In a session from the Future of Field Service Live Tour stop in Dusseldorf, Sarah talks with Lucas Rigotto, CSO of GEA, about what it takes to make – and keep – service top of mind in a business with a rich legacy of manufacturing products.
Sarah Nicastro: Okay, so we're going to talk about bringing service into the DNA of a historically product-centric business. So back to change, right?
Lucas Rigotto: That's what I love to do.
Sarah Nicastro: Before we do that, tell everyone a little bit about yourself.
Lucas Rigotto: Yeah. I am Lucas Rigotto, originally from Brazil. Always in services, my entire career. And from fixing machines I started fixing projects, processes, building foundational organizations in services, training, remote support. And then did a lot of restructuring in my career for making services good for the customers and making services good for the business, as well.
So I had the chance to evolve. During some years, I was commuting between Brazil and Germany every week, until when we decided it was time to move here. Spent most of my career with what was General Electric Healthcare, then oil and gas. And then, since the last nine months, gladly joined GEA to help us continue to transform the business there.
Sarah Nicastro: Excellent. So when we think about manufacturers who are working on seizing the potential of service, we see people at different phases or different spots on the continuum of really embracing that and going full steam, to really, really resisting that and staying very much in sort of the legacy, right?
So you were brought into GEA because the company obviously realizes there's potential around service. What's sort of the temperature, if you will, of the company, in terms of where you would say they're at on that continuum? Is it full steam ahead? Is it resistant in the middle? What are you up against in terms of what you were brought in to do?
Lucas Rigotto: It's the right time to be in services. So very high expectations but the infrastructure, the in-between, people still love to sell the boxes or the projects, right? So the expectations, the opportunity, the recognition of the value of services to the business outcomes are outstanding. I think companies are starting, for example, to report the services share in their annual report. That's a big message on services is not the necessary evil. Services is something that's driving the company.
But between saying that and realizing that potential that you mentioned, there is a whole infrastructure that needs to be adjusted in terms of mindset for services, in terms of, it's much easier to sell the box. It's much easier to go get the PO for what the CapEx that the customer already have in their plans and so on and leave the service discussion for later. Or yeah, I'll give you some hours of service or a kit of spare parts or something.
So making services part of the business is where we are really striving to deliver some significant outcomes across the business, was in the previous, as well. I love to say that for many years that service is not the janitor. Yes, we don't need to be on the driver's seat, but we are not coin of exchange or to clean up product quality mistakes. Our guys, they don't schedule time to be at the customer. They arrive, they have the door open, they have a place to park, they are welcome and so on.
The sales teams need to schedule time, need to go through the reception, get the badge. So services really builds this repeat business, repeat the current relationship with the customer. And it's not from a philosophical standpoint, it's from reality. Our technicians, our field engineers, they are godfathers, godmothers, of the customers people. The relationship is changing from that level to higher but it's nevertheless absolutely critical the impact of services there. So temperature is great, expectations very high, matching expectations with getting it done is where the real job is.
Sarah Nicastro: All right, so we're going to talk about those challenges. But I don't know if everyone is familiar with GEA, so can you talk about-
Lucas Rigotto: Oh yeah, sure.
Sarah Nicastro: ... what the company does, how service plays a role?
Lucas Rigotto: Yeah. GEA is, I would say, the largest manufacturer of food and beverage equipment for the industry. All the beer, milk, cheese, chicken nuggets, plant-based food that you have. Mayo, ketchup, medicine is made on GEA equipment across the globe. It's a German company. It's operating in basically all the countries, very much direct businesses, not a lot of partners. And we're really proud of ourselves from the quality of the expertise we bring to the customer operation.
Sarah Nicastro: So traditionally service has been sort of the, we'll say afterthought, right? Not a primary focus, making it a focus for the business. What is the goal, I guess? Is it to sell more service contracts upfront? Is it to change the customer experience through service? What are you working to accomplish for the company?
Lucas Rigotto: It's all of that with a primary reason, right? Companies exist to make money. Measuring the services as a business companies are starting to do. That's why I say it's the right time to build services. It's what bringing the realization of that. So you have to grow your installed base so you can do services, but the profitability comes from a healthy, recognized, valued service relationship with the customers. So what I think the way that we are going is exactly that, right? You have to look at services as a business.
The analysts look at the traded companies at the percentage of equivalent revenue as a factor for the multiplier. For you to get there, you have to execute services really well. And it's not saying, "Oh, we focus on the customer, we love our customer." You have to genuinely deliver great services. And then we already discussed today the challenges to get the right level of people.
