Interview to Luis Díaz, Digital Transformation Manager for Alfa Laval Group
Part 1: The first trials.
Now that 5G is to be launched, to talk about connectivity in the world is a trend. For that reason, many companies are doing efforts not only for digitalizing themselves, but for transforming digitally their customers, preparing connectivity solutions for them.
Such an attractive offer with a clear value behind looks easy to accept by clients, however, this is not so wished, as represents processes very difficult to adopt or requests additional resources or are huge challenges.
In real, the value is not so clear as does not face, at least in an obvious way, the customers pain points, these ones that need to be solved urgently due to criticality or any harmful repetitiveness.
To talk about it, I have had the pleasure to interview Luis Díaz, Digital Transformation Manager in Alfa Laval.
CPA: Luis, you are fully working in offering connectivity solutions to your customers. Although I know that this is still an open question, similar to ask for internet expectation 30 years ago, what do customers wait from connectivity today?
LD: When we began working on Connected Services we raised the same question: “what do we expect from Connected Services?”; when, in reality, the right question was the other way around “how can we use connectivity technology to solve our current problems or satisfy our current needs?”. It might sound like two similar questions, but they are radically different, one starts with the tool, i.e. connectivity, the other one with our pain points as you have mentioned.
The truth is that, in many industries, we are only starting to understand what Connected Services can deliver to us. There are other industries that are far more advanced, like the aviation or the power generation industry. We can (should) learn from them, but we need to be aware that our pain points might not always be the same.
CPA: Could you share how did you developed your first solution of connectivity V1? How was the launching?
LD: It was a catastrophe! We (the team that is working on this) come from the mechanical world and are used to selling and buying things that we can touch and feel, tangible assets if you may. When we got our “connectivity tool” from our Automation Development department we thought it was a fantastic product that we could sell straight away. After some months promoting it, even giving it away for free at the beginning in a test & buy model, we realised that customers had little to no interest on it. We then realised that it was only a fancy tool and, as such, it didn’t necessarily deliver any value on its own.
We decided to come back to the drawing board and rethink our strategy, we began building our new services not starting with the tool (i.e. connectivity) but starting with our customer’s pain points, “forget about connectivity” we used to say, “focus on the value you are trying to deliver.
CPA: Why do you think this first solution failed? Which was the customer expectation not achieved?
LD: It basically didn’t deliver much value to the customer. It was new, interesting, pretty in a way, but it was also useless because we didn’t give it a purpose.
CPA: Was it key to establish a value proposition with more detail, better defined or just different?
LD: Absolutely yes. When we understood that, we began looking at what we called “customer value”, i.e. what value does this tool deliver to this customer, the project changed direction radically. We stopped talking about “connectivity” or “connected services” and we began talking about “uptime”, “service cost”, “yield”, etc. We had fantastic customer meetings during which we didn’t talk once about connectivity.
I still remember one meeting with a service manager of one of the largest food companies in the world. He was talking about the cost of downtime and how expensive unplanned stops were for his production centres. We left that meeting not having said a word about connectivity technology. Some months later I sent him an email “we have been working on what you said about downtime, this is what we have thought…”. I sent the email on a Friday evening, last thing before I left the office, I did not have to wait much for his reply, Saturday morning I got an email from him inviting us for a meeting. Bingo!
CPA: How do you think you could better analyze what is real value for customer? Is it so hard to detect? Where should you your eye on?
LD: That is quite a tricky question Cristina, most of the time we are not that open about our real needs and customers are no exception, and even if we wanted, many times it is not so easy or obvious to know what we really need. I like to use a well-known interviewing technique that consists on asking about “last time that”: “last time they had to unexpectedly stop the factory”, “last time that a production problem kept him awake all night”, “last time that…”. Most of the time the answer will lead you in the right direction.
And the ultimate proof that you are delivering value to a customer, is when you get the second purchase order. The first one is important, but we all have bought something we regret to have bought, when someone buys something twice it is because they really like it.
CPA: Which were the different phases of your learning process?
LD: It is important to listen. I stopped preparing presentations for customer meetings because that normally ended up in one-way communication. Instead of that, I now prepare some opening questions and then try to have a good dialogue. Not sure I have answered your question
CPA: How do you extrapolate a defined solution from one industry to another, or from one customer to other?
LD: It is normally not complicated to find links between customers, e.g. they work in the same industry or are based in the same region. That can already give you an idea of what probably interests them, that works probably 50 to 75% of the time. But you have to keep your mind open, let me give you an example, two potato starch industries placed in the same region can have absolutely different pain points, one can have some extra capacity and be focusing on reducing their costs while the other one might have had a recent problem with one of their lines and need to operate at 125% of their capacity thus be really focused on uptime and yield. Consider now in this example that we want to offer a predictive maintenance system to these customers, in the first case we will talk about extending the service intervals (thus reducing service costs) while in the second one we will focus on avoiding downtime by using the early warning notifications of the system to plan maintenance well in advance and avoid expensive unexpected downtime.
A pleasure to have shared a dinner with Luis and other professional from industry.