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Tag: Digital transformation

Industrial goods, Strategic account manager skills and competencies, Technology

Helping your customers go digital: A conversation with Boston Consulting Groups’s Jonathan Van Wyck

Boston Consulting Group recently released a three-part series on digital maturity in the manufacturing sector. SAMA reached out to series co-author Jonathan Van Wyck, a partner and managing director at BCG, to ask him what suppliers can do to make themselves indispensable to their strategic customers’ digital transformation journeys. This conversation has been lightly edited for length and clarity.

SAMA: I think people may have a narrow view of what we’re talking about when we talk about digitization. Can you lay out the full scope of what we mean by digitization?

JVW: When we think about digital transformation broadly, we think about a couple of different avenues. There’s one leg of it that’s saying, “How do you reengineer the customer experience, leveraging digital technologies, to support the projects and products you are offering?” The second is, “How do you actually leverage digitization as an opportunity to drive new growth and launch new solutions and new businesses?” And then there’s digitizing your internal operations, which is taking the internal lens and asking, “How do I take my manufacturing process, my supply chain, my customer service and support, and my sales processes, and leverage digital technologies to reengineer — either at a lower cost or to drive more effectiveness — those internal processes?” We have a framework off the shelf on that if that’s helpful to share. 

Courtesy of Boston Consulting Group (2019)

SAMA : Can you talk about what you set out to study and what you learned? 

JVW: What we’ve been seeing is that everybody’s talking about digital operations, and everyone feels a high degree of conviction that this is the future. But when you take that and contrast it with  the progress that we see with our clients, there’s a disconnect. What we’ve found is that they’re taking almost a project-based approach to digitization, where they’re working with individual vendors who have a cool technology to pilot it in a specific location. Or they have an internal project around some component of digital — a plant scheduling tool or something like that — but they’re not able to drive it at scale and really capture the full benefit.

So we took a step back and started thinking about what we have learned from doing this with a bunch of companies to sort of bridge that gap between what we talk about as the opportunity versus the reality of where companies are — and then move from point solutions and individual projects or applications to actually driving value at scale. 

SAMA: So what you’re saying is, there are a lot of pilot projects out there that can prove themselves out, but the companies, for any of a number of reasons, don’t manage to scale the solution and really capture the full value. 

JVW: Exactly. When you look at past industrial revolutions, I’m sure it took the same stages in development. But the challenge here is that the way of working is so fundamentally different from traditional approaches. We’re talking about another revolution in terms of the types of talent, way of working from an agile standpoint — but also building the infrastructure to be able to support these use cases. I see our third paper as the most critical one. It’s about the organization and way of working to drive this at scale, which is ultimately what I think is the issue.

It’s not like companies don’t have great ideas, and it’s not like companies don’t have an idea of what the right use cases are. It’s really about, “How do you actually build the organizational capability, the funding model and the talent to be able to do this?”

SAMA: I’m thinking about the manufacturing environment, in which great plants are typically run by very seasoned people who have been doing this forever. And to do a pilot project, you’ve got to bring in data scientists and a bunch of under-30 digital natives who can actually make it happen. 

JVW: Also, company processes are oriented towards waterfall I.T. projects and are not set up to support this type of innovation. Because a traditional funding model is, “Submit a capital request with your full plan, the milestones all laid out, the exact financial investment that you’re looking for from the company, and then we’ll have a meeting with our senior leadership and debate it, probably cut your funding a little bit, and then approve it.” Whereas here, you don’t actually know the challenges, and actually laying out a full roadmap and waterfall set of milestones is actually counterproductive to what you actually need to do to experiment quickly, which is to assume that 25 percent of what you do is really going to work. So you do the 75 percent that will fail very cheaply, and then rapidly scale the 25 percent that does work. You just don’t know all that stuff in advance, and so it doesn’t fit with traditional processes.

So there’s a challenge from a talent standpoint, but I don’t think it’s just about hiring more people under 30. It’s about thinking about your internal processes and, in some cases, modifying your approach to how you drive digital operations. And this applies more broadly, not just within operations but to your traditional funding, project management and approval. 

