think about, is that something where started at birth? Is it something which I had been green and sustainable from day one on? Without any doubt, I had not. It was in particular, my wife being pregnant with our first daughter, in the meantime she's 11 years old, and with a pregnancy, we started thinking about what is the future for our kids looking like, and what is clothings, and what is food, and what is the whole surrounding we are living at, and how can we make that more natural? How can we make that less impactful in regard of pollution and noise and all of that. That was the starting of it. It led me to then furthermore environmental aspects to support local NGOs, local charities, which are here based in the Munich area.

It brought me more and more into the whole area of understanding what sustainability is all about. The term itself, nowadays, if you look at it, is mostly understood with climate, with maybe decarbonization, and with carbon emissions in the atmosphere. But sustainability itself is so much more. You just already mentioned this, I'm in particular stepping out of my regular comfort zone, I would say, and getting to events and taking invitations like the ones I get from you and appreciate it to be able to speak to and get influenced by others and maybe inspire them as well. So everything I do in the meantime is based on the United Nation's Sustainable Development Goals, and one of that 17 goals, the last one, SDG 17 is on partnership for the good. Partnership means work together, collaborate with others, in particular, and you said that as well already, we have to join forces to act now.

We don't have the time to maybe delay and just invent the wheel, everybody by itself. We need to come up with a very quick and fast way of acting and making things happen. This only can be done if we do it together and join forces; meaning, to share knowledge, to share the experience, the good and the bad, just share what has happened good, and what was maybe not successful to just avoid everybody else making the same mistakes. And so, this is maybe how it turned more and more from at the beginning, a very little thing, into something which became my biggest passion. I mean, maybe this explains why I, as a typical IT guy, in IT since 24 years, then had the opportunity to turn two years back from a standard type of an IT person into a sustainability IT person. Nowadays I'm speaking both languages, translating between both worlds, and this became exactly, as I said, my biggest passion.

Sarah Nicastro: That's really cool. I think it's interesting how having kids changes you and your perspective. Just really gives you that broader and longer term awareness. I mean, even it's such an interesting dynamic. You think when you're young, you think you're invincible. The older you get, the more you realize how precious everything around us really is.

For this podcast, I mean, what I want to do is give people a sense of some of the areas of impact that ... We talk a lot on this podcast, Rainer about the fact that service leaders are already tasked with so much. They're supposed to keep up with the day-to-day business. They need to meet the current needs of customers, all the while innovating and thinking about how service delivery is evolving, et cetera. My goal is not to come in here and say, okay, and now also, this also needs to be your number one priority. But the reality to your point is it needs to be a priority for all of us. So I just want people to have it be a part of their consideration and decisions. Because as we're going to talk about, there are some things going on in service that can have a really positive impact on the environment, but also a positive impact on the business and some of the goals that these folks are working towards.

We're going to get into some of the service related points, but before we do that, I know you were at a few conferences this week talking about these topics, et cetera. Just to set the broader stage for those listening who might not be themselves involved in sustainability day in and day out, can you just talk a little bit about where is the most progress happening and what can we learn from that? And what are still the biggest gaps and obstacles we need to overcome?

Rainer Karcher: With pleasure. Thanks for that very important question. I mean, it all starts with transparency. To be sustainable, you first need to know where you currently. That is for nearly everything. If you don't know how much waste you are producing, if you don't know how much miles you covered with business trips, if you do not know how much gas you burned with being physically present with your customers or with anybody you're just trying to support, if you do not know what the carbon emissions are caused by, for example, data centers, which has been operated by yourself or where you host your services at, then you're not able to influence it in any way. Therefore, and this is the biggest progress which has been made from my perspective within the last 7, 8, 9 months, that where it was quite hard as I started my job two years back to get any kind of information in a reliable way without the big chance that there is a lot of marketing part in it as well, and this still happens from time to time.

So the typical term of greenwashing, some of most prominent things is carbon offsets at the moment. A lot of products are declared carbon free or carbon neutral. The reality is that there is mostly offset certificates behind. The product itself is still the whole same thing. Nothing has been changed, no optimization, no increased efficiency, so that the environmental impact of that product still is the same but there is now a sticker on it because it's a very nice prominent thing. It's just paying an offset price, which is way less than the environment impact itself would be. Therefore, what we need to have is a transparency, and we've got that. And the numbers and the reliability of those numbers is now helping to understand what can be done.

