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October 20, 2021 | 23 Mins Read

Bureau Veritas’ Focus on a Sustainable Future

October 20, 2021 | 23 Mins Read

Bureau Veritas’ Focus on a Sustainable Future

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Lou DeLoreto, Vice President, Safety & Sustainability- North America, Bureau Veritas talks with Sarah about the company’s focus on improving sustainability, both in achieving its own objectives and also by helping customers with their sustainability goals.  

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today, we are going to be talking about how Bureau Veritas is focused on building a sustainable future. I feel like I'm going to be saying this for a number of podcasts in a row, so you may already know this, but I do have some renovations underway in my house, so if you hear any background noise on my part, please bear with me. The show must go on, so we're going to forge ahead, but there might be a little bit of noise. Okay, so I'm excited to welcome to the podcast today, Lou DeLoreto, who is the Vice President of Safety and Sustainability for North America at Bureau Veritas. Lou, welcome to the Future of Field Service podcast.

Lou DeLoreto: Super happy to be here. Nice to meet you, Sarah.

Sarah Nicastro: Thanks. Thanks. Happy to have you, so before we dig into the topic at hand, can you tell our listeners a little bit about yourself, your background, and maybe give a little recap on BV as a business.

Lou DeLoreto: I will do that, so let's see. I won't bore you too much with my career, but essentially for the last 26 years professionally, I've been in the health, safety, and environment field, most with two large multinational companies, a lot of field service construction, in fact elevators were a big part of that career throughout the world. And it's now I think been about eight months since I've joined Bureau Veritas, like you say, BV safety and sustainability for those. And BV sometimes isn't well recognized in the US, but I can tell you that anyone listening at some part of their day, BVs been involved whether it be the food or water you drink, to the car you drive, the bridge you cross, the building you work, or school you study in. Maybe it's an electronic vehicle that you're driving. We really inspect, certify everything from food to, like I said, infrastructure, but we really are like kind of the quality control, the trust of the product for those who use it, so you've definitely have been around us whether you know it or not.

Sarah Nicastro: Yes. Thank you, Lou. And we recently had Maggie Laureano on and we put a link in that show note episode, I'll do the same for this one of the kind of day in a life video that shows a lot of those different interactions with BV. And it really illustrates your point of, you may not know the brand by name, but you've inevitably come across pieces of infrastructure that have been touched by BV.

Lou DeLoreto: And I'd say like in the North America space, roughly about 6,000 plus employees and 150 locations of labs and buildings around US and Canada, that's kind of where we're positioned.

Sarah Nicastro: Okay, cool. All right, so Lou, my first question is really just, if you can comment on the topic of sustainability and the desire to move toward a more sustainable future. In your words, why is this so critically important to have top of mind right now?

Lou DeLoreto: Yeah, I think, we think a lot about that and I say that I think it's always been critical, but you can't find a news outlet or something on social media, that's not talking about some major climate event. Whether it's the fires happening in the west, what Ida just did to the south and up to the Northeast. Whether you're choosing not to listen about the impact of climate or maybe some worry denial, it's real and present. And I think that's where you see a lot of, I would say even organizations, regardless of policy, really taking on some environmental stewardship, recognizing that it's going to take all levers to try to get around this thing, but really not only find out what their impact on their businesses to the environment, but how can they use their businesses to make it even better. I think it's just really eye opening what's happening around the world. And I think you're seeing a lot more, I'd say leadership in the space and I think that's extremely critical for us to make some improvements.

Sarah Nicastro: Yeah. I think that's a good point. It kind of feels to me like, particularly in North America, we're reaching a tipping point here where companies have an option to do some of what we're going to talk about today, that BV has done and sort of lead the charge in this area or quickly be forced into doing so, right? And so just like most business change, the more you can be proactive instead of reactive, the better off you're going to be. But there's a lot of new legislation coming along, new regulations being passed that companies are going to be forced to comply with. And so whether your catalyst is altruistic or just business focused, it's an important topic to sort of educate and do some work on.

Lou DeLoreto: You know what I'm seeing, so obviously you're also seeing financial institutions. If you want backing and support, they're expecting you to be mature or at least have a plan to be mature in this space around sustainability, as well as like attracting and retaining employees, so employees just it isn't all about just the paycheck anymore. They also want to be part of something bigger, so the more that you have some strategy around making the planet or making people better from when they came to you to your company and went back home, like people are starting to expect that, so it's even beyond the environment, you know? And I think that's important.

Sarah Nicastro: Yeah. Those are really, really good points and different areas of consideration around this topic. Lou, can you talk a little bit about the role you feel or not, do you feel like COVID has had an impact on the way companies perceive this topic and are taking action?

Lou DeLoreto: Yeah, I think COVID had a couple of, I'd say important aspects on how companies not only saw how they can support clients but also what COVID did is really made companies think about how they can operate during a pandemic, right? For us, I can give examples, we're an important say part of a supply chain, so if you have a big project you need do, or you want your fuel, or if you need your food certified so you can go sell it, we had to be there. And so we found ways on how we could keep our labs operating, how we could leverage drones for example, or even halos for lenses, but really kind of be creative on how we could bring that same service during a pandemic while making sure we have health and safety of our employees. That was one aspect, right?

I'd say the other thing is, are there other ways we can help our customers during a pandemic? And one example would be like the restart of the business, so we did a lot of audits and inspections of building spaces to make sure they could reopen refaced or even have the right checklist or things in place, so if people were at work they had the same protocols, masking, distancing, hygiene, all those things. We did two things, we said, okay, how can we continue to provide the same service so that clients need it. How can we also help them to keep their services? And then lastly, I'd say it also gave us a look at how much is there a nice to have versus a real necessity?

And so for an example, we had a lot of virtual work, do we need 60,000 square feet in this building anymore? When a lot of what we could do is maybe virtual. How much is true essential travel? The idea of like a carbon footprint, it also made us reflect a little bit on, okay, so what could the future look like where we reduce the impact of carbon to the environment based on the way we work. We're seeing opportunities there, so I think there's lots of areas where it did actually impact us.

Sarah Nicastro: Yeah. I agree. We had a podcast published recently with Dr. Andreas Schroeder of the Advanced Services Group at Aston business school. And we were talking about how specifically servitization, but even just services and sustainability are inextricably linked, and his point was there is just so much that is really good business that improves sustainability. And there's so many opportunities for sustainability in business, right? He is kind of talking about whatever your lens is in looking at this topic, there's business benefits to becoming more sustainable and there's business opportunities in sustainability, right? You can look at those things a bunch of different ways, but I agree that COVID was a big reflection point in a lot of those areas of, okay, wait a minute. And then there was some points where I read some different research on how it impacted the environment.

And I think that made people think about, to your point, is all of this necessary or are there things we could be doing that would have a big benefit that we just... You get caught in the status quo and that shook things up enough, I think for people to reflect and think about that a bit more. Lou, I want to talk about two different areas here next. I want to talk about how Bureau Veritas in some of the ways that you're enabling your customers to become more sustainable. And then I also want to talk about how you as an organization are focusing on your own sustainability as well. To start, can you talk a little bit about some of the efforts and options that BV is offering to its customers to improve their sustainability?

Lou DeLoreto: Yeah. It's interesting, and I look at it in both of those areas, so when we look at how BV looked internal for sustainability, as well as external, what we found is a lot of the things we were already doing before ESG or CSR was kind of a thing. We were always doing stuff on it. What this allowed us to do is kind of get more strategic around it, get it under one sort of packaged umbrella, but we had a lot of offerings, so we call them our green line of services, okay. We kind of have like four pillars. We work in sort of the consumption and traceability space, so that's like supply chain resilience, the food, everything that you're using or... Is it traceable and what's the sourcing and making sure that we've got that aspect for customers.

We also do obviously the building and infrastructure. We'll do the green building certs, we'll make sure we project manage good life cycle of all of those projects to make sure from conception design, to final install, all those are meeting that expectation and really all those aspects of infrastructure that would be for renewable energies, we have a piece of that. Third is new mobility, so I think 25% of the carbons really around air travel, vehicles, all those things, so we actually try to work with clients on a variety of technologies, mixing fuels. Bless you. To see if there's alternative ways that we can do that travel more efficiently. In fact, I think we're one of the only companies that have conceptually put the whole life cycle of electronic vehicles from design to install, to even govern it's inspections, to make sure they're always doing it.

And so that's kind of a new offering we just came out with on mobility. And then lastly, it's just like the resources and production, which is really around the renewable space. We just acquired and bought to the BV family, Bradley Construction. And they're really heavily in the solar and wind space. I think they've got over 50 projects that they've been a part of. And that's like probably like the fourth pillar that we are in, so the renewable piece. But long list of renewable, I would say, our green line service are really helping other clients achieve their sustainable goals too, which is exciting.

Sarah Nicastro: Okay, so let me ask you this. You mentioned that BV has really been doing these things for quite a long time, but the focus on these initiatives has allowed you to sort of become more strategic, categorize things differently. How long would you say the green line of services has existed? Even if it wasn't referred to as that?

Lou DeLoreto: Hard for me to exactly say, but I know some of the industries I spoke about is who BV was born on like in Marine & Offshore, so thinking about how they can be more efficient and optimized, that travel has always been there so like conceptually, I feel like there was always pieces of sustainability in BV strategy. I can't give you a year, but I know it's kind of, if you think about Veritas is the pursuit of truth, right? We've always been trying to help clients do the right thing and confirm they're doing the right thing. And sustainability's been just part of that, so I think it's really conceptually, always a piece. I just think the pieces are getting a lot bigger in our offerings going forward.

Sarah Nicastro: Yeah. That makes sense. Would you think it's fair to say, like has there been an increase in interest specifically around those sustainability services? Like of customers looking at it from the lens of sustainability, so their desire to expand their initiatives?

Lou DeLoreto: Yeah. One of the things, so we've got a platform we talk about as Clarity. We do a lot of certification, so training certification, and buildings, and everything, and people, so we're getting a lot of interest of us leveraging our platform to come into a company and help baseline where they think they are in sustainability, so it pulls in, you can help decide what's important to you in the whole CSR or ESG space. We come and help you walk through where you are in that journey and then work with you on the pace for which you want to get to somewhere different, so we've seen a lot more interest in that, because I think you can define CSG so many different ways. We help you define what it makes more value add for the company yourself.

And I see that's come a long way as well as just infrastructure, right? Even as we're getting a lot more project-based work that's in that area to make sure that obviously the quality, the control, and even the sustainability targets they have in those projects are met, so those are probably two big ones I'm seeing. 

Sarah Nicastro: Now, if you consult with a client who has this interest in improving their own efforts, do you provide guidance on the best ways to do that? Or do you just help them execute the plan that they've set?

Lou DeLoreto: No, I think the product and the service is just that, so I think it tells you where you are.

Sarah Nicastro: Mm-hmm (affirmative).

Lou DeLoreto: And I think it then it gives you some BDPs practices that we know from other clients.

Sarah Nicastro: Mm-hmm (affirmative).

Lou DeLoreto: And then we just work realistic to a timeline and investment that, that client's interested in, right?

Sarah Nicastro: Yeah.

Lou DeLoreto: It's collaborative.

Sarah Nicastro: Yeah. And I think it's interesting that you say that's an area that there's a lot more interest in. We are recording a podcast with Tetra Pak and they're kind of seeing the same type of thing, and having organizations that they work with in their services division, looking for more assistance on what are the right targets? What is the right path to get there? How should we measure our success? And it's just interesting to me that some of the companies like Tetra Pak or BV that have maybe then more of a leader in this area are in a really good position to leverage that expertise and experience to help others on this path. Okay, cool. All right. Lou, let's talk a little bit then about how BV itself is transforming in the area of sustainability, so maybe if you can talk a little bit about what are the goals, what are the focus areas, that sort of thing?

Lou DeLoreto: And I'd say like, this is the same kind of thing. When you start taking inventory of the things that you do in CSR, you find out, wait, we do train people. We do care about the environment, so the inventory was already there, but again, it allowed us to kind of really kind of package it, and be a little bit more strategic, and really get some KPIs around it. But so we go to market shaping a world of trust, right. And really building it for our customers, helping them, internally we call it shaping a better world, so CSR in BV is called Shaping a Better World, okay. And so we're kind of playing on really what I think is important. And we look at three, I would say areas within sustainability. One is people of the workplace, and the middle is the environment and the climate, and last is business practices.

And so we're kind of emphasizing initiatives in each one of those. In the workplace we talk about things, health and safety. We talk about diversity and gender, training and development, right? There's a lot of whole people play in the work place. The environment is really about impact on the climate, our carbon per employee. And then business practices is not only do our own business practice, but our suppliers. So we kind of make sure of ethics and those things are important. When it comes to like goals and KPIs. There's 17 sustainable development goals that are recognized around the world. We've started with five that we think we can make a good impact fast. And who knows if it doesn't turn into all 17, but those five all live in those three pillars, so we are looking at equal pay and diversity, health and safety, economic growth and development, climate action is the middle.

And then the last one again is like business practices. And all those drive KPIs, right? We want to reduce our injury rates by 2025, by 50%. We want to get women in leadership positions, equal pay to a percentage, so we've got KPIs lined up for each one of those. Climate, we want to reduce our carbon footprint per employee all around the world, so we've got like different KPIs that we've set up ourselves up to 2025, and then we'll probably push again thereafter. And then when it comes to like management's engagement, like other things CSR is kind of a pay for performance, so their engagement and I'd say influence of those KPIs that I just mentioned are really built into sort of the objectives that we're all held accountable for.

Sarah Nicastro: Okay, so apologies if this is a silly question, but the 17 metrics that you mentioned of which BV has picked five to focus on, are those BV metrics that you could choose from, or you're talking about like a global standard?

Lou DeLoreto: Okay, so the five SDGs are global standard. What we do is we assess BVs maturity of each one of those five, okay. And they're not really KPI driven, it's just a maturity path. Here is you're doing everything, what percentage of you do you still need to do? That's a separate, like how does BV perform against other companies in those, and everyone has the same kind of self-assessment, so that's one get out of those five SDGs that are around the world. Inside that we develop BV KPIs, so it's kind of more of a target based KPI than really just the maturity of that whole development area, so we might have, 95% completion in health and safety because we've been doing it forever, right. But we still want to reduce our actions by this, here's the KPI. They're kind of two separate focuses for us, keep maturing in those five but also give yourself some agreeable targets as a KPI. Does that make sense?

Sarah Nicastro: It does. Yes. And I think there's a couple things that I think are just important enough to touch on, right? One is this idea that when BV decided to sort of formalize this focus and you know put some different structure and terminology around it, you realized that there was quite a bit you were already doing, but it also then brought clarity to the areas that you did need to focus more on, right. And so I think that if I'm just thinking about how to derive some of what you're saying into actionable insight for folks that are listening. The first thing is if you don't have some formality around this within the business, that's where you need to sort of start. You always hear if it's not measured, it's not going to change, right?

It's sort of this idea that, if this is going to be an important focus, then it needs to have its own structure, its own strategy, its own measurement, et cetera. Which leads me then to the second point, which is you saying that you have the key areas of focus, but if I'm understanding you correctly, the individual KPIs within each of those categories can change related to where you have made progress and have achieved the target level of performance and what areas still need to be improved upon. Is that correct?

Lou DeLoreto: That's exactly right. And it allows us to kind of lean in and try to drive a little bit more, I would say, tactical improvements.

Sarah Nicastro: Right.

Lou DeLoreto: And really kind of push us.

Sarah Nicastro: Yeah. And that's what I was hoping you could maybe talk a little bit more about, is just this idea of the role accountability plays in all of this because CSR and sustainability, I mean they are buzzwords, right. And there's a lot of things in business today, we have a great company culture and our employee experience is awesome. And there's all these things that people know they should say, but there's a difference obviously between saying it and doing it. And I think particularly related to things that are very measurable, like a lot of the KPIs that you're giving as examples. This idea of measurement and accountability is super important, so can you talk a little bit about that?

Lou DeLoreto: Yeah. I think there's two important things. I think when you talk about sustainability, although like I'm probably the facilitator and lead, you're not successful in sustainability unless everyone owns it, right. No matter what role you are in the organization, you do have to support sustainability activities for BV to be successful and for us to truly make an impact, right. That's one thing, and I think the way I integrate that into all of the different roles throughout the organization is really important. And I think that's still a maturity path, right? For every individual to wake up and say, oh, CSR is part of what I do takes some time, right. It's kind of new script, so that's got a maturity path to go to. In terms of, I would say accountability or like even I think is like more importantly, if a company says it's important to them, how are they really showing it by action?

And an example I could say is, one of the things that we're trying to increase is participation in citizenship and volunteering, right. And we had pockets of people doing it just because it's the right thing to do with no real BV sanctioned program, so we recognized that through our self-assessment and through not really knowing the participation rates of volunteering. We came out with this year that we support eight hours for every individual, as a proved PTO to go help someone or something, right. And that was a huge demonstration by leadership to say, we are really supporting sustainability and here's one exact way, right? In fact, this month around the world, all of BV is Shaping a Better World month, so we have people all over the world doing what they can themselves or in teams in volunteering, right. And so that's pretty cool. I think that's an important part too, is not only just saying it's important, but like what are you putting yourself out there that shows you really are driving it and really important to it? I think those are two important parts.

Sarah Nicastro: Yeah. I like that point too because, so we have that as well at IFS, we have a CSR day and what I like about that is there are KPIs and metrics, which are going to be driven by process change, and technology change, and operational things. But you need or should balance that with how to get your people personally invested in making a difference as well. You can have the goal to reduce fuel consumption or whatever those things are that are more operational. But I like the idea of also considering how do we bring each individual, that's a part of this company into this mission and how do we... I mean, to your point, some people are going to do it just because it's already a part of their life, but for those that don't already, that's a great way to get them involved.

Lou DeLoreto: Yeah. I think leveraging your resources, and finances, and your business processes to make impact, but more important leveraging your employee resources to give back is huge, so I think that, that participation level is really important to us and we want to see that really increase.

Sarah Nicastro: Yeah.

Lou, if there's someone listening who let's say is lagging a bit in making this a real focus in the business. Like we talked about with some real structure around it, with some real strategy around it, with some real accountability around it, what is sort of your best overarching advice?

Lou DeLoreto: I think there's a few things, its workshop driven. It's really kind of... Well, first you could hire BV to help you to get the sense of where you are, but it's like who are you as a brand? How do you see or define CSR today? Where are you on that maturity path? It's really just taking stock of looking inside your walls, and learning about your company, and what your impact is on the environment to people, to the CSR sort of like structures, but it's like really doing the self-work of learning what you do, and what's important to you. I think, like not giving yourself the space and time to really kind of think that through and jot down that inventory is really important, that's one thing.

There are experts out there like us and others that can help facilitate the discussion, make you ask the right questions, there's tons of tools. We've pulled in experts globally. We've got kind of a board of exports that help us sort this out. We meet quarterly, but really it's kind of a dynamic process. We're always kind of learning more and there's not one size fits all. But I think it's giving yourself that time and space to understand, what does it mean? What do you do? What does it mean to you? And where do you want to go with it, right? I'd say the last thing is just start, like waiting to make it perfect is just a loss of time, so just start getting engaged, picking a few things that are in CSR is really important.

Because you can lose months and years if you want to try to make it perfect. And we've already recognized, even our first start is, let's expand on this and we've got now OGs, which are regions around the world, they're adding their own different goals, so they're even like the foundations there globally, but their own country or culture thinks this is also important and they're roping more things in, so it's not perfect. Start somewhere and ask the experts, they're out there.

Sarah Nicastro: Yeah, that makes sense. I think too, just thinking through when you're in that sort of thinking process. Thinking about the different drivers for this, right? It is, what difference do we want to make? What type of initiatives and efforts do we want our business and our brand to be associated with? But it also is, what opportunity is in this to provide different green services to our customers. And then also what is the customer demand? Depending on the market you serve, people are becoming more and more invested in our future and they're going to demand better from their service providers, and their vendors, and their manufacturers, so it's important to consider that as well.

Lou DeLoreto: Yeah, that's a good point. I think like even asking your clients where they are and what's important to them.

Sarah Nicastro: Mm-hmm (affirmative).

Lou DeLoreto: Helps you mirror sometimes what you might be missing, so having that dialogue with vendors, suppliers, and clients start finding it for you as well.

Sarah Nicastro: Yeah. Or if you're... Again, really just getting started with this initiative, it may give you some really good insight on where to start. What are the biggest areas of impact, and start there and like you said, you can't do it all at once. It's not going to be perfect.

Lou DeLoreto: Yeah.

Sarah Nicastro: So figure out what's most important to your customers and start with those things and then go from there. Lou, I also wanted to ask, what do you think are going to be some of the biggest trends or topics related to sustainability that we'll see over the next 12 or 18 months?

Lou DeLoreto: Well, I do think it's in the way of infrastructure, so we're kind of seeing some of that push through some of the policy changes. And I think you're going to see a lot more investment in some of those sort of infrastructure, climate driven project work, for sure. I think, we're already seeing a lot of that happen and people sort of looking at that opportunity to see how we can support our clients with that project work. I do see it in some of the mobility piece, so you're going to get a little bit more, I'd say recognition around electric vehicles, and stations, and those pieces. But the last piece is I think you're going to still get a lot more transparency around how to measure different companies on sustainability. Make sure they're not green washing, that they're really kind of doing what they say they do and not trying to find shortcuts, so I think you'll find more ways where you can normalize and configure control. How someone's good at it and they can prove it. I think those are probably three areas we see coming.

Sarah Nicastro: Yeah. That's really interesting. I hadn't really thought about that from a consumer, or even a business consumer, consumer of services perspective. Being able to investigate the transparency and the efforts that each company is doing. Cool.

Lou DeLoreto: I mean, we have about six or eight non-financial agencies that come and look at our work-

Sarah Nicastro: Mm-hmm (affirmative).

Lou DeLoreto: So that we can make statements and be comfortable and transparent about it, so I think you're going to see a lot more of that you're going to need to be kind of accredited-

Sarah Nicastro: Right.

Lou DeLoreto: About the lofty goals, KPIs, and maturity path you're taking.

Sarah Nicastro: Yeah, no, that's good. Any other comments? Words of wisdom? Closing thoughts?

Lou DeLoreto: No, the construction work wasn't so bad back there, so that was okay. I didn't hear much.

Sarah Nicastro: Okay, good. Well, you did have to say the dreaded you're on mute once, so apologies for that. I was trying to be fast enough.

Lou DeLoreto: No worries.

Sarah Nicastro: I think the mute helped, but I'm glad it wasn't too disruptive.

Lou DeLoreto: No, I appreciate the time. Listen, we're very passionate about the topic and we're doing some great things, so it was great to have the opportunity to share with you and listeners.

Sarah Nicastro: Yeah. Well, thank you for being here. And BV does a really good job on social media, sharing some of its sustainability initiatives, safety initiatives, diversity and inclusion initiatives, so well worth a follow and checking out some of the things that are going on. Lou, thanks again for being here. I really appreciate it.

Lou DeLoreto: Great.

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

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Creating a Compelling Employee Value Proposition

October 13, 2021 | 25 Mins Read

Creating a Compelling Employee Value Proposition

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Lauren Winans, CEO and Principal Consultant and Next Level Benefits, talks with Sarah about ways to modernize the perception, creation, and articulation of an employee value proposition to improve success with recruiting, hiring, and retention.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Before we get started, I do want to apologize in advance. If anyone hears any background noise. My kitchen is being remodeled and in the work from home life, there are very few places for me to go that would be less noisy. So I figured I would have equal trouble at Starbucks as I am here. So if you hear any loud crashes, smashes, or booms, please know that everything's fine. So, all right. I'm excited to be here today talking about creating a compelling employee value proposition. We've talked a number of times on this podcast about how it is becoming increasingly challenging to attract new talent at the pace we need to with folks leaving the workforce. And what makes up a compelling value proposition for employees evolves regularly. And so, I'm thrilled to have on the podcast with me today, Lauren Winans, who is the chief executive officer of Next Level Benefits. Lauren, welcome to the Future of Field Service podcast.

Lauren Winans: Thank you, Sarah. I'm really looking forward to this conversation today.

Sarah Nicastro: Me too. And I will say, we had some technical difficulties getting started, which is a rare occurrence, and Lauren has patiently hung with me. So here we go. Okay. All right. So Lauren, before we dig into some of the things that we're going to touch on today, tell our listeners a little bit about yourself.

Lauren Winans: Sure. My background is human resources. I've been a human resources professional for over 20 years now. Prior to starting my own HR consultancy practice, I was in corporate HR roles, primarily in total rewards in the employee benefits space. But have been an HR leader for many years with experience across all disciplines of HR. I've worked at large public corporations, primarily in organizations that have a multi-generational workforce that is dispersed across the country. So I have a lot of experience in trying to find the best ways to engage employees.

Lauren Winans: So when I started my practice about two years ago, just really excited to leverage my experience in a new and different way. And right now we work very closely with HR teams to help them build a really wonderful employee value proposition that is deep, that is truly what employees want, and not necessarily what companies want to offer. It's something that we pride ourselves on from a strategic standpoint. And I can say right now we've got four different clients that we're working on this exact project about. So it's something that is near and dear to my heart and I'm excited to share some experiences and some stories with all of you today.

Sarah Nicastro: Cool. Well, thank you. And Lauren is my quasi neighbor down interstate 79 in Pittsburgh, Pennsylvania. So we're going to make a lunch date happen here at some point.

Lauren Winans: That's right.

Sarah Nicastro: Okay. So I have a couple things that I think would likely be preconceived notions, maybe some of my own that I want to kind of clear up maybe to get us started. And I will say, Lauren and I have talked about the fact that the listeners of this podcast are primarily not HR. I mean, there may be some, but it is not the majority. That being said, I talk with you all listeners regularly about the challenge of filling the talent gap and understanding better what needs to change in terms of meeting those employee wants and needs is important regardless of whether you are actually in the HR function or not. So, that's kind of the context we're going to take today.

Sarah Nicastro: So Lauren, I have a feeling there could potentially be people that listened to the setup of this episode and think, I'll tell you what the employee value proposition is. The employee value proposition is show up to work and collect paycheck. So what would you say to that?

Lauren Winans: Well, I would say, yes, that's one side of the employee value proposition. The other side would be, well, what does an employee get in exchange for showing up and providing the company with the hours in which they're providing their service. And so, the other side of this is, what does an employee get out of it? And ultimately those, they have to be in balance. So what the employer wants to get out of the relationship with the employee versus what the employee wants to get out of the relationship with the employer, they have to be you in a balanced situation in order to kind of keep that talent, retain that talent within your organization and attract new talent. And so that's why it's important to consider this concept.

Lauren Winans: I'll try as much as I can during this dialogue too, to kind of let you know when I have my HR hat on and when maybe I have my leader hat on or my employee hat on, just so you can kind of get the different players and stakeholders that are part of this conversation. They all want something different and they all play a different role in the process. So an employee value proposition, ultimately, when you think about what it is, it's what is an employee getting out of this relationship? And what's an employer getting out of the relationship? And so the best way to infuse value into this relationship is to identify what it is that both parties want and to construct a... let's say a structure around what that really looks like. And there's typically four components of employee value proposition. And I'm going to talk about them now, just so that this concept gets a little more clear.

Lauren Winans: So it's primarily total rewards, which is compensation and benefits that companies would be offering to employees. And then it's also, career growth and opportunity as well as employer culture. The actual culture within the organization. So all four of those components in an ideal situation have the right balance of what an employee wants out of those four categories and what an employer wants out of those four categories. Some of those categories, most of those categories cost an employer money to offer or to create or to operate or to train. And in most cases on the employee side, these are things that are very valuable to you. Your wages, incredibly important. The health insurance that you have, incredibly important. The ability to grow your career and to work in an environment that's inclusive and equitable and fair. These are all things that employees want.

Lauren Winans: And so ultimately, employee value proposition is an incredibly important concept, but you definitely need to get a good sense of what it is and not necessarily go into it with any sort of preconceived notions. Naturally there are, I think some, misconceptions out there around what value, how you can actually define value. But I think generally speaking, if you can think about, if you can really break this down into what does an employee want? What does an employer want? And yes, an employer wants you to show up and just do what you're supposed to do, clock your hours and in exchange give you a paycheck. That's the basic formality of the transaction here.

Lauren Winans: But ultimately employers are in a place where they need to build upon that, and employees have a lot of choice right now. They can easily move to another employer to find a deeper and more meaningful value proposition that works better for them. So to ignore this concept would be a miss in a lot of different ways.

Sarah Nicastro: For sure. And I think, just to explain a little bit, and Lauren and I have talked in preparing for this. We're talking a lot about field service roles, manufacturing roles and things like this. And so I think there is this issue where maybe generationally, there was a time historically where the employees priorities or what they wanted from the employer was different. Maybe i.e. perceived as simpler. And as the generational changes take hold along with the fact that you have less people coming into these types of roles. And so it's creating this urgency to recruit and to fill a bunch of talent. We need to, as an industry, understand that the desires of the talent base have matured and the way that we're looking at this type of talent need to as well.

Sarah Nicastro: And I'm talking a lot about the frontline workers, but that feeds up into the management level, the director level and all the way up. I mean you need people in all of those spots as well. And so, it's just something to think about. So, maybe can we talk about that a little bit, Lauren, in the sense of like, it seems like when you talk about employee value proposition or a compensation package, that seems intuitive at a certain level of management or leadership, maybe not all the way down to the front line. And so for some of those roles that the workforce is beginning to have more mature or different desires. Talk about the fit or the need to consider value proposition, whether you're talking about hiring in a new CEO all the way down to hiring in a first time field technician.

Lauren Winans: Yeah. I think it's very important at every level. Doesn't matter what level we're talking about. It doesn't matter if they're a leader, if they manage people, if they don't, if they're an individual contributor, if they're entry level. The value proposition exists at all levels. And in most employers, it's different at every level. So if you think about executives, you've got, executive compensation packages are very different than entry level or perhaps field, any sort of individual contributor is going to have a different package as an executive would. And it's okay to develop employee value propositions that are different for the different positions or the different levels within your workforce. I think that ultimately when we're thinking about employees that are individual contributors, and when I say that, I'm saying, they're not managing people.