So looking at sales as a business is no longer taking the field engineer and promoting to a sales manager, which I'm very proud for being a sales engineer and becoming a sales leader. But it's about looking at this and how we actually deliver value to the company and to the market to differentiate. So it's about creating perspective for the technicians. It's about the diversity of bringing opportunities for this new generation, but making the job challenging, exciting, productizing what we do.
I mean, it's so easy to talk about spare parts is our core. Break and fix is our core. Everybody's talking about remote support and figuring out how we are going to do condition-based monitoring and everything else. But how do you actually productize this, engage the customers on that for the long term, help the customer, keep the company selling a lot more with a proven performance in the market and have the customers staying with you because they see the value there.
So talking about value propositioning services today, it's not something that we need to learn, we should be doing already. And this transformation on connecting from the business goals to giving a phenomenal customer experience, it's a people business. I like to say that. So we don't do this alone behind our desks in Dusseldorf. We do this on the ground in the regions in Asia, in Latin America, in Africa by enabling our teams, by making them being able to talk about value, about customer experience truly, by identifying opportunities, by educating the managing directors on the entities that services is a leverage for their growth.
So it's such an exciting challenge to have. But then the reason I'm giving this very long answer is because it's not just about the top line. It's not just about executing services properly in front of the customer. It's making sure that this energy that is usually 20% of the workforce, that is usually 20 to 40% of the revenue of the company, but can be over 60, 80% of the total profitability. Make sure that this agent is seen as a business and you can deliver value from that. So the philosophy, it's lovely to be part of services. It's lovely to leave our gift of delivering value to the customers but the realization that we can help the company achieve their long-term goals and growth in sustainability that we mentioned is absolutely phenomenal.
Sarah Nicastro: So what would you say are some of the biggest barriers that exist in incorporating service into the mindset, into the focus of the organization?
Lucas Rigotto: First and foremost is the focus on product. It's a lot easier to sell a product than articulate the value of a service agreement. Explaining to the customer why uptime matters. The personas we're talking are changing. So the old sales organization, and I'm sorry for saying that, they are not ready to actually articulate services often. So the mindset of the value proposition of services is one thing. The other thing is the high expectations with the outcomes and the right investments to get there.
There is no chicken or egg. You have to execute flawlessly. You have to deliver great experience to your customer beyond the talk. So you have to be able to enable your talent. To hire enough talents to give them the right tools, to give them the perspective of a career for them to stay and develop. Managing experts and staff, this is a big challenge because what I see across the globe as I travel in every single entity there is someone that we say, "Oh, that guy's great and he's 69-years-old or 72." There was a place where we created Mr. Manfred Ali in the office because the guy's there at 84 years. Really great people.
But what are we doing about cloning this phenomenal expertise? So we really need to look at ... And that's the feeling of the engineers, right? I am the expert, my expertise is my asset. Creating this culture of sharing, of development, of learning, is important. So to summarize, I think the commercial aspect of it, selling value, the true engagement with customers that services is not a coin of exchange. Having the right talents that make services really relevant for the organization and then deliver on your promises,
Say do ratio is absolutely important because you can meet a customer, promise them everything and they identify that you understand the pain. But if you don't deliver on that to them, it's the last time you're going to come. That's where I see the challenges.
Sarah Nicastro: I want to ask you about something you said, which is productizing service. Can you explain what you mean by that?
Lucas Rigotto: Yeah, absolutely. Services agreements. No two service agreements are going to be the same, at least in my experience. Every customer have a different expectation. But you have to have a platform that your global customers, that your teams understand what is the product service agreement? Is it spare parts? Is it response time? Is it a consigned stock? Is it a remote support block amount of hours, this must be products.
Yesterday I was on a meeting and one of the guys mentioned really well, how I think. Productizing services is important because the size of your business is your installed base, multiplied by your product portfolio, multiplied by your market penetration in that. So it's no longer the time that services, we go and we figure out what we do in front of the customer. We are talking about going from reactive to proactive, but what is remote services? From what hour to what hour?
It's a block of hours is based on the outcome, is based on the replacing the break and fix from the past. So it's going to cost more than the trip, but you know why it's costing more because we're solving your problem faster before machine fails and so on. It's productizing plant availability. Not as, "Hey, I like you, I'm going to visit you and let's see what we want to do." It's actually have a product where you sell to the customer, a plant audit, a consulting that says it's no longer the guy that's there with a screwdriver and a spare patch to replace the part and that we become part of the customer operation, truly.
If we want to do equipment as a services outcome based in the future, we have to do this fundamentals really well, proof and gain the trust so we can go there. So clarity of the portfolio services, for me, it means specifically to your question is like we have product managers that design the next product, the next technology. I have product managers that are designing the app upgrades, the modernizations, the service agreements, the spare parts kits and everything else so that we make it easy for customers for sales to understand so that we can more accurately estimate our potential.