In particular, the aspect of energy efficiency, if it comes to understanding how can it further improve consumption of electricity, for example. This is something where we've already made good progress as well. If you take the example of hyperscalers on cloud service providers, they do tremendously good things now and have a good progress made, all of them in the last couple of month, in just optimizing the data center structure and the surrounding in that remark. But this is only one of the aspects, and there is plenty of others where we still not a clue of how to make things happen and whether is standards missing.

One of the aspects which we are currently looking at is a so-called product passport, which is describing the product footprint and the environmental impact of a certain product, which can be even a service. It doesn't have to be physical products. It could be a service provisioning in regards to software, for example, as well. The problem with this is there is no standards defined, which are globally available, and which are then valid to make it comparable. With that, we have hard times in, first of all, getting reliable numbers. Then secondly, we have hard times in calculating and finding algorithms, which are then helping to understand what then a certain type of a component or a product, meaning copper or iron or whatever it might be, what that means from an environmental impact, and how to then measure it. Again, back to what the starting is all about, it is the transparency which we need to have to make things happen and to change. This is something where we are still at the beginning.

In certain aspects, we do have an idea of how to drive things and in certain others, we don't. One thing which I'm always pointing towards is biodiversity. Species, which is maybe even a bigger crisis than we are already facing than climate, and nobody is really having a clue currently. Even the most famous scientists and biologists don't have even an understanding of what could be done and what would be the solution to drive things different. But we have to report that. Why I mention that in particular, now the audience could mention, well, that is an IT guy. Why is he talking about biodiversity? Well, there is directives coming across. Here in Europe, for example, just two days back from the European Commission agreed a so-called CSRD, that's the Corporate Sustainability Reporting Directive. This is hitting companies with a large than 250 employees from the year 2024 on, looking backwards to data from 2023.

This is nothing which is way above in the future. This is quite close to us. That's 107 KPIs from which there is a certain amount facing towards biodiversity. So we need to report what is the current influence on production sites in regard of species, bees or insects, and what is maybe lighting of those buildings having effects on. So, there is a lot of things where numbers are required, where measurement is required, where we don't even have an understanding how to get to the numbers and not even a clue then how to get influenced and maybe then further improve it. So, this is one of the biggest challenges which lies ahead of us.

Sarah Nicastro: I just thought of one other question I want to ask. So, yours is a global role. You're based in Germany, but yours is a global role. What, I guess, region of the world would you say is farthest along and is lagging behind in terms of overall focus and progress related to the topic?

Rainer Karcher: That's a very difficult question to answer politically correct, but I'll try my very best. I mean, in general, you have to always try to get the perspective of people who are affected and who do have a special situation and special challenge they have to face. It would be an easy one to point towards China, towards India, to say, well, as long as they are burning coal as hell, why should we change things what we do? But first of all, we need to understand why things are happening in China, which are happening, or in India. One of the aspects which I didn't had a clue about is that in India, there is still around 80% of households without electricity. Burning coal for them means just fulfilling basic needs. That is cooking, that is heating in winter times.

That is not, in a way, like we look at it. For us, it might be an easy thing to replace coal with more renewable energies and sustainable way of creating electricity. But for India in particular, it is a very much difficult situation. So therefore, it is not something you can just easily point towards and say, "Well, they are behind all of us and lagging behind of us." What I would look at it is a level of awareness. If you just now treat the European world and the American world in particular, I think we do have, at least from an awareness perspective, we are on top. We know way better than most of the Chinese, the Asian world, or the Southern American world, what the current consumption and current emissions look like, what we are responsible for, what the effect is of what we are responsible for with a day-to-day consumption, with whatever we do for business purposes.

From that point of view, I think we are ahead of us and we need to be, because this is the second thing and that's a message which I would like to point towards as well. The current change in temperature, the current climate crisis which we are already seeing, the first outcome of, is a outcome of what we had been responsible for. And that is for a particular reason. Carbon is nothing which reacts immediately. It's not the carbon, which now is being emitted which is reacting a day or two later. There is a time spanning between. This is around 30 to 35 years. The changes which are happening right now is caused by energy emissions by carbon which has been emitted 30 years back. So if you now look at India and China 30 years back, it wasn't them consuming and emitting the most. It was us.