Lauren Winans: When you think about that type of employee, regardless of their entry level, or they've been enrolled for many years. What're ultimately wanting to do is create a package that makes sense for that individual. And there's a lot of data that can be poured through and analytics that your company will have at its fingertips to identify what types of compensation makes sense. Not just salary, but also like pay raises and bonuses and how fair we are and equitable across the different compensation scales and whether or not, people are getting fair on treatment across the board. All of that kind of is a compensation package, not just that dollar figure, not just that salary figure, that hourly rate.

Lauren Winans: And so if you think about that across all the different types of jobs within an organization, it's really important to remain competitive and to make sure that the value that you're building has direct meaning to those that you're building it for. And so, for example, if you're building an equity program for an executive, you're going to want to make sure that the number of shares that are being offered to that executive is comparable to your like size competitors or your like industry competitors. And same goals for a frontline field technician. You want to take a look at that salary. You want to bench that compensation on a regular basis. You want to make sure that you're ahead of those who are going to try to take those people away from your organization.

Lauren Winans: And that's ultimately what a value proposition does, is it keeps people in the seats, it keeps people in the trucks, it keeps people wherever that they might be. It keeps them in role. And then ultimately allows you to attract more talent and new talent into the organization, and from a talent gap perspective, that is incredibly important right now. You ultimately want to bring in really bright talented individuals. There's a lot of different skills that you can train than you can teach on. But you definitely want to be finding, talented folks that are willing to learn and are willing to grow with a company. And in order to do that, they're shopping around just like you would interview several candidates for a position. They're shopping around and looking for the right companies that align with their values or offer the right benefits and compensation, allow them to grow and move up the ranks over time.

Lauren Winans: And so it's a really interesting conversation, because when you're talking about the talent gap, the talent gap has really put a magnifying glass on employee value proposition, how important it is to the conversation and how important it is to make sure that you're customizing an EVP, Employee Value Proposition. An EVP that is sustainable for the different pockets of your organization, the different generations within those pockets. And so it's just really important to kind of think through it big picture, and that's ultimately what an HR team does, but a lot of times it takes leaders to kind of come forward and say, this is something we need, I want to be able to offer this to our entry level employees. Or I want to be able to spend time figuring out a succession plan for these four individuals.

Lauren Winans: You're absolutely in your right to partner with the HR team to develop a value proposition that works and is customized based upon your specific team, based upon what your workforce needs. And I think that there's even folks who are maybe in an older generation, maybe close to retirement, they're still going to find this meaningful, just as much as someone who's coming in from college or maybe coming in from a trade school, or maybe coming in directly from high school. Everyone is looking for value in exchange for their time and their effort and their skills.

Sarah Nicastro: Yeah. There's a couple points that I want to go back to there. So the first one that comes to mind is the idea that employee value proposition is important for everyone, but it doesn't need to look the same for everyone. And I think that when we talk about some of the roles that companies in our audience are having the hardest time filling right now. So we'll just generalize field technicians. Okay. There's aspects of the role that are there already that if you just position them creatively could get more attention.

Sarah Nicastro: So I'm thinking specifically of a conversation that I've had with a gentleman who's been on the podcast before Roy Dockery, he's with Swisslog and he's done a lot in his role in service leadership to revamp how they recruit and hire. And his point was as he started as a pretty young man in their business as a field technician. And one of the things that he loved is being able to travel, and see different areas of the country. And so just kind of understanding better what aspects of the job could be attractive to candidates and looking for how to creatively call out different things, rather than just always defaulting to only, and here's what the pay is. I mean, there are other things that you can leverage to your advantage with a little bit of creativity to get people's attention or to differentiate or to draw yourselves in.

Sarah Nicastro: So I'm wondering if we can talk a little bit about, I think people have a better understanding of the hard benefits. Like, okay, well, people obviously want paid and for a lot of folks that consists of, a base pay and some sort of variable pay and how should that be structured, etc. Things like health insurance, things like that are fairly standard. Let's maybe talk about some of the soft benefits and different categories or examples of those so that the listeners can get kind of get a sense of areas they could maybe explore if they haven't.

Lauren Winans: Yeah. I think anything that really kind of falls into that career or culture bucket, those two buckets in addition to the comp and benefits. But the career and the culture, I think are really where some of those soft items kind of fall into. So if you think about culture, an organization's mission and values are really important and they need to be defined and they need to be communicated. And so employees who are coming into an organization need to have a really good sense of what those are. And it's really important for an organization to also be able to kind of walk that walk and not necessarily just be kind of like, okay, here's our mission and values, but they don't have an environment that kind of lives up to that.

Lauren Winans: And so, the atmosphere and the sense of teamwork and camaraderie that kind of exists within culture is something that can translate from top to bottom, from an office setting to a field setting, to a factory setting. All these different, it doesn't matter where an employee is working. You should be able to feel the culture throughout out the entire organization.

Lauren Winans: And culture can be something that you're waiting to feel as an employee, or it can be something that you participate in because it is part of your day to day interaction with your coworkers or with your boss, or with other colleagues. And I think the reason I say that is that particularly, employees that are dispersed and are not necessarily in one location aren't always going to feel culture exactly the same way that someone who might be sitting in a corporate office is feeling it. But you can still live it, it can still be embodied. It can still be something that your leader takes the time, effort and energy to make sure that by checking in with you, by communicating with you, by sharing messages that you to be hearing about, by letting you know about big company changes or how the company's investing in some community efforts, or has just made a charitable contribution or it can also even be making sure that you have an opportunity to watch any sort of company videos or read any company announcements directly.

Lauren Winans: It's a matter of what steps and what types of activities and events can, myself as a leader, get my employees involved into as well as if I'm an employee, what types of things do I want my leader to help inform me about. And all of these relationships are all two way streets. So let's say, right now you are listening to this and you're an employee, not managing anybody, but you just don't feel that connected to your organization. There is nothing wrong with trying to figure out how to seek out repairing that, because if you don't have a deep connection with your organization, perhaps that's a box that remains unchecked when it comes to the employee value proposition that your organization is offering you. Your company wants to know that. They want to know if they're falling short in some of those areas. I mean, most companies do.

Lauren Winans: And so expressing that is not necessarily in my opinion an issue. I think it's, hey, I need to better understand what our mission is here, or I need to better understand what my guiding principles are when I'm making decisions out in the field on my own. Or are we able to get together once a month so I can meet with my team. Or, hey, can we create some sort of standard check-in meeting where, we're able to kind of just discuss some of the challenges that we have so that we can all be on the same page, kind of help each other through it.

Lauren Winans: There's a variety of different soft skills that kind of fall into a culture bucket. And culture, that term is thrown around a lot. And I think the best way that I would describe it is, it's how you feel about the company that you're working for. It's how connected you are to their mission, to their leaders. Whether or not you agree with what's going on, or you don't. And it's kind of hard to sell to someone who's coming into an organization as someone who's coming in from, let's say maybe they're in their early twenties. It's a hard concept to kind of wrap your brain around. It's also hard for someone who might be on the tail end of their career and going to be retiring soon.

Lauren Winans: Culture wasn't necessarily something that was that big of a... It wasn't really part of a value proposition for the entire time that they were employed. But it's about making sure that you are able to get something out of this relationship more than just financially speaking. Now, some people may be totally fine with a financial arrangement that does not have anything to do with culture, and there's nothing wrong with that. But there are a lot of employees who want to love where they work, who want to connect on a deeper level, and who might feel that that connection is lacking and are looking for ways to kind of bridge that gap. So I think the soft side of culture, combined with a little bit of the soft side of career, like around coaching and training. Those are types of things that a company who does culture and career development well will definitely find themselves being able to retain employees over longer periods of time.

Sarah Nicastro: Yeah. So it is tricky because number one. Well, let me just say, you're right. It might not be super critical to everyone, but I think there's a lot of research that indicates its far more critical, too far more new employees than it ever has been before. So I think it is undoubtedly incredibly important to be thinking about. So there's that.

Sarah Nicastro: The second thing that gets tricky though is, we're talking about this assuming that the company does care about its culture and the environment it's providing. Which is fine for the sake of this conversation, but to put real action behind it, that has to be true. And then the third thing that gets really challenging is just playing devil's advocate. If I'm someone who has a bunch of different job opportunities, or I'm taking a look at what's available in a certain industry, everyone is going to say they have a good company culture. And so it gets hard to think about tactical ways to illustrate that.

Sarah Nicastro: So to your point, I think that when we talk about retention, it does the work for you. Like if you are really putting the effort into having a good company culture and providing career development opportunities for employees that you bring in, that will be reflected in retention. But I'm thinking about sort of the initial sell, the initial hiring process and what is in the employee value proposition that sticks out. And that is really tough. So what I'm thinking, now I'm no HR expert and maybe you're going to tell me like that's too expensive or crazy or whatever, but what I'm thinking about, again, through the lens of our audience is, you all know your company mission and company values and company culture characteristics better than anyone else. But maybe look at those and try and think through some fairly inexpensive ways to make those tangible for new hires.

Sarah Nicastro: So for instance, like let's say that you want your employees that are in the field to have an opportunity to learn and educate them. Maybe give them an audible subscription, or maybe... things like that. Maybe it's Spotify. I mean, whatever it is like you're talking about 10 or $15 a month. Something really low cost, but things like that, I'm just thinking whether it's you want to play up the fun or the education or the we care. I mean, there's a ton. You could do Headspace. If you want to say, hey, mental health is very important to our company, so we give all of our employees a subscription to Headspace or Calm or whatever the different options are. But I'm just thinking like, those are the type of creative thinking processes that I believe companies need to be doing to take what on paper is very abstract, and honestly easy to be highly skeptical of. And at least put some specifics behind it in a way that can stand out a little bit and make people think like, oh.

Sarah Nicastro: I mean, I've seen people that do, they purchase their employees a certain number of books per year, or they do. And those are all just for their consumption. That's more on the culture side. On the career side, what I've seen that has worked well is because the younger workforce does want to have more progression opportunity and we kind of know that with them coming in, mapping that out and discussing that in the interview and hiring process so that they have of what the longer term potential is from the outset. So I'm kind of babbling, but I'm just trying to think through different ways to take some of the soft things that can be very abstract and try and make them more tangible for folks.

Lauren Winans: Yeah. I think those are really good examples. And I think that there is some cost issues that come along depending on how large you are with those sorts of things and how many employees you might have. But that's the type of actionable examples that we need to be thinking about when you think about employee value proposition, because it's going to be different for each person you're kind of catering it to.

Lauren Winans: And to your point, when you're trying to attract new individuals to your organization, really trying to hone in almost like creating a persona. Okay, well, if I'm going to be hiring a 25 year old in this particular geographic area who is single, who doesn't [inaudible 00:33:31]. And you kind of list out who they are, you can develop more of a custom EVP in a different way. And if you just kind of wing it and you're just kind of like, you're trying to figure it out.

Lauren Winans: But yeah, it's all about creativity. It's about the type of people you want working for your organization and what you know about them and what you know would be valuable to them and meaningful and then just creating something around that, whether that be comp or whether that be a benefit, whether that be career development in, maybe it's a succession plan or maybe it is something as simple as I just want these people... Anyone on my team to have access to masterclass or something that helps people to learn a little bit more from a personal and a professional standpoint. And then culture naturally kind of wraps around all of this and is really critical.

Sarah Nicastro: I was thinking maybe focus groups would be a good idea too, in the sense of, if you have a new wave of employees come in that you can tap into, or if you have your HR team, maybe it's a university, high school, trade school, depending on what the requirements of sort of your entry level positions are. But go out and sit down in a room of those people and just ask open-ended questions. Like, as you start looking for jobs, what are you looking for? Or how would you rank these criteria? What's the most creative idea... And get some input that way. Because that's one of the things too, is I think historically we've reexamined employee value proposition maybe less frequently than we need to today. Would you agree with that?

Lauren Winans: I agree. I think what I would say is on an annual basis, you need to be looking at the four factors that kind of make it up. You don't necessarily need to make sweeping changes in each category every year, but you need to be assessing it on an annual basis. And the reason being is that things are changing so rapidly within the labor market, within the workforces that, we all are a part of. And it is silly to think that something that worked you year ago or two years ago is still working today. And not just talking about the pandemic, I'm just talking about generally speaking, even if we aren't in a pandemic, it would still be something that you need to be looking at regularly to stay ahead.

Lauren Winans: And ultimately we all want to stay ahead and be pulling the best talent possible into our organizations and be working with the best colleagues possible. That's what makes work fun is when you can accomplish things together on a different level. And the only way you're going to be able to do that is to gradually enhance that EVP year over year to a place where you can feel confident and comfortable that you are able to retain and you're able to attract. And it's a hard thing to do because I think there's a misconception that HR and or leaders are solely responsible for EVP, and that's not the case. We're all responsible in some way, shape or form in all of these categories. And even an employee in an entry level position is responsible for contributing to the culture of the organization.

Lauren Winans: So everyone touches this in various different ways and it's important. It's more important now than it ever has been. It's going to get more important than it is today in the future, and it's got to be something that you at least spend some time better understanding, and figuring out which ways you can take action on it.

Sarah Nicastro: What are some of the, I guess, further changes or evolution of kind of what employees want or what becomes important to consider over like the next five years?

Lauren Winans: I think that EVP is going to get bigger over time and not just focused mainly on like four categories. I think diversity equity and inclusion is going to end up with more of its own category, so to speak and not just kind of shoved in there in the culture category. But that's going to become more important and naturally so. So I think that is something that we can see kind of change over time. I do think too that some of the things that we're used to seeing today as it relates to benefits and compensation are going to change over time, especially if federal minimum wage at a $15 an hour rate does indeed take hold. I think there's going to be quite a few changes in total rewards and how we kind of look at salary scales and compensation in general.

Lauren Winans: And then lastly, I think from a career development standpoint. What we're finding right now with a lot of the clients that we work with is that there's a desire to make sure that all training components and methods are able to meet people where they're at. So for example, I think there's going to be a lot more training and development opportunities available via video through your company over time. As well as through external third party sources that your company's going to contract with to offer development opportunity. And so I think that's going to be something that grows over time because of desire and need, but also because we all consume content differently and we're all leaning more towards that video, audio content more so than actually reading the words on a page.

Sarah Nicastro: Right. That makes sense. Okay. In summary, any sort of last words of wisdom, missteps to avoid.

Lauren Winans: Yeah. What I would say is, if this concept was a little bit foreign today, that makes total sense, because this is an evolving concept that changes quite a bit. But what I'd like you take away from the conversation hopefully is that there are components to an employee value proposition that could attract and retain employees in a different way than maybe it is being done today. And so spending some time, identifying what that EVP is and coming up with solutions for tangible changes that are going to move the needle for you to bring in talented individuals and keep them, I think is worth the exercise of going through.

Lauren Winans: And you can even make small tangible changes for your own teams. If you are a leader listening to this, you can make similar, just small changes to some of the things that you're doing to increase inclusivity or help someone get promoted by getting more development opportunities or making sure that everyone on your team is making a fair and equitable wage for the work that they're putting in. You have the power, and I think we all have the power when it comes to this. It's just a matter of figuring out where you kind of fit in the equation. And I hope that you will also kind of take away from today that, this is an important concept to continue to learn about and to not necessarily assume that just giving someone a paycheck is going to be enough anymore.

Sarah Nicastro: Yeah. I did think of one other question. So we talked a little bit at the beginning about sort of assessing the competitive landscape. So in your industry, what are other people providing and how do you match or address that. But I also think there could be some maybe creative inspiration just looking outside of industry. So I just wanted to ask, and it's okay if the answer is no, but is there any one company that comes to mind or a couple that you think do a really good job of this right now?

Lauren Winans: I really do think that Walmart does a really great job of this. I think everyone has varying opinions on Walmart and some of the stances that they take. But what I will say is that their ability to create culture and infuse it in every single thing that they do, including making sure that total rewards packages and career development opportunities are available. They really take the time to know their employee base and know what would be meaningful to them. And they develop their EVP around that. And I think they do it very well. So I would say they're a really great example to turn to, even though they might not necessarily be within your specific industry. They have some really great examples of how they're doing that. And it's public, you can just like Google these things and the information on their website. And so, there might be some really great ideas out there to kind of take advantage of.

Sarah Nicastro: Yeah, that's good. I think it is helpful. It's always helpful to look in industry, but I think it's helpful to look outside of your own industry as well and get some different thoughts and fuel the creative process. So, okay. All right, Lauren. Well, thank you so much. I really appreciate you coming and talking with our listeners today. And this is a super important topic, and I know that there's a lot of other areas of this we can address. So I'd love to have you back at some point.

Lauren Winans: Yeah. I would have to come back. We've just scratched the surface of EVP.

Sarah Nicastro: Yes.

Lauren Winans: But I very much appreciate the conversation and I look forward to chatting with you again soon.

Sarah Nicastro: Awesome. All right. You can find more by visiting us at futureoffieldserviceref.ifs.com. You can also find us on LinkedIn as well as Twitter at 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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Tetra Pak on Sustainability and its Services Potential

October 6, 2021 | 29 Mins Read

Tetra Pak on Sustainability and its Services Potential

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Sarah is joined by Jason Pelz, VP Sustainability Americas at Tetra Pak, and Sasha Ilyukhin, VP Services Solutions at Tetra Pak for a discussion around the company’s leadership position in its own sustainability efforts as well as the opportunity it sees for growth in offering services related to sustainability.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today, we are going to be talking with Tetra Pak and discussing their view on sustainability, both internally and in the services potential that it provides the company. Super interesting conversation and thrilled to be joined today by Jason Pelz, who is the Vice President of Sustainability at Tetra Pak in the Americas and Sasha Ilyukhin, who is the Vice President of Services Solutions for the Americas at Tetra Pak. That's a mouthful, gentlemen. But welcome to the podcast. Thanks for being here.

Jason Pelz: Thanks for having us.

Sasha Ilyukhin: Thank you, Sarah. Glad to be here.

Sarah Nicastro: Yeah, absolutely. Good. So before we get into the meat of the conversation, let's just go through some intros. So Jason, can you start and just tell our listeners a little bit about your background, your role, whatever you want to share?

Jason Pelz: Sure. So as you all now know, I'm Jason Pelz. I'm the VP of Sustainability for Tetra Pak Americas. My background, actually, I grew up in a family that had a recycling collection, sorting, and bailing corporation, so I've been around part of the space for a long time, and I've worked for a few companies. And since I've been at Tetra Pak, myself and my team have really been out fighting the good fight for Tetra Pak, pushing our sustainability agenda, most recently across the Americas.

Sarah Nicastro: Very cool. It's really interesting you have a background in all of this. I didn't know that part. Good.

Jason Pelz: Yeah, you can't leave it.

Sarah Nicastro: Yeah. Yeah, for sure. All right, Sasha. Sasha, you've actually been on the podcast before.

Sasha Ilyukhin: I have.

Sarah Nicastro: I didn't look and see what episode it was, but it's been a while.

Sasha Ilyukhin: I don't remember the number either. That's okay.

Sarah Nicastro: Go ahead and tell folks about yourself.

Sasha Ilyukhin: Absolutely. So my name is Sasha Ilyukhin. I'm VP of Services Solutions for Tetra Pak Americas. My background is I am from Russia, so I was born in Russia, and then I came to the US to study and then ended up starting my work adventures here in the US. So I'm in the food industry for more than 20 years, most of that time is with Tetra Pak in a variety of different roles in the US and in Europe as well. I am also responsible for the services solutions. So my entire career has been in services and customer services. And I am currently leading the team that is growing the business of services solutions for our customers. And sustainability is a pretty big theme these days. So we're doing some interesting work with sustainability and services.

Sarah Nicastro: Awesome. Okay. And so this is going to be sort of in some ways a two-part conversation. Because we're going to talk with Jason a bit about some of Tetra Pak's sustainability initiatives and objectives, and then talk with Sasha about how that translates into potential for the services business. I feel like I've said this on a string of podcasts lately, but I do have kitchen renovations underway. So if you guys hear any crazy noises in the background, I apologize and just bear with me. Okay. So, Jason, I'm going to start with you. Maybe give folks a little bit of context on, I guess, the Tetra Pak business, but specifically how the company has gotten to the point of being seen as really a leader when it comes to sustainability and sort of the passion the company has around really focusing on that leadership position and being as involved as it is in its own sustainability initiatives and also encouraging its partners and its customers and the world to focus more on this area as well.

Jason Pelz: That's a very broad way to start, but I'll give it a shot. I think the most important thing to say is this, it's not new for us. Sustainability has really been part of Tetra Pak's DNA since Dr. Rausing started the company. He said, "A package should save more than it costs." And I think when you immediately do that, you've already got in mind something tied to sustainability. As I said, you've gone in a bunch of different directions, but really, since our beginning, if you think about the package we created, an aseptic package which allows for products to be safely held within a package, not needing refrigeration, long shelf life, you're talking about things like not needing electricity, excuse me, not needing refrigeration, food waste can be minimized, things like that. Again, to go back, for Tetra Pak, it's been a journey. This hasn't been something that is new in five or 10 years. It's really been since the beginning.

Jason Pelz: The company, I would say, because of that initial DNA, I would say, we've always looked at things that we need to be out there driving and pushing the envelope to make things better. So whether it is in our processing solutions, how can we have more efficient equipment? In our packaging, how we make a more sustainable package, how we better protect food. How, at our own factories, at our own sites, what can we do to reduce the footprint we have on the local environment? I could talk for an hour on this one thing. We look at things from a holistic standpoint. Every part of what we do contributes, in the end, to how we want to make sure that as a leader, we have the least footprint on the environment as possible, yet at the same time, be able to provide people with an exceptional package that can handle these products.

Jason Pelz: If I go into certain details, for example, we've made commitments. In 2010, we set a goal to cap our CO2 emissions at 2010 levels at the time we reached 2020. And not only did we cap them, we reduced emissions by 19% and we grew our packaging by 16%. So there's something to said about what we achieved. We've made other commitments. We engage and do things based on the sustainable development goals set by the UN. Again, Sarah, I could go on for a long time about all this stuff. But really, what maybe is the best thing to say is because it's so much part of our culture and because it is so much ingrained in what we're trying to do, not that it's easy to accomplish, but the company believes in it, and therefore, we're given this power to move forward. And that's why we're doing so many of these things.

Sarah Nicastro: Yeah. So, Jason, one of the words you said, holistic, I really liked. Because that was one thing that struck me when we talked in preparation for this discussion is... And it's both because of how Tetra Pak's business is structured, right? You have the packaging itself. You have the packaging equipment. You have the services function. There are these different areas of this life cycle that you touch. But I think it's also in culture, to not overlook opportunities of impact. So the word holistic, I think, is a really good adjective for the way it seems Tetra Pak approaches its sustainability objectives. Because you're looking across the business, across those different areas of impact, not having a narrow view on, "Okay, let's just pick more sustainable materials for our packaging." That would be maybe a more obvious aspect to focus on. But there's all these other components that you all are working on as well to really drive the most positive change that you can. So I think holistic is a super good word for that. I was wondering if you could talk a little bit about your sustainability mission statement is broken down into sort of three pillars. Can you talk a little bit about why it's structured that way and what those three areas are?

Jason Pelz: Yeah. Basically, our brand promise is to protect what's good. And then if you take that a step further and you look at the three, what you're talking about, you've got food, people, and planet. So what we want to do is when it comes to the food, we want to make sure that we protect and make food available everywhere to anyone. So to us, that is part of our mission, and from a sustainability standpoint, that is key. We need to feed a growing population and we believe that we have a great way in our whole process, processing, technical services, the filling equipment, and the packaging, to do that.

Jason Pelz: When it comes to the people, for us, it's our people who obviously at Tetra Pak that we want to protect, but it's also the communities that we work in. We want to make sure that we're good stewards to the communities that we work in. And then it's to the greater world. Again, I talked about food safety and food availability, we want to make sure we do that. We take diversity and inclusion very seriously. We want to have a very well-structured and open environment at our company. Again, which is all key to making sure holistically we're driving sustainability.

Jason Pelz: And then finally, when it comes to planet, this is the buzzword of all, which is the environment. Everybody is very in tune with the environment. And for us, we want to have the best, least impactful packaging material. We want to use the least amount of energy, the least amount of water. We want to work with our customers to allow them do the exact same thing. We want to reduce our carbon footprint across the value chain. And that gets us involved in a lot of different things. We're very involved, for example, in the recycling value chain because we need to be there, that's part of what contributes to it. But we also take very seriously how we source our materials. Because you can have a very recyclable package, but if it all comes from fossil-based materials, you're not looking at things... You're not taking the planet into consideration. And so this is why for us, we do it. And by breaking it into those three areas, it allows for good focus as we drive our mission forward.

Sarah Nicastro: That makes sense. Sasha, I was wondering if you can talk a little bit about how people typically view the sustainability life cycle. And so as I just mentioned, one of the things that struck me when we spoke about this topic is sort of the attention to detail in terms of Tetra Pak looking at all of the areas where it can improve sustainability and making sure that things don't get missed. And the description you gave of sort of, "Here's some of the top of mind areas that people commonly default to thinking about," which are important, "But here are some of maybe the less-considered areas to address," which relates into the services conversation we'll get to. But I think it also would be a good point now to touch on so people can sort of visualize what we talk about when we say holistic.

Sasha Ilyukhin: Yeah. I think that that's a very, very good word that Jason had used as well, and I like it. All of the value chains are becoming circular. People are looking for products as consumers that are circular products. So you buy something, you consume parts of it, and whatever is left kind of enters the value chain in one shape or form, and then it just makes that full circle. So if you look at that circular value chain, sourcing becomes extremely important and recycling becomes extremely important. Jason mentioned those two things. And I would argue that if you just go out in the street and stop the first 20 people and you ask them, "What is the most important part of the value chain?" that's what they would most likely say. The would say that it's important to them where the product is coming from, that it's actually sourced properly, and how is that product then recycled, what happens to it at the end of life so it doesn't just go into the landfill and just pollute the planet.

Sasha Ilyukhin: What is interesting about this is that there is one piece in the middle there in that circular value chain that is called manufacturing. So you source the materials, you start putting them together, that typically happens in a manufacturing plant. Then there may be multiple manufacturing nodes, if you will, on that value chain because then it goes further. We manufacture, for example, equipment. We manufacture packaging material. Our customers manufacture consumer products using what we had manufactured previously. So if you take that whole manufacturing piece, our data suggests that the whole impact on sort of the carbon footprint of the entire value chain, 48% of that footprint is actually caused by manufacturing. So you think about, again, sourcing, extremely important, recycling is extremely important, but half of this entire impact comes from manufacturing.

Sasha Ilyukhin: And for many people, for good reasons, manufacturing is kind of a black box. You, as a consumer, you have no idea how different products are made. Yeah, there is this how it's made series on TV. That's great. I love to see it as an engineer. But for most people, it's kind of a black box. That black box is extremely important. I think it's gaining a lot of relevance. And we can talk about it when we talk about services. We can talk about how services can actually impact what's happening within that box, too, to reduce the footprint.

Sarah Nicastro: Okay, perfect. Yeah, go ahead, Jason.

Jason Pelz: Sarah, can I just add something to what Sasha said which is super important, and that's where we've made some of our commitments. We've committed to be part of the Renewable Energy 100, which is by 2030, we want to have 100% of our infrastructure supplied by renewable energy. So we've made investments. We're not just talking, we're walking the talk. We've put solar arrays. We're buying credits. We're buying green energy where we can, because Sasha's got a great point, if we don't start working on that manufacturing base to make sure that we reduce the impact it makes, and even take it a step further, and even with our suppliers, how do we work with them? Because again, we have to look at the whole scope. It's true that black box becomes a big piece of the puzzle. And if that 48% can get reduced, it makes a big deal.

Sarah Nicastro: Absolutely. And you actually... That was a perfect segue into the next question I wanted to ask you. Which is there is more and more conversation around sustainability, which is a great thing, it's something that should be being discussed for sure, but acted upon. And so the point you made around we're not just talking, we're doing, is super important. Because the reality is, as these things become top of mind for people and reach sort of a buzzword status, then you have a lot of people that jump on and say, "Oh yes, we're also focusing on sustainability." And so what the actual efforts are and what impact they're having is super, super important. And I was just wondering if you could talk a little bit about how do you create accountability around making real progress on the goals that you're setting as an organization?

Jason Pelz: What we do, we have reporting, there's government, so you have reporting mechanisms. When it comes to our sourcing, for example, we have certifications for our renewable sourcing, be it FSE certification. We have certification for our plant-based polyethylene. We're part of the Aluminum Stewardship Initiative. Which even though aluminum is not necessarily a renewable resource, there's still a right way to source it. So we do engage with a number of those things. We've signed on to the UN Global Company. And so these are ways that we've kind of done it. Our targets are verified by science-based targets. So we make sure that we're very transparent and we have these ways to show the people that we're not just saying it, we're doing it. And these are well-respected certifications. And it's a commitment. It's a commitment with time and people and costs. This isn't free to do this stuff. These are all the things that we do to take into consideration and how we've driven it and continue to drive it.

Sarah Nicastro: Yeah. No, that's good, and I just think that's such an important part of this topic is how do you make sure that the areas you're focusing on are having a real impact and that you're doing enough. Every bit helps. But just going back to the conversation about if you think only about sourcing and recycling, there's this chunk of half in the middle that never gets addressed. So just thinking about how to make sure you're looking at all of the areas you could have an impact and keeping yourself accountable for making progress is really important. All right, Jason, last question for you before we talk a bit about services is what lessons have you learned or what advice do you have related to driving this topic forward and making real, significant progress as it relates to sustainability?