I think 20 years ago I did my forecast. Yeah, I think when ratio is that we are going to end like that. We need to go out of that. To manage our pipeline, I need to see byproduct, what is that we are negotiating, quoting, available and really evolve on that. So that's why the productization of our expertise is important.
Sarah Nicastro: Yeah. No, I like that because we're often talking about servitizing a business. But I like the element within that of productizing service and bringing clarity to what is the value and really defining that in a way that internally you understand so that then you can be successful communicating it externally. In terms of change management, what's been the biggest pocket of need that you've experienced so far in terms of change management? In other words, who within the business is most resistant?
Lucas Rigotto: The old team of services sometimes it's very resistant because we have always done it like that and we are profitable and we lost selling our spare parts. So making sure that we understand the value of everything else that we can do. There is this resistance of, "If I succeed this month, you're going to ask me to deliver 10% more next month or increase my net promoter score in 3, 5, 4 points more based on that." So actually I heard in an example, "It took me 20 years to get in this stable environment, let me enjoy it a little bit."
So creating that sense of hungriness, never being satisfied, deliver more for our customers, be more impactful for their operations, takes a little bit of courage to make it happen. So had to work a little bit on the organization set up, had to work significantly on the culture. It's important. The other part of the resistance is really around your global commercial teams, as I said because it's much, much easier to sell a product. It's much, much easier to say we are not selling because of services or I can only sell if I give away services.
So really having the courage to say no and fight for the space of services is absolutely critical. Yeah, that's around that. I want to be clear, it's no longer anymore about building the right backbone of the organization because I think services, having a seat on the table, is a bit easier. But it's really the commercial and we have always done like that.
Sarah Nicastro: You mentioned earlier that the sales teams today aren't really adept at selling service the way they need to be. So are you, I guess, augmenting that with people that are selling service or are you just working on upskilling them to do a better job of selling service?
Lucas Rigotto: It's a mix of both. But I'll go back to the previous one because I wanted to say customer is also part of the resistance. And I think this is important because it's connected to what they're saying. Customer's job is to commoditize our sales offerings and that's why productize is important and that's why the resistance of the customer, we need to be aware of. The procurement team wants you to be cheaper than previously. The operators, the quality leaders, the CFO, they want you to be better than previous years, so you increase the factory efficiency.
So managing the customer's different personas is a big challenge. But then I go to the sales guys. The answer again, it's maybe both and depends because I am a true believer that you will perform and excel in services when you have dedicated services sales expertise. People that talk the customer's language, people that understand OpEx dynamics. Because it's much easier to talk about a project in CapEx that has been approved previously already but if you don't get the right incentives for the machines, sales teams, to sell services, as well, if you don't give them the incentive to talk about services confidently knowing what they're talking about.
So why we need to be specific, why we need very dedicated sales force able to articulate all the value and the outcomes and the benefits we can deliver and make sure that we are selling what we can deliver, you really have to engage the entire organization that everybody's selling all the time, to be able to talk about it properly. I think you mentioned on your opening speech this thing that on the change, the natural effect is to go back. And we commit and then we go back to our previous aspect. So really making sure that the change stays is really important.
Sarah Nicastro: Yeah, that makes sense. You mentioned the importance of good talent. We talked already a little bit about how that's particularly challenging. What are you doing to find good talent, people that you think can execute on the vision that you're working toward?
Lucas Rigotto: In different levels, from management, we are going to the industry and going after the talented people that have success history in services to join us. I saw in GEA, beyond my division, all the other CSOs from the other divisions that, as well new and people with great expertise, not necessarily only internal talents, but people that live and believe and have the courage for that. On the management level, the challenge with the field engineer that become a sales manager, that become a service director and so on, investing to develop on this level is really important.
And then you start attracting people from other industries. So we are food and beverage companies, but we are attracting people from automotive, from pharmaceuticals, people that are actively applying to our jobs, asking about what we do. We become very visible on [inaudible 00:23:18] and stuff. Not because we are searching for jobs or because our customers are buying from social networks, but because the talents that we need are looking there for the next employees. You need to be known by your talents there.
And then on the engineering design, field services, project management training, we are promoting a lot from inside. I have specifically implemented a very detailed plan for us to manage pipeline talent. So we look at the bottom as well and take the right actions, but so that we also create perspective for the guys we want to attract, right? Including sustainability in what we say, you just discussed, the flexible work remote support versus field. We have a lot of long-term projects at customer side, six, eight months. How you make that interesting for a guy to be outside?
So then at this level, we are open to bring talents from everywhere around the globe. We are bringing people from our company, from entities in remote countries, relocating them to where we have the biggest [inaudible 00:24:37]. Overhiring a little bit in this places where we have excess of talent, good engineering universities like in Asia and Cologne and Brazil. So we hire a bit more and we train people in these countries.