And so, therefore there is a responsibility and we have therefore, at least a bit of a lighthouse function there as well. We need to be front runners. We need to show that we are able to do things different, and we can do things more in a sustainable way and in a different, in a more responsible way than what we've done in the past. Then I am just 100% sure that the Asian world, China, India, and the Southern American world will follow. I hope I answered that in a politically-correct way without pointing towards anyone.

Sarah Nicastro: I realize, and apologize, it may have been a bit of an unfair question. I think the reason I was asking that is because I see Europe being further ahead with this than even the US. I mean, I'm in the US. I think that there are pockets of greater awareness, pockets of greater focus, but there's also pockets of sort of a, I think sometimes you still have a mentality of, "Well, it's not my problem," or "I get it, but I only care about or am so tied to the pressure of this day-to-day stuff."

And so, one of the things I wanted to point out before we talk about some of these specific areas of focus is that while I absolutely appreciate and respect your personal passion for this, that it does not need to be shared to that degree by people to have a positive impact. What I mean is, the content that we're going to share here is not only applicable to people who altruistically want to prioritize this because they care as much as you do. The reality is there's a few other reasons that are very important to consider what we're about to share. Yes, it is the impact and the fact that we should care, but it is also the fact that a lot of the things we're going to talk through simultaneously can positively impact the business and the bottom line and the environment.

There's also the fact of, as you mentioned, particularly in Europe, there are regulations coming along pretty quickly that are going to force more focus on this. I think that will also be the case in the US. So, there's an argument for, don't wait until you're behind to try and catch up. Get ahead of it. Put some emphasis on it now, so that you're in a better position and you're not having to be reactive.

Finally, I think it's a growing reality that your customers, meaning the people I'm speaking to in our audience, care more and more; which means, they're going to be looking more and more closely at this and expecting more from their providers and partners. And so, those are all reasons outside of just genuinely caring that this demands focus from service organizations. So I just wanted to make sure folks understand that even if they're not as personally tied to this topic as you are, they don't need to necessarily get to that level to share the passion for the impact of it, which is also in those other areas. Does that make sense?

Rainer Karcher: If I may comment on that, it does totally makes sense. Thanks for bringing that up. I mean, this is something which I think the history just showed. I mean, science is pointing towards climate crisis this nearly 100 years. So there is scientists all over the world, independent on where they are, which are trying to understand and making us understand what the outcome is of what we do on a day-to-day basis. And so far, unfortunately, it had not been understood in a broader way. There is one term which I always try to come up with, which is, it doesn't require to have a handful of people doing everything perfect. It requires a majority of people doing a lot of things in the right way. This is then the bigger impact.

So exactly as to say, we need to come to an understanding that there is many different ways why it is a good thing and a good idea to take things different and make it a more sustainable product, a more sustainable service in the future than what had happened in the past. You mentioned already the legal requirements, which is indeed one of the major aspects. I mean, the European Green Deal which I've just pointed towards is only one out of currently seven green deals. There is one which is in the US, active and coming up as well. Same for Southern Europe, same for China, same for Asian world. So, that's one of them.

There is the customers. You said that as well. More and more customers are demanding to see what is the outcome of a product, in particular if it is within the supply chain. So pointing towards ourselves, Siemens is working with 65,000 tier one suppliers. To have a transparent view on what's going to happen, I just can't demand it. I need to work together with them. I need to just support them in getting the transparent view on that. Then are we able then to provide the environmental impact aspects to our customers only in a joint approach then as well.

One thing which is coming on top beside the public opinion, which is I think, worth mentioning as well. So it's not only a public opinion, but then employees or future employees. Talent attraction comes here into the game as well. Gen Z, who is coming from universities or used to be prior to pandemic standing on the street we defined as the future, they are the ones not working for a company who's not taking things serious. And so, to be able to proceed with our business, we have to be attractive for people who are interested in sustainability in a real way.