Jason Pelz: A couple of things. You have to have... Your company's got to be committed. And when I say committed, it's got to be top down, bottom up. One layer in the company can't drive it, and then you can't expect everybody else to just be there. No one can be a spectator. That's a good way to put it. Everybody's got to be engaged. Doesn't matter, from the CEO down to the person working in the plant every day, everybody's got to understand it and everybody has to drive it. Because really, if your company believes in it, I think that's key. You've got to be willing to spend some money. It's not free. It's going to cost money. The returns will probably not be immediate in some cases. But long term, there will definitely be a benefit.

Jason Pelz: And I think the final thing that I've learned through this and I think we as a company have learned is you can't do it alone. There's no one group that's big enough, or one company, I believe, that is big enough that can make this happen on their own. You've got to have partners. And it can be interesting partners. It can be your competition. It can be whomever. But you've got to be willing to work with others. For two reasons. One, it's important for knowledge to be shared both directions, whether you to them or them back. Secondly, people think of stuff that you might not have or your company might not have. So you can't assume you know it all. And by having these partners, and whatever it is, and we've done, I think, a great job more recently in doing so, if someone is better, bring them along, have them help. Don't look at it as a challenge, look at it as something to take advantage of and work together to create something better. That's what I would say.

Sarah Nicastro: Yeah. Those are really, really good points. Good. Okay. So let's shift gears a little bit and talk about services. Sasha, I want to talk about your perspective around how sustainability is going to become a bigger driver for services businesses overall, but specifically Tetra Pak's service business. I guess before you comment on that, for folks that didn't listen to your first podcast, maybe just speak a little bit about sort of the types of services that you provide and how that shift toward sustainability as a driver is taking place.

Sasha Ilyukhin: Yes. Wow, what an introduction. Let me start first with a little bit of a story, and then I will talk about the portfolio and kind of where we go with this. So the story goes like this. I recently booked a business trip, so yay, we're starting to travel again after over a year of these lockdowns. I want to go and see my customers face to face. So I've started to book some business trips. And an interesting bit of information I see in our travel booking software is that I see carbon footprint. So always, when I look at flights, I'm choosing flights, and okay, this flight is this many kilos of CO2 and this flight is this many kilos of CO2. And if look at the price of the flights, okay, I could choose a flight that's, let's say, $200 less, for example. But now I see that, wait a second, it's 500 kilos more when I choose that flight. So all of a sudden, I am, as a business consumer in that case, I'm kind of thinking about, I'm making conscious decisions, how should I focus and what should I focus on? And we have a commitment to reduce carbon footprint across the value chain and within Tetra Pak as well. So all of a sudden, I'm paying attention to these things.

Sasha Ilyukhin: This actually very much applies to just us as regular consumers. So a lot of customers, or many of our customer, I should say, are starting to put carbon footprint on their package. Oatly is a great example. Oatly, all of their packages, you take any package from Oatly, there is a figure on it, and I know that they're working hard on reducing that figure across the board. So that's a good example. And it's not only Oatly, but there are many other customers that are starting to put their carbon footprint on the package.

Sasha Ilyukhin: So again, it becomes very relevant for consumers. It becomes very relevant for customers. And of course, it is very relevant to us as well. And I think at the end of the day, from a business point of view, it also becomes a competitive advantage. If I was a consumer starting to choose which package do I buy or which ticket do I book, with which airline, etc., etc., all of a sudden, that drives my decision, my purchase decision. And that, of course, has a big impact on the business if you kind of accumulate that across the consumer base.

Sasha Ilyukhin: And now so let me just kind of digress a little bit and talk about the portfolio and kind of where we're coming from as a company. And these two lines will meet together. So we as a company, in services, we started very traditional. If you watched the previous podcast, Sarah and I, we talked about this at length. But we started with a traditional portfolio, kind of parts, maintenance, after sales, if you will, etc. And then over time, we started to introduce outcome-based solutions, well, service contracts, maintenance contracts, and then outcome-based solutions, solutions that are focused on cost reductions, on improving efficiencies, and some hard commitments, for example, on operational costs, etc., share of savings, and these types of contracts.

Sasha Ilyukhin: And what we see lately is there's also a clear need from our customers in improving sustainability as well. Because Jason said it. You cannot do it alone. And it's the whole value chain that we talked about earlier that needs to work on it. So all of our customers are setting their science-based targets on their reductions and their commitments to the environment. We do the same. So how do we work together? We work together by basically aligning our services portfolio into what it can do to help our customer reduce their carbon footprint to enable them to be more competitive versus other producers out there. And this is our commitment to our customers on that as well, on sustainability.

Sasha Ilyukhin: So this is kind of how it all kind of comes around, and this is where services play a big role. But from a services organization perspective, then we need to think about, "Okay, so what are the competencies that we need for this? How can we do this?" Because this is not just claiming and proclaiming, we need to actually prove. We need to put the numbers. We need to calculate. We need to make sure that the numbers are audited, they're confirmed, and that we are really reducing the impact across the value chain.

Sarah Nicastro: Okay. So I want to go back to the value chain part. But, what was interesting to me about the story you shared about your flight and kind of looking at the criteria and then talking about how some of your customers have started to publicly state their statistics on their packaging, it just made me think, we have this whole point about accountability. And so that public declaration of, "Here's where we are. And you can watch and see if we're making progress," is them forcing accountability on themselves to continue prioritizing this as an objective. And I think that to your point, that is a competitive advantage. It will become increasingly so.

Sasha Ilyukhin: Absolutely.

Sarah Nicastro: But what's interesting to me and what sort of helps paint the picture of the opportunity you see is so some customers are doing that now, it's going to be more and more and more, and so they will be creating their own accountability and forcing their own increased actions to have this impact. And so that's where you're seeing this as a growing driver of services. So, I guess, going back to the value chain point and the sort of manufacturing part that sits in the middle that makes up for roughly half of the opportunity here, talk a little bit about some of the ways that that can be addressed and some of the areas there to tackle from a services standpoint to really provide value to your customers.

Sasha Ilyukhin: Yeah. We are learning. I'm not going to claim that we know everything here on how to approach this. So we're also on a learning journey. But what we've learned so far is what I can share is that when we do the cost reduction projects with our customers, when we help our customers reduce their operational costs, we do it through total productive maintenance. So we use the methodology of TPM, total productive maintenance. And that typically starts with doing things like mass balance of the plan and what is called activity-based costing. This may be too specific of a term, but we call it ABC, so activity-based costing. Where you basically slice and dice everything that's happening in the manufacturing facility on the vector of time and on the vector of the phase of production to see what activities are actually happening, how much cost they generate, and where are the opportunities to actually reduce that cost. So this is how we sort of map it out and start to approach it.

Sasha Ilyukhin: With sustainability, it's a very, very similar process. So we've learned how to do a mass balance, but using the energy, using the water consumption, using the VODs, CODs, using the waste. So we are doing a different type of mass balance, but it is, anyhow, a mass balance of energy, if you will, energy that is a carbon equivalent of mass balance. And then we approach it in a similar way with total productive maintenance. So we basically set up focus improvement teams. We set up pillars with our customers with the typical sort of lean manufacturing TPM where you look at autonomous maintenance, you look at preventive maintenance, you look at education and training, early equipment management, etc. So you have these pillars and you have the standard 16 losses in manufacturing. We'll look at that. But we look at it also from the standpoint of how they impact the carbon footprint of the facility.

Sasha Ilyukhin: And to give you some examples, so recently we've managed to reduce in one of our customers over 1,000 tons of CO2 per year. So this is a confirmed equivalent that we have reduced. If you convert that back to the efficiency of the plant, so overall equipment protectiveness, that increases 19.4%. So 19.4% efficiency increase plant-wide is equivalent in that case to just over 1,000 tons of CO2. If you convert that to yet another equivalent of like, "Okay, so what does that even mean?" That means that you need about 1,500 acres of forest to sequester that CO2 out of the atmosphere, so just to put it kind of common terms.

Sasha Ilyukhin: How is that done? About 40% of that actually came from standardization across the plant. And the specialists out there, the black belts and the green belts, they will immediately understand what we're doing. What we're starting with is we're center lining everything. So we are bringing equipment to basic conditions. We're making sure that everything is serviced properly, that it's properly maintained, managed, etc., and so everything runs properly in that facility. That itself brought about 40% of that improvement over the year. And then, for example, another big chunk was cleaning. So when we looked at cleaning, not only the cleaning cycles themselves, but it has to do a lot with how the production is planned, for example, all the production cycles. So we analyze all of that. So we have this what is called minimal economic quantity. We look at balancing supply and demand. It's a lot of very tedious work. So it's not just you come with a very quick method, etc. No, it takes weeks and weeks and weeks. But we balance supply and demand of that manufacturing facility. That drives the corporate cleaning routines, for example, and corporate downtime for cleaning. That, in itself, gives around 30% of that overall annual carbon footprint reduction, for example. But there are some other things, of course.

Sarah Nicastro: Okay. So I got really wrapped up in the example and forgot where my next question was going to come from. All right. So there's all of these ways, all of these specific detailed ways that you can go in and really examine, in the same way you would if you were driving efficiency. So if the whole goal was to increase efficiency to reduce cost, in this instance, you're talking about really examining processes and increasing efficiency to lower carbon footprint. So same concept that you are accustomed to using, just different metrics by which you're operating. And you can go in and look for all of these areas of opportunity. Now, we had talked previously about the fact that this is maybe a different way to approach this than some may initially think of when they think about, "Okay, how do we have a more sustainable manufacturing facility?" And maybe the first thought is, "Let's get more energy-efficient equipment." But that can be cost-prohibitive. And so talk a little bit about why that's not a bad goal to have, but it might not be immediately feasible for everyone that thinks that that could be a good option. And so this process of examining the current operating conditions and structure and looking to make these improvements can be an option to make immediate impact and maybe put yourself in a position where new equipment becomes a more reasonable option to invest in.

Sasha Ilyukhin: Yeah. Well, what can I say? We also manufacture equipment. And we'd love to sell more equipment, because our new equipment is awesome. From the sustainability standpoint, our packaging lines, for example, use 40% less energy than our previous generation packaging line. So if you talk to any equipment manufacturing, any OEM, of course they would tell you that, "Yeah, absolutely, just go and change out the equipment and this will help reduce the carbon footprint." And that's true. The tricky part for that is, of course, budgets and CAPEX in general, there's not a lot of appetite for CAPEX out there. In fact, I see, even from the services point of view more and more drive towards OPEX. Even with the big brands, what's happening is they're saying, "We don't want to focus on the manufacturing assets anymore." So a lot of it goes into contract manufacturing or co-packing. And the brands then focus on their brand, on developing the products and what's inside the package and the ingredients and the recipes and all this great stuff and marketing and so on.

Sasha Ilyukhin: But manufacturing still becomes relevant. So all of a sudden, you have these co-packers and contract manufacturers that are getting bigger. They are, of course, typically a mix of old equipment, new equipment. So what do you do? If you're a contract manufacturer or if you're a traditional manufacturer with capital equipment, what do you do? You can't go out and just start changing all the equipment in your facility. That's completely unrealistic. So my advice to that is, is there such an enormous potential in total productive maintenance, in that case. So please look into sort of fine tuning, calibrating your equipment and looking at where the costs are, driving the costs out. In a typical manufacturing facility, in food manufacturing, I'm speaking food manufacturing now, the average total utilization of the equipment, if you take total capacity utilization, is somewhere between 30 and 40%. So equipment, you've got the CAPEX out there, it's only producing products 30 or 40% of the time. Is that an opportunity? Absolutely. Absolutely it is an opportunity.

Sasha Ilyukhin: And when it's producing, it's typically producing with some losses, some quality losses. A lot of food manufacturers, the way that they risk manage, for example, is that there's a lot of quality sampling. I've seen up to 2% quality sampling, which is, in my opinion, a pretty crazy figure statistically speaking. So there are a lot of different ways to drive efficiency and therefore reduce carbon footprint without changing the capital equipment.

Sarah Nicastro: Yeah. It makes sense. And certainly, it's not to say that new capital equipment isn't great when it becomes a reasonable option to invest in. But in the meantime, there are all of these other things that can be done to have a more immediate impact. One of the comments that we talked about is the fact that sustainability is just good business. So, talk a little bit about what that quote means to you.

Sasha Ilyukhin: Yeah, I think it's becoming more and more the license to operate, in my opinion, the license to stay in business, not only good business, it used to be good business. It used to be you are in business, and if you also care about the planet and if you do some things for sustainability, you're doing good business. And that's true. But I don't think it's any longer relevant. I think that it becomes mandatory, it becomes license to operate for businesses to define how they impact sustainability, what are they doing to impact sustainability. And people can argue for days and days about, for example, how humans are impacting climate change and whatnot. There's huge arguments about this. But there is no argument to we as stewards to this planet, it's just good stewardship. And to me, it makes absolute sense that businesses are starting to pay more and more attention and put more and more effort into sustainability goals. It's not the bottom of the balance scorecard anymore. It goes to the top of the balance scorecard. And I have examples in our business where in talks with our customers, some customers are starting to place these goals as equivalent to their business goals. So they not only want to achieve their net sales and profitability, they also want to achieve their goals on carbon reduction and being carbon neutral and things of that nature. So, absolutely, it is a license to operate.

Sarah Nicastro: Yeah, I was having a conversation not long ago with Dr. Andreas Schroeder from the Advanced Services Group at Aston Business School. And we were talking about the intersection between servitization and sustainability. And it was a similar reflection from him that the business they work with on their servitization journeys, sustainability historically has been sort of a secondary focus. So there was always a primary focus and that would be sort of, "And where and when we can, we'd also like to positively impact this." And his point is it's very quickly picking up steam and being the primary driver, not a secondary objective. So I think that's very much in line with what you're seeing in terms of those priorities becoming more level versus it being further down the scorecard. Okay, so I want to ask you both one final question for today, which is, I guess, if you had to kind of give one premonition or prediction on what we think is something notable we'll see over the next six or 12 months, what are your thoughts on where this is all heading?

Jason Pelz: Do you want me to go first?

Sasha Ilyukhin: Go first, yes.

Jason Pelz: Listen, I would say to you the importance of this topic, the premonition is it's just going to become that much more important. I think Sasha hit it on the head when he said it's a license to operate. I also think it's almost becoming not even so... It's going to become a license to survival is what I really think. I would even take it one step beyond to that, where companies, and we as society, are going to have to make some decisions. Because clearly, you see things going on. And really, I only see the topic of sustainability, how it's going to affect how people run business or are even able to start businesses, it's going to just become more and more important. Again, one is a license but two is a survival thing. Because really, we're in a resource-strapped world, I would say. And if things aren't taken into consideration, whether it is reducing what you take from the planet or your ability to take advantage of those renewable things to run your business, you may find yourself in a situation where you can't run your business. So it's not a question that someone might shut you down, it's a question that you just might not have access to some input that you need. So I would say, and people may think, "Thanks, Captain Obvious," but truly, it's going to be more and more important. This subject is not going away.

Sarah Nicastro: That's what I call my husband a lot of times, Captain Obvious.

Jason Pelz: It's an easy one to quote from the TV.

Sarah Nicastro: All right, Sasha, what do you think?

Sasha Ilyukhin: Well, what I think is that this is really people-driven. And I wanted to say consumer-driven, but that's not the right way to say it. It's really people-driven. So of course we're all consumers. We all go to the grocery store. We all buy different products and food and beverages, etc. But what's happening here and the need for this increased attention to sustainability and real action happening in sustainability is people-driven. And we as consumers will make choices, we will make these decisions. So, I agree with Jason, it's not only a license to operate, it's a license to survive.

Sasha Ilyukhin: But the good news is that we as people, we're everywhere, at all levels of all of these organizations, at our customers, in Tetra Pak, and at IFS and in all of these companies. We are people that care, and people that start to care more and more and more. And I for one, I want to leave a better planet for my daughter. So I do care. I do make choices when I can make these choices. And I think that's a great thing. So every small change counts. And if you're running a business out there, tap into your people's potential. I strongly believe in the power of teams, power of people. This is where the change is happening. Don't wait for someone to come in, some smart consultant or vendor or whatever to tell you what to do. You need to figure out what to do and then look for the right partnerships in that area. So that's my thought on this.

Sarah Nicastro: Yeah, I think that's a really good point. It's the power of people. And like you just said at the end, it's also the power of partnerships. Jason, you made a really good point earlier where, yes, in instances, this is a competitive differentiator, but it's also a moral imperative. So it can't be something where we're feeling like, "Oh, this is our secret sauce to sustainability so we won't share this." We all really should be invested in the bigger picture and the common goal of, to your point, Sasha, leaving the world in the best possible state for the next generation. And so the point you made earlier, Jason, about this is something where the benefits of community and collective knowledge and learning from what others are doing and tapping into whomever and wherever and whatever you can get some perspective from to drive the needle forward is super important.

Sarah Nicastro: So yeah, and this podcast is a good start. This is great. I really, really appreciate you both being here. I think that we will need to revisit this conversation because I do think that it, as we've said, Captain Obviouses, it will only become more and more important. And I think that as that continued focus plays out, there's going to be more and more lessons learned and best practices and what's next for us to be talking about. So thank you both for spending some time with me today.

Jason Pelz: Pleasure.

Sasha Ilyukhin: Thank you, Sarah. Thank you. It's such a relevant and such an important topic. So thank you. I really appreciate being here.

Sarah Nicastro: Absolutely.

Jason Pelz: Yes, I appreciate you inviting us.

Sarah Nicastro: Yes. All right, you can find more by visiting us at futureoffieldserviceref.ifs.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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Darren Roos on the 2021 Gartner Magic Quadrant for FSM

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Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. I'm joined today by Darren Roos, CEO of IFS, to talk about all things service and reflect a bit on the most recent iteration of the Gartner Magic Quadrant for Field Service Management. Darren, welcome back to the podcast.

Darren Roos: Thank you, Sarah. Thanks for having me again.

Sarah Nicastro: Yes. Thanks for being here. It's been another exciting year in many different ways and this marks the sixth consecutive year in a leadership position for IFS on the Gartner MQ for Field Service Management furthest for vision. How are you feeling about the MQ this year?

Darren Roos: Look, Sarah, we're incredibly committed to our customers and we've worked tirelessly with them building capability that's important for them to be able to run their businesses better. When we see that recognized in the MQs, it's obviously very satisfying. We have a team that's constantly thinking about what additional value we can make available to our customers. They're out there talking to customers, their challenges, day in and day out, and that means that we have a very open communication channel, the customers talk to us and that's reflected in our vision position. So, very proud, but it's a reflection, frankly, of the work we do with our customers and then that MQ is a by-product.

Sarah Nicastro: Yeah, absolutely, and reflecting on the last year, I know everyone's very tired of talking about COVID, myself included, but it is just an undeniable part of our reality. I will say that not being able to change that fact, it's made me very proud to be a part of IFS both in how you led the company to handle the impact of the pandemic internally, so the culture we have, and then also how we've banded together to help our customers in various industries, various regions handle the complexity that was thrown at them. When you think of the internal and external experiences of the past year, what comes to mind for you?

Darren Roos: Look, I think the key... First of all, thank you. It certainly didn't feel easy going through it.

Sarah Nicastro: It wasn't. That's a fair assessment and it still isn't, so yeah, for sure.

Darren Roos: I mean, that's a good point. I think, first of all, it's not over. Not only is COVID not over, but the repercussions and consequences of the decisions that have been made by governments and companies over the last 18 months will live with us for likely decades to come. At IFS, it was really about communication both with our employees, with the leadership team and then also with our customers. But if I just start with the internally, I was running these monthly fireside chats with the whole company, as you know, it was really about increasing visibility and giving people the opportunity to talk about what was on their minds, what were they concerned about. From an IFS perspective, the direction that we took, as you know, was to make sure that we protected jobs. I didn't want to be in a situation where we were having to make people redundant during COVID when they would be at their most vulnerable.

Darren Roos: Job security was my number one priority. And then, in reality, the business continued to grow and our customers saw value in what we were doing. In that dialogue with customers, immediately became apparent that there were ways in which they needed us to change what we were doing to be able to navigate these wild fluctuations in demand and work circumstances, so different demand and different work circumstance. Can we take a couple of examples of that with, for example, the technology like our IFS Remote Assistance, with Munters, they needed this remote assistance capability urgently to continue to run their business. We did the initial deployment in just six days and now we're expanding that remote assistance globally where we'll finish the full roll out globally in the next couple of weeks, and that includes build technicians, third line support who are using the solution on their existing mobile devices.

Darren Roos: We also had experts guiding customers and people internally on the opening of new production lines, for example, in their manufacturing facility in the Czech Republic. So, crazy levels of innovation within the business, but really rapid. That was capability that we had, but frankly, we just hadn't been as much demand, but because we had this dialogue, we were able to identify areas that we could help customers. So, that's one example. Panasonic was another one where Panasonic heating and cooling systems had been piloting remote assistance in the UK and in Germany. The feedback was overwhelmingly positive. Super interested in the technology throughout Panasonic and, in the pilot, it's super interesting how you learn new things that in addition to driving service consistency by having this remote capability, it also enabled them to capture and transfer knowledge while retaining technical insights that they just didn't have before that they're now used to educate and upskill their workforce.

Darren Roos: Just everything that we're doing has changed but it comes down to communications then close to our customers, close to the employees and finding ways in which we could help employees and then help customers.

Sarah Nicastro: Yeah. When I think about the communication side, it's a lot of honesty. I think about those fireside chats and that's one of the things I liked about them is you weren't pulling any punches, there wasn't this facade of everything's great guys. I mean, it was an acknowledgement that, "Hey, this is a really hard experience for us all to go through, and let me try and tell you as much as I know about the current moment, knowing it's all probably going to change again before tomorrow." I think, in the same way, our customers had to get very honest with us. Munters, for example, they had this on their roadmap, but just to your point, hadn't been an urgent priority. It was something they were prioritizing a bit ahead. The idea of them calling IFS up and saying, "Hey, we need this, but we need it right now," and being able to say, "Okay, what do we need to do to adapt internally to be able to boom? If this is going to help them, let's get it done." The speed of that is full.

Sarah Nicastro: But also, I don't want to say things have normalized. I just think, what does that even mean? I mean, that's a whole different conversation, but what's cool about Munters and another example is Alfa Laval. They also turned to remote assistance for business continuity, but they are evolving that use as the business needs change. Where it was we cannot travel, we need a way to do remote service as our lifeline, once travel became an option again, it's not we don't need this anymore. It's great. This is awesome. We have it. How do we evolve its use to become a part of our service delivery and our overall strategy?

Darren Roos: It's a great sustainability angle there also which every company on the planet today is thinking about ways in which they can reduce their carbon footprint by which they can run their businesses more sustainably. Travel is a huge carbon polluter and I don't know a single executive that doesn't have this on their agenda today and finding ways, as you say, in which they could sustainably change that dynamic of travel is huge. Massive. For people who aren't in service, you think about travel as transcontinental travel. But when you have thousands of tens of thousands of technicians that are driving around in polluting vehicles and historically the narrative would have been, can we convert these to electric, and now all of a sudden, because of COVID, you actually know you can do this remotely, that's a massive benefit and we definitely see loads of examples of that.

Sarah Nicastro: Yeah. It's a super good point. I mean, I've had a lot of conversations just over the last few weeks, one with Bureau Veritas, one with Tetra Pak, one with the Advanced Services Group at Aston, all around the shift people seeing in sustainability being a key factor to the driving factor in a lot of these decisions, technology investments, et cetera. I think that there's conversations I've had around the goal isn't all service be remote service, but when you're sending technicians out in a truck to drive however many hours or miles or kilometers, and for them to just say, "Yep, I went to figure out what's wrong, didn't have what I needed to fix it so I'll go back next week." You know what I mean? The idea of how much of that that is inefficient and unnecessary that can be eliminated is just astounding. Okay. It's been a crazy year and a lot of it has been challenging, but there's been a lot of good things going on too.

Sarah Nicastro: When it comes to the momentum that IFS has internally and related to service, we have not slowed down. We've just kept full speed ahead and then some. Can you talk about, you know, some of the highlights of the last year that I'm sure have had a big contribution to our leadership position?

Darren Roos: Yeah. Look, again, thanks to our customers, we've experienced a fantastic growth, significant growth in service management in particular, 2020 was another triple digit growth year. We demonstrated agility as we responded to these crazy needs that we just talked about in the way the market changed in providing solutions that were more relevant to customers and help them keep the business on track. We didn't just hunk it down and this year we are continuing the growth and transformation plan. We're completing our own digital transformation by implementing IFS cloud within our own business. We obviously have Clevest having joined the family in the utilities service management and asset management space, Axios in the IT service management space and Customerville customer satisfaction surveys, and those are just three of the acquisitions that we've done over the last 18 months. They're all connected by our goals to support companies as they evolve their own business towards servitization.

Darren Roos: We fully relaunched the IFS branding and our new product, IFS Cloud, obviously has come to market. In fact, we're coming up to the second release already now in October. Customers can see that this is why they're choosing IFS and providing the most incredible feedback to analysts like Gartner, et cetera, and others as we see in the MQ.

Sarah Nicastro: Yeah. It's funny, I was thinking one of the calls I was on this morning, someone says, "How's it going?" I'm like, "It's insane." The pace is crazy, but for me, it's energizing. I think that all of these things are very visible in the industry as to what is going on behind the scenes and it's fun and it's exciting, and it's all to your point geared toward what is the best value we can deliver to the customers, what do they need, how do we continue evolving to meet those needs and I just think that that's really cool.

Darren Roos: I think if I can comment on that. Every business leader deals with this challenge of change management. We are compelled to continue to evolve the business. There's a great Jack Welch quote around the pace of change in a business. Effectively, he says that when the pace of change outside the organization is greater than the pace of change inside the organization, the end is near. I think we can all relate to that. Even COVID aside, the landscape around if we think about the topics that we're talking about here, technology and servitization, they are rapidly changing. If you are static and you're not evolving, then you will not be competitive and you will likely not exist. But, the counterpoint to that is that people are naturally resistant to change. Employees don't want to be doing something different all the time.

Darren Roos: It is difficult to continuously train people and make them aware of new technologies and new capabilities. It's difficult to continuously evolve and change your business model. These are tickets to the game today and I think it's the organizations that have embraced technology to support the business, that have an appetite to change and evolve that are the ones that are most likely to succeed. It's the old Darwinian Theory of Evolution. It is the ones that evolve that survive, and that's what we're seeing. During times like this, that pace of change is much quicker and therefore much more difficult to manage.

Sarah Nicastro: Yeah, I haven't shared this with you, Darren, but I've tossed around the idea in my head multiple times and at some point I'll get to it. It's just something that would take up some significant concentration, but the journey that you've been on for the last three years at IFS, three and a half, and the journey that a lot of our customers are on in service really parallels one another in a lot of ways. This idea of disruption and innovation and change, and how do you modernize a company culture, and how do you put people at ease and bring people along on the journey and equip them with the training and knowledge they need and all of those different things, I mean, there's a lot of what we are going through as an organization that gives us a real sense of empathy for what our customers are going through as they face a lot of that same thing.

Sarah Nicastro: The shift to servitization or outcomes-based service or advanced services, I mean, it is a foundational shift in how a company does business and it's far bigger than just technology or just focusing more on service. I mean, there's layers and layers of everything that has to evolve. I think it's an interesting parallel that I'd like to explore a bit more at some point. Okay. One of the other things that was introduced in the last year is IFS's messaging around Moment of Service. I absolutely love this messaging. Tell me a little bit what that means to you as it relates to us and how we serve our customers.

Darren Roos: When the idea was initially pitched to me and as you probably know, Sarah, we didn't hire an agency to do this. We got a focus group of employees together, people that we felt were at the right mindset to be able to shape where we would go in the future and they did a load of work, and then we came up with that Moment of Service messaging. When I heard it the first time, it immediately resonated with me because what we recognize is that every single one of us understands the concept of the Moment of Service. We've all, whether it's buying a car and having that delivery, or whether it's having the, I don't know what you guys call it in the U. S., a boiler or geyser, the thing that makes hot water break down and then call a service company and the technician arrives, and you've got hot water again to stick the kids in the bath. We've all had that moment of service. The next step is appreciating and realizing that every single business has moments of service. When you're able to shape a business by helping them to create outstanding moments of service, which is what we do, it's the reason we exist, is to help businesses in the industries that we operate to orchestrate the parts of their business, their assets, their people, their customers, to orchestrate those to create outstanding moments of service.

Darren Roos: That's a fantastic thing to be able to do. When we think about the ways in which we've built out technology and the acquisitions that we've made with customable, being able to listen to our customer's customer at that moment of service and validate that we've given an amazing moment of service is really important. A lot of people think this is about us offering outstanding moments of service. Of course, that is important, and we measure our moments of service. Much more importantly, this is about how we help our customers create outstanding moments of service for their customers. They can be no doubt that if you stay close to your customers and you can create those amazing moments of service, then you have a sustainable business model. That's simple.

Sarah Nicastro: When I first heard this message, I immediately saw in my mind moment of service, but the word could rotate. So, moment of impact, moment of opportunity, moment of differentiation, moment of influence. There's all these things that that moment represents for businesses both that are trying to really optimize and protect and master that moment, but also those who are looking at how to evolve and innovate what that moment means for their business. I just think that I love the term because I think it can represent so many different things and is just super, super important, and really reinforces the really immense power that the frontline worker has in helping you carry out your service objectives, which I think is a whole another topic that's super important.

Sarah Nicastro: Okay. I realize I'm a service nerd and probably get a little bit overly excited about all of the potential and innovation and opportunity, but, trust me, I didn't think I would be here either. When I started and didn't know what field service was, I certainly didn't envision myself 14 years later being still fired up about this stuff. But, I think it is something that I get really excited about because I think that we've only just begun. Both IFS, I truly believe, and also the innovation and the evolution and transformation that's taking place, you know what I mean, we're there, but we've really only scratched the surface of all of the potential. Looking at the future and all of that opportunity, what do you think you would list as our biggest strengths and differentiators for helping our customers really seize that service opportunity?