SAMA: So to a certain extent, you have to invest and pray and then say, “OK. How can we take this 25% percent [that’s actually working] and really put more effort into those and get more benefits faster?”

JVW:  You just need to set it up to say, “We’re going to have an outside-in view of what the opportunity is. And we’ll have a long list of use cases, roughly mapped to that opportunity, and an idea of what that’s likely going to cost.” And then in your next meeting, a month later, you’re going to have a much more refined view. And then a month later, it will be even more refined.

So it’s a journey from more ambiguity to more specificity, but you just can’t shortcut that journey and have the specificity at the beginning.

That’s really challenging for companies that are used to having that specificity, which in reality is false specificity because projects overrun 80 percent of the time and take longer, et cetera. It’s a mindset shift. 

SAMA: In my career, we had a hurdle rate that you had to exceed. If your project didn’t have better than a two-year ROI and proven, financially sound waterfall, you didn’t even submit the project because it was never going to get funded. Is that mentality bumping up against how you have to approach the digitization project? 

JVW: There is a set of infrastructure that needs to be put in place to support use cases: You need to set up a cloud infrastructure. You need to build a data lake. You need to invest in a certain number of technologies, et cetera.

The challenge is where I’ve seen companies burdening those first set of use cases with the cost of all that infrastructure, even though that infrastructure could support 100 use cases.

This problem can be unlocked by doing it at scale and having conviction around the strategic relevance for your overall company and the total value on the table, versus taking it piecemeal and starting with three or four use cases in one factory.

SAMA: In a normal plant environment, there’s a plant manager, there’s a division leader, there’s probably some subject-matter experts, et cetera. But with this kind of thing, it sounds like you need to go above that traditional manufacturing decision-making process and get C-level buy-in?

JVW: Typically it’s at the C-level.

SAMA: From the supplier perspective, do you see them being a catalyst by bringing some of these ideas forward, or is it all internal to the customer itself? 

JVW: I think the more stakeholders you can involve in the ideation process, the better. I’m a big proponent of involving suppliers, but I like to first recommend that companies internally align on what the pain points are and a high-level view of what a solution could look like before they go down that path. 

SAMA: Are there any kind of best practices that you see good suppliers doing to really help this process work? 

JVW: Recognizing that the process needs to start with the pain points and value levers. Don’t lead with your technologies, but facilitate a workshop around a specific process that’s relevant to them. That can be really powerful. It’s also about being open to collaboration and sharing of data. Because one of the other challenges I see is that it’s so hard to share data across companies.

SAMA: Are there any observations on who typically leads that so-called ecosystem to create a common data lake? Do you sometimes see a supplier that takes that on for the manufacturing company to help pull all these disparate entities together?

JVW: It’s typically a manufacturer, but wherever the supplier has the scale I don’t see why they couldn’t take the lead in their specific swim lane. 

SAMA: We teach our customers to say, “It takes a village to solve the problem, and if you can become the leader of that village, there’s a lot of value.“

JVW: I think that’s the next frontier: How do you digitize the value chain and start working with your suppliers and working with your customers to take waste out of the system looking holistically? Whoever can lead that ecosystem is in a pretty interesting position.

SAMA: Say I’m the strategic account manager for 3M going into a factory and trying to bring value to them. Any advice you’d give? 

JVW: First, I think it’s so much easier to do that if you have a business model or an offering where you’re a solution provider versus an individual product provider. That’s one piece. And then the other piece is, map out the customer journey associated with your product or solution, and what that looks like — where the frictions or pain points are along that journey. If you don’t have that, then you’re not going to be able to add value to your customer. Having that approach embedded into the strategic account playbook becomes really valuable because it allows you to have a different level of discourse with your customers.

SAMA: Say you’re a SAM who just got assigned to a new customer. Is there a typical spot that you might want to start inside your customer, or is that really company by company, organization by organization?