But one thing was, at least I do see in a very increasing way since now six months is investors. We at Siemens are very much faced from investors who are asking and demanding to see real action. They want to have it in a quarterly basis reported what is the KPIs, what Siemens is working towards in regard of sustainability measures. Not only carbon and decarbonized world, but there is female sharing management. There is learning hours of employees. There is diversity, equity, and gender equality aspects in addition. There is so many things which are now demanded from investors. I mean, in that remark, we are talking about money and about financial investment.

If the investors define a company who is somewhere listed and stuck, not as sustainable anymore, and they're pulling out their investments, then we know the outcome. So that's something which I think is hopefully convincing that there is more than just the environmental care aspect. There is more than just taking care on the future of our planet, which should be anyhow a basic for everybody. But without that, even if you're not convinced of things, there is a list of reasons now and requirements which are hopefully bringing you to convince yourself that this is worth thinking about it.

Sarah Nicastro: For sure. All right. At the event in Frankfurt, we touched on a couple of different things that are specific to field service and service that I want to run through. We don't need to get super detailed on each, but we'll just surface these as points for our audience to consider that both can benefit the business but also have a positive impact here.

The first is optimization of resources, particularly related to dynamic scheduling and routing and making sure that we don't have a lot of waste in travel. And so, are we making sure that we're paying attention to first time fix and getting resolution to where we're not doing repeat trips, and making sure that the person that we're sending has the right skills, has the right parts, so that we're not just wasting time on the business side, and then all of that travel on the environmental side. So, that's one. Anything you want to point out there? Or I can just run through these and then we can talk about any of the things that are interesting.

Rainer Karcher: Well, maybe I can give an example of exactly that concrete idea, what you just said to avoid maybe travel, to avoid then the energy consumption or burning gas, in that remark. One thing which my former colleagues from Siemens Energy who is now a separated owned legal entity, so therefore it's nothing which is in my influence, but I think a very good example worth mentioning. Maintenance on windmills or power plants is very specific and requires a lot of experience and a lot of knowledge and understanding. Therefore in the past, it had most been Siemens' employees, technicians from us, who had required to do the maintenance on site. So whenever there was even some little issues, it was always some Siemens technicians physically traveling to then the power plan, to the windmill, to make maintenance or repairing aspects.

What we've then achieved is the way to support customers who are on site and who are anyhow there which might not have the right understanding or experience based on their level of work with a remote way. So there is now a type of augmented reality combined type of maintenance way. There is a tablet which is combined with a helmet camera with inner devices, which is then leading a technician remotely. The Siemens employees, the experienced experts, are sitting somewhere in Siemens headquarters and guiding an onsite technician who's anyhow there through the whole process. There is the information about, I don't know, maintenance parts, part numbers, how to dismantle or mantle some components being displayed then in an augmented way into glasses, or then on the tablet, helping him and supporting him. This is avoiding a huge amount of physical travel and is therefore helping to protect the environment as well because of avoided emissions due to travel. That's just one of the examples exactly facing towards what you said.

Sarah Nicastro: I had that on the list as well. I guess the reason I'm considering those two different things is only because in the situations where it is actually essential to send someone, then let's make sure we're doing so in the most efficient way. So, there's two parts to that: make sure that we're eliminating the things that are not essential; and then make sure that when the visit is essential, that the person going is prepared and has what they need so that they don't have to go back and forth. The remote service and remote collaboration capabilities is another really good point. I think that comes in a few different ways. I mean, certainly there's the element of exactly what you said. Can we use remote assistance, augmented reality to help customers resolve issues that historically someone would go on site to do that are quite basic, that they're probably quite capable of. It gives them faster resolution and it avoids that travel.

We also see this though with things like, even internal to an organization. I'll give you an example. We did a podcast a while back with Munters who implemented remote assistance at the very, very beginning of the pandemic because their technicians could not travel. And so, this was their sort of business continuity plan. But what they ended up finding once they were using it is that when they used to open a new production facility, they would send all of these internal experts there to essentially do what was more of like a quality check. More of an assessment. Now they can do all of that remotely. So, they started to find all of these other ways where it was this technology that allows you to see what someone's seeing to annotate and to provide that type of guidance as if you were also there. There's a lot of situations where that can come into play and really alleviate the need to do as much in-person service and travel. So I think that is a really powerful, powerful thing.

