The lunch keynote was Mark Taft, Global Vice President for Systems for ABB, who also achieved a certain notoriety this morning by being quoted on the front page of USA Today. His topic was “The Shift to Service Selling.”
Taft started out by insulting all the UT fans in the audience. This especially impacted Con Lau and Kari Mitchell from Yokogawa, both UT grads.
“There is a knowledge management gap,” he said. Manufacturers no longer have the in-house expertise they once did. There is a shrinking workforce, with retirees not being replaced and the average age of the automation work force (ISA members) is 48. This knowledge is not being captured, and fewer students are entering the engineering profession.
“In 1999, a study was done that said the average age of people with an engineering degree was between 40 and 49. And that was in 1999!” Taft pointed out.
ARC cited corporate downsizing and the aging workforce, and the churn of technology as gap enhancing forces. There are shrinking product lifecycles, COTS operating systems and computers, and other issues.
Not everyone is an early adopter. “I love the hype curve that Dan Miklovic showed last night,” Taft said, “because it clearly shows what happens to early adopters. You can win big, but you can also lose.”
“Another thing our customers are doing is re-evaluating what is ‘core’ to them. They are deciding what they are going to do in house, and things that used to be core, like maintenance management, are being questioned, now. Maybe it isn’t as ‘core’ as it used to be, and maybe I’m willing to partner with somebody else to do some of this.”
There is so much capital investment going on that there is a shortage of engineers to get the projects done.
Customers are looking for flawless execution. This has led them to risk sharing partnerships with suppliers. This makes the supplier have a stake in the project’s success, and produces predictable results, keeps the project on track, and brings it in under budget.
How do these trends influence the customers needs and expectations?
Service is so much more than “repair or replace.” Service has evolved. “Site and Maintenance management are included, Mark said, “as well as project management and engineering services, process application implementation, system integration and work process improvement are all part of the service picture now.”
Each party has a state in the success of the activity…the supplier/partner manages non-core activities, with stated KPIs to measure performance, while the customer can focus scarce resources on improving core business. Everybody wins.
End users can leverage supplier knowledge.
Suppliers are current on the state of technology, and can be in the best position to advise the customer on how, where and when to implement new technologies and upgrade systems.
This requires us to look at the lifecycle of our products. We must look at how much it costs to install, upgrade and repair systems and how to optimize systems to provide the maximum return.
Redeployment of best practices is going on everywhere. Customers need to use best practices to be more efficient. But most customers only know their own best practices. Suppliers can help them see what industry wide best practices are.
So how do we embrace this shift?
First, listen to your customers. What is keeping them up at night? What would help their operations be more effective? What problem areas do they have? How can you help?
“I spent much of my career in sales,” Mark said, “and it took me a while to learn that I couldn’t make a sales call where I spoke for 50 minutes and left after an hour, thinking that the customer heard everything I said.”
“You need to help the customer figure out how to apply your products, and you need to help him understand what he needs.”
So how do we make this shift?
Get out of your silos. Work within the company to integrate offerings. Collaborate with other suppliers to provide what customers want. Innovate for efficient products. Make them quicker, lower cost, and make them have a better fit for the purpose.
“Those of us who are product people have to back off from our natural desire to sing the praises of our products and maybe bury them in a service offering,” Mark opined.
Evaluating your service offering is key. Does it follow the “just fix it” model? Or are you already offering an aggressive product/service mix? Can you make the offering stronger? Listen to your sales people. They know the customers better than you do.
You must identify the barriers to success. Are your silos keeping your people from working together. Are there competing organizations? Is your sales team on board for services selling or will they hinder you?
You have to recognize that this business is more about relationships than it is about products. The more work you do with your customer, the more opportunity there is for you to solidify the relationship between you and the customer. Your sales team must be on board for this.
Externally, there is often apprehension about the new and unknown, as well as potentially unfavorable experiences in the past.
You have to educate, both internally and externally, using examples, benchmarks, reproduceable results so that you can show them you can help them implement your product for greater results.
Can you partner with your customers, with third parties? “Heresy, of course,” he cracked, “why would we go out and find third party technology when we could spend all that time and money developing it ourselves?”
How can you make this happen?
Value “above and beyond the box” is a key differentiator. If you can move from a commodity sale to one that allows you to produce a complete solution for the maximum ROI for your customer, you can create more value for your product and be able to increase what you can sell your product for.
The more you are interacting with that customer, to help him solve his problems, the more likely he is to come to you again and again to you to solve more problems, and together you’ll make more money.
About the knowledge gap, we need to help the next generation find the marvel in manufacturing we had when we entered this profession.