Darren Roos: There's a few things I would talk about here but let me just start by saying that I agree a hundred percent. I think that we are at the beginning of a very long continuum of service improvement and artificial intelligence and machine learning, and next generation analytics, IOT, all provide for provide incredible opportunities for us to significantly improve what service means across virtually every industry, and anyone that asserts that it's just about the human touch, just doesn't understand it at all. There is so much that we can do and ways in which the insights and technologies that are available to us today that simply weren't available in the past, it really changes the game. So, the key things though, the ways that I think IFS specifically impacts the service capability is, the first thing is that orchestrating this capability across an organization, I said earlier, customers, assets, your employees is incredibly hard.

Darren Roos: What's happened in the IT industry over the last decade, particularly, is a massive fragmentation of that IT landscape. If you go back further than 10 years ago, we had quite large monolithic systems that were integrated single data model, single UX, and that in some ways, while it was clunky and it was slow move, it was integrated at least. At least you have the idea of a single view of those three elements, customers, assets, people was potentially possible. With the advent of cloud and the fragmentation of the IT landscape, nobody's solving that, there's no standards, which means that the complexity of integration falls to customers and that is incredibly difficult to do. The first thing is that IFS cloud is one single solution and it supports this idea that we can provide a single view of our customers, single view of service, and enable customers to orchestrate these reports. However, we recognize that not every customer is going to start from scratch.

Darren Roos: Not every customer wants everything from IFS, and therefore we approach it from a very integration centric, API centric approach supporting the idea of a composable enterprise, but whereas, idealistically, you want to be able to do that with 50 disparate applications, one for HR, one for procurement, one for travel and expense management, one for service, one for finance, you can carry on forever. That's not really practical unless you're in an enormous company and you have thousands and thousands of people in it. What we give customers the ability to do, and this is the most common use case for us is that they will run a chunk of their business on IFS that might be asset management and field service management, it might be ERP and field service management and ITSM, it might be ITSMs and service management, but at least we give them the ability to have this platform on which they can then add on other things. So, that single solution is incredibly important.

Darren Roos: Next thing, and I touched on the role of innovative new technologies, digital twins, low code development environments, embedded analytics, artificial intelligence, all of these are capabilities that we bring to the customer natively in the platform. This is newer technologies that many customers that perhaps are a little bit less sophisticated are saying, "You know, how do I leverage artificial intelligence or machine learning or IOT or digital twins in my business when I don't have a thousand people in it. And I don't have a budget of billions to go and do a massive POC." We bring that capability in a very pragmatic way to our customers today. So, single platform innovation embedded, not attached, embedded. And then the third thing is choice where we offer customers the ability to deploy either on premise or in the cloud. We offer them choice around who deploys.

Darren Roos: It could be us; it could be one of many partners, and we've worked very hard across those elements to provide customers choice, not being overly prescriptive, not saying you're going to have it in the cloud, you can't configure this application beyond the very tight parameters that we've given you and you're going to take an upgrade every year or plus a year, et cetera, et cetera. That's not the way we think about it. We offer them choice because we recognize the complexity of that heterogeneous IT landscape and we're not saying we're going to be overly prescriptive. I think those are the three big things, choice, innovation embedded and single platform to reduce that complexity of integration.

Sarah Nicastro: It's interesting. Our customers are all very heavily focused on improving their customer experience, and so when I think about the fragmentation you described, the first thing I think about is all of the failure points that that surfaces for areas where they are likely to drop the ball on their customer experience. This idea of more cohesiveness and simplification, elimination of unnecessary failure points, all of those things are so, so important and I just want to urge listeners, I don't know the number off the top of my head, but I did a podcast interview with Pekka from Cimcorp who is leveraging IFS Cloud and the insights he had on their more modern IT strategy were just spot on, I think, in where people need to head to. I certainly would recommend anyone go listen to that. Darren, I have two more questions and I know we're almost out of time, so we'll try and keep them really brief. Six years and running as a leader in the Gartner Magic Quadrant for Field Service Management, what is going to be the key for us maintaining that status?

Darren Roos: Look, I think I'm actually going to go back to something that you said now and answer a question that I'd rather answer here than that one because maintaining that status actually for me, is not an objective. Making sure that our customer is happy is an objective that I'd want to maintain, but you touched on this voice of customer and the customer satisfaction, and how do they make sure that their customers are happy. Actually, I think it's a pretty simple equation. For me, and I'll use IFS as an example as a company. We run IFS. We also run a host of other applications because IFS doesn't do everything. We run a very heterogeneous application suite. Everything's in the cloud, everything's integrated. The way we think about it is that we offer moments of service to our customers and we've identified, I think it's seven or eight different areas where we provide and we endeavor to provide an outstanding moment of service to our customer.

Darren Roos: That could be, if we just think about our business, during the sales cycle, it could be when we respond to a request for some work, when we're in the implementation phase, when we go live, et cetera. There are these moments of service and what are the critical things that we've done is that we've leveraged Customerville, which we now acquired, but prior to acquiring Customerville to listen to our customer's feedback at those moments of service, and now we know whether we're doing well. I think it's a much simpler equation. I think, just going back to your question of this complexity is that every business leader goes, what are the moments of service that I provide and am I listening to my customers at that moment of service to know whether I'm doing a good job or not?

Darren Roos: If I'm not, let's get real-time feedback so I can fix it. And then, we have the capability to orchestrate the bits of the business that I need to fix it. Not as complicated as many people would make it out to be. I think we provide that capability, but I think technology aside that for me is got to be the aspiration. That only anyone's going to argue that whether you're building carports or whether you're a pest control company killing bugs, or whether you're a mining company, you all have a customer and every one of them is trying to delight their customer. If they offer their customer outstanding moments of service, then they will get more customers.

Sarah Nicastro: Yeah, absolutely. All right. Last question, Darren is, in this wild, challenging, but also exciting last year, what's the biggest lesson that you as a leader have learned?

Darren Roos: We touched earlier on the communication and I think, historically, I've relied a lot on my ability to get out and see people face to face and meet them and get to know them, and all of a sudden that luxury wasn't there. I think that it became incredibly important for me to be able to make it clear where are we today, where are we headed and how is each person expected to help us get there. There's a few different dimensions to this. There's clarity for everyone and where we are, there's clarity for everyone on how we get there. Everybody has different roles though. It starts to become quite difficult on how do you make sure that you're communicating effectively across the various functions of the business, how somebody makes a contribution. But, we did a lot of this. We did a lot of talking. I think we've got to the point where I was pretty sure people were tired of hearing from me, but it was very important to me that we over communicated and that everybody understood the role that they would play in taking IFS to where we were going.

Darren Roos: In the feedback that I've had, it's proven to be more important because people were suffering with mental health issues, people were struggling with the fact that they couldn't get out there, almost caged, and the fact that they had a sense of importance, that they understood the role that they would play, that there was a bigger cause underpinned by this job security topic that I spoke about right at the beginning really made a difference. Frankly, I was just trying to figure out how to do it. There was no genius involved. I think I got lucky. I had a great leadership team that, together, we coached each other through it.

Darren Roos: One thing I would add, and I'm not just saying this for effect, but I learned more from our customer CEOs than anybody else. I continue to talk to our customers. Many of them shared fantastic ideas of how they were responding to the crisis. In fact, our initial actions when we responded and what we did right out of the gate was based on a customer that I spoke to and some guidance that they offered me on what they were doing. So, really appreciative to everyone who shared their ideas with me. That was the big thing, super communicate, over communicate, make it clear where we're going, have people understand where they are now and how they can individually contribute.

Sarah Nicastro: Yeah. I love that illustration of the power of community, and how you're connecting with them and taking just as much from those interactions as you're trying to give. I think that's really cool. Darren, thank you so much for your time. I really appreciate it. Thanks for being on. You can find more on all things service at www.futureoffieldserviceref.ifs.com. You can also find us on LinkedIn as well as Twitter @thefutureoffs. The Future of Field Service podcast is, of course, published in partnership with IFS. You can learn more at ifs.com. As always, thank you for listening.

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Sarah Nicastro: Welcome, to The Future of Field Service podcast. I'm your host Sarah Nicastro. Today, we are going to be taking a look into Bureau Veritas's take charge approach to the future of work. I feel like every second or third headline you read in the news today is talking about what the future of work is going to look like and it's a conversation that is top of mind for many of our listeners. I'm excited to welcome to the podcast today, Maggie Laureano, who's the Vice President of Human Resources Americas at Bureau Veritas. Maggie, welcome to The Future of Field Service podcast.

Maggie Laureano: Thank you so much, Sarah, and I am really delighted to be here. Thanks for the invite.

Sarah Nicastro: Yeah, thanks for being here. Okay, so before we dig into the topic at hand, tell our listeners a bit about yourself, your background, and your role at Bureau Veritas.

Maggie Laureano: Great, I'm happy to do that. So Sarah, I'm going to go back a little bit in time and so while I'm a resident of Florida now and have been for a number of years, I'm originally from New York, New York City. And went to college at Fordham University where I fully expected that I was going to, beyond my undergraduate in psychology, I fully expected that I was going to continue into a masters and potentially a PhD and be a psychologist or at the very least a therapist. And after I got my undergrad in psych, I decided to take a year off and get some experience under my belt, and then go back to school. Well, P.S., I won't tell you how many years later, but I did not go back to school and my first job out of college was as an HR Assistant at a bank. As you know, New York City is ripe with all kinds of financial service organizations so that's kind of where my career started.

Maggie Laureano: Unlike most people coming out of college where typically you spend just a few years in your first job, I actually spent about eight years at that Hearst organization and the reason I did so was because I was given an incredible amount of opportunities to learn, and grow within in HR, and do different things. And so within that eight year span, I started as an HR Assistant, I moved into benefits administration, I worked in payroll, I did recruiting, I did employee relations, I did training facilitation, and so really I got a really, really good foundation. And I think part of that, Sarah, was I was very inquisitive and so I would ask a lot of questions, I wanted to know about what that area did, what the other area did, and so I think my manager at the time was really impressed with that intellectual curiosity and I was given lots of opportunities.

Maggie Laureano: But after that, I evolved into or I moved into other roles in HR at other financial institutions also in New York and then I transferred to Florida. Throughout my career, in financial services in particular, I was really a generalist most of the time, but I did have stints where I was in a recruiting function or in an employee relations function and I managed those two functions as well in different companies. And then in 2006, I transitioned to logistics. I worked with DHL for a couple of years and then after that I moved into aviation with Embraer and I was with that company for 11 years. And then in 2018, I came to Bureau Veritas and the one thing about human resources that I have found is that it's a very transferrable skill and you can learn the industry, you can learn your internal customers, and the business that you support because really the skills that go into HR you can apply in any industry.

Maggie Laureano: And the other thing that I love about being at Bureau Veritas is the ability to really help transform the HR function, which I'm happy to go into a little bit, a little bit later.

Sarah Nicastro: Mm-hmm (affirmative). Cool.

Maggie Laureano: But that's a little bit about me and my career.

Sarah Nicastro: I love it. Okay, and real quick before we go on, for listeners that maybe aren't familiar with Bureau Veritas can you talk a little bit about the organization? You guys have a very cool video that I've come across and I'm going to see if I can find the link to it to put in the show notes because it talks about how many interactions with Bureau Veritas happen in a day, but people maybe don't recognize the brand by name. So can you give folks a sense of what the company does? [ view video here: https://www.youtube.com/watch?v=s9Sq4YvXnO8]

Maggie Laureano: Absolutely, and you make a great point and I'm happy to just talk about that video a little bit more because I love it. So Bureau Veritas is about a 200 year old company that started Europe. It is actually headquartered out of Paris and it started in the marine industry. And over the years, it has expanded to much more and we are a leader in testing, inspection, and certification services. And so when you talk about that video, Sarah, that's one of the things that I loved when I was going through the interview process with Bureau Veritas, watching that video and it was so eye opening because it takes a gentleman through the entire day from the time he wakes up, to taking his daughter to school, driving to work, picking up his coffee, going into his office, and then on, and on until he returns home in the evening and you have these pop ups throughout the video that show all the different touchpoints.

Maggie Laureano: And so Bureau Veritas inspects food, it inspects toys, so think in a McDonald's Happy Meal for your kid, as a matter of fact, I use extra virgin olive oil and when I was interviewing for BV I saw that it was inspected by Bureau Veritas. But we also do a lot in the infrastructure space, so for example here in North America we have contracts with municipalities, with different cities where we certify that their building codes are up to par, where we certify and inspect bridges, we do elevator inspections. We're into the energy sector now and of course, oil and gas is a big part of our business. Yeah, it's really... We are the company that, especially in North America we're not very well known, but a company that really touches all of our lives without even us realizing it.

Maggie Laureano: And we're built on safety and that is one of our absolutes, safety and ethics, which are critically important because we provide services to our customers that they must rely on our expertise that we provide, and safety and ethics are clearly very, very important in what we do.

Sarah Nicastro: Mm-hmm (affirmative). Now, to give people a context for the size of the organization, how many employees do you have either globally or specific to North America?

Maggie Laureano: Yeah, so I'll give you both, Sarah. So about 75,000 globally and in North America we have about 6,300 and that is primarily in Canada and the U.S., but we also have operations in Mexico and in the Caribbean.

Sarah Nicastro: Mm-hmm (affirmative). Yeah, so you might not know the Bureau Veritas name, but you have undoubtedly interacted with something the company has inspected or something along the way, so I'll see if I can find that video and put it in the show notes.

Sarah Nicastro: Okay, so in researching for this episode, Maggie, what stood out to me is that you get stuff done. I think that's likely the New Yorker in you, but the other thing that I want... So what I wanted to kind of talk about is, you get things done, right? But sometimes taking real action isn't about what's fast or what's easy to tackle, but digging deep and understanding how to make the biggest impact. So we're going to talk a little bit about when you joined BV and you realized sort of the talent shortage and some of the things that are facing not only your company, but the industry at large. We're going to talk about that, we're going to talk about some of the steps that you all have taken to address that challenge, but before we get into sort of the tactical conversation I'd like to just talk for a moment about this balance of depth, and speed, and why taking shortcuts often doesn't pay off.

Maggie Laureano: Yeah, sure and it was a really interesting experience for me, Sarah, because having come into this role with a million years of experience, I don't even want to think about how long it's been, but I've been in HR for a long time and I have seen what works and what doesn't work. And so I came in with my own preconceived notions of how I would have wanted to set up the HR organization and the types of things that we could do to impact the employee experience and that sort of thing. But one of the most important things, I think, for any HR professional is to really get to understand your company, and your internal customers, and their business, and how do they make money, and what's important to them, and that sort of thing, right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: And so in doing that what I realized was that I couldn't just jump in and make the changes that I thought would be impactful and important. I really had to step back and listen to my customers because they were in different places. One of things about BV that is kind of neat, it's a very entrepreneurial organization and so it's not the kind of place where one size fits all and where you can dictate okay, this is what we're going to do and every business is going to do it. And so for me, that digging deep and spending time meeting with my internal customers, getting to understand their business, getting to understand their needs, helped to inform how I was going to make changes because whereas at other organization where I've worked I had the ability to make kind of a blanket change for all, at Bureau Veritas it just did not work that way. And had I done that, I would have failed miserably.

Maggie Laureano: And so I think my lesson there was you need to listen, you need to understand, and even though you may come to the table with expertise and experience that you can offer, but it needs to fit I guess is the best way I can say it. It needs to fit. So I've been at Bureau Veritas now for almost three years and the things that we do, what I like to do is provide a framework for my internal customers that kind of an umbrella approach, right? So these are the minimum things that we will do, but certainly each business leader has the ability to customize it further to fit their needs.

Sarah Nicastro: Mm-hmm (affirmative). Yeah, that makes sense and I think that's really good advice not specifically to anything to do with HR, but just for leaders in general that are seeking to make change within a business, right? And what I liked about how you described it, and this is where you can tell that you took that time and you did that digging with the right intention, because you said you used what you learned to inform your strategy and your plan not to pacify people for whom you were going to change something, right? And so I think when you start to talk about leading through change and the need to understand internal stakeholders, I think one of the mistakes that gets made is really related to intent, so some people kind of take certain actions, listening, getting feedback, talking to check a box rather than to actually consume that perspective and let it, like you said, influence what the plan is going to be. Does that make sense?

Maggie Laureano: Yeah, it makes absolute sense and if I had taken that approach of listening just to check the box, like I said, it would not have been successful. And as I said, the business, we're a very entrepreneurial organization and it just would never have passed muster, if you will.

Sarah Nicastro: Mm-hmm (affirmative). So there's a couple themes that I want to talk about before we get into the specifics of the talent shortage and what you have done about that. The first is kind of what I just mentioned, which is this authenticity, right? And so in some of the articles that you've been a part of that I read prior to our interview, you talk about the importance of communication, which everyone talks about, but there is this level of emphasis on honesty and authenticity that you have. And I'm hoping you can just speak for a moment about how that helps you build trust, how that helps you make connections with your workforce that have a big impact when it comes to engagement and retention, which is part of the equation of this talent shortage, right?

Maggie Laureano: Absolutely. And Sarah, to me, communication in the workplace and with our employees is no different than communication in a person relationship, right? It needs to be honest, it needs to be genuine, it needs to be transparent, it needs to be two way, right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: And so I bring that same kind of philosophy to the work place and my brand, if you will, my personal brand is important to me and I don't ever want that to be tarnished by someone thinking that I've lied, or I've led them astray in any way, or that I'm hiding information. Now, to be clear, there are things organizationally that you just cannot disclose to employees, confidential information or what have you, but short of that I think open and honest communication is critical. And as an example, and I'll come to Bureau Veritas in just a minute, but in my prior organization I used to host town halls probably on a quarterly basis and it was my CEO and myself that would kind of partner to do the town halls. And over time, I mean I was there for 10 years, and over time the respect and the trust that I had from employees and the things that they would come to me with absolutely astounding and it was because they knew that I was going to tell it like it is, right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: They knew that I wasn't sugar coating the message, I was going to be very direct and honest with them. And I've brought that same approach to Bureau Veritas and the pandemic, 2020 was a perfect example and not just myself, but also our CEO, Natalia, and some of our other leaders we hosted town halls with pretty difficult messages to the employees and we were always very honest about the message. There was hope in the message despite some negativity that might have been included, but there was hope and then there was always follow up, right?

Maggie Laureano: And making sure that if we were taking an action we would then follow up and talk about how it was going and if we were going to change directions. And the other piece is getting feedback from the employees is really important, how are they feeling, what are they thinking, what's important to them, so again, Sarah, I go back to it's no different than a personal relationship. If it's going to work, it's got to be authentic, honest, transparent, and really it's got to come from a good place.

Sarah Nicastro: Mm-hmm (affirmative). Yeah. I think that's an important point and the other point before we talk a bit about how to bring in new talent is... The other point that I wanted to talk to you a little bit about is the importance of empowerment, right? And so you mentioned the culture at BV is very entrepreneurial and so in that type of environment the role of empowerment is important and probably in some ways expected. But I think that empowerment is something that is underutilized in a lot of businesses as it relates to looking at ways to foster greater employee engagement and satisfaction, right? We bring these people in because they're talented and then we don't want to trust or empower them to do what we've brought them in to do, right? So can you talk a little bit about the importance of empowerment?

Maggie Laureano: Yeah, absolutely and it reminds me of many, many years ago I remember being a training class and it was all about empowering employees and so forth. And I remember the facilitator said, "You don't want to have empowerment with a leash." Right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: And so pretend empowerment essentially, yeah, yeah, yeah you can do that, but then if you make a mistake, boom, you're pulled back and you're penalized in some way. So one of the philosophies of our CEO is fail fast and you don't have to have all the information you need in order to make a decision. And so in her mind, 75-80% of the information needed to take a decision is fine and then if that doesn't work okay, that's great, we can course correct, and come back, and make it better. And I think that's a really important message for all of our employees because if you've got the skills, you've got the experience, and the know-how, as a new employee obviously you've got to learn the ropes, you've got to learn the company, the way we do things, and things like that, but we hired you for a reason, right?

Maggie Laureano: And so it's important to be able to give employees the opportunity to show what they have, what they've done, what they can do and it's okay to make mistakes. And I think that's what I really love about BV, that making a mistake is not catastrophic, making a mistake is a way to learn, it's a way to improve, and it's like a child, right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: You can't put your arms around a child and not allow them to explore their surroundings because they just won't know what to do when you release them, right? So it's similar to employees, right? You've got to let them go, you've got to let them do, and I think an empowered workforce is a much more productive workforce and a more satisfied workforce overall and we certainly encourage that here.

Sarah Nicastro: Yeah. No, I think it's very, very important for companies to start digging into the, I'm going to call it the retention side of this equation, but it's not just retention, it's also engagement and satisfaction. And it's if this talent shortage is real, and it is, then part of it is where does the new talent come from, but a big part of it also needs to be how do you treat the talent you have and are you maximizing their potential, which is where I think the idea of empowerment really comes into play.

Maggie Laureano: Mm-hmm (affirmative). And Sarah, we do a lot of... We're very focused on our talent, on their development, on giving them opportunities to grow, to develop within the company. I mean, it's one thing, yes of course we can hire externally, and we do of course, but yes, with the talent shortage it's become even more critical for companies and for us to look internally and see. I mean, in North America we've got about 6,300 employees. Let's develop them, let's understand what their desires are in terms of their career, and what we can do and work together to help them get there. We may have a diamond in the rough buried somewhere in our organization that we need to uncover and we need to help grow, and nurture, and support them in their development. And so that's one of the things that we've been doing for several years is a very deep dive into our talent looking at who we've got, assessing them, working on individual development plans. So growing our own, if you will, has kind of been one of our missions in the last couple of years.

Sarah Nicastro: Okay. Good. All right, so let's shift gears a little bit and talk about... Okay, so you joined Bureau Veritas, you started taking a look and digging into okay, what's the state of things, what needs addressed, what are the challenges, what are the opportunities, and your recognition of the talent shortage was one of the big things that came out of that work. So let's talk about some of the actions you've taken to help address that challenge.

Maggie Laureano: Yeah, so early on when we saw the market start getting really, really competitive, and even before that, we've got pockets in our organization where historically it's been very difficult to find talent. And so we started exploring could we create internships, could we create apprenticeships because some of our positions require certain certifications and you need to be overseen by an experienced professional in that particular area, and so we started to explore how can we again, grow our own, right? So hire more entry level junior people and help them grow, and get certified, and get the experience that they need. So we worked on that, we partnered with a number of different schools to do that.

Maggie Laureano: We also started tapping into very niche kind of publications and organizations for some of these positions and we became active with them. Well, let me before I go into it, I was going to talk about a management training program that we started, but even before that, so we started to take steps to see how we could build up our talent pool. But it became very clear that we needed really much more attention in that area and so to that end I hired an experienced talent acquisition leader and he joined us in January of this year. And Sarah, the transformation has been absolutely incredible and it's come in a number of different ways. So his philosophy is he's got a very unique way and methodology in which he and his team recruit. There's a lot of data and analytics attached to it and so at any given moment you could see where the different candidates are in the process.

Maggie Laureano: Are they all residing with the recruiters being sourced? Or have the moved on to the hiring manager? Or are they in final interview stage or in offer stage? And on a daily basis you could see that graph moving. We have introduced artificial intelligence in order to do a lot of the sourcing for us and also, to provide us with market intelligence for different geographies and for different positions. And that has really been a game changer with our leaders because now, the recruiters have become more consultative with them. And so if we are hiring for someone at, I'm just going to make this up, at $18.00 an hour and the market is telling us with the data that we have that market rate is $22.00 an hour, and therefore we're not really able attract talent, we need to pivot. We need to do something different.

Maggie Laureano: And that is exactly what has happened with us internally, our recruiters have become much more consultative because of the analytics that they have and we have been able to make some decisions internally about increasing starting salaries, increasing the salaries of our incumbents to become more competitive in the market. That's been another way in which we've addressed this talent shortage is by bringing in some additional talent on the talent acquisition team that has really shifted the paradigm with regards to how even our leaders are looking the talent acquisition process. Now, we are much more partners and everybody has skin in the game, the hiring managers, the recruiters, everyone, and so we're in it together.

Maggie Laureano: As I said, we've created a management training program. We're partnering with the military to recruit from their databases. We're focusing on a lot more on diversity, equity, and inclusion, and we've got some KPIs associated with that, and we're also creating our own kind of a ready talent pool for different types of positions in different geographies, so kind of hiring folks into this pool that we will tap into when the need arises. So a lot that we've done and I've rambled on for way too long on it, but I think it's really helped us to turn the corner and I don't know that we're necessarily ahead of the curve, but we're certainly not completely behind it. And a lot of the things that we've put into place are not necessarily going to bear fruit today or tomorrow, but they're setting us up for success in the future.

Sarah Nicastro: Yeah. Well, and I think this challenge is one where you have to take a long game approach and I think that's part of the lesson folks are learning is in instances where you maybe used to be able to have success hiring based off of we want X years of experience doing this work, if those folks aren't available then to your point, how do you get creative when it comes to growing your own experienced workforce? Right? So how can you look for certain skills, aptitudes, characteristics, et cetera that you can bring in and provide with the training and experience that will get them to the level that maybe you were able to hire at before, right? And I think a lot of organizations are just struggling with coming to grips with the amount of work that they have to do to grow talent that they maybe used to be able to get in easier ways.

Sarah Nicastro: So I think the grow your own philosophy is a very important one to embrace and take action on, and the sooner that you do that, the better your long term results are going to be. And I think that you'll probably see that you are ahead of the curve when it comes to making those investments and how they pay off. But I also think the points you made about investing in talent acquisition resources and skills is important, as well as the technology piece, right? Because if you can leverage that technology to get actionable data both on where are we succeeding and why, and where are we struggling and why, that allows you the business intelligence to either replicate success or avoid those challenges and have better overall results. So I think those are all really good points.

Sarah Nicastro: The other thing I wanted to talk with you about is the program that BV has created, the Bureau Veritas Stem Scholars Program. So let's talk a little bit about what that program is, what its intention is, and what role that plays in all of this.

Maggie Laureano: Yeah. Well, thanks for bringing that up. We're really excited about that program. So we started that with an organization in New York City where a group of students were selected to go through a program to learn more about BV, what we do. So a lot of our leaders were involved in getting in front of those students and sharing all about our business, but then they were also given a project to work on. And it was incredible the level of engagement, of excitement, and really the outcome of the projects, right? So we're excited about that. We are going to be expanding it into our other markets probably in Houston because that's where we have a large presence as well, and so we're working toward that. But Sarah, I mean, stem overall, as you know, not enough kids are going into those fields, right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: In college. And our company, Bureau Veritas is essentially at its core an engineering company and so it's important. Yes, it's selfish for us specifically, but I think overall for our country, if I might be so bold as to say that, we really need more students going into these fields and helping. We talked about recruiting and looking at the long term, same thing with this. We need to be a part of, BV needs to be a part of encouraging students going into stem careers and helping them in any way that we can. We've given these kids scholarships and we will do that with the next group when we expand this to Houston. It's important that we lead the way in encouraging students to look at these careers and supporting them. And so I think our leaders having been so involved in the program and really demonstrating to them okay, so academically this is what you learn, but practically this is how it can be used in the workplace. And I think that connection to how it translates into real life is really important.

Sarah Nicastro: Yeah. Now, just to clarify, if I understood this program correctly, you award these students a scholarship, but they do not have to use it to come to BV. Right? I mean, is there a tie for them to come and do anything in exchange?

Maggie Laureano: No, there are no strings attached.

Sarah Nicastro: No, so that was my understanding and I think that it is a long term strategy, right? But it's an unselfish way to increase the awareness of some of the different career paths that might not be readily presented, right? And so we talked at the beginning of the conversation about how BV is a brand, the services and the outcomes of the organization are everywhere, but the name might not be known, right? And so how does that translate to recruiting if it's a company that potential candidates are saying, what's Bureau Veritas? And that's a similar challenge for a lot of organizations, right?

Sarah Nicastro: And so I think this idea of how do we do different creative things to invest not only in our own bench of talent, but in increasing the overall awareness of career opportunities in this space, I think is a really important and really smart thing to do. And perhaps, more impactful because there isn't a direct payoff necessarily or a selfish interest, it's you're helping young people with their career, and you're increasing awareness, and those are really good things. I just think that's a really, really cool initiative and something else that folks could take something from.

Maggie Laureano: Yep. Absolutely. And the other thing, you talk about brand recognition, you're absolutely right. BV in Europe is very well known, but in North America much less so. And so we've tried... Not tried, we are actively working on our brand recognition throughout North America through social media and not just through our own internal marketing department, but even our talent acquisition team putting a lot of content out there in social media, videos, and just commenting, and being thought leaders in terms of what they put out there. And so trying in every way that we can to heighten the awareness of Bureau Veritas and as you said, through programs such as stem and we're also very committed to corporate social responsibility, and so putting our name out there as well through programs linked to that.

Sarah Nicastro: Yeah. Yeah, very cool. So I know we talked about the fact that this is a long game, but what would you say about what you've found from these efforts thus far and sort of what you see on the horizon?

Maggie Laureano: So far what we are... We're seeing a turnaround, as I said, with regards to our talent acquisition and partly because of the data that we have and the artificial intelligence that we've invested in, so that is really paying off. In addition, we're making it easier, Sarah, for candidates to engage with us. So we've automated a lot of our processes for candidates and then new hires, so it's not cumbersome and it's not very time consuming to apply, to once their hired to go through the process, and so we're trying to make it easier and more user friendly on the candidate side. And then internally, talk about growing our own and imagine the retention hopefully that we will have, right?

Sarah Nicastro: Mm-hmm (affirmative).

Maggie Laureano: Because we're investing in our people, because we're giving them opportunities, because we're listening to them to understand what it is that makes them tick and where they want to go in the organization, and so we're seeing all of that beginning to bear fruit for us.

Sarah Nicastro: Yeah. Yeah. Okay, so I want to do kind of a rapid fire of words of wisdom. So some of these I think will be maybe summarizing or recapping points we've touched on, but we'll just go through. So your advice on different areas of future of work, so number one is, how do we modernize recruiting? So what comes to mind as advice for steps to take to modernize that process?