The other thing is if you have technicians again who do need to be on site and they get stuck, They don't know how to complete the job. If you have that technology and they can get help from the back office again, you're avoiding a repeat visit. So, there's quite a bit there between the remote service and the remote collaboration tools, and then making sure that when travel is necessary, it's done in the most efficient manner. Those are things that have a positive impact.

The other one that came up at the event is a greener fleet. And so, what are you seeing in terms of trends of fleet selection and replacement and what opportunities there are there for people to make better choices?

Rainer Karcher: Maybe if I may, I could comment, first of all, to the first point which you came up with, which I 100% agree to avoidance and something to just be quite well aware of what is important, and if there is someone locally required, then to have it as much efficient as possible. One thing which is in my mind is prediction. What we do, in particular with IoT devices, our trains, for example, are producing a huge amount of data which has been used to predict when there is maintenance required.

What we are able to do with that is we can predict where at that moment a train is being physically located if we have to exchange certain parts, if there is a maintenance required. We are able to predict as well, what components might be required, what kind of replacement components might be required. So what we avoid is then that a service technician is in an urgency call somewhere, and then is required to, first of all, identify what type of components are required. Then as soon as he's there, and then he has to maybe order those replacement parts because they are physically located in the same area.

And so, this is first of all, a massive increase of timing. We are way less efficient if we don't have that opportunity. Secondly, it is having a great impact then in regard of maybe a second or a third type of travel back and forth to be able then to do that maintenance or replacement. If you can predict it with using data, with using IT and technology, this is helping in all various aspects. It is increasing the service quality. It is increasing the speed of maintenance. In particular, it is lowering cost. It is lowering efficiency ... not lowering efficiency, lowering emissions in regard of increasing the efficiency. So therefore, I think this is something which can help here as well, and is just a way which already exists. This is not artificial. This is not a future part. This is already something which is there.

Coming towards the question of fleet, indeed for us at Siemens, one of the biggest, biggest portions of greenhouse gas emissions is indeed fleet because we have service technicians and service cars running and for several reasons. Well, for sure, this is the typical type of diesel engines which are being used. One of the aspects is, for sure, electrification. Electrification of fleet and of fleet cars in particular is something which is definitely one of the ways to treat it, because as soon as I've electrified, I can make use of renewable energy as a source, and that is something which helps then to lower the emissions.

Is that the answer and the solution for everything? Well, I mean, that question is as much treated as the question is electrified cars the solution, or is it something which is even worse? Well, my perspective is electrification is the currently only way what we have as an alternative. We have to stop burning fossils in general. There is no alternative and there is no way in keeping what we have. The only way possible is then electrified. Well, this is quite harder, and this is maybe one of the big differences between the US and Germany. I mean, in Germany, the size of the country is just way, way lower and smaller. So with the current capacities of batteries, of electrified cars, we can cover most of our country.

I mean, in the US, some of the US states are the same size than what Germany is all about, so this is harder. Therefore, it requires, for sure, more solutions. Maybe there is some upcoming things with hydrogen, which might be worth looking into, but this is more a future thing. But in particular is I think worth looking into it from, again, the efficiency perspective, if you know which distances had been covered and for what reason you are able maybe to optimize it. Maybe you can just combine ways. Maybe you could just combine some of the trips back and forth and reduce the amount due to knowing what the whole situation is all about. And this is again requiring data.

Sarah Nicastro: It's a good point too, about predictive, and to your point, not only predicting issues and failures and getting ahead of that, because the more you can be proactive, the more you can plan intelligently and in a way that is beneficial. But also to your point, predicting parts needed and coordinating that into everything.

A couple more points to get through. The next one is related to servitization and the move toward as a service. This to me is super exciting because essentially what we're talking about is manufacturing things for lifespan and serviceability versus initial purchase price, which allows us to put more innovation into creating things in a more sustainable way. Then, if a company has shifted to as a service, any of the efforts they put into creating more efficiency, lowering the cost of service, et cetera, benefits them, benefits the environment, but the customer is essentially paying for the outcome.

Then the other part of this is around the circular economy where traditionally a customer purchases an asset, so let's take an HVAC unit. The manufacturer then provides service on that. But at the point that the customer moves to a different building or needs something else, the manufacturer has no visibility or control over what happens with that asset. So in and as a service model, they are able to swap assets in and out of different situations. They're able to put them back into use with another customer. They are able to remanufacture, et cetera. I think this to me is such a big area of potential of where service and sustainability can really come together.