So they join our local teams and we give our existing talents global opportunities for mobility. Not only from lower developed countries to higher, but we have seen people moving from Germany to US. And these guys, they bring their friends to work with us. So when you become a good employer ... And for me, I keep telling we are a people business. I love to know every field engineer. Today I cannot do this anymore. But when those guys realize they're working for a great company and services, it means leaving the mission and doing something relevant, meaningful and so on. They talk about this in the networks and they want to bring the best ones. And I think that's a really good story.
Sarah Nicastro: Yeah. I think understanding what's relevant to today's talent and then working to create stories. Not just stories, I mean, it can't only be a story, it needs to be a reality. But really working to align to what matters, having a purpose, flexibility. I think it's important to understand that we know from a lot of different research that what is important to talent today is not just the paycheck, it's not just the dollar amount.
There's other things that play a huge role. So that makes sense. So what aspect of what you're working on, what you see for the future, what are you most excited about? What's the biggest goal you're going to achieve that you'll want to throw a party when you do it?
Lucas Rigotto: In two years from now, we are not going to be selling a service that is not a formal full-blown product that has been launched. That's the first thing. And it's important because of the scalability. We want to do more with the same or do more with less, hence all this remote support capabilities. But then the clear focus on the products that we have on the market for services are really important. Going out of the run ratio perspective for services growth to knowing where I'm going to be based on the potential and my share of wallet and my services coverage is also very important.
But what I want for us that will make the growth and the productization a consequence of it, what I want for us is to be recognized as the premium service provider in the market. We are going to be selling machines because our customers love the services they have with us. And this is not just a fluffy statement, we have to live this on a daily basis.
So we will be this company that customers are buying machines because of our services because we integrate the customer voice, the customer feedback in everything that we do, the customer perspective in how we behave, in how we act in front of them. And because our teams are making that happen. I'm a field engineer and I will always be a field engineer. And I think that when we have this challenging job for our teams, we can get there and be this and realize on this vision.
Sarah Nicastro: Yeah. I thought of another question. You mentioned earlier that you have a vision for where you're going. You also need to be impeccable in your execution. So you can't build that trust with your customers if you aren't showing up on time, doing a good job on first time fix, et cetera. How are you balancing, making sure that the execution of today's service is strong while also working on the vision for the future?
Lucas Rigotto: It's a blunt, realistic approach to everything that we do. We don't appreciate discussing our greatest achievements from the previous month or the previous week. We really have to love the reds in our KPIs and that's how I deal on a daily basis. So, oh, we improved our own time delivery and we improved our lead time, but it's not there where we want. Let's celebrate the small steps but let's keep hungry, stay hungry for more.
So for me, looking at the reds and being fully unsatisfied with where we are, not patting ourselves in the back, not doing things because we believe this is going to be great without the customer buying, not designing solutions because, yeah, I think it's great without validating. I think that's what takes us there, really. So we have to celebrate. I'm Brazilian, I like parties and you know that.
So I like to celebrate the very small tiny victors but the mindset of, guys, let's focus on what's meaningful. Let's not waste time with our chit chat and the nice stuff. Sharing best practice, it's really important. So we improve and leverage from there. It's really critical. And just on that, the other aspect is we waste a ton of time reacting super fast in the issue that was raised or in the problem that we need to address.
As one of the things that I have done in creating our customer experience area is root cause analysis is really critical. Sometimes going a little bit slower helps us go faster. So I'm no longer asking the teams, what's the action for this right now? What is the actual root cause? And I think that's what gives us a scalable improvement for the future.
Sarah Nicastro: That makes sense.
Lucas Rigotto: Most initiative of the month.
Sarah Nicastro: Yeah. So you started as a field technician and you have a great journey to be proud of. What's the biggest lesson you've learned along the way?
Lucas Rigotto: It's great to not always be on the driving seat. I think that as services, to leave the gift of serving, we need to accept that the sales organization is the one that's creating store base, that is driving that we'll have more of a visible profile. But staying humble and realize that we make the machine work. That it's a people business, that we need to make our people part of the journey is my biggest lesson.
This is not a game for individuals for stars. This is not a game for you to say, "I'm the best CSO of the Universe." You are temporarily CSO based on the performance of your team, on the ability to make the difference. So it's a people game. We are a factory of people and we need to realize on that lesson.
Sarah Nicastro: Yeah, makes sense.
Lucas Rigotto: Thank you very much.
Sarah Nicastro: Okay. Lucas, thank you so much.
Lucas Rigotto: Thank you very much.
Sarah Nicastro: I appreciate it.
Lucas Rigotto: Very good to be here.
Sarah Nicastro: Of course.