JVW: It is very case by case. Some organizations will have a manufacturing strategist. Some may have a digital organization already set up. Some may be decentralized, with the plant manager driving the decision making. Some may be more centralized. That’s why you need to be able to map the organization of your customer and understand where the decision makers are.

SAMA:  Typically, when this first meeting happens, is the customer expecting the supplier to bring people that have subject-matter expertise? 

JVW: Yes, you can also look horizontally — because you may not have the whole scope of technology required to solve this pain point.

You need to be humble in recognizing that you may not have the capabilities to solve the entire pain point, and so you may need to work with your peers to build a solution that you can then bring to your customer.

And if you’re the one actually orchestrating that, it can be really value-additive, versus just bringing your customer a specific technology.

Say for example that you have the best programmable logical controllers, and then maybe you partner with the analytics provider who does the analysis on top of that, and then — oh by the way — you partner with a robotics company. I haven’t seen many suppliers do this effectively, but that could be very differentiating to be able to offer as the supplier. And then, by the way, you’re the one with the overall solution, versus [just being] one piece of it. That’s a much more powerful position to be in from a margin standpoint. 

You can find BCG’s how-to guide to digitization here. Parts two and three can be found here and here.

August 20, 2019August 20, 2019customer co-discovery, Digital transformation, Ecosystem management, Industry 4.0, Moving from products to solutionsLeave a comment
Industrial goods, Strategic account management program organization, Uncategorized

Eleven pieces of wisdom on digital transformation, from HP

Is there a business challenge today that’s both more important, and yet less understood, than digital transformation? Back in July SAMA and ERP software provider QAD hosted a full-day symposium featuring senior leaders discussing how to drive digital transformation at their own companies and at their customers’.

Here, SAMA offers ten important truths about digital transformation from Volkhard Bregulla, VP for Global Accounts Germany and Central Eastern Europe at Hewlett-Packard GmbH. (Click here for the first part in this series.)

First-mover’s advantage is real and growing. The speed of adoption is taking place faster than ever, with new technologies emerging at unprecedented space. This is expanding the gap between the leaders and the laggards.

Business outcomes are the key. Entrenched customers aren’t going to get excited by new digital technologies for their own sake. To hook them, you need to connect the technology to the KPIs they care about. To produce a digital transformation in the manufacturing space, customers need to see double-digit improvement in those critical KPIs.

Start with predictive maintenance.  In manufacturing, this is by far the easiest place to start implementing digital transformation. First, it’s easy for the customer to understand. They want to push their machines as hard as they can without risking them. Second, with the wealth of data available, the algorithms are already quite strong. Third, there is enormous money to be made from optimizing asset utilization and predictive maintenance.

Data must be integrated horizontally. Simply capturing data isn’t enough; you have to be able to integrate it across all points on your value chain. 

The analytical engine has to sit as close to the process or manufacturing line as possible. Mission critical decisions need to be made in microseconds. That’s why Gardner predicts 70 percent of all processing power will move out of the data center in the next five years. Be prepared.

Find the right people to talk to. If all that processing power is leaving the data room, your SAMs need to learn how to have different kinds of conversations (around KPIs) with different customer stakeholders. (HP estimates that each year two percent of its budget moves away from the people at the customer with whom the company currently engages.) Instead of focusing on the “manager of data,” Bregulla recommends concentrating on the “manager of results.”

Defend, extend, create, disrupt. This is the framework executives use to conceptualize their business. When your SAMs are talking to these people, they need to frame their conversations along one of these four quadrants and be prepared to place your solutions in the context of one of these scenarios.

Bandwidth is the most precious natural resource of all time. The amount of processing power required to run AI and other technologies is astronomical. There will always be computing bottlenecks somewhere; you need to move them around creatively and efficiently.

Your SAMs will need to be trained differently. At HP that means putting its top client executives through a customized, 12-week “Digital Master’s” program that teaches them the fundamentals of driving digital transformation. They are also training these executives on how to sell to the line of business, rather than to IT. It’s a matter of zeroing in on the right customer stakeholder, identifying the KPIs that these stakeholders care about, and connecting it to the right part of HP’s portfolio.