Maggie Laureano: You know what? I think, and this is pretty selfish because of what we've done at BV, but having the right people in those roles. My head of talent acquisition is absolutely amazing. He is a thought leader, he is assertive. Data analytics has been critical for us, being consultative with our clients has been critical, and providing that market intelligence. So I think that all of those aspects of transforming your recruiting function, I think all of that is very, very important. And in a few short months that he has been here we have seen a change in the tide not just in improvement in our results, but also improvement in the collaboration with our hiring managers, and so it's absolutely critical.

Sarah Nicastro: Mm-hmm (affirmative). Okay. Are there new roles that are imperative for folks to be considering for today's landscape?

Maggie Laureano: I mean, I think going back to talent and what we just discussed, I think data scientists would be really, and I would love to have an intern data scientist on my team for a period of time, because business is driven by data and they make decisions based on data. And so the more that we are able to provide that, the more credible we will be, and the better we can make our case. So I think analytics in general is really important.

Sarah Nicastro: Yeah. I agree. Okay, what's your best piece of advice around retention of today's workforce and particularly the younger generation?

Maggie Laureano: I think having a sense of purpose. I think the younger generation is really driven by not just the work, but doing good overall. And so I think all of our, for example, our corporate social responsibility efforts, and programs, and what we stand for as a company, I mean, BV as a company stands for, as I said, safety, and ethics, and providing that to our customers and so I think that sense of purpose. But in addition to that, right now, and actually as the pandemic continues to unfold, flexibility. Flexibility in the way in which they work and where they work I think is really, really important. We are finding more and more that when we're making offers remote work is really important to people, not having to drive in to an office, or not even having to relocate for an opportunity. Obviously, that is not possible for every position, right?

Sarah Nicastro: Right.

Maggie Laureano: But where it is possible, companies really ought to consider offering that to their candidates, to their new hires, and even to incumbent employees because that is a real differentiator between somebody choosing your company over another. And at Bureau Veritas we have become quite open and flexible in that regard.

Sarah Nicastro: Okay. What would be your number one piece of advice for improving employee engagement and satisfaction?

Maggie Laureano: Sarah, there are many. There are very many, but I will tell you the one lever that I would pull with regards to that is assuming that we've got other things that contribute to employee engagement and satisfaction or the overall employee experience, but I would say the leaders. Leaders are the ones that... When an employee talks about the company that they work for, they're really talking about their leader. They're talking about the environment and the culture, if you will, that that leader is creating for their team and that could be very, very positive or very, very negative. And so I think having strong leadership, strong leaders that have been trained, that have strong EQ, that understand how they impact their employees, there's so much that goes into it, but I would say that is the number one thing, in my opinion, that helps to drive a positive employee experience.

Sarah Nicastro: I agree. Okay, what is your top prediction around the future of work over the next five years?

Maggie Laureano: Oh my goodness, I don't know. I don't have a crystal ball. But I do think... I do think certainly going back to the issue of flexibility, I mean if that trend is to continue, being flexible in where and how we do work. And then that creates the challenge of measuring work, and performance, and all of that, but we're facing that today. But I don't know, Sarah, that would be my best guest.

Sarah Nicastro: Mm-hmm (affirmative). Yeah. Yeah. It will be interesting to see what happens and five years is a good chunk of time when you're talking about these types of things.

Maggie Laureano: It sure is.

Sarah Nicastro: Okay. All right, Maggie, last question for today, what is your proudest accomplishment thus far in your time at BV?

Maggie Laureano: Well, I think that we've done so many things to help improve the employee experience, which is, in my opinion, kind of the life's mission of HR no matter where you are in HR. But I think my proudest achievement has been to assemble a team of HR professionals that really are helping to drive the value that HR can bring and working very, very closely, very collaboratively with our internal customers to really again, understand their needs and be flexible in the way that we deliver our services. But I couldn't do it without the strong team that I have behind me and I think that for me that is probably the greatest accomplishment. I've got a great team of people, we're all moving in the same direction, rowing the boat in the same direction, and we've got the same objective that we're all striving for.

Sarah Nicastro: Yep. That makes a big difference. Well, thank you so much, Maggie. I was impressed in my research in all that you've accomplished in less than three years’ time and I appreciate you coming on and sharing some of your lessons learned and actions taken with our listeners.

Maggie Laureano: It's my pleasure, Sarah. Thank you so much for having me.

Sarah Nicastro: Absolutely. You can find more by visiting us at futureoffieldserviceref.ifs.com. You can also find us on LinkedIn and 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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Russell Masters, Director of IT and Analytics at DHU, a provider to the UK National Health Service, who formerly spent significant time at Rolls-Royce involved in digital innovation efforts, talks with Sarah about the call for leaders to become more digitally adept. They discuss what this does and doesn’t mean, some of the key changes necessary, and what the future holds for leaders in the digital age.

Sarah Nicastro: Welcome to the Future of Field Service Podcast. I'm your host, Sarah Nicastro. Today we're going to be talking about the increasing demand for business leaders to be digitally adept. We know we are living in a digital world and what that demands of leadership has changed, is changing and will continue to change. Very excited to have with me today to discuss this topic, Russell Masters, who's the director of IT and analytics at DHU, a provider to the UK National Health Service. Russell, thanks for joining me today.

Russell Masters: Hi Sarah, thanks for havin0g me. It's lovely to be here.

Sarah Nicastro: Lovely to have you. That was a mouthful. Russell has been so kind to join me today on what is a bank holiday for him, so that's very nice of you to give me some of your time, appreciate it. Before we begin our conversation Russell, tell our listeners a little bit about yourself, your background, your current role and kind of how we got to be here today to talk about what we're going to talk about.

Russell Masters: Yeah, sure. It's fantastic to be here. Know it's a bank holiday, but it's loads of fun talking about this kind of stuff and I love to take the time out to do it. So my career really I've been kind of in industry for 20 years, and pretty much all have that has been in services, either physical or digital somehow, hence my interest in this and my passion for this subject area. And the vast majority of my career was in fact in aviation, and so I've been fortunate to work in a couple airline organizations and the majority of that time also working at Rolls-Royce where I was responsible for a whole range of business transformation and digital services. And that's brought me after quite a long time in aviation to a big career change, so now I'm in healthcare. And I work DHU, which is a community interest company. We support the UK National Health Service in providing urgent and emergency care services, a big part of which is the digital content required to make those services work. And whilst on the face of it, it would seem that moving from planes to people is a big shift, actually there's a whole load of stuff that's very similar. And notwithstanding, the huge amount of digital content and digital technology required to make all of those services work.

Sarah Nicastro: Interesting. So yeah, I've been covering this space for a little bit less than 20 years, but a similar amount of time. And it's interesting to witness and experience how digital has evolved and what that means as it relates to the topic that we're talking about today. So you, through your experiences in industry and services and in different spaces, aviation, healthcare, the reality is no matter what industry we're talking about, the digital imperative is real and it's an area where all organizations have been forced to not only adapt and embrace but to really transform and innovate. And what that takes at the leadership level is really, really interesting. I think that we've asked our workforce to really do a 180 in how business is done and what value propositions we're providing from 20 years ago. And it's not an easy feat, and the way that companies lead is critically important in the success or failure of this initiatives. So I'm curious Russell, in your 20 years of experience, so I know a big chunk of that was at Rolls-Royce and Rolls-Royce is obviously seen as a leader in that industry with a lot of these things. How have you witnessed digital leadership evolve?

Russell Masters: I think, obviously I've seen this all the way through my career and I've been really fortunate in that I've been both a part of delivery of physical services and digital services. And if you like, I've had kind of the dream set of experiences because I've been able to do some of the doing, do some of the building of new things, and also lead some of the more modern cutting edge digital technology projects and services that you could ever want. And I think I consider myself kind of really lucky in that I was born with a personal computer, probably the first generation to have a PC appear in their life. And yet for me, it's still really, really challenging and really difficult as you take forward the blending of IT technology with the real world and go through what has effectively been a transition from IT and big IT and the way that that technology appeared in our life to the more ubiquitous version of that which is digital. And every aspect of our life now is touched by some form of digital technology. And I would suggest that probably the generation of business leaders that we have now are right at the forefront of being the first to take those big digital tools and technologies and deploy them into their companies, into their businesses and their teams at any real scale.

Russell Masters: And so much of that is exciting, but so much of it is very scary. And what I think it's prompting is a wholesale change in the way that we lead and the way that we support our teams, the way that we approach projects and challenges. If I think back to maybe 10 or 15 years ago when we were firmly in the IT age, IT was by definition very technology heavy, it was kind of quite expensive, it was quite time consuming and quite a lot of effort to deploy these technology into companies, despite the huge value that they delivered. And now we fly forward 15, 20 years and those technologies are becoming cheaper, they're becoming easier to deploy, and they're becoming so great to democratize, there's so much more democratization those technologies into our daily lives. And it makes the challenge of taking those and making something useful out of them, both in one way much, much easier because the cost of doing so and the speed at which you can do so is much less, but also much, much riskier because you can get yourself into a whole load of hot water by deploying digital tools and technologies into your organization on scale and on mass.

Russell Masters: And I think I'm probably part of one of the first generations of leaders who've really had to get their head round how do you take these digital tools and technologies and how do you deploy them successfully into your organization? And it's a really complicated story and it's to do with people and it's to do with technology and it's to do with culture and it's to do with philosophy. And I think what I've seen, the predominant trend over the last 20 years as you say has just been this complete democratization of those technologies and the availability of those technologies and leaders wrestling with how do they make something really successful out of something that they probably haven't had a lot of chance to understand but know is incredibly important and being used by everyone everywhere to make their businesses better and more effective.

Sarah Nicastro: Yeah. It's funny, I was smiling because the article that we published today, actually, is called, the headline is Actually, Technology's the Easy Part. And one of the things that I mentioned in that article is what you just said, which is the democratization of these tools in some ways makes things easier, the barrier to entry is lower, the affordability is greater, the accessibility and availability, all of those things. But on the flip side, when I was writing about these things, we'll say 15 years ago, just embracing technology was a competitive advantage. And that is no longer the case, and so from that perspective it is more complex because relating it to the topic we're discussing today, the understanding has to be far deeper. You could get away with, at one point, the understanding being, "Okay, we need to go digital." And that was a feat but it was a journey that was pretty easy to conceptualize and outline and embark on. And what comes next in the further iterations and generations of that strategy is more complex and it requires a lot more expertise and understanding and all of those things. So I think that's a very good point. And like you said, both exciting in some ways and scary for leaders to know that they have some work to do.

Sarah Nicastro: I recently quoted an Accenture report that said all companies are now technology companies. So what are your thoughts on that statement and how does that underpin the importance of leaders becoming more digitally competent?

Russell Masters: Yeah, I completely agree with that. I think there aren't any companies now from the smallest kind of mom and pop shop retailer to the largest multinational that doesn't use technology in some ways as part of either their employee experience or their customer experience and the product and service that they provide. And so yeah, pretty much every company is a technology company today. And building upon the point you were making in response to the beginning of the conversation, I think historically in times gone past it was about how do you fit the people to the technology. The technology would show up and it would do something and you needed to fit the people to the technology to make that work. Increasingly, it's now about how do you take the technology and fit it to the people because pretty much every successful company, every organization that exists today that has any kind of future, has any kind of purpose, has people at the center of it. Whether it's the employees who deliver the end experience to the customer or whether it's the customer themselves or it's a whole network of stakeholders and providers and vendors and other people. It's always people at the core.

Russell Masters: And so I think the big challenge for leaders today is, how do you take something that is inherently very sophisticated, very technology based, and how do you make that really super simple and really super compatible with people so that you can get the best of both? And I think pretty much anyone who's been in my position leading digital products or in and around technology will say that it's the people part that's the really hard part and it's the part that can make a project really successful or an endeavor really successful or not. And I think as we're talking about what the leaders need to do to be successful in this area and how does digital leadership show up in a big organization, it is increasingly helping to enable people but with a background of technology and technological change. And I think that is one of the most difficult subjects for any leader to start getting their head around, and frankly not one that you're prepared for when you've come through maybe a University system 20 years ago or have entered the world of work at that time. So that's the challenge for all of us, is how do we get good at making the technology fit the people?

Sarah Nicastro: Mm-hmm (affirmative). What would you say are the biggest barriers to this happening? So if leaders need to become more digitally adept, what are the challenges in that happening?

Russell Masters: Well, there's all sorts of things we could talk about, but there's probably a couple that spring to mind. I think first and foremost, like any big change in business or in society, there's a level of understanding and knowledge required to get started. And I think the subject of digital and IT technology and digital technology starts, first and foremost, with some pretty super sophisticated content. And that can be really daunting when you're starting to contemplate how do you take digital tools and technologies forward. And there's always a sense and a concern that really maybe you have to actually be a developer yourself to be able to be effective in these areas, maybe actually have to understand architecture or maybe you have to understand the latest technologies in order to be successful. And I think that is a very real but not necessarily, it's a boundary, it's a barrier that can get in the way of a lot of leaders when they're starting to take these projects forward.

Russell Masters: And I was actually having a discussion with a colleague of mine who was moving into a government role in and around technology and she was really concerned, "What do I need to know about the cloud? What do I need to know about the latest coding language?" And I think her situation is mirrored across many, many organizations. And the truth is, actually you do need to know something about the technology and you do need to find a way of interacting with the many, many professional people that you'll meet, professional developers, enterprise architects and digital experts. But it's less about understanding what they're doing from a technical perspective, and it's more about having a common language set and some empathy and understanding so that you can both work collaboratively as a team to take forward whatever you're working on.

Russell Masters: And so I think the first challenge for serious lead if you want to be more digitally enabled, is to understand the subject matter a bit more but not to be too worried about knowing it to the Nth degree. And that can be as simple as networking, building up contacts and relationships with people in and around these areas. It can be taking the time to get to know your support team, developer team, IT team, understanding their problems, understanding how the technology works, and as well self-educating. So I think that's the first barrier, if you like, the first action to take if you're going to get serious about becoming a leader in a digital age is to inform yourself.

Russell Masters: But I think then the really value added bit in all of this is there are hundreds, thousands, millions of really well qualified, very professional technology experts out in the world. And it's probably the case that if you're as a senior leader involved in any of these projects, you're not there because you know the technology, you're there to build a team or to work with a team to take them forward and deliver some sort of outcome an some sort of end result. And I think one of the hardest things as a leader of a technological business is to get yourself away from the how are we going to do it more to the what are we going to do and why are we going to do it? And to start getting away from maybe some of the older, safer methods for managing projects and managing organizations where it's about being prescriptive about what happens and why and moving to a more collaborative culture where we start to talk about, "Well, what is the outcome? What is the thing that we're going to achieve?"

Russell Masters: And that's something that I've noticed has been really important in all the world that I've done, both in my previous roles and my current roles, is how is this going to show up in the face of the customer? And that could have been in the face of the end use of the service, or in my case now in the end patient. So the second big challenge for, I think, digital leaders is to start to get better at working towards outcomes and enabling your team to understand those outcomes. And then thirdly, really supporting them, moving away from a culture where you're the one making all the decisions and you're the one driving all the actions to the one where you're more making the team accountable for the outcome that you'll need to deliver and fostering a culture where we all work together to achieve an end result.

Russell Masters: And those are very different cultural approaches, those are very different management philosophies and ways of working and not ones that are necessarily well understood or well practiced everywhere. And so certainly that's been one of the big challenges of the experiences I've been through, both in previous roles and certainly in my current role, is how do you help organizations move away from action to outcome and how do you build the right team and create the right culture an collaborative spirit where you can run at those things together?

Sarah Nicastro: Mm-hmm (affirmative), okay. All right, those are good bits of insight into some of the challenges. So let's then talk next about some of the what not to do. So I think a couple things I want to touch on that I'm taking out of what you just said, I think number one in my mind is that leaders can't completely offload the responsibility to become more digitally competent or adept. So there's a certain degree here of, "Okay, well if I'm not an expert here then I'll just hire someone to do it." So let's talk about the idea of not trying to cop out of growing your own perspective and knowledge and understanding.

Russell Masters: Yeah, I certainly think you've got to decide when you are going to participate or when you're going to be responsible for a new digital product or service or some sort of transformation journey. You still have to make a conscious decision about how are you going to show up and how are you going to participate in that project. And I guess there's various ways that you can do it. And sometimes it's just about not treading on the toes of the experts, if you know what I mean. And so first and foremost, your first focus should be building a great team. And having built that great team, you've got to trust that that team can do the task that you put them together for. Now, by the same account, you still have to be there and show up every day and show interest and drive the energy. As a leader, your job really in a number of ways is to just pour constant amounts of energy into those projects. And so there is a tension there between wanting to participate, wanting to roll your sleeves up and get involved, but also getting in the way.

Russell Masters: And I think I've seen and I've been myself part, and any experience I've gained here has been through a combination of dumb luck and mistakes and slips and trips. And it is really difficult when you're leading a big project to understand how far do you go in demonstrating that you're committed and care about it and you're willing to take action and participate and how do you make sure you don't go too far and stifle the creativity and the enthusiasm and the ownership of the team around you? And so that's a difficult path to tread and one that you need to take a lot of care. But you certainly can't just throw it over the fence.

Russell Masters: And I think the other thing that you've got to do is just always remain focused on what is the outcome and I think a big learning point for me has been, historically as a project manager of projects or more junior roles, I always felt it was more necessary to drive for the most ambitious goal possible because that felt like really good work. And it's taken me many years really and probably the most number of mistakes and is probably the area where I continue to challenge myself to actually manage these things in a more agile method and not in kind of, to use the fashionable version of the world agile where it's kind of just constantly changing, what I really mean is to be properly agile where focusing on what's the smallest thing that we can do today? What can we deliver in a week? What can we do really quickly and be really efficient with? And again, that is a big challenge for leaders coming into these projects. You might be used to delivering in a more conventional way with more [inaudible 00:21:24] and culture. So both of those things really are the big challenge of what not to do, by all means participate, but don't over participate. And you absolutely have to have control but only the way that helps the team take it forward in the most agile sense.

Sarah Nicastro: Mm-hmm (affirmative). Yeah, so there's a lot of areas here that are a delicate balance. So that being said, I think just a couple key points to reiterate for folks, number one is as a leader you can't, to your point, just throw it over the fence. This can't be a facet of your scope of responsibility that you just say, "Well, you know what? This isn't my area of expertise, so I won't worry about it." There has to be a greater desire to learn and grow and expand in the sense of that understanding, not necessarily in the sense, to your earlier point, of becoming an expert yourself. Number two is this idea of if you know that this is an area that you need to increase your knowledge of but you are not going to be the expert then you do need to hire a team of experts that you can trust, and then you need to allow them the culture and environment in which to do what they do and carry out the mission that that you're setting forth. And to your point, that is often going to look different than maybe projects have in the past, so understanding that there needs to be some morphing of workflows and culture and expectations to be more outcome based versus action based.

Sarah Nicastro: So all kind of areas of finding the right balance for yourself, your company, your team, your project that you're working on. But I think those are some really good points in terms of what not to do.

Russell Masters: Yeah, I think you've just got to show up. You've almost got to be there when the problems are there and show up when the problems are there. So trust that your team will take this thing forward, but recognize that they'll get stuck at times. How can you support them and take responsibility for the problems and then just kind of fade away then it's all working. But all the while, demonstrating that you really care and that you're bothered. And I've certainly tried to only ever associate myself with projects that I'm really passionate about and I care about. And I think that, again, is another side to this more modern leadership style has needed to be, it's a much more feeling, much more empathetic approach, and to what are effectively very technological and kind of scientific problems.

Sarah Nicastro: Mm-hmm (affirmative). Yeah, I think that's a good point. And that point traverses this topic into other areas of conversation related though to innovation, which is as our businesses continue to evolve and transform in ways that are new and different, you mentioned earlier the idea of a more collaborative working environment. The more we all have to own our areas of expertise but also work well with people that have different strengths. That's how this all continues to advance. We had a conversation on here not too long ago about the fact that when you look at the topic of digital transformation, it's this very fragmented and siloed approach that is really killing business's opportunity to get a return on their investment. And so this idea of whether it's digital transformation or digital products and services, this idea of greater collaboration, better teamwork, more agility is super, super important. So let's talk a little bit more about what that means though. So I want to talk about three areas of what we should focus on doing. And number one is creating a digitally native culture. So talk a little bit about what that means and, not that you can give anyone a blueprint for doing it, but maybe some thoughts on what it means and how to consider advancing that culture within a business.

Russell Masters: Well, I think you've got to, coming back to my previous point about people and this being so people centric, I think it wouldn't be unbelievable in a lot of companies and people who work for companies you might be listening to, the digital projects, IT related projects, they don't always have the best reputation. They can be expensive, they can take time, they can be impersonal. And I sort of think the key to having a digital culture, if you like, is both to completely dispel the fear of these kind of activities and make them as accessible as possible. And that requires you to talk about them frequently, express them simply, make the language as simple and practical and real as possible. And there can be some resistance to that, because it can sometimes be the case that you have your experts and you have people who are very invested in maybe the previous ways of working, and so suddenly talking about it in maybe less technologically accurate terms or in a simpler way can be counter to the current culture. But it's essential that you make everybody feel like they can have some part of these initiatives and that digital capability and digital content can mean something to them.

Russell Masters: And then I think you've really got to start with either the customer or your workforce or both tell you and you've got to make whatever you're working on as relevant to the problems and challenges you've got at any particular time as possible. And the more that you can talk about outcome, the more that you can talk less about the technology and what you're going to implement and more about the change it'll make within everybody's daily lives and the more belief that you can have. And that can be hard, especially if you're leading an organization where maybe there's a bit of legacy, there's a bit of history or maybe you're sort of a bit earlier in your journey. But showing up every day, being really positive about it, is massively important. And you'll suddenly find almost you reach critical mass where this stuff starts to move. And then before you know it, your whole organization is behind this and seeing what's in it for them. And that's when this stuff is both at its most fun and its best because then you can capitalize on that energy and use that to drive forward and whatever the right strategies for your organization and move more towards a digital first culture.

Sarah Nicastro: Mm-hmm (affirmative). I was just thinking, we talked earlier about how technology itself has become democratized and it's almost this idea of now next we need to democratize the interest and responsibility throughout the organization. So the technology is there, the capability is there, it's the people part of it, the culture part of it, and weaving it into everyone's scope of work and everyone's language and all of that. It makes sense.

Russell Masters: And investing in everybody who's involved in that change because whether you're moving from working on a certain application or providing a service in a certain way or maybe just gaining information or using information to gain an outcome, it is just so important that everybody, from the most senior person to the most junior and everyone in between, is involved in that. Because otherwise you run the risk of it becoming a particular person, a particular area or particular department's job. And much the same as historically, the other productivity tools that we each organization came to know and love became ubiquitous. It's the same here, it's just got to be consistently delivered, everybody engaged, and made relevant for as many people as possible.

Sarah Nicastro: Mm-hmm (affirmative), okay. All right, there's a lot of other questions I could ask you there. And I think we could certainly have you back and talk a bit about the how to in some more granular detail with some of these things. But for the sake of today's conversation, area number two in terms of becoming more digitally adept is improving digital acumen. So let's talk about how leaders need to be able to talk the talk when it comes to digital.

Russell Masters: Yeah, and I think this is another area where there's the potential to get caught out or trip yourself up.

Sarah Nicastro: Overdo it.

Russell Masters: And I think first and foremost, you have to just be realistic with yourself. I've over the course of a 20 year career have found myself involved in increasingly digital technologies, increasingly digital projects, and over the course of that time I've made a point and I've made it a specific ambition to learn more about these technologies, learn more about the approaches and learn more about the best ways to take these forward. It's about learning enough of the language so that you can converse and learning enough of it so that you can engage with the team that you build around you and the team that you work with to take this forward. So you do need to know enough about the technology to make yourself educated and informed, but you don't have to be the expert.

Russell Masters: And I think learning to ask intelligent questions and learning to pick out the areas where maybe it's worth digging into a big deeper or checking your understanding, is probably a far more valuable skill than, for example, taking yourself back to night school and learning all about cloud architecture and everything else. Primarily because you just won't do it justice, and the standard in industry now is so high and the level of education is so high and the quality of individuals that you can attract to these teams is so high. And so if you find yourself, and you should, involved in these increasingly digital projects, your job should be to become familiar and converse in the broad language and be able to know who to speak to about which challenge and which issue, and to learn how to bring those people together in a way that drives towards a common goal.

Russell Masters: And I would definitely advise against trying to become a very deep domain expert, unless you want to retrain on something else, but an executive level I think it's about, "How do I understand enough of this to actually bring together the parts to make something whole?" Much the same as if you're building a house, you wouldn't lecture our architect on where to put the beams and how deep the footings would be, you trust that they know how to do their job. But you'd certainly have an opinion on what the outcome looked like, how many bedrooms and what it would look like.

Sarah Nicastro: Yeah, that's a good point. And I think one of the key things here is pride and don't let pride get in the way of making impacts that matter here. So this isn't about pretending you know more than you do or you know everything. You don't need to know everything, you need to know enough to be able to understand where the business needs to go and understand what the end goals are and to be able to, like you said, pour energy into the team and motivate them. But I think the world we live in today, there's no way for leaders to be a master of all and no need for. I think that the more you can, like you said, ask good questions and own the areas where you don't know what's being discussed. Because if you can just own that and you can let your team, the experts that you've hired to execute here, let them educate you because that lets them see that they're valued. There's nothing wrong with just admitting that, "I know this much, you know this much, so what do you think and what do you think we need to do next?" And like you said, trust the people that you have put in place to do these things and just know enough to talk with them about what's happening and where it's going.

Sarah Nicastro: I think that there's this element for leaders of just the whole pride and power area that we really need to set aside and just focus more on the people and team building and the outcomes.

Russell Masters: Yeah, and I think this isn't a digital challenge, as much as we're seeing a technological step change within industry, we're also seeing a step change in the philosophies that managers and leaders are using to motivate people, to bring teams forward. And we hear a lot about what's the purpose and the vision and maybe historically those could be treated as quite perfunctory kind of things that we just do because that's what appears in the corporate report or something else. But increasingly those are really important areas. And I think the other thing is, to your point on pride, I don't think it's necessarily about, there's nothing wrong with pride, I think that's a good thing. But maybe accepting or tuning into the fact that actually creating the compelling vision for a team of super enabled, super capable people is actually something to be very proud of and is actually tremendously valuable within an organization. Bringing together all of the right disciplines, lining them up in the right way, especially as most organizations today and most teams are multidisciplinary. We no longer exist in organizations where individual departments do their thing because we know that real truly game changing outcomes come from combining lots of different elements together in a certain way.

Russell Masters: And so I think it's not just a digital challenge, it's a modern leadership challenge, it's how do we create organizations with purpose and mission and vision? And how do we get super positive and proud of that as opposed to maybe knowing what the right answer is at any point in time? And ultimately far more satisfying, I think, than always being the person who makes the decision and directs traffic.

Sarah Nicastro: For sure. Okay. And then the third area, what is your best advice for building confidence, competence, and capability?

Russell Masters: Well I think it's just built upon the conversation that we've had before. I think being very, very curious about every project that you're going into. Certainly something I've had to watch for myself is to jump too quickly to a conclusion or an answer and to try and encourage myself to be more open minded. And the more open minded you can be and the more flexible, the more adaptable you can be, and the more opportunities you can see and the more opportunities you explore, the more you learn. I definitely think this is an area where learning by doing is a really important part of this. This, like any kind of new subject area or discipline, there's so much information out there that you can almost paralyze yourself by trying to know enough to get started. And so I think you've got to start. But I think very much building upon your point, it's about taking forward whatever you're working on with the confidence that you have the right team around you and the humility to engage those team members no matter how small or big the question. And then use that and relying upon your leadership belief and your skills and experience to bring all those elements together.

Russell Masters: And things will go wrong, and I've had many things go wrong in my career. But if you are attacking things with positivity, if you're always doing it for the thing, then my experience you always get the support of your team and your organization and the best thing to do is to embrace that and use that as one big learning experience. And I think that confidence comes from knowing it won't actually be that bad if things go wrong and embracing the fact that if you are working in small steps, your last mistake probably wasn't a big one.

Sarah Nicastro: Right. And I think when you talk about, maybe not digitally native culture, but just the type of culture we need to be fostering today period. This idea of a fail safe environment is very important. Companies aren't getting ahead by playing it safe and embracing the status quo. And part of being able to promote creativity and innovation is people not being terrified to make a mistake or to fail. And so I think that's a good point. Building confidence comes from making some of those missteps and recovering from them and what you learn in doing that, and that's okay and that's important.

Russell Masters: And I think it's the learning the lesson is the most important thing. I would be disappointed in myself to repeat the same mistake again and again and I think that's a really reasonable expectation in the teams that you create and the organization that you work within is, "Well, let's make this mistake and if we make it once well let's not make it again." And I think that's the most important and seeing how you can build upon that is in itself incredibly enabling. And I think maybe just learning to trust your team and trust people is maybe actually one of the things that will have come out of the current circumstances, obviously we've all moved to remote working and a huge number of organizations that would have previously maybe been concerned about that or maybe worried about letting people work from home. I've actually seen it's worked really well and it's a really good proof point of it's not so much about worrying about a mistake, it's maybe trusting that your teams and you will actually make less of them than you might think and might actually achieve more and leveraging the power of people, as with all these things, whether it's management or digital, it's all about the people.

Sarah Nicastro: Yeah, for sure. Okay. So Russell, last question, what is your best advice for leaders that know that they need to become more digitally adept in terms of, we've talked about some of the, "Here's what not to do, here's what to do," what about specific actions? Whether that's resources or just, "Hey, maybe try this." What type of tactical advice do you have for folks?

