Interview to Luis Díaz, Digital Transformation Manager for Alfa Laval Group
Part 2: The solution.
We continue talking with Luis Díaz, Digital Transformation Manager in Alfa Laval about Connectivity.
CPA: What was the essence of a solution? How do you define the value generated in order to create more products to monetize?
LD: Its essence is the value it delivers, you need to translate that to some sort of monetary equivalent and discuss it with the buyer. If you are really delivering a “true value” it will probably be an easy and pleasant discussion and you will be helping your counterpart to create a good case that will support the project. Remember that we all have managers that will eventually have to approve where do we spend the money of the company.
CPA: The product or service will be easy to monetize if the value is tangible and measurable; based, for example, on savings or increased sales. But if the value is intangible… how do you establish a fair price?
LD: If only I knew… There is not a single answer to that, in many cases as you say it is easy to calculate. Let’s go back to the predictive maintenance example above, if we are going to extend the service interval by 10% then the calculation is obvious, but what about the second customer? How do we quantify “reducing the risk of unexpected downtime”? The only way I have been able to answer this has been through an open and honest dialogue with the customer, for instance if the customer just suffered a very painful unexpected stop last week then value will be obvious, but imagine they never suffered from unexpected downtime? My house has never burst in flames and I still have an insurance…
CPA: How do you test your customers to understand the alignment between price and value?
LD: I’ll refer to my previous answers, what has always worked well for me has been an open and honest dialogue with the customer. Don’t hide your agenda, you are there to do business, that is obvious to everyone, but you won’t sell anything if you don’t deliver value, that’s also known. Simply be honest, to your customer and to yourself. And ask the right questions!
CPA: Do you work using any methodology as trial – error, or pilot phases or Project milestones?
LD: We do trial and error, we do pilot testing, we do experiments… And we are open about it, internally and externally, so we are sure we have and we create the right expectation level.
My advice would be that it is never too soon to give it a shot. Think MVP (minimum viable product), then challenge it and make it even “more minimum” and then do it again, and again… until you end up with something you can try almost immediately. Then the cost of failure will be very little while the potential for learning will hopefully be significant, if that is not the case then you have designed the experiment wrongly.
CPA: Which are your prospects in every phase?
LD: Educated speaking partners normally offer a good learning experience but newcomers tend to think more out of the box. We try to keep a good balance.
CPA: How do you plan an offer when it is for something new, with no previous cost history or none of customers already paying for it?
LD: If you understand your value proposition it should not be too complicated to come up with a starting price. It might not be the right one, but it probably won’t be too far off.
CPA: What is your advice for those starting now with a similar adventure?
LD: I’ll go with the typical ones, listen and dare to try to do new things, don’t be afraid of failing but be afraid of not doing anything. And, of course, always keep an eye on the risk you are assuming, risk evaluations are critical when experimenting in order to avoid getting into trouble.
In my case, it helped me a lot to talk about the project with anyone that would be willing to listen. It is amazing how many good advices one can get, even from the most unexpected ones.
CPA: I have heard you live in Denmark being from Galicia. Have you got homesickness?
LD: Denmark is a great country. As a young family Denmark offers most of what we need and a bit more but one thing I will tell you, it is not the food that keeps us there!
Webinar offered by Luis Diaz about Connectivity. Glad to assist on April 2020.