Invest in partnerships to build real-life use cases. Many customers, especially in manufacturing, are inherently conservative. It is hard to sell them on digital transformation with a PowerPoint, no matter how persuasive it may be. That is why HP has invested in partnerships that put HP technology inside actual customer sites. It gives HP’s SAMs and salespeople not just real data (which is huge) and real use cases, but also a real-life setting in which customers can see HP’s digital solutions in action.

Establish a clear, simple process for pushing digital transformation with customers. At HP, it’s the following: (1) Establish credibility on the KPI level (see “Find the right people to talk to” above). (2)  Establish what you can do for the customer to impact their critical KPIs. (3) Offer use cases. (4) Establish partnerships within the ecosystem.

Wish you could have engaged with Volkhard in person? SAMA’s Executive Symposium series offers SAMA corporate members the chance to learn from senior SAMs and SAM program leaders facing the same challenges as you. To learn more about the benefits of SAMA corporate membership, contact SAMA Director of Membership & Strategic Accounts Chris Jensen at jensen@strategicaccounts.org or +1 312-251-3131, ext. 10.

September 20, 2018August 20, 2019Digital transformation, Industry 4.0, SAMA symposiaLeave a comment
Strategic account management program organization, Strategic account manager skills and competencies

Industry 4.0: How one company is tackling digital transformation at its customers

By Nicolas Zimmerman

Editor-in-chief

SAMA

It’s widely accepted that the introduction of new technologies like blockchain, Internet of Things, augmented reality and others is changing business faster and like never before, creating uncertainty for customers and suppliers alike. But if you’re unnerved by this state of uncertainty, good news from the front lines: Your customers are looking for help navigating the complexity of digital transformation, and if your company can provide answers, you’re going to be sitting pretty.

At a recent SAMA Executive Symposium, Anton Chilton, the global head of field operations for manufacturing software company (and symposium co-host) QAD, offered a comprehensive take on his company’s approach to dealing with the changes wrought by new digital technologies. (QAD makes ERP software for manufacturers.)

He outlined three of the biggest high-level challenges facing his customers:

  • Industry disruption. For evidence of how quickly industries can transform, look no further than the automotive world, once thought to be immune to disruptors due to its astronomical barriers to entry. Not only has Tesla advanced to become a major player in just a few short years, but Dyson (yes, that Dyson) is working on an electric vehicle.
  • Smart manufacturing. Technology isn’t just changing businesses themselves but also how customers conduct business — from how they interact with their supply chains to how they optimize their shop floors.
  • Geopolitical turmoil. From trade wars to Brexit, the world is seething with change and uncertainty. If you’re a global manufacturer, how do you decide where to invest?

What does this mean for you, as a strategic supplier? Chilton suggests that adaptability will become (if it hasn’t already) the new competitive business advantage. He suggests four key traits to maintain your organization’s agility.

  • Ability to read and act on signals. The time to react to changes is growing ever-shorter, so you have to be highly focused on the external world. Look at what’s happening in the world around you — with your customers, with their customers, with their supply bases and with your competitors — and be prepared to act on those signals.
  • Ability to experiment. Much of the potential business value from digital transformation is, as yet, in the realm of the imaginary. The use cases may yet not exist. But you don’t want to make a big bet on something that *might* work. The ability to experiment, and the willingness to “fail fast,” is critical.
  • Ability to manage complex systems. Because of the interconnectedness of everything, you will increasingly need to excel at knitting together multiple systems, from multiple parties. Only the most nimble suppliers will be able to pull this off successfully.
  • Ability to mobilize. With the pace of change accelerating, none of the first three traits will “play” if you can’t translate strategic thinking into action and deliverables.

For QAD, this has created a host of new business model imperatives. As Chilton says, these things have always been true. But they’re “even more true now.”