Russell Masters: Yeah, and I can't confess that I knew all this when I started and in some of the roles, this is definitely the result not the starting point in terms of my experience, but I think a good discipline to get into, whether it's a digital project or something else, is focusing on the outcome. And that can sound really easy, but it's actually quite difficult to train yourself to think, "What is the outcome I want to achieve?" And it's not, "I want these tasks done by this date," it's, "Well I want my customer to now see these things," or, "I want my employees to now be able to do this." So that is a really good discipline. And I think start would be the other piece of advice. You will learn far more by doing and getting involved than by not and waiting. And it's like any big life event, you're never quite ready. And so again, I will just say start. And network, network within your team, network without your team, and have the humility as you do that to be really open about your experience and not worry too much that maybe this is your first foray into this kind of world or maybe don't forget that as much as you've done 10 or 20 projects you've still got a tremendous amount to learn.

Russell Masters: So just have that continuous asking questions, networking, learning mindset. And with those three things, you won't go wrong. And I'm sure you'll have some slips and trips, but that is by far I think the best way to start.

Sarah Nicastro: Cool. Awesome. Well Russell, thank you so much for joining us and sharing this advice. I think there's some areas here we could definitely dig into, so I'd love to have you back and have some more conversations. But appreciate you coming today on a holiday and sharing with us and our listeners. So thank you.

Russell Masters: Sarah, it's been fantastic to be with you and thank you so much for asking me. It's been a great experience, thank you.

Sarah Nicastro: We'll do it again soon. You can learn more by visiting us at futureoffieldserviceref.ifs.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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September 8, 2021 | 24 Mins Read

The Intersection of Servitization and Sustainability

September 8, 2021 | 24 Mins Read

The Intersection of Servitization and Sustainability

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Sarah welcomes back to the podcast Dr. Andreas Schroeder, Digital Lead of the Advanced Services Group, for a discussion around how Servitization and sustainability are inextricably linked and what that means for the future of businesses differentiating through service.

Note: As referenced in this discussion, you can view the agenda and register for Servitization Live at https://www.servitizationlive.com/.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. Today we're going to be talking about the intersection between servitization and sustainability. I'm thrilled to welcome back to the podcast today, Dr. Andreas Schroeder, who is the digital lead of the Advanced Services Group at Aston Business School. Dr. Andreas Schroeder has allowed me to call him Andy, so I will do that from now on.

Sarah Nicastro: Andy, welcome back to the Future of Field Service podcast.

Dr. Andreas Schroeder: Yeah. Thank you very much, Sarah, for having me back.

Sarah Nicastro: Thank you for being here. I'm excited to chat with you again. Andy was on a previous episode of the podcast, episode 100. We had a really good conversation about how we need to leverage data, and how we need to think about data related to driving servitization. Today, we're going to talk about a completely different topic, but one that is top of mind for a lot of folks right now, which is sustainability. We're going to be talking about how servitization really fuels sustainability, and vice versa, in some different ways.

Sarah Nicastro: So Andy, the Advanced Services Group is gearing up for Servitization Live, which is an event that you all are hosting at the beginning of October. Sustainability, or climate change, is one of the three mega-trends that you all have defined, that you will be talking about at the event. Before we dig into our conversation for today, why don't you tell our listeners just a little bit about those mega-trends are, was Servitization Live is about, and how they can check that out of they're interested in getting some good insights.

Dr. Andreas Schroeder: Yeah, of course. The three mega-trends that we're looking at in the context of servitization, and we'll talk about servitization itself in a minute, we see servitization as a very innovative business model that had dire implications, not just for the companies engaging with it, but wider societal implications. The specific ones that we've been looking at is its contributions to topics like aging population. There's just no going away, as a population we are aging, and there are technologies and ways of interaction that can help to manage this situation. Servitization plays a role in this.

Dr. Andreas Schroeder: There's food and food security, is another mega-trend. As the population grows, food is an important resource, more important than ever. Again, servitization has a role to play in bringing in technologies and different partners of food-supply chain. Making sure that food security and efficiency of food can be managed.

Dr. Andreas Schroeder: The one that we will be talking about today, and looking at the intersection, is sustainability in the wider context. So, we're looking at climate change, resource utilization, and so on, and so on. These are the three trends, so sustainability is the one that we're focusing on in the podcast here.

Dr. Andreas Schroeder: The event that we're gearing up, and thank you for pointing this out, there is a big executive conference that we are mounting. You find this under the title Servitization Live. It is a mixture, it is a hybrid event. It is from the fourth to the sixth of October, including, and taking place physically in Birmingham, UK, but will be streamed worldwide in real-time, of course. We will have a number of very interesting guest speakers coming from industry. The names that will be represented, and will be presenting, is Goodyear, Schneider Electric, Baxi Boilers, and Emuron Technologies. These are some of the names. They will be discussing, from their point of view, how servitization activities already help their business, what their future plans are, and what their contribution for their companies are to their sustainability goals through this business model.

Dr. Andreas Schroeder: It's an event, please visit the website. If it's of interest, please register. It will be a very good event. We are expecting around 600 people to attend. We did this last year, and I hope we exceed this this year.

Sarah Nicastro: Excellent.

Dr. Andreas Schroeder: Thank you.

Sarah Nicastro: Yeah, absolutely. Those of you that have been listening to the podcast, or following the content on Future of Field Service, you know that I'm a big fan of what the Advanced Services Group does. I participated in the event they held last fall, and I'll be participating in Servitization Live as well. Certainly don't come because of me, there are many wonderful guests that will be speaking and sharing, and talking about how these mega-trends are in their minds and in their strategies, and how that trickles down into their individual businesses. We'll make sure to put the link to check out the event in the show notes.

Sarah Nicastro: For now, let's dive into our chat for today. As Andy mentioned, the trend or theme that we're focusing on today is sustainability. I think that what I like about how you all have planned Servitization Live is to really urge people to think about these mega-trends. I think it's very natural for business leaders to get very focused on their day-to-day, their views, and their world. It's important to do that, but it's also important to take a look at the bigger picture of what's happening, and how that all plays in.

Sarah Nicastro: Today we're going to talk about this intersection between servitization and sustainability. The first thing I want to talk about, Andy, is the differences in perception of products, between traditional product delivery or production models, and servitized models. Can we talk a little bit about what the difference is, and how that relates to this intersection between servitization and sustainability?

Dr. Andreas Schroeder: Okay. Yeah, I think this is a good starting point. Maybe before we go into the detail, the way I understand sustainability, there are societal obligations towards sustainability, and then, of course, companies have their own strategies, and so on. What I argue is that these are not contradictive to each other. A good-run business, or specifically a business that tries to move into the Advanced Services space, naturally needs, and I will show this in my explanation, naturally needs and contributes to sustainability objectives. These are not two diverging interests that need to be balanced out. The interesting thing is that these are very well, and very nicely, aligned. The speakers at the conference will map this out for us as well.

Dr. Andreas Schroeder: When we talk about Advanced Services, for us this is a move away. Largely we focus on manufactures, and we support around 300 manufacturers in their move from only focusing on their products, designing, developing, and manufacturing the products, and then selling it on to the customer, to a situation where a manufacturer designs, produces, the product, but instead of selling it on to the customer, the manufacturer retains ownership and responsibility for the product. It often becomes a pay-per-use scenario. The classic example is the Rolls-Royce-era engine example, where Rolls-Royce bought a large number of engines, still stays responsible for the functioning and performance of the engines, and the airlines are paying by the amount of thrust they take out of these engines. This is a significant shift for manufacturers, from being producer of products to provider of services on the basis of their product.

Sarah Nicastro: Services, and, in a lot of cases, outcomes. They're really selling that outcome in a lot of instances, so kind of a step beyond selling it as pay-per-use or pay-per-service and selling it as pay-for-an-outcome. Maybe not in every situation, but in many. That makes sense. In the conversation related to sustainability, let's talk about then how the difference in model, of produce to sell and offload versus produce to own, maintain, and deliver outcomes on, contributes to the topic of sustainability.

Dr. Andreas Schroeder: Yeah, yeah. I think this is the angle to understand this. In a traditional business model, and we generalize here, of course there are differences in companies so we look at generic business models of produce to sell, the objective is to make a profit margin, of course. The objective for design is not necessarily to look at the full life-cycle of the product. The objective of design and production of the product is to make it attractive for purchase. There will be a lot of innovations that companies would have in their drawers that would not meet the price point that they've identified for their customers, so these will not be developed. Or, they make the product a bit more expensive, probably a bit less attractive for an initial capital investment, but maybe there's a long-term benefit to it that they failed to communicate, or they're unsure that they can communicate in a sale of a product situation.

Dr. Andreas Schroeder: A traditional business model, that limits a company. How much innovation they can introduce in their product, and also what is the cost of product they are prepared to invest in and sell. When we look at a change of business model, from a product to a servitization context, a lot of these changes... We are in a situation where the objective is not to sell for an immediate price point, or to design for an immediate price point and sell, but to be able to deliver services on the back of a product for a longer period of time. The contracts we're looking at are 10-year contracts, servitization contract. This is a company that designs a product, and knows that they are responsible for it, for the use, and service, and outcome, and possibly efficiency of the product for a ten-year period, will naturally design the product in a different way. We see this with companies like Rolls-Royce. When they design an aero-engine for service, that is a very different aero-engine, there are very different design principles, than if they would design an engine just for the immediate sell and not for continuous ownership.

Sarah Nicastro: Just to clarify a couple of points for my mind, and for listeners, this is not to say that manufacturers in a traditional business model are producing garbage, or intentionally producing products that are not good. But, by the nature of staying in business, they are producing products that the market will bear. They are producing products to the degree that the market will bear in the sense of selling that product under a traditional, capital-based sales model. So in that, when you mentioned innovation, there are certain restrictions on innovation. Some of the things that could potentially be done to, let's say, maybe put higher quality materials into that product, or to design it and produce it with the ultimate duration of life in mind, versus having to stay at a certain price point. That's where we're talking about there's differences in how these things could be produced if the goal was not to produce what the market can bare for a capital expenditure.

Sarah Nicastro: If you look at it now moving to the servitization model, the manufacturer is retaining ownership of the product, and they're responsible for delivering the outcome, so then it makes sense to invest more in the production of the product to extend that life cycle, because ultimately, they are benefiting from that longer-term view. That will help them in terms of their ultimate profits by innovating in the way that the market won't bare on a capital-expenditure model.

Sarah Nicastro: Let's talk about this just a little bit, to make sure folks are understanding. When you are going to build a product to be longer lasting, there's more expense to that. This is where looking at servitization or the shift to a pay-per-use, or as-a-service model, comes into play. Let's talk about why and how that is.

Dr. Andreas Schroeder: Longer lasting is one aspect, but, for example, serviceability. A lot of products are not designed to be easy to service, in the sense of easy to exchange parts that deteriorate in order to be able to maintain that entire product and give it a longer life. We know this. Again, thank you for pointing this out, this is not talking down companies and their design objective. If you are competing on price, and a lot of companies it doesn't matter in which price point they are there is a price element in the way they can position themselves in the market, there are restrictions of what they can innovate and what prices they can ask for. That limits it. The beauty of the change of the business model is that it takes away some of these limitations, and allow companies that are innovative to actually use their innovation to develop products that they would otherwise not be able to.

Dr. Andreas Schroeder: What we have is longer lasting. When we look at developing products in a servitized context, or as a part of Advanced Services, we have products that are longer lasting. There is no interest in companies having to replace products repeatedly, selling another one, just preparing for the next sale. There is no interest in that. The interest there is efficiently, in an optimized way, maintaining this product in use, because they benefit from products in use, not products in sale. The other part is, again, every service, every repair, is to the detriment of the manufacturer. It's a cost to the manufacturer, so they will design in a way that things naturally are easier to service, if it has to be replaced, then it would otherwise be. A lot of these Advances Services contacts also have efficiency clause in there. It is up to the manufacturer who provides the service to ensure a certain energy efficiency, or even cost-down commitments. Sometimes there are clauses in there that requires a manufacturer to ensure that there's, I don't know, a 3% energy efficiency benefit every year as part of the service, so cost-down commitments from the side of the manufacturer.

Dr. Andreas Schroeder: These very much change how a product is being designed, that's the design and production phase, but also it changes how the product is being in the use phase. When the product is being managed by somebody who has designed the product for longer lasting, who has penalties around inefficiencies, there will a lot of focus on maintaining, making sure, that the product runs on maximum efficiency. That's where the digital part comes in, a lot of monitoring along the side to ensure that this is in place.

Dr. Andreas Schroeder: Also, there is significant opportunities to look at the end of life of a product. Again, traditionally when we have a product-for-sale model, these products are being sold off after a while. There's a primary use, and then a pump or a machine is sold out over to a secondary-use, and possibly internationally gets distributed. There is very little chance for a manufacturer to be systematic about remanufacturing some of the products that are being taken out of use. They disappear somewhere and reduce efficiency, and cannot be traced back. When we have a situation like we're describing in a servitized context, where the manufacturer retains ownership of the products, has to monitor these products, be responsible for them, for them it's a natural, easy process to actually remanufacture these products, and take these products back and put them into a remanufacturing, recycling context.

Dr. Andreas Schroeder: This is some of sustainability benefits of Advanced Services that are part of the business model. They are not an extra, kind of an ethical or moral obligation, this is to optimize the business of the manufacturers in Advanced Services context.

Sarah Nicastro: Yes, that makes sense. We're talking about the difference between products being optimized for sale versus being optimized for use. I want to emphasize the point you just made, because this is a conversation you and I had when we first talked about this topic, which is there are people for whom sustainability is a very, very important topic when it comes to their personal beliefs, and objectives, and how they want to contribute to the environment in a positive way, and all of those things. We see that reflected in a lot of, like you said at the very beginning, there's the personal obligation side of this, and there's the corporate obligation side of this. You see some correlation there, but I want to go back to the point you just made, which is nothing we've talked about so far is something that is important simply to benefit the environment. It does, and that intersection is fantastic in the sense that these servitization objectives and journeys have that impact, but what we're talking about here is really just good business. That's all we've talked about so far, is if you are on a servitization journey it benefits you from an efficiency standpoint, a financial standpoint, to put these measures in place that also improve sustainability.

Sarah Nicastro: Let's talk about that a little bit more, because I think that there is a, again we're generalizing for the sake of a podcast discussion, but there is a group of people that care deeply about the topic of sustainability and want to altruistically take measure to have a positive impact there. There are people that maybe care less. Not to sound negative, but there are people for whom it isn't as big of a personal objective. The point is, whichever side of that lens you're looking at this from, the benefit is the same. If you're looking at it from the sustainability lens, there's benefit. If you're just looking at it from the value of servitization and how to maximize that value, there's benefit. Can you talk about that a little bit?

Dr. Andreas Schroeder: Yeah, yeah. There's another dimension that will come in. In the future, just as an example, in the UK we have now, a new legislation has come out, that by 2025 no gas boilers can be installed in new houses. For a manufacturer of gas boilers that means if they don't change technology, they have no business. Forget about the moral obligation and the environment constraints of gas boilers, from the legislative point of view they do not have a business within four years' time. They need to innovate technologies in order to be in business, and customers need heat. They are now looking at technologies, for example heat pumps, which is more advanced technology than that traditional heating boilers. But, these technologies are more expensive, they are more difficult to manage. They require more collaboration, more looking after, than traditional gas boilers.

Dr. Andreas Schroeder: They are now into the trap that we described where they have to innovate. The technologies are largely there, but they don't match the traditional price point of a gas boiler, around, I don't know, £4,000, £5,000. They are now working, and all of them do this, at saying, "Okay, the legislation doesn't allow us to go for traditional technology." The legislation is based on sustainability goals from the government, but even if the company doesn't subscribe to them they will not have business if they do not meet these goals. They are now looking at finding new business models around Advanced Services to make sure that their higher-value technology, that is more expensive and probably out of reach for a couple of new homeowners, can still be put into market, they have a business, and that technology can be provided, and their expertise can be of use in providing heat.

Dr. Andreas Schroeder: This is on our side of the pond. The Americans, you have similar sustainability goals that means 50% reduction by 2030. This is nine years' time, 50% reduction of CO2 emissions. There will be, if there are yet, significant legislation coming out there, for private citizens, for companies. There will be a lot of new technologies coming on the market to meet these goals. It will happen. If the goals are met or not, but legislation will be there, incentives will be there, and the penalties will be there. Again, we are in the space where new technologies, as I described with the gas boilers, come onto market, possibly at a different price point, requiring new business models for these businesses to have a business, a viable business.

Sarah Nicastro: That's a good point. What we're really talking about is disruption, and where that's coming from. You and I have known each other a while, and we both talk with companies regularly who are embracing the journey to servitization. Many of them have begun that journey because they saw the opportunity to do so. They saw the opportunity to differentiate their business, to provide different value to their customers, to embrace a business model that would really transform their value proposition and their company, and how they operate and everything. Those folks maybe have a bit of a head start, in the sense that if some of those companies are then impacted by this legislation, they kind of have a start toward that transition. However, even those that haven't yet embraced the journey sheerly based on the opportunity they see, now they're being nudged to do so because of this legislation. The disruption is coming in the terms of a threat, not an opportunity. Regardless of how that's coming, it's just the reality.

Sarah Nicastro: The opportunity to servitize, and the opportunity that exists to change the business model, so that they can develop the products they need to develop in the way the need to develop them to meet those legislative restrictions is really pretty awesome, that that opportunity exists. However you're kind of coming into the journey, it's a really exciting journey to be able to embark on. I think you make a really good point about the US, and it's probably safer for me to say this than you, because I live in the US, but we do lag a bit in a lot of areas on this topic, related to some other countries and regions. You make a very good point, which is the objectives are there and the legislation comes next. It is going to come, so there's an opportunity here for those organizations here to get ahead of that a bit. Rather than waiting for that to be looming, and to be trying to race through this, there's an opportunity to look ahead a little bit and to sort of see what's coming, and to get ahead of that. That's a really interesting point.

Sarah Nicastro: I think we talked a bit about, for you all and the organizations you work with, what have you seen related to the catalyst? Is there differences in the catalyst for why companies are embarking on this journey? Have you seen that reflected in when companies come to you and they say, "Hey, we want to servitize, and here's why"? Are those stories different today than they were a few years ago? Or, how do you see that evolving?

Dr. Andreas Schroeder: Yeah. There are different kinds of motivations, and they always show up in different ways in these companies. The buckets that I would put out there to group these, quite a number of them come from the digital angle. They're saying, "Okay, we have now digitized our products, have a good understanding. What are the business models that help us to get more value out of our investment in digital?" We discussed it in the first podcast, Advanced Services is one of the business models, I would even argue the business model, for digitalized products.

Dr. Andreas Schroeder: The other bucket is certainly companies that, and often quite successful company, that are saying, "Okay, the competition is creeping up. We believe that we have an edge in terms of product, innovation, and so on, and so on, but we are getting squeezed on price. Let's look at a new business model where we can make use of our innovation and our expertise, and not have to compete on price with the competition." Now, we see also, in the case of the boiler for example, or other companies we're interacting with, where companies literally see the absolute need... the constraints that the traditional business models puts on the way they can interact with customers.

Dr. Andreas Schroeder: Just as another example, again in London, I'm not sure what year it kicks in, but it's to become a low-pollution... entire London, city of London, not just the city, the environment, the metropolis of London, a low-pollution environment. Manufacturers producing, or even products being used... We talk about trucks, we talk about cranes, we talk about diggers, we talk about everything, will have to meet this requirement.

Dr. Andreas Schroeder: All the alternative technologies are electronic-based, will be more expensive, more difficult to maintain, require different kinds of care, do not fit traditional models. Companies coming to us and saying, "We see how the market is being constrained for us", for the right reasons, they don't even blame legislators for it. They see that this is a game change for them, now we have to respond to this. Again, coming not from altruistic motives, but somebody as a leader of a business that needs to make sure that they have a business in 15 years' time.

Dr. Andreas Schroeder: Also, sometimes it's based on legislation, sometimes their customers. Their customers, if it's a progressive company, their customers want to have certain commitments and certain energy efficiency benefits. Seeing from their supplier, because it becomes part of their own energy balance. If I run a production line, I'm responsible for all the energy emissions that are being created as part of the production line. If some of the machines are not owned by me, I'm still responsible, it still shows up on my balance sheet, so I want to make sure that my suppliers of products helps me to achieve these emission targets that might be there because of law, or because of strategy, or ambitions. There's a cascading effect now also, where companies hold each other accountable, and enforce each other's business model, therefore.

Sarah Nicastro: Mm-hmm (affirmative). This is probably a really unfair question, because I don't think there's any real way to answer it. I know that you're going to want to give me a concrete answer, but when would you say that the traditional business model is just going to become largely obsolete?

Dr. Andreas Schroeder: Yeah, I can give you a precise answer, and the precise answer is the innovative companies will start... We already see it, not will start, they are starting to change the business model. But even a company like Rolls-Royce, aero-engine, will still have a market for selling some of the products from the traditional way. I would hazard a guess that the more innovated companies will, of course, embark on it further, but even the most innovate companies will still have a business related to traditional products. What we see, and the benefit of having this Advanced Service in place is the innovations that come out of designing products differently, and looking after a product differently. They seep over into the design of the products that are for the for-sale market. Any kind efficiency, and kind of improvements, will not just be isolated to one part of the business.

Dr. Andreas Schroeder: I don't think there will be a world where traditional business model is totally phased out, but definitely the Advanced Services business model takes over. As always, there are some companies spearheading. Some regions are spearheading. Scandinavia is very much ahead of most of the rest of the world. Europe is catching up. The US is actually involved, and it will involve further, and further regions of the world. And, so it goes.

Sarah Nicastro: Like I said, that was unfair, and probably poorly stated. Maybe obsolete isn't the right word, but you just think about... There's a point at which the lag just becomes insurmountable. The companies that are innovating, and the companies that are not, I think there will reach a point where that gap is very hard to close. I do think that, while the traditional model won't become entirely obsolete, the demand to embrace this reality is immense. I don't think that a company can just say, "Oh, we'll just keep doing it this way and we'll continue to be successful." It just seems that that is virtually impossible. Okay, I'm trying to think of-

Dr. Andreas Schroeder: Let me just get to it with another... You're saying it's virtually impossible. We have examples of companies that... I don't know what the proper word is, that didn't pick up a trend. Polaroid, Kodak, Blockbuster. There are examples of companies who missed the trend, and some can catch up, some cannot. It depends on the set-up. Innovative companies miss trends, so it can always happen. Information is out there. So that's one thing, the other interesting thing that we've seen over the years, I started with the example of Rolls-Royce, these are high-value, very high-value, items. I'm not sure the price point of an aero-engine, but let's assume we're talking about millions. The price point of products that are becoming attractive for Advanced Service models are now on the level of boilers, which are around a couple of thousand pounds. The change over the last 10 years, in what is possible and what is feasible, is dramatic. Largely related to building up expertise, opening up to the business model, but also the connectivity part.

Sarah Nicastro: You're saying the two servitized, so the potential... Yeah, it's almost like... I wrote an article, it was years ago, I don't even remember the exact angle, but it was talking about the trickle-down effect. It's the same concept. This originated as a business model that seemed feasible or a good opportunity for a company like Rolls-Royce that produces products that are millions of dollars, but it's now becoming an opportunity that is equally viable to a company that produces boilers that are a couple of thousand pounds. There's-

Dr. Andreas Schroeder: Just one point to it. If we take the same mindset, as a service, and we wind back 10 years ago and we looked at software as a service coming around the corner. Of course, this started with very innovated companies, but now if you develop a piece of innovative software and you don't have it as a service proposition, you probably don't have a business. If you expect that everybody will host themselves any version of your software you don't have a business. A lot of companies will still offer this. It is getting wound down. Sometimes you cannot host it yourself. Try to host Gmail yourself, it's a tricky proposition. This is the way I see it with Advanced Services as well, that it starts with the innovative companies, it starts with the bigger companies with a high-value product, it trickles down into smaller-value products.

Dr. Andreas Schroeder: Just for our conversation, I looked up, just to close the loop, the energy efficiency of software as a service, or cloud services, versus hosting yourself is around 90%. If you would use the same software, hosting yourself as an SME, versus going into the cloud and using some of the cloud space available, you reduce your energy consumption by 90%, CO2 creation by 90%, by going into the cloud. Not the same numbers in our, as a service proposition, because we talk about products, physical products, that need to be shipped, that need to be produced, but we talk also about significant potential in energy and CO2 emission reduction based on the same principles.

Sarah Nicastro: Yeah. And product waste, in the sense of what we talked about initially, which is these products being intentionally developed and manufactured to last as long as they can. Yeah, it's really-

Dr. Andreas Schroeder: And be recycled at the end. So lasting, and the recycling loop. Which again, is big chunk of what needs to be done by companies for their own efficiency's sake, and which has the added benefit for sustainability aspects.

Sarah Nicastro: Yeah. I love this topic. I think it's so interesting. We have a podcast coming up with Tetra Pak, and it's a whole sort of extension of this conversation, which is looking at the opportunity for... beyond their own products, but looking at the opportunity to offer sustainability efforts as a service, and to help other organizations improve their own sustainability efforts. It's really interesting. I consider them a leader, and industry leader, and one of the more innovative companies, but those are the best to learn from in the sense of what we talked about with the trickle down. To listen those stories, and to think, "Hmm, how could that apply to my own business?", I think is just really cool. There's a ton of potential here. There's so many layers to this topic. I really enjoyed talking with you today, and having this conversation. I'm sure you'll come back. Is there any other comments, or words of wisdom, that you would like to close with? Any other thoughts?

Dr. Andreas Schroeder: Everybody who's interested in this topic should definitely attend, register and attend, our Servitization Live conference. Again, I outlined the speakers, but what you will hear is innovative companies, for example, who are in the heating or cooling business that, again, servitize. They will also map out their servitization journey, their strategy, their objective, their motivations, but also show how they are under significant scrutiny in terms of sustainability and climate change. Cooling and heating is one of the major sources. They use this new business model to make significant headway in standing up to the scrutiny, and innovate in the way that benefits their business, as well as meeting governmental targets. If anybody is interested, and you should be, then please join Servitization Live.

Sarah Nicastro: Awesome. Yes, I definitely urge you to do so. Just to reiterate what we talked about today, the two objectives are inextricably linked. That's the really exciting thing there, is that this intersection is real, and as organizations embark on their servitization journeys they're going to improve sustainability, and as companies focus more on sustainability their going to turn to servitization. That's a really cool thing, and it'll give us a lot more to talk about. We will be sure to put the link to the event in the show notes, so that you can all go and register. I urge you to do that.

Sarah Nicastro: Andy, that you so much for joining me again today. I appreciate it.

Dr. Andreas Schroeder: Thank you very much for having me. It was a pleasure.

Sarah Nicastro: Yes. 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 about IFS at IFS.com. As always, thank you for listening.

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The Importance of Service Benchmarking

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The Importance of Service Benchmarking

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Hilbrand Rustema of Noventum joins Sarah again to talk about the value and importance of service benchmarking, the best practices for gaining valuable insight, and what trends are most important to gauge against at the moment.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host Sarah Nicastro. Today we're going to be talking about the importance of benchmarking when it comes to achieving strategic service objectives. We talk a lot on this podcast and within our content on Future of Field Service about all of the change that's taking place in the industry right now, all of the ways in which companies need to be innovating to keep pace with customer expectations and market pressures, and benchmarking can be a very important way to make sure that you are progressing the way you need to be with those objectives.

Sarah Nicastro: So I'm excited to welcome back today Hilbrand Rustema who is partner at Noventum. Hilbrand, welcome back to the podcast.

Hilbrand Rustema: Hi Sarah.

Sarah Nicastro: Thanks for being here. So you may recognize Hilbrand's face. He's been on the podcast a few times and is back today to talk about this topic. So disclaimer, obviously Noventum does benchmarking. So there is that, but regardless of that aspect, it's certainly something that warrants a conversation because it can be a valuable way to understand how you're keeping pace with the change that is being demanded of you. So let's start off Hilbrand just by talking a little bit about the importance of benchmarking for service-based businesses today.

Hilbrand Rustema: Yeah. What I would say is that it's important, particularly for service businesses, to benchmark. I think there are two major areas where every sort of service executive should be using benchmarking. First of all, when you define your service business strategy, you need to set realistic, achievable goals. And therefore it's very useful to know what other similar companies have been doing, are doing in similar stages of their growth and their development so that you set realistic, achievable goals.

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: Now I think that's one area and the second area is looking at what is it that you're really doing? How is your performance currently compared to, of course your strategic objectives, but also compared to the rest of the world and what are similar companies doing? Because-

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: When you set your strategy you typically have at least a medium to long-term view. And in the meantime, lots of things can happen. So if you do some regular, I would say at least once a year, but preferably more often, some benchmarking on how you're doing versus other similar companies, it would give you like a reality check.

Hilbrand Rustema: And that would allow you sometimes to sort of pivot a bit your strategy and to know if it is working what you're-

Sarah Nicastro: Mm-hmm (affirmative) Mm-hmm (affirmative) Yeah. So some folks probably know that in my role with IFS I run a customer group, customer community, and we engage really frequently, twice a month or so. And in some sense it's almost like benchmarking anecdotally versus in a quantitative way, right. And I think there is so much value in the idea of understanding what your peers are up to, right. And so there's instances where I see these light bulb moments in the group of honestly feeling not alone in the struggles, right? So it can be reassuring to see that organizations with similar objectives to yours are struggling in some of the same ways that you are. And then obviously in the group we have a lot of conversations about how to overcome those challenges so that we can kind of build collective knowledge and help share some insights and spark different ideas.

Sarah Nicastro: But then there's also an element of understanding where you may be lagging and kind of getting a little kick in the pants in the right direction when you realize that there might be areas where you are behind the pace of your peers. And so certainly in that group communication type setting, I've seen the value of this type of insight play out in real time. And I think that the idea of putting systems in place to do this regularly and to look at more quantitative data and see things in numbers and charts and graphs and percentages is certainly valuable with all of the objectives that companies are juggling today.