Rainer Karcher: 100% agreed on that.

Sarah Nicastro: What are your thoughts?

Rainer Karcher: 100% agreed. I mean, to stick the example of cloudification and hyperscalers, hyperscalers are itself enforced to be as much economical optimized as possible because of cost efficiency. That's their main interest: to make a data center as much filled from a load perspective as possible to make it as much energy efficient as possible because of economic reasons. What we, as IT companies, are mostly consuming is then a service. So there is exactly the way from what you've described, a way from what we've done in the past with on demand, any kind of own operated data centers and servers to as a service models within the hyperscalers. What it created is a huge opportunity.

So this is theoretical values and very much the optimized way, but there is a number which is calculated from all of the hyperscalers. If you put systems from on-prem data centers into hyperscalers, there is a chance of reducing carbon emissions by 80%, eight-zero. I mean, this is just showing what the opportunity is all about. Exactly, as you said, there is so much more in it because of the responsibility, which is then shifted from the one who is consuming to the one who is providing the service. I think this is something, whether it's huge opportunities to take influence in so many different aspects.

As you just mentioned, that topic of circle economy, I would like to come up with another example. We are worldwide active as a company, 300,000 employees. That makes it 300,000 end user equipment devices. That means laptops, smartphones, any kind of equipment which is used on a day-to-day basis, which is exchanged after a series of time. At the current situation where we purchased the devices in most of the countries, we have to take care on refurbishment or recycling afterwards. If there is a as a service topic, which by the way is being worked on from our perspective at the moment for those equipment, I do have 100% secured that there is a partner which is reliable, which is documenting what he's doing in a societal and environmentally friendly way, what is happening with those devices after using them. And this is something which helps us backwards to the reporting aspect, which I've spoken about. So all the directives, they do have certain KPIs within which is focusing exactly on this. Refurbishment rates, recycling rates, which we have to document.

Secondly, I can't be ensured that there is not a partner, maybe treating things wrong and just making money out of. I do have, therefore, I think, a huge impact with as a service constructions exactly as you described that into various different aspects as well. It makes it a win-win for both sites, because I think this is something which is not only helping those who are consuming, but those who are providing the service the same way.

Sarah Nicastro: That's the thing. Going back to what I said a bit earlier, that's what I want to encourage people to do, at least initially, is look for those win-win scenarios. I mean, this doesn't have to be something that is just a cost. There are areas, if we're smart about this, that can impact both the business and the environment positively. Let's focus on those things at least, and the low hanging fruit, if you will. Then maybe as we make some progress, you can shift toward investing in a new fleet or what have you. Right?

The last thing on my list, and we've done a couple of podcasts on this. One was with bureau Veritas, one was with Tetra Pak, and it's around how those organizations are creating new service offerings for their customers around sustainability. Looking for ways to help their customers focus on their sustainability efforts. This obviously depends on what industry you're in and what types of customers you're servicing. But there is a potential opportunity to look at the option of increasing your portfolio of services by helping your customer base focus on these same things. So, go ahead. Were you going to say something?

Rainer Karcher: I was just going to, again, echo what you said and agree of what you said 100%. This is something I would like to particularly mention, but because there is so much more chances than challenges. I mean, the topic itself is currently on everybody's focus. It is a priority topic. Anyhow, it's quite prominently spoken about everywhere and there is huge, huge opportunities being created out of that aspect. It is something, if you treat that right, if you just be the one taking things serious, you can just separate from competitors, even in that remark as well, and show things which are then valuable. I am 100% then sure that this is a benefit, then not only for the environment, not only for the customers, but for the company providing that service then as well. This is something which is definitely more worth mentioning than just avoiding it and just bypassing and saying, "Well, I don't mind. This is not something I have to look into." I just wanted to agree with you.

Sarah Nicastro: For sure. Two more questions. Let's talk about why companies shouldn't wait until this is more of a mandate or a more urgent customer pressure to start prioritizing these things now.