  • Results-oriented. It’s easy to get excited by new technologies, but you can’t forget that they have to lead to good business outcomes. Don’t be seduced by tech for tech’s sake.
  • Rapid response to change. If new technologies are transforming your customers’ businesses (and they most certainly are), you can’t take five years to roll out a new project. 
  • Risk & change management. So many big capital projects run over budget, run late or fail to deliver the promised business benefits — sometimes all three. More and more, customers will be looking to their strategic suppliers to help them both manage risk and manage change.

Research reveals that the only way to grow business with existing customers is to bring them new ideas and fresh perspectives. That is the strategic account manager’s raison d’etre. Good SAMs are experts at taking their company’s existing capabilities and leveraging them to solve their customers’ problems. But increasingly, customers look to their suppliers for a distinct point of view on digital technologies whose business impact may be an open question. Suddenly, a SAM can find himself in uncharted territory.

So how does QAD attempt to navigate this untrodden train? Chilton’s team puts emerging technologies in one of four buckets, based on how close they are to having real-world impact: (1) research/monitor, (2) educate/evaluate, (3) innovate or (4) productize. Chilton likens the framework to a “virtual time machine,” which helps QAD keep tabs on emerging technologies while staying focused on the ones most likely to yield dividends.

Of course, it’s still up to the SAM to ask probing questions with her strategic customers to tease out which emerging digital technologies could be leveraged to solve a customer’s business problems.

“It’s a difficult conversation to have,” Chilton admits. “You don’t want to give the impression you’re out there just fishing. You don’t want to seem clueless.”

This new paradigm makes it more critical than ever to find and develop SAMs with the right blend of traits to have productive, probing conversations with customers around future challenges.

What follows are the traits Chilton prioritizes when adding new talent to his strategic accounts team. For the most part, these attributes have always been important to SAM, but they’re doubly so now as interactions shift from the known to the unknown.

  1. Curiosity. If SAMs are not naturally interested in how their customers are using new technologies, they aren’t going to be able to harvest insights on QAD’s behalf. More than ever, they also need to be curious about the technologies themselves. What is it, how does it work, what are some examples of how it could be used? These insights can help QAD build a roadmap.
  2. Key observation skills. Who at the customer is using these new technologies? Whose job could potentially be changed or improved with the use of new digital technologies? What kind of things are they being used for?
  3. Networking. There are an increasing number of key decision makers at our customers. In the past, QAD always worked with the IT group, but that’s changing and expanding. Especially with big digital transformation projects, many more people need to be involved than in the past, so SAMs have to seek out and cultivate relationships with the customer stakeholders who may be impacted by new digital technologies.
  4. Collaboration. This means both internally and at customers. No one is going to own any “digital transformation space,” so there will inevitably be third-party providers bringing solutions you will have to introduce and integrate at the customer. Collaboration will be become even more important than it already is.
  5. Courage. It’s hard to sit in front of a senior customer and navigate a successful conversation in areas in which you’re not an expert. And with so many emerging technologies out there, this will be an inevitable condition of many customer conversations. Self-confidence will be absolutely critical.
  6. Coaching. You grow existing accounts with fresh ideas and by convincing the customer you’re the only company that can solve a given problem. Coaching the customer (as well as internal stakeholders) will only grow in importance.

Chilton ended on a note of fierce optimism. While digital transformation may be disrupting industries, including yours, the fact is that no one has the answers. Your customers know this, and they’re looking for help from their suppliers. If you can empower your SAMs to help customers navigate this uncertain time and start developing answers, your company will be primed to take advantage of the uncertainty created by digital transformation.

Wish you could have seen Chilton speak in person? SAMA’s executive symposium series is open to all SAMA Corporate Member companies. Want to become a member? Contact Chris Jensen, SAMA’s Director of Membership & Strategic Accounts, at jensen@strategicaccounts.org or +1 312-251-3131, ext. 10.

July 30, 2018July 4, 2020Digital transformation, Disruption, Finding and selecting the right talent, Industry 4.01 Comment

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