Hilbrand Rustema: I think it's very good that you mentioned that. I think making a distinction between the qualitative and the quantitative benchmarking is a good one because qualitative, like in terms of talking about best practices and how do you solve this issue, is very useful, very valuable, but quantitative, really looking at the financials for example, that has multiple purposes and obviously any well-run business needs to have a clear, good sort of dashboards on how they're performing financially.

Hilbrand Rustema: Currently what we're seeing is that there's a lot of companies that want to go into the data-driven services, the predictive services, more sophisticated services, and they are not so sure what the growth potential is, what the profitability of each type of service is because if you really look at it, there's so many different types of these sophisticated services that go beyond the basic product related services and each has its own sort of business model with different growth and profitability potential that the world is suddenly becoming a lot more complex.

Hilbrand Rustema: And one of the things that I see service leaders also sometimes a bit struggling is to explain to their colleagues, particularly if they're in the manufacturing business, on what the growth opportunity really is or the profit improvement potential really is. And having data that shows, "Hey, these type of companies, or maybe even a very direct competitor, is able to do this and why are we not able to do something similar?" That is also sort of a change management tool.

Sarah Nicastro: Right.

Hilbrand Rustema: It helps you to get the rest of the organization to realize, "Hey, it's real. Others are doing similar things. So we should be able to do that as well."

Hilbrand Rustema: And until you get that realism, many organizations will sort of say, Yeah, yeah. Okay. Let's see and wait." So yeah. There's a very important change management aspect to using benchmarking, the quantitative benchmarking effectively.

Sarah Nicastro: Right. Yeah. I mean, when we talk about topics related to customer experience, customer satisfaction, we always talk about the importance of that balance between qualitative and quantitative insights and it's really the same thing here. It's hugely valuable to sit down in a group of five or six or 10 peers and have a detailed conversation, but it's also incredibly valuable to look at a study and get a quantitative idea of where you are in that journey versus some of the others. And to your point, certainly as it relates to servitization or delivering outcomes, it is a real challenge for some organizations that there is this idea of needing to kind of convince or win over the hearts and minds of some of the folks on the value of that journey and the importance of that journey.

Sarah Nicastro: And certainly in those instances, I think, there is nothing stronger than being able to present some objective quantitative data that's looking at how others are progressing and what benefits they're seeing. So absolutely an important part of being able to convince leadership and convince others within the organization of the why behind a certain direction. Okay. So we've talked a little bit about the importance of benchmarking, the value it can provide. Let's talk about where organizations go wrong. So I guess one thing would be just not doing it or not participating in the act of looking at or doing some benchmarking, but what else kind of prohibits companies from utilizing this type of insight as a good resource?

Hilbrand Rustema: Well to give you an example, looking at profitability of your service business is so insightful or can be so insightful if you use benchmarking in there. One of the things that we see happening right now is that a lot of companies are moving from this preventive maintenance or full service contracts to the predictive services.

Hilbrand Rustema: And obviously that creates enormous value for the end customer because you are improving performance of the equipment, you are reducing maintenance costs. And one of the interesting things that we see happening in the benchmarking that we do is that we see that companies, when they're in this experimental mode almost when they sometimes not have the full value propositions, the new service proposition, the promise to the customer, when they haven't fully developed that, when they don't have a full understanding of what is exactly the value for the customer, they are still saying, "Yeah. It's not completely ready yet." So let's just give that functionality included in the full service contract.

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: And effectively what they're doing then is they're giving a lot of value away-

Sarah Nicastro: Right.

Hilbrand Rustema: For free. And it's amazing how quickly customers get used to that new level of performance.

Sarah Nicastro: Right. It's really cannibalizing the ability to monetize it when you're ready to do that. Like when you've sorted out how you want to do that, then you're really backtracking at that point to say, "Oh. Well, we've been giving you this, but now we've landed on this new offering and so what that looks like is you would pay X for it." And so that is a really big challenge for folks.

Hilbrand Rustema: Yeah. I mean, let me give you one example. I was working with a client the other day that provides street sweeping equipment. And they see several things going on. So obviously they are now able to connect their machines and sort of monitor real time of what's happening with these machines, but also they're electrifying, meaning that that equipment is maybe three thousand parts that were heavily sort of maintenance intensive parts.

Hilbrand Rustema: It goes back to 30 and they see their potential service business, in the current business model, they see it quickly disappearing. And this is the right moment for them to sort of switch over to a totally new business model. So maybe they should be offering the same equipment as a service right now. And as this is not fully crystallized yet in that industry, if you would look at benchmarking data and say, "Okay. Well what is the profitability? What's the growth opportunities for that type of business model versus what we are having right now?" You can say, "Well, okay. It makes sense." But right now the tendency for this type of situation is, "Let's wait and see and well we have another year or two," and then suddenly some competitor shows up and they've done it-

Sarah Nicastro: Right.

Hilbrand Rustema: And you're gone, you're out of the business.

Sarah Nicastro: Yeah. That's a good point. We did a podcast quite a while back with a gentleman who his name is Sae Kwon. He was at Cisco at the time. And it was called weighing the decision of disruption. And it was basically around that conversation. In their instance he was talking about them making the decision to evolve the business before there was any urgency and that sometimes has its own challenges because things are running smoothly, you're successful, and so there's a huge don't rock the boat mentality. But when you see the opportunity to make that change before it becomes kind of dire circumstances, there's a lot of benefit in acting early.

Sarah Nicastro: And so the idea that, the company you're referencing, there's this change that now they have to react to, but that then puts a certain amount of pressure on the time in which they react and the way in which they react, where if you can have a little bit more of a forward thinking or innovative perspective and get ahead of those opportunities, it gives you a little bit more latitude to make that change on your own terms instead of making that change on the industry's terms or the market's terms.

Hilbrand Rustema: Exactly. So you can see several trends and you can benchmark yourself against those trends.

Sarah Nicastro: Right.

Hilbrand Rustema: So you can sort of see it coming rather than just being internally focused and if you just look inside your organization and don't benchmark that much, you would be happy with yourself.

Sarah Nicastro: Right. Right.

Hilbrand Rustema: Yeah. It causes some sort of inaction.

Hilbrand Rustema: The other thing is very often when companies have to make these difficult decisions to quite drastically change their entire business model, they don't know what they're getting into.

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: If you are able to look at benchmark data of similar companies that may not have the same product, but at least they have a similar business model that you are aspiring to you can kind of see what to expect there and that facilitates the decision-making because without facts, usually the senior executives are not willing to make any decision at all.

Sarah Nicastro: Mm-hmm (affirmative) That makes sense. So I think you've touched on a few, but just to sort of recap or add anything to the list, what are some of the biggest trends or areas right now that you think organizations should be benchmarking against? And obviously I'm referring to organizations that would be the folks listening to this podcast, which are very similar to the types of organizations that Noventum works with. So what are some of the biggest areas that you would suggest companies be investing time and effort into benchmarking on and paying attention to?

Hilbrand Rustema: So, first of all, I would benchmark the type of service revenue that you are into. So if you just throw all the service revenue on one big pile and you see growth and you're happy with that, usually you have a distorted picture.

Hilbrand Rustema: So you have to try and distinguish between well-established types of service revenue. Like be it parts, be it preventive maintenance contracts, full service contracts, preventive maintenance contracts, or even go beyond that. So what we always call the customer business related services. So process optimization type of services can be outcome-based or as a service business models where you have the equipment, you may finance the whole equipment as well, managed services, business process outsourcing, or the real data-driven type of services where you have maybe in that category alone, you can already have sort of 10 sub categories. So trying to look at the type of service revenue and see where you are growing, where you're not growing.

Hilbrand Rustema: And then perhaps if you have that ability to look at what are your customers doing and which type of customers are the most profitable ones as a result of different types of revenues that they are consuming or what they're spending their money on.

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: And then the second area is the profitability. So if you can distinguish between the different types of service revenue in your own accounting systems or even if it is by approximation, that's also pretty good already, then you can look at what are gross margins for each of these types of services. And what are the trends that you see there?

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: One of our recent studies showed that most service executives, they expect not to see any growth in the purely product related service revenues in the coming three to five years. So that means that, "Okay. It goes beyond product related service revenue." So what should they be looking at? What type of business model, what type of service revenue will be the right one for them to focus on and what is the expected growth of that and the profitability?

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: So you may come to a conclusion, particularly in a highly digitalized world where sometimes the leaders of the back, it's a winner takes all model in many industries. So you have to try and look ahead, look at the trends, and look at revenue, profitability, and the growth rates. And I think if you are able to do that as a service leader, you're in a pretty good position, you can avoid a lot of nasty surprises.

Sarah Nicastro: Mm-hmm (affirmative) Yep. Okay. So last question is around what are the best practices? So what's your advice for folks on, we've talked about the importance of benchmarking and some of the areas that people need to be paying attention to. How do they benchmark and make sure they're benchmarking well?

Hilbrand Rustema: Well first of all, inside your organization you need to be able that you compare apples with apples. So most, let's say professional service organizations, they have their accounting principles standardized across the globe so that the different types of revenues are clearly defined and recorded in that way. And profitability is a result of cost allocation and recognition in the right way. So I think that's sort of the basis for the financial type of benchmarking.

Hilbrand Rustema: Then I would say you need to find reliable sources of that benchmark data. I know it's hard. So the choices basically are you can identify a couple of companies that are similar enough. Usually your direct competitors don't want to benchmark with you or they're not allowed to, but you can identify a couple of companies and that's one of the things that we do as Noventum. You work with a consulting firm that has the research capability, that has the benchmark data available in a sort of statistically validated way so that there's a quality check on that data.

Sarah Nicastro: Mm-hmm (affirmative).

Hilbrand Rustema: Another important best practice I would say is not only to benchmark at, let's say the headquarter level, throw everything in one big bucket and benchmark at that level. No. Also try to, if you're a multi-national, try to benchmark the individual country or regional operations.

Hilbrand Rustema: And you may find lots of interesting differences there and then figure out why is one country performing very well in one particular area and why is another country doing in another area much better? So that gives you the opportunities to benchmark internally, which is probably the best quality of benchmark data that you can get if you do that internally. So another best practice is to not fall into the trap of wanting only to benchmark within your industry.

Hilbrand Rustema: What we've found in our benchmarking database, if you look at it statistically, there is no correlation very often between different players in one industry because they are in a totally different level of maturity of the service business. What we've found is it doesn't matter what is the type of equipment that you service, it's more what is the business model that you have?

Sarah Nicastro: Right.

Hilbrand Rustema: And so to make sure that you have a peer group of similar companies that fulfill certain requirements, such as obviously size, but maturity level, the type of services. It is more important than trying to benchmark with only your industry peers.

Hilbrand Rustema: Because if you do that by definition you may run behind, whereas you can learn so much from other industries, which may be further ahead than your own industry in terms of the service business.

Sarah Nicastro: Yeah. And I think that's an important point is a lot of the advanced service type offerings that we talk about, they are, at a macro level, the same, industry to industry or similar enough. And so I think this idea of only looking within your industry at what's happening and what the trends are and what companies are doing and what customers want, you could lead your industry, but still be behind in terms of really where the future of services going.

Sarah Nicastro: And so I think most companies have embraced that fact and find a lot of value in looking for inspiration and innovation ideas outside of their industry, but it's certainly an important point. I always say, so going back to the group that I run, you're talking about companies in different industries, across the world, and we have so many good conversations and I always say like there's no one in this group that can create you a map of where you need to go and how to get there.

Sarah Nicastro: But by having those conversations, by exposing yourself to what others are doing and how others are thinking, it gives you a lot of opportunity to spark different ideas that can lead to immense positive change within your business. So I think it's a really important point that when you're looking at how to innovate, it's valuable to take inspiration from other industries, even industries super different than yours. I mean, that's how those disruptive ideas happen, not by kind of sticking close to home and playing it safe.

Hilbrand Rustema: Yeah.

Sarah Nicastro: Makes sense.

Hilbrand Rustema: So what you're saying here is obviously a mix of quantitative financial benchmarking and qualitative. And I would say another best practice perhaps if I come back to the question is start with the financial benchmarking and then you will identify certain areas of improvement. And then go into the qualitative benchmarking, look at service industry standards, look at the best practices. There are many out there obviously. So in that approach and try to look at statistically validated information rather than anecdotal.

Sarah Nicastro: Right. Right. Alright. So as it happens, not coincidentally, but intentionally, there is a benchmarking project that you have underway. So tell folks about that and who is a fit to participate, how they can participate, and where they can participate?

Hilbrand Rustema: Yeah. So at the moment we're running a large benchmark project, which is open to any, let's say, manufacturing company interested in growing their service business. That's the name of the project. So it's called the 2021 service growth benchmark. You can have a look anybody's interested in that and finds it valuable to participate in such a benchmark. You can have a look at our landing page for that is called thefutureofservice.com. So thefutureofservice.com. Companies can participate by filling out a survey. It's a database. It collects data until the end of September, then it will be closed. Then all participants will get an automatically generated benchmark report. And we do that by, or the system does it, by indeed creating peer groups of similar companies, pretty much according to maturity level, sizes, et cetera. And then you get an individual benchmark report.

Hilbrand Rustema: And depending on how much data you have actually filled out, you will get back on the parts of the survey that you have actually entered data in. It's free of charge and there will be a number of executive round tables organized. So to get sort of the story behind the results that we'll see. So we will be inviting some of the companies that have remarkable results and we'll invite them to talk about that. And then in small groups, 15 people or so, we will discuss the outcome by peer group. And that is more the qualitative part as you were mentioning, Sarah. And yeah. It gets a story behind the numbers.

Sarah Nicastro: Okay.

Hilbrand Rustema: And then the project will end with sort of a full report, which we expect to publish in January next year. That should give a pretty in-depth insight in the biggest trends and some of the best practices of the most successful companies.

Sarah Nicastro: Okay. Good. Well I urge anyone that is listening that is in the manufacturing space to check it out. So we are future of field service. This is the future of service. So that could get a little confusing, but we'll make sure we put it in the show notes. I mean, you all know that I'm a huge, huge fan of the idea of pure perspective and the voice of the industry and understanding what is happening across the space and this is certainly a really helpful way to get a view of what the trends are and where you sit amidst the trends. So definitely participate and maybe in January Hilbrand, we'll have you back to talk about some of the findings and share with folks what the trends are for those that participated. But I appreciate you coming on today to talk a bit about the importance of this and to share the project with everyone.

Hilbrand Rustema: Yeah. Well thanks a lot, Sarah. For sure we'll be back in January when we have the report.

Sarah Nicastro: Sounds good! If you'd like to participate, that is thefutureofservice.com. Not to be confused with futureoffieldserviceref.ifs.com, which is where you can find more of our content. You can also find us on LinkedIn as well as Twitter at The Future of FS. The Future of Field Service podcast is published in partnership with IFS. You can learn more at ifs.com. As always, thank you for listening.

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How Brinks Home is Fueling Service Innovation

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How Brinks Home is Fueling Service Innovation

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Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host, Sarah Nicastro. We talk a lot on the podcast and within the content on future of field service, about how organizations are focusing and making progress with innovation, related to all of the opportunity that service presents. Today, we're going to be talking specifically with Joni Chapas, who is the Vice President of Field Operations Support for Brinks Home about how Brinks Home is tackling this issue, challenge, journey. Joni, welcome to the Future of Field Service podcast.

Joni Chapas: Hi Sarah, thanks for having me.

Sarah Nicastro: Thanks for being here. So before we dig into the conversation, can you start just by telling our listeners a little bit about yourself, your background and your role at Brinks Home?

Joni Chapas: Sure. I actually came to field service in maybe what be a little bit of an unusual path. I really spent most of my career at a telecommunications company and I was on the IT side of the house there. And I spent really most of my career there on the IT side, focused on mergers and acquisitions, and then really sort of project management and IT solutions. So I was working with the business units in that telecommunications company, implement improvements and automation and things to help address their business needs. So when I left there and came to Brinks Home in September of 2019 to shift from being on the IT side to coming over to the business side of the house, where I came in as working in the operations support organization. A lot of those skills that I had learned in working with the business on how to implement solutions to improve their process, I could really bring to the table in the new role.

Joni Chapas: So at Brinks I'm the Vice President of Operations Support. And my team, as you know, the name probably implies, we support kind of all aspects of the operations team. And that ranges, we handle anything from kind of tactical support from things like fleet management and helping us with our ... we have third party partners, helping them obtain equipment that they need to do work for us, to really the more strategic part, which I think we'll talk more about today, of things of business process improvement, analytics, business intelligence, project management, learning and development, that kind of thing.

Sarah Nicastro: Good. So as I mentioned at the beginning, there's a huge amount of change underway in service at the moment. Both in terms of customer expectations and market demands and ways that organizations are evolving and modernizing their service delivery or business models. And then you have technological change, there's a lot going on. And I think I wrote an article, I don't know how long ago, but it was sort of about the idea of the dichotomy of service leadership, right? And so this concept that, as the landscape changes leaders have been tasked with the huge, huge, huge challenge of innovation while also needing to keep pace with their quote unquote day job or all of the day-to-day demands of the work.

Sarah Nicastro: And so with your role, the idea that Brinks Home has, is that innovation can be led by a dedicated team that sits alongside operations, right? To sort of balance that workload and help spearhead and some of those innovation related efforts. So I think I explained that correctly, if I didn't please correct my explanation and maybe talk a little bit about some of the reasons that it is so difficult to expect innovation from operational leadership.

Joni Chapas: Yeah. I mean, I think it's just the fact that there's always ... in operations, there's always a fire that's closer to you than that smoldering ember that's out in the woods. Now that smoldering ember might end up being what's going to lead to the forest fire that really can be truly, severely detrimental if you don't stay on top of it. But before you can even look to that, you have to be dealing with what's in front of you. So, I mean, we look to operational leaders to make sure that they're managing your day to day metrics. I mean, that's what you're looking at. I kind of use example of, most call centers in the world have a ticker or some kind of screen that is up on the wall of their call center.

Joni Chapas: Maybe now that a lot of folks are remote, they don't quite have that, but where you've had, where it's kind of showing how many calls are on hold, what's average handle time right now, how many ... what's the abandoned rate for calls that are coming in? So we have things like that that are flashing before these operational leaders, their eyes to make sure they're keeping up with those day in day out, minute by minutes stats of how things are going. So to then also really expect that, oh, and hey, and by the way, in the next quarter, next year, we need to see this overall improvement in those metrics, it's kind of tough for them to have that dual focus.

Joni Chapas: I mean, again, even you can use a whole host of analogies, but it's the same thing. Like you can't really read a book if you're sitting on the beach, you can't really both read your book and watch your kids that are running off in the distance, right. You really can focus on one or the other. And so if you have ... if you're looking back and forth too much between the two, it's hard to be effective at either one. So I think that's what ... it's not about do they have the knowledge? They absolutely do. They're the people that are living and breathing it every day. But you also don't want them to take their eye off of those ticker numbers that are flashing in front of them that show you how you're doing it this very minute. So the idea of my organization is really to partner and work alongside, so that we can have more of the eye on the future, while they're focusing more on the near term and what's right in front of their face.

Sarah Nicastro: And it does sort of feel like an unfair expectation that companies put on leaders to do both ends of that spectrum, right? I mean, to your point, it isn't about the operational leaders not having the ideas, or the insight, or the perspective, right? It's about the bandwidth that it takes to really enable innovation and not expecting those folks responsible for the day-to-day to be able to just magically manufacture that bandwidth.

Sarah Nicastro: So I'm wondering if you can tell us a little bit about the thinking behind, how did this role, your team come to be at Brinks Home? Because I think that I've certainly talked with people that are in situations where they have the expectation of both. They are, fair or not, being tasked with keeping pace with the day-to-day and looking for the opportunities for innovation. And, then I've talked with other organizations that sort of do this type of approach where it's a specific function within the business that kind of drives the effort. So how did the idea to put this in place, come to fruition at Brinks Home?

Joni Chapas: It started off really with, when I came to Brinks with the idea of coming into operations, to kind of help find continual process improvements. But it was really to ... it was really focused on project management. So I said, I was in IT and telecommunications for the earlier part of my career, but that was ... let me be clear, I was never a real techie person. I was always on the ... within IT, but was always more on the sort of getting solution side and project and program management. So when I came to Brinks it was really with that idea of, hey, we have some large operational projects and we just need project management to sort of help see those through. So I kind of came with the idea of sort of establishing a project management organization within operations to just help drive those things forward.

Joni Chapas: But what we kind of quickly found was that we wanted to expand that and not just help execute, not just help manage the execution of those, but to really help with the more the strategic analysis, because it really does tie, we ... the operations folks are ... they have ideas of what are some of the strategic things that need to happen.

Joni Chapas: But again, really taking the time to really analyze those ideas, to go and explore is something that they really aren't afforded the time to do. So it just became ... just sort of developed out of ... as an extension of, oh, hey, there's a project we want to do, can you have somebody, have a team that will help manage those projects to more, can we have more ownership on what the right projects are and what the ... how we can optimize the technology that's out there, how we can research about where ... what are really some ... the true business problems and what solutions we might have for those. So it really kind of expanded, but that was just kind of the evolution from, again, more tactical project management to strategic planning.

Sarah Nicastro: So what does the working relationship between you and your team and the operational leadership look like? Like how do you kind of collaborate together and learn about their ideas and their insights and figure out what to put into action? What does that collaboration look like?

Joni Chapas: Yeah, I mean, and it's, again, it's really imperative that we be working right with those operational leaders. So my team and I felt we do work directly with those operations folks when we're looking at, for example, our monthly metrics and doing our end of the month summary of how are things going and what things are we experiencing, I'm participating right along with that, that we're as accountable to the KPIs of the organization as those operational leaders. And so we work really closely with them, but what we're able to do is, and most people will kind of hear this and say, in anything that you're doing, people always talk about, it's easier to have a straw man or something to work from, and then get feedback on what's wrong with that than handing somebody sort of a blank piece of paper.

Joni Chapas: So we generally try to do that. I mean, sometimes we come ... I have one of my peers come to me with a business problem and say, can you help us in figuring out how to solve that? And we go through and kind of brainstorm and think about ideas and talk to different people involved to get some feedback. And sometimes they come really with an idea of a change that they've observed and they think is a change that can really benefit their team, and are just asking for more help in putting that all together and getting all the right people involved and operationalizing a change.

Joni Chapas: So we work closely with them and again, what we do going into my straw man point is that we're generally taking and creating those strawmans, whether it's based on an idea that they feed us or business problem or something from even higher level leadership that we can go through and say here's a straw man for how this might work, or what change that we could make, and then let them kind of tweak and edit that. Where if they're truly without us, it's like somebody handing them the blank piece of paper and saying now you have to go draw it all yourself.

Joni Chapas: So it's much more efficient for them to be able to let us do the documentation, do the ideation, go through and do analysis of what does the data show us? What does ... what are the cost benefit of and risk factors associated with it? Let us go through and do that, go do industry research and things like that. And then be able to do more of a sign-off and approval or give tweaks and adjustments, as opposed to having them again, have to go through all those steps themselves to achieve the objectives.

Sarah Nicastro: That makes sense. So how would you describe the biggest advantages to the structure that you have set up at Brinks Home, where your team is working alongside operations to drive innovation?

Joni Chapas: I think there's ... the couple key things are just the ability to focus on it because you, as you're mentioning earlier, there's the ever, ever evolving future field service, just like what this is, this whole series is about, that you have to keep an eye and you have to look to the future and you have to innovate, or your business is not going to be successful. But you again, also have to take care of these day-to-day items. So it's really just kind of, instead of having the same people with divided focus, it kind of lets us focus on our own ... focus on those individual pieces. And again, we can't do that in silos, to your point, there definitely is collaboration and working, we're on the same team. I mean, we literally work for the same leader, but that focus, and then it really is minimizing the time spent from the operational leaders on projects.

Joni Chapas: And some of the ... I don't want to say administrative in a term that's negative, but when you're doing an organizing project, there's a lot of that analytics and thinking about things, organizing, making sure we have all the right constituents identified, making sure that you're really thinking about all of the impacts throughout the organization, dependencies, costs, timelines, all those kinds of things that we can focus on. And those operational leaders really don't need to think about that. They need to think about the impact to their operation or what is the business need that they have. And so we get to take some of that off of their ... those other pieces off their hands, that let's be honest are critical to the success of longer range projects.

Joni Chapas: But if you have a leader that is also responsible for day-to-day metrics, this is probably to stop that sort of slipping through the cracks. They probably ... not because they're not capable, but because of the timeframe that they have, that they probably aren't able to get to as thorough of analysis as they might like here. Or maybe the communication piece kind of, and coordination with other parts of the organization maybe falls through the cracks a little bit. So it helps for a little bit cleaner in those projects and minimizes the need for the operational experts to handle some of those other pieces.

Sarah Nicastro: Yeah. No, that makes sense. And I think you're right about what slips through the cracks. It's the less urgent it is, the easier it is to postpone. And I think that's one of the important things to have folks understand is that the pace of change today and the degree to companies are innovating, there is a need to dedicate specific resource or make investments in the longer term strategy and the innovation that's going to get you there. Whether that's a structure, like what you have at Brinks Home, whether that's consultants, whether that's someone, some other structure. It doesn't necessarily need to be prescriptively done in a certain way. But it absolutely is important, I think in terms of keeping pace strategically, to understand that there has to be some dedicated resource, energy, effort to this type of initiative. So are there any drawbacks to this approach that you would caution people on?

Joni Chapas: Yeah. I mean, it requires communication, absolutely. So it's really the relationship building, it's trust and buy-in are the initial pieces. So as much as the ... there's kind of a mix. You'll have some operational leaders that, because they're very accountable to metrics, I mean, their life is generally metric-driven, most anybody that works in operations, they've got KPIs and that's what they are held accountable to all the time. So because of that, there are times where they are a little bit leery, of kind of handing over ... seemingly handing over some control of projects or things that are going to affect those to somebody outside of the team. So they really do have to build that relationship of trust and buy-in, and know that we're not making decisions on their behalf, they're part of it.

Joni Chapas: We're doing more of the legwork piece. We're still ... and we have to hold to that. We have to make sure that we're accountable, to not be trying to implement change that they're not ready for, to not be making decisions that impact them without their buy-in. And to know that we're ... my team is just as invested in the KPIs that they're held to as they are. So I think it's not, definitely not so much be a drawback as much as it is a ... just a, it's a kind of, a little bit of a, it can be a little bit of our hurdle to getting there.

Joni Chapas: In some cases you have folks that out of the gates want to ... are happy as can be to have someone else that can, hey, I've been meaning to try to get to this improvement for a long time, and I haven't been able to have anybody on my team focus on it, so here, I'm glad you're here, go take this. So you'll get some of those, and in that case, you'll get more work than you have time for. But there is really that fact of building the right collaboration so that it is a balance of ensuring that those leaders also, at the end of the day, aren't able to come in and say, oh, well we were hoping that this initiative was going to achieve a 10% improvement in X, Y, Z metric, that at the end of the day, if it doesn't achieve that, that they don't get to just look and be like, I don't know Joni and her team did that. I don't know what they did.

Joni Chapas: So there definitely ... that's one thing is that it can't be viewed as, it's not a throw it over the wall, either way from my team to those folks or vice versa, that it is collaboration that we're in it together. So you have to make sure that relationship, it's really key to the success.

Sarah Nicastro: Yeah. I like the idea of making decisions together, but then you sort of are dividing and conquering when it comes to the efforts, right? So it's ... we have to decide together where we're going, but now, you keep doing X, Y, and Z, we'll go do A, B and C when it's time to reconvene, we reconvene. But to your point, it really allows both parties to focus on their responsibilities in a way that maximizes productivity versus trying to have either responsible for both.

Sarah Nicastro: So the next area I want to talk about ... so when we talk about innovation, I think one of the biggest barriers to innovation, other than allocating appropriate resource, which we've already talked about is the idea of organizational silos. So another big part of your role and your team's role, is to aid in that strategic alignment and to ensure that the innovation that's taking place at Brinks Home is well coordinated, is in line with the company's objectives, etcetera. So talk a little bit about that aspect of things.

Joni Chapas: Yeah. So, and we're responsible for that kind of both within the various teams that make operations, as well as outside of that. So the easy examples within the organization, we've kind of touched on it a little bit within operations, but we also, again, I use learning and development as one of the areas underneath of my organization as well. So we might go through and look at when we hear about a challenge that we're having in operations, we can jump on that to go through and say, okay, what can we do? What can L&D do to help with those issues? So, I'm ... not too long ago, asked my L&D manager to go through and review the latest set of KPIs for the operations team, and then to come back and tell me to say, here are things either that we can build on in training that we already have, here's development for ongoing development for the team, here are resources that we can make available.

Joni Chapas: But it's, again, some of that is making sure that we're not just getting complacent and oh okay, we have these training that we hire, we do these types of webinars and lunch and learns, but to go through and say, it's actually directly tied to those strategic goals. Here are the strategic KPIs that we're trying to do. But again, also, as far as going across other organizations, I'm afforded a little bit more, have a little bit more bandwidth in my team to go through and have regular reviews and one-on-ones, and participate with product development, with sales.

Joni Chapas: So we can look and see what's on their roadmap. What are they doing? And take some time to absorb that and think about what does that mean? What does that mean to where we want to go? How do we ... from an operation standpoint, what are the impacts? How can we drive some of that innovation together? Again, it's just that ability to spend some time, focus and thinking on that, where from a really a more pure operational perspective, you typically will get like, oh hey, sales is rolling out this new program, or whatever it may be.

Joni Chapas: And then now let's kind of react to it. And even if you're doing it as part of our project, you're going through and putting those things in place, but you're not often looking at ... and those operational leaders aren't often looking at sales where are you trying to get to in the next year, three years, five years where I can do more of that.

Joni Chapas: So it's imperative that we can again,a cross the silos of the organization and I've built relationships with those other leaders or say, hey, can I sit in on your monthly review or quarterly review, so that we can get ... that we can see where they're headed and take that into consideration and make sure that we're all sort of headed in the same and right directions that we can align, for strategies and innovation, because we can hear, hey, you guys, it sounds like someone's looking for a tool that may aid in X, Y, and Z, but that really closely aligns to something that we want to do too. So maybe this is instead of, in a vacuum one group going and looking for a tool set, that we look together and kind of go through and do that through the power of putting that together.