Rainer Karcher: Well, first of all, there is, they already mentioned directives, which are quite quickly hitting us. If, and now, again back to Europe, look at the timeline, we have to start reporting by January 1st, 2024, which might seem to be far away. But we have to report numbers from 2023. If I do not start collecting those numbers in less than six months, I don't have anything to report at. This is the first. Secondly, the sooner I get into this, the more time I do have to be proactive and not just wait for someone to push me towards something and to enforce me to do something different. Third, I think it is quite of importance to show proactively that we are taking things serious in our enterprises, in our companies, in our surroundings, not only to show to competitors, but to show to the consumers, to our customers as well, that the current perspective is on priority aspects like the sustainability topic is, as I already mentioned.

And so, with that in mind, I think it is more than just one reason why it is of importance not to wait for it beside then the fact that this is once again my passion coming into this. If you take the latest IPCC World Climate Report, it says clearly and points to what the remaining carbon budget. So the emissions, which is able to be covered by the planet to still stick with one to five degree global warming. This is a timeframe of less than seven and a half years. That time window is closing dramatically and the longer we'll wait, the harder the cut has to be. The longer we wait with reducing carbon emissions and keep going what currently by the way is the case.

So after the pandemic, obviously, well, it seems to have stopped even if it probably still is there, but it has not been as prominent at the moment anymore. The emissions are going up at the moment and not going down. What we would have to do? And so, the longer we keep going, the harder the cut has to be. This is something which I think makes it worth looking into it already right now and not wait for it.

Sarah Nicastro: That makes sense. All right, so last question. Stepping away from the business conversation and tapping into more of your passion for this topic. For the folks that are listening who do share some of your passion and recognize the criticality of all of this, are there a couple of things you could point to that as individuals we could focus on to contribute and have a positive impact?

Rainer Karcher: Yeah, definitely with pleasure. Thanks for that question again, Sarah. First of all, don't feel alone. There is plenty of you and of us with the same passion, with the same awareness, and we're getting more. This is the first thing. And joint forces means get together. Even if you're at the starting, don't get disappointed, don't get overwhelmed with all the terms and all the specific areas to look into.

Secondly, don't get disappointed with the overwhelming amount of negative messages which are coming across. There is always a chance to be in a changing position. The change starts with ourselves, exactly as you said. There is sometimes just a little thing. So if you look into the electricity topic, I mean maybe unplugging devices instead of keeping them in standby is one of the first things. This is not influencing only carbon emissions, but your own wallet as well. Because, I mean, energy is getting more and more expensive. If you unplug, this is reducing. A number just to throw at, if you keep your laptop plugged in all the time, 365 days, 24 hours a day, this consumes, even if it's just in stand by $50 per year, just with a standby instead of plugging it off. $50 in my wallet or not makes a difference. This is one of the examples.

Same is with usage of devices. Is it required to exchange the smartphone every two years? Well, the vendors just want us to, and the marketing wants us to. Is it from an environmental perspective, the good thing? It's not. The longer we use it, the better it is for the environment. Then it goes just in the same way with making use of data. Nowadays data and taking the example of a smartphone, pictures are stored mostly in cloud, and it doesn't even cost you a thing so you just forget about it. You take plenty of pictures, you forget about it. They are stored somewhere. Well, the problem with that is we have billions of smartphones all over the world and everybody is using the same thing and doing that picture thing. Whatever is being stored, a single picture currently is with a resolution of modern smartphone, seven to eight megabytes.

If you just sum that up with that multimillion of pictures being taken day to day, there is storage systems behind. And one of the most increasing topic currently is data centers and the energy consumption of data centers therefore is increasing because of we are just not thinking about it. So get aware of what you do, get aware of what the current situation is, of what your behaviors look like, and change. As I've said, the change start with ourselves. If you change our behavior with the little things, all the little things combined make big things as well and make a big step. This is then getting, I think, the stone rolling and hopefully leading then to a bit more of awareness and for the next steps.

Sarah Nicastro: Okay, perfect. Thank you, Rainer. I really appreciate it. I have immense respect for your passion on this topic and your insights, and I'm so thankful for you to come and share with our audience and give them some food for thought.

Rainer Karcher: My pleasure, and always coming back if you want me to. Thank you very much, Sarah.

Sarah Nicastro: Excellent. Thank you. You can find more on this topic and many others 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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A Service Transformation Deep Dive with Electrolux

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