Sarah Nicastro: Yeah. I mean, it always shocks me. It seems like it shouldn't be, but there is always a lot of missed opportunity within any company of those collaboration points within function to function. So having a team that acts sort of as a conduit for ensuring that those opportunities, you get ahead of them instead of to your point at being reactive, oh, you're doing this? Great. We could use it this way. Getting ahead of that curve and thinking more strategically about the areas of opportunity across functions, so that you can be more intentional about those. That makes a lot of sense. So good. All right.

Sarah Nicastro: And then the last area is around technological innovation. So your team is also responsible for innovation in terms of technology and digital transformation. So, this recently resulted in a partnership with IFS, and that is something again where you're looking at how different tools can be leveraged across the business, to drive success in sort of modernizing the company's approach to technology. So talk a little bit about what that looks like, in terms of working alongside operations to bring those digital transformation projects to life.

Joni Chapas: Yeah, so we work, again kind of to the point of working sort of across the silos is that, I also work pretty closely with our IT organization, that ... and then vendors, for example, IFS is this key one that we've recently been working on, but to work with our IT team and again, make sure that I understand what their roadmap is and to get our needs on, on the roadmap and to be looking out ahead, of not just, hey, there's something that came up, we need to get a request in now, but what are the advancements that we want to be making?

Joni Chapas: And it's more about more of the long-range planning. But specifically for something like, IFS is a great example of that a lot of people can probably relate to. We did that through an RFP process, and if anybody's ever done that, in most organizations, there's a whole lot of ... you're putting together lot of the information on what are the requirements and what's needed, the whole RFP process, identifying vendors that are going to participate, reviewing their responses, doing Q and A sessions with them, getting demos and whatnot from them, typically putting together some cost benefits on the ROI type of information. You're able to generate a score card that you're comparing people that participate in the RFP process.

Joni Chapas: So really my team did all of that type of work. Actually, we also ... even if you step back from that, we kind of more of the research to look and see what's out there in the marketplace. And to say, we know we have a particular need that we want to address, but we also want to think ahead to a tool that not only will address that specific need, but will grow with us, and that has additional modules, functionality, and a roadmap that kind of aligns with Brinks Home, where our roadmap was going. But anyway, but going through that process, so going and coming up with all of those pieces of ... through that RFP process, what we did was then take some of the experts in and said, hey, come in and sit in the demo and help us score them.

Joni Chapas: And then yeah, they helped us provide information on requirements upfront as well. But all the other pieces and people, again, if you've done an RFP process, you know it can be very time consuming. They didn't have to spend the time on that. But, from the technology standpoint, again, being able to look ahead, investigate, understand what other teams within the organization, what their needs are, so that we can ... because obviously when you're spending money on certainly outside tools, you want to have a tool set that's going to integrate together, where you can have, not just disparate a whole bunch of one-off tools that now don't talk to each other and, or duplicative in nature. So really our role is to, again, define, think ahead, define what those needs are, then really shepherd it through that whole process.

Joni Chapas: And then when it came to actually working on the project of ... to building and rolling out field service management and PSO, that we could go through and again, play the key role in a lot of the documentation, working as the primary project team and bring those, the SMEs in as needed. We could do a lot of the testing and review and then bring them in for final sign-off. And again, take a lot of that burden of all the time that it takes, so that we could turn that around as a ... realistically turn that around much more quickly than it would be if we were relying on people to do that in addition to their day job. That's kind of the other thing I say a lot is everybody in operations, they have a day job. This is our day job.

Joni Chapas: So, but you know, really technology is a key for innovation and automation, is what you need to get there. I mean, obviously in the modern world, innovation and technology are kind of hand in hand. And so really thinking through those, understanding the longer range vision, and trying to figure out how to do that, helps you progress and bring change to the organization without crippling the organization in the meantime.

Joni Chapas: It's definitely, I mean, it's disruptive. It's disruptive, but you have to be able to kind of put all the pieces in place to have that disruption be as minimal as it can be, and then achieve the result that you want, again, without jeopardizing your day-to-day in the meantime.

Sarah Nicastro: Yeah. And I think, you mentioned speed, right? If you are relying on operational leaders to do that whole process in addition to their everyday responsibilities, it's ... the whole thing is going to move at a slower pace, than if you have a team dedicated to it. And speed is imperative when it comes to keeping pace, and innovating, and leveraging technology today. Everything is changing faster than it ever has before, and it's not slowing down. So looking for the best way to set your company up for success, to not only focus as needed on the short term, but focus the way you need to on the longterm is super important.

Sarah Nicastro: So whatever that structure looks like, whether it's a structure like Brinks Home has, whether it's something completely different, for any company that is focusing on driving innovation, what would you say are some of the key ingredients to success?

Joni Chapas: Yeah, I think a couple of key things. One is leveraging the best of what you have right in front of you. I mean, I know that there's a balance between, yeah we want to change and we want to think outside the box, which we need to do, but you want to take a look and know what the strengths of what you already have and how to leverage those as you move forward, is really key. A lot of folks get into the almost the throwing the baby out with the bath water. So really want to make sure you know yourself and know what your strengths are. Data-driven decision-making. I mean, I can't probably preach enough. So, I'm thrilled that within my organization at the Brinks Home, that the data analytics team is there, because that's essential.

Joni Chapas: It's essential to the business. You need to look at, let the trending, tell you where you're going, but predictive analysis and analytics tell you kind of where you need to improve and where you need to go. And then that you're going to make the right decisions. I mean, there are a lot of things, don't mistake the fact that there's technology out there that's really cool to have, but when you put pencil to paper, the business case for that really cool technology may not be there.

Joni Chapas: But you will need to really understand your data and using that, again to make the right decisions for your business of where you're going to get the most bang for your buck. What's the return? Where can you really improve? That's really key. Attention to detail, which is probably, if you summarize a lot of the things that we were talking about, about sort of the focus, that's one of those pieces that, because the team's able to focus we can pay more attention to those details, that's often what happens to any of us. Any time you're rushing through something, or you're doing two things at one time, that's generally what suffers is the detail.

Joni Chapas: So, obviously everybody knows the phrase, the devil is in the details, of when you're working through certainly a complex implementation or a technology change. And so, making sure that you have people that can focus on that. And then of course, collaboration and communication, just so important to everything that we do. And regardless of the organizational structure, like you were mentioning, communication and collaboration really has nothing to do with your org chart. It's all about people. And so that's just one of my other mantras, is that we have to engage and keep talking with each other and make sure that everybody's on the same page. Because as things are moving faster and faster, it's very easy to miss those steps and to try to, race ahead and be in a hurry and miss some of those key points.

Sarah Nicastro: That makes sense. Very good advice, Joni, and I bet there's going to be people listening to this podcast that are being tasked with the operational duties and the innovative duties that are, are going to be jealous of the support that you're providing at Brinks Home. So it's a good model though, I think for anyone to kind of think about and to consider and really just to do some critical thinking about what exactly the focus on innovation is within the business. And is it scaled to the degree it needs to be, is it as effective as it needs to be, are you moving at the pace you need to be, et cetera.

Sarah Nicastro: So I appreciate you coming on and talking a bit about how you're doing that at Brinks Home and thanks for being here.

Joni Chapas: Thank you. Thanks for having me.

Sarah Nicastro: Absolutely. You can check out more of our content by visiting us at futureoffieldserviceref.ifs.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 by visiting ifs.com. As always, thank you for listening.

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Embracing The Realities & Possibilities of Innovation

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Dan McClure, Systems Innovation Choreographer at Innovation Ecosystem discusses with Sarah the differences between incremental improvement and true innovation and provides advice for companies on how to react sufficiently to today’s disruption.

Sarah Nicastro: Welcome to the Future of Field Service podcast. I'm your host Sarah Nicastro. Today we are going to be talking about both the lure and the detriment that the idea of incremental improvement can cause your business. I'm excited to be joined today by Dan McClure who is the systems innovation choreographer at Innovation Ecosystem. Dan, welcome to the Future of Field Service Podcast.

Dan McClure: Sarah, it's great to be here.

Sarah Nicastro: It's great to have you. So before we get into the thick of it, why don't you tell our audience a little bit about yourself?

Dan McClure: Well, I have been somebody who has through good luck been thrown into burning buildings throughout my entire career. So I started my career in an industry that was going through massive deregulation, had a chance to spend time as an entrepreneur for a decade and then have gone from industry to industry really looking for the places where disruption was happening and there were opportunities to do what we've called system innovation, changing the way that they fundament organization works to create value in the world.

Sarah Nicastro: Okay. Now it's interesting that you would categorize being thrown into burning buildings as good luck, because I don't know that everyone would feel that way. Why do you say it that way? What do you think that that fact has enabled you to learn or to do?

Dan McClure: Well what's exciting about a burning building or more conventionally framed, a burning platform, is that you are in a position where there is not only a motivation for big change, but you've broken out of the status quo. There are pieces that are freed up that allow you to be really boldly creative. So if you're the type of person who says, "I don't want to simply repaint the house, but I want to imagine the house with an entirely new set of rooms," a burning building is not a bad place to start because you really get the chance to bring other people along on a big bold dream and do something that has a real impact in the world.

Sarah Nicastro: Yeah. That's really cool. So I read an article you wrote that said ... The quote said, "The hard truth is that complex systems problem can't be solved with piece meal inventions. They need to be addressed with far more ambitious systems solutions." So tell us a little bit what you mean by that quote and what the route of systems innovations is.

Dan McClure: So most organizations are in the habit of working. They have built up a set of system, they've built up a value proposition. They've built up a market place. That all work together to essentially deliver value to their customers and to their shareholders and to their employees. Everything works. And for those types of organizations, simply making an incremental change to make things a bit better makes them more profitable, more competitive. Sustains their role in the market place. The challenge is, if they need to make a bigger change, let's say a competitor comes in and offers a radically better proposition, or the fundamental basis for their marketplace disappears, then they can't make small changes to the way things work, because those won't be enough. They'll find themselves in perhaps three different categories of situations.

Dan McClure: They may find themselves commoditized. So they can continue to sell in their market, but they're not going to make any profit on it. They may hit a plateau where they really still have their market share but they're never going to grow any further than they are. They have essentially gone as far as they can and they're just waiting for something worse to happen. And the third thing, the worst that could happen, is they might find themselves completely obsolete. So this temptation to resort to small incremental innovation often leads to these dead ends or these areas where the future is really not very bright at all. And so moving beyond incremental change becomes the thing that they need to do. They need to create a new value proposition that's new and differentiated in the market.

Sarah Nicastro: So what I'm curious about and I recorded a podcast a while back with a gentleman who at the time worked at Cisco and the title of that podcast was weighing the decision of disruption. And it was this idea that Cisco's business in the area and region that he worked, was doing quite well. But they knew there was an opportunity to do things differently. And it was a tough choice to make because there wasn't this catastrophic burning building type issue. They weren't becoming obsolete. There wasn't that big of an issue. But there was a significant opportunity and I think Dan, that a lot of people in our audience are in similar situations where there's a big opportunity being presented by the market and the customers that these customers serve for more and for different than what they've historically provided. But maybe for a lot of organizations, the need for that change isn't so intense that it's a do or die type scenario which causes people to drag their feet. So how does a company know when it's the right time to look at more of a systems innovation approach then just sort of incremental improvement?

Dan McClure: I think the whole question of disruption and the way people react to disruption is interesting. Often times disruption is framed as opportunities early on. So you look at the marketplace and you say, "Ooh, there's a new opportunity, maybe we could be a fast follower, or maybe we could do this sometime in the future." There's a couple of problems with that. That optionality, that assumption that we can wait because things are going pretty well right now. You sighted that example of the gentleman from Cisco. The reality is their platform may well be burning, well in advance of the time they see smoke. And often times these disruptive changes are already well in flight before anybody realizes them.

Dan McClure: The other problem is, is that there's an assumption that if we delay, when we do see the disruption, we'll have the time to respond. And frequently once these changes start to happen, they happen incredibly quickly. So consider the classic case of Uber, which used to be the innovation example cited in every conference three or four years ago. But it took them only three years to outpace New York City taxi cabs as the primary provider of transportation service in New York City. If you look at other industries like healthcare, in the first six months of the pandemic, there was a 16,000% increase in digital health services. Once the lever tends to tip, it tends to tip very, very quickly. So this idea that we can wait, because we don't have a burning platform right now, is often, misses the true reality of the situation organizations are at.

Dan McClure: The other thing to remember is you don't simply get to claim market share by showing up. And so when these new market opportunities emerge, they're going to be fiercely competed for. And as a result, if your organization isn't making the kind of deep thoughtful creative changes to position you as a leader in that market, you're not going to be in a position to show up late in the game and say, "Okay, now I want my share."

Sarah Nicastro: Right. Okay, so that makes sense, but I think what I want to talk about is sort of what you refer to in some of your content as the lure of incremental improvement. So saying it makes sense. It makes sense. You need to be creative, you need to innovative. You need to stay ahead of disruption. It all sounds very good. But it's obviously harder than it sounds when we're talking about it. And I think part of that is this lure of incremental improvement. So let's talk a little bit about why that tendency is so so strong for organizations to sort of stay in their comfort zone, maintain or incrementally improve the status quo, et cetera.

Dan McClure: Yeah. I think it's interesting and you almost have to go down to a project level. So imagine you're a project leader and you have two ideas. One of them is an incremental change and the other one is a disruptive change. For the incremental change, you're going to be able to document pretty hard evidence of the types of improvement you see. So you may be able to reduce head count or you can project with reasonable certainty a 1% increase in market share. And as a result, that projects going to be very easy to sell. If you're the sponsor, the person with the budget, you're going to be able to say, "Well, I'm pretty sure I can get that type of project delivered." But that's got to have some pretty high degree of certainty of results. And then I you look for everybody else across the organization, it's just going to be a small change to the way they work, so they're going to have an easy time to adopt it. So all along the way, that project, that incremental project, is going to be easier to sell, lower risk to execute and easier to adopt. And that's a very attractive thing in an organization. Nobody wants to be the person who's spearheading a failed project.

Dan McClure: Now contrast that to a disruptive change which requires an entire system to change. Here we're saying, "We're going to imagine a much bigger opportunity and it's not even going to really be proven out by any evidence in the marketplace yet." So we're going to have to hypothesize over what we think the opportunity is. We're going to have to change lots of different pieces and put in new things that nobody's thought about before really carefully and therefore the risks are going to be higher. And finally, we're going to have to get everybody else onto an entirely new page. And so all those system changes are going to have to cascade across the organization. If you compare selling those two projects, it's a heck of a lot easier to sell that small incremental project. And at the same time, it's the big disruptive system change project that really offers the hope of getting past these big threats that we were talking about earlier.

Sarah Nicastro: Yeah. It's interesting because it makes me think about in a lot of the conversations that I have here, we talk a lot about, I mentioned before we started recording that some of the big disruptive change in our space is related to the idea of this journey to servitization or to outcomes based service. And we have a lot of conversations on this podcast about the fact that that level of change and evolution is not possible without buy-in from the top. And so that is just making me think about what you're saying which is the ultimate stakeholders that you're presenting these options to, if they're very comfort zone in status quo oriented, if they have certain motivations that maybe make them incredibly risk averse, if they are quite stuck in their ways for a number of different reasons, it's really hard for anyone that sees this opportunity within the business to bring it to the forefront. It just, they keep defaulting to the easier options that are being presented. And so it's just making me wonder your thoughts on the criticality of leadership who is willing to take risks and be creative and embrace a more innovative approach.

Dan McClure: So here's where I think sometimes the narrative is a little too simple. I certainly have been the person who's been going to a leader and then been slapped down hard, and that's not a pleasant experience. And I probably went out to the bar later that evening and had a beer and was complaining to my friends about what Luddite and risk-averse manager we had and da dah, da dah, da dah. The reality is, while that can be a concern, more often it's that people are pursing system innovation in the wrong way. They're asking their leadership to do things that don't make sense and as a result, what we really need is to figure out how to do system innovation well and then use that to go to management with a clear set of here's how we're going to approach this disruptive change.

Dan McClure: So let me give you a few examples of things that people do wrong when they go and talk to senior management. The first thing is they arrive and deliver a dead rat. So they walk through the door and they say, "The world is ending. Everything is going to go bad and we need to change something." And then they stop talking and they've delivered the dead rat, but they don't actually have a solution. And this is often way easier to do than actually coming up with a solution for a hard disruptive market change. If you were to imagine your newspaper co, a newspaper, and you've got print editions and this is your business, and certainly I'm sure lots of people ran into management offices saying the world is coming to an end. Much harder to come up with, and now what do we do? So that's the first thing is the system innovator, the person who's proposing these changes actually has to think through what it is they want to see.

Dan McClure: The second piece is they need to come in with a solution that is complete and compelling. So it's not enough to simply say, "We need to make this one little foray into some change. We need to add a mobile app." For a while there it was, we could become a digital company simply by adding a mobile app for example. I think servitization often becomes the same sort of silver bullet solution, is we'll simply add a bit more service onto our product, do what we've always done. And what the system innovator needs to do is if they're going to go to management, they need to come up with a big enough and powerful enough system change that it actually does create new differentiated value.

Dan McClure: And finally, they need to go with a strategy that basically manages the risk. You're asking an organization to take big leaps in faith, plow into areas of uncertainty and so you need a strategy that allows you to evolve this new market opportunity. Evolve this new disruptive system over time. And it can't be we're going to invest for four years, put millions of dollars into it and then see if it works at the end. There have to be early points of feedback, all the way along the way to show that this is all working. I think if you do that well, we'll find that a lot of those senior leaders that seemed like they might be anti-change, are very appreciative of the fact that they don't want their company to fail either and they have a real opportunity here. Here's something they can actually act on with faith.

Sarah Nicastro: So it just makes me think, what is it then that would drive someone within the organization to take that on, because it does sound daunting. So at the beginning when you've mentioned you've had the good luck of being in these burning buildings, I mean it sounds like you have looked at this through the lens of liking the challenge and seeing the opportunity and wanting to do this work of presenting a solution and seeing it through. What is it within a person that you think gives them the likelihood to want to spearhead systems innovation?

Dan McClure: So I think it's really fascinating that there are different types of roles within organizations, that we've clearly defined. We know what a manager's role is and what the skills are that go with that. So you need somebody who's organized, who has good attention to detail. We understand in many ways that executives are good about exercising control and being able to take bold moves, et cetera. When we look at systems innovation, there is an unnamed role that is I think far more common than people realize. But it's a type of person that we've labeled as a choreographer. And their focus is really ... Their passion is about new ideas. And not small new ideas like we've made a bit of change in the production line. But rather, this is a big bold idea that gets me excited. So at the risk of citing guys who have been launching themselves into space, the Elon Musks, the Richard Branson, the Jeff Bezos, are all these sort of excited by big idea people. Regardless of how you feel about them individually, you can certainly get the sense that there's a group of people that are excited about big ideas.

Dan McClure: The other aspects of that type of personality is they tend to look at big pictures rather than at the details. So when they look at an opportunity, they don't see the small things that stand in their way. They see the big connection of how all the piece fit together. And they're fostered in that by the ability to be generalists. So one of the phrases that I really dislike is the, "he's a jack of all trades, but a master or none." A generalist is basically a specialist in everything. A specialist in seeing across things. So they don't necessarily know the details of everything, but they see how a lot of things fit together. And when you combine this sort of passion for big ideas, the ability to see the big picture, a generalist background, along with a certain rebel attitude of what being willing to break thing apart, you end up with somebody who not only is able to accept that kind of challenge, but who fits actually very poorly in most other jobs and so they need to go find those types of challenges if they're going to be happy.

Sarah Nicastro: Okay. So here's my next question then. So if you think about, let's just take an example of an organization that manufactures something, has been around for 100 plus years and there is this disruption happening, but this tendency towards incremental improvement versus true innovation. Do you think that it's possible for somehow that organization to find this talent, motivation, inspiration, skill set among itself, or is there a benefit to seeking outside perspective or different roles, different talent if you're trying to make some progress in this area?

Dan McClure: So what's interesting about choreographers, because they don't have an official job title, often times there are choreographers wandering your hall and you're not even aware of it. So part of it is simply just being aware of the choreographers that you have. You probably have some that have been banging around, looking at the bit problems, excited about ideas, but haven't been recognized for their ability to do this. So part of it is just look at the groups that are within your organization. A second feature here though is, don't kill them off. So most organizations are actually well designed to identify choreographers and get rid of them because they disrupt the way things work.

Dan McClure: Christensen talked a lot about this, just there are people who within organizations will try to bring up new ideas and the organization is designed to stop them from doing that. So part of it is just removing the immune system to these types of people. But the reality is most of these individuals have very random resumes. So I've been talking about my own resume being a fruit salad of all these different things all tumbled together across multiple industries. If you're going to go out and look for choreographers, look for people who have the skill of dealing with big disruptive ideas, rather than somebody who's a specialist in your industry, who's had a particular job title, et cetera. You're really looking for a unique type of person rather than a particular career path.

Sarah Nicastro: Okay, that makes sense. Going back to the question that I brought up about knowing when is the time and recognizing disruption, and you point about often times it's well underway when you have that aha moment, but there're companies that are choosing to nurture disruption and to embrace it and to try and be ahead of the curve. And then there are those that are responding to disruption by force. So are there differences in approach that need to be taken with systems innovation for an organization that is sort of being more proactive versus reactive? Does that make sense?

Dan McClure: Yeah. I think, so the first thing I would observe here is, many of the things that companies do to check off the I'm an innovator check box, are really pretty ineffective and they're designed for either incremental or irrelevant innovation. So there was a period of time where every company wanted to have a hackathon and there were big company celebrations around here's all the ideas that came out of our hackathon. Those types of events very, very seldom produce substantial systemic change, because they're small ideas imagined in the moment without deep connection to where the company is or where it's going. Likewise, innovation labs, where a few privileged innovators are given a space to go off and test out new ideas et cetera, very seldom successful in actually scaling up ideas. And to go back to the idea of spin offs. Perhaps you create a spin off company that could go and test out an idea.

Dan McClure: The problem with all of these is they essentially isolate the change in a corner of the company. And what you really need for this type of disruptive deep change, the type that's going to allow you to capture a new market place is you need to be weaving change throughout the entire organization, which makes it a much more enterprise wide effort. And so it has to be technology, it has to be business, it has to be senior leadership. It has to be middle management. Middle management is often the biggest barrier to a lot of these changes. So when we look at a genuinely agile organization, it's somebody who's able to take all the pieces of their organization and engage them in these new ideas.

Sarah Nicastro: Okay. So can you tell me why it is that middle management is often the sticking point here?

Dan McClure: Yeah. So the phrase that you often hear is the frozen middle. So people on the ground are often choreographers, can have ideas, they see things that are new that are different. They are generally focusing on particular problems and challenges, and so they can get excited about those. Senior leaders see the big market challenges, the dangers, et cetera and often times they will bring in specific people who are charged with making all those new and different strategies go. Middle management is basically in the role of making the organization as it is work. And both their job security and the nature of their job, puts them in a position where they need to keep the status quo what it is and as a result they're going to be hesitant to raise up ideas from below and they're going to resist the types of deeper systemic change, even if it's coming from above.

Sarah Nicastro: So then how does an organization counterbalance that?

Dan McClure: So you really have to intentionally plan to do system change. And that's where we'll come back here to the concept of system innovation. System innovation basically says, I'm not simply changing a process or an output, like a feature or a product. But rather I'm changing the way everything works to achieve a new type of goal. And so the entire effort has to be around all those different types of change. And that means that you need a vision of what that whole change is going to be. But you also need the choreographers to work across the organization to make all those pieces of change happen. So you basically are designing your entire organization to be embracing this kind of change.

Sarah Nicastro: Okay. Now you said earlier that a lot of times companies put in place things that they think are fostering innovation that really aren't, so the examples of the hackathon or the innovation lab, et cetera. Is there any sort of self-reflection test or criteria a company can use to determine, do we think we're innovating, but we're really just continuing to promote incremental change maybe at a better than average pace? Do you know what I mean?

Dan McClure: Oh yeah, absolutely. So frankly, if they were promoting incremental change at a better than average pace, that would still be a positive outcome. Frequently what you see with these programs is really nothing is happening. So the first piece would be simply measuring what your actual outcomes are from these operations and whether it's a lab or a hackathon. Not how many things were generated this week in the hackathon, but rather for last year's hackathon how many of those things actually went into practice. So there could be just some discipline in classic lean fashion of how much did this change matter to me?

Dan McClure: I think more fundamentally though, as we've talked about just more, better incremental change is not going to be enough. And so the real question is, how do I know that I'm on the path for doing something deeper and more systemic. And there it really begins with understanding that there is a systemic change that you want to make and putting that front and center of everything and then starting to build in measures around how close am I to making this systemic change. It becomes really a case of refocusing yourself on that bigger, deeper change.

Sarah Nicastro: Okay. So talk to me about the role of agile in all of this and then also some of the misperceptions of what that means.

Dan McClure: So for a lot of folks, both the phrase systems and the phrase agile is tied to technology teams. And there are certainly uses of those terms. So if we're talking agile as far as agile software development, what that really is a more flexible business aware form of software delivery. It allows for less upfront design and allows you to deliver software in ways that you could learn as you go along. That's great stuff. You should be doing that no matter what. Agile applied to an enterprise level is really a much bigger change. And what you're really talking about there is the organization can exhibit agile practices. They can identify long term goals. They can adapt and change. They can respond to insights as they go along.

Dan McClure: All of these things are at really a different level than agile technology teams. And so while we've called them the same thing and they have some of the same principles, learn as you go along, have clear goals of where you're going et cetera, it's a very different type of journey for the organization and you shouldn't assume that you can simply take your agile scrum coach and throw them into the enterprise and you'll get the kind of results that you want. Because what you're really trying to do is a much different type of creation. You're creating a new system in the organization rather than creating a new piece of software.

Sarah Nicastro: Right. Now is there advice about how to adopt a more agile mindset and business mentality?

Dan McClure: So is an element at the senior level of beginning to recognize where you want to go from an opportunity perspective. So instead of focusing on scheduling the projects that you're going to do in the next year, understand the opportunities that you want to pursue. The advantage here is that once you've shifted to think about opportunities, you can continue to change the way you approach and pursue those, rather than simply saying, "I've now executed this project and it didn't really didn't make a difference whether I changed anything in the marketplace or not." So this shifting the executive focus to opportunities and where do you want to go. So what are these big new things you want to do?

Dan McClure: Then when you start to make change across the enterprise, you're going to want to do it in a vertical slice. So it's going to be very difficult to get the entire enterprise to change all at once. So instead, pick a layer of executive, middle management and folks on the ground who can all work together around a new idea. And that type of slice will allow executive sponsorship, middle management, operational control and hands on work on the ground to actually all work together around the change. And then move additional thin slices as you go through.

Sarah Nicastro: Now is there a typical slice that usually works well, or it just depends on the industry, the organization, et cetera?

Dan McClure: I would say it depends on the system you're trying to create. But the key thing here is to note that opportunities come from bolting many things together, multiple things together. So your thin slice won't necessarily be just the marketing operation. It may well be multiple pieces of very different things that all need to work together to create this new opportunity.

Sarah Nicastro: Yeah. And that sort of higher level orchestration, the elimination of silos, they change management of getting everyone bought into these concepts, I mean, that is the hard hard work. I mean, those are the things that come up time and time again in the conversations we have here about why regardless of what that opportunity is, it can be very, very hard to make progress. So yeah, this is great insight, Dan. I wanted to ask what are you favorite sources of insight or motivation related to innovation and considering how to make progress here?

Dan McClure: I think one of the things that's really exciting is, for a long time, if you were a system innovator, there was not a lot of language around what we did. So there was sort of very academic abstract systems thinking books that you could get. And then there was a lot of sort of management theory books about some details of ways that you might do bigger strategies. But there wasn't a lot about people who were actually doing system change. It's exciting in the last year and a half perhaps, to see the level of embrace of practical system change. And so I think one of the things you could do is simply look for examples of places here people have changed the way things work and look at how they did that. And I would strongly advise to look outside your particular field. It's often easy in your own domain to get trapped into the idea that's the hot new idea and think of that as the innovation. Whereas really the question is, is how do you make systems work differently? How do you make the organization work differently and bring together different pieces? And for that, being the generalist, looking outside your own particular domain, can provide a lot of inspiration.

Sarah Nicastro: Right. That makes sense. I mean the idea here is not following the latest trend to be able to orchestrate yourselves to deliver on that. It's this concept of re-engineering the way your business works to be able to recognize and deliver on opportunities. Whatever those are and as they change. I mean-

Dan McClure: And it's complex opportunities. It's not we were the first person to pick up X and then we were the first person to pick up Y. But rather, it's we re-imagined how this manufacturing business might go if we thoroughly integrated service to the product offering. Or we imagined how we could be more customized in the delivery of services to customers. And those aren't a series of one off type additions. They're really reshaping the way the organization works and creates value.

Sarah Nicastro: ... Right. Right. Okay, this is some wonderful food for thought. Do you have any closing thoughts or last words of wisdom before we wrap up for today?

Dan McClure: I don't know, if I was in an organization that was on the cusp of being a burning building, whether or not the flames have come out or not, I think if I was the choreographer, I would say rise to the challenge. See the big opportunities there and learn how to make big ideas acceptable to leadership. And for leadership I would say recognize that this big change that you want to do is going to require you to change things across the entire enterprise and you're going to need the support of choreographers within your organization to do that. So there's a real opportunity for everybody here to rise to exciting new challenges, and I think while it's exciting as all get out, it's also pretty exciting.

Sarah Nicastro: Yeah, I agree. It's a little bit of both. All right, well Dan, thank you so much for being here with us today. I appreciate it.

Dan McClure: Thank you very much.

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

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