Cubbies Edge Giants, Despite 2 Bonds Round-trippers

For the 16th year in a row, the nPhase Smart Services Summit culminated in a rooftop view of Wrigley Field (see inset), sans precipitation I might add. Barry 'roid-rage Bonds crushed two homers to inch within 2 of Hank Aaron's record, but Summit delegates were still treated to a 9-8 home team victory.

The Summit itself was attended by a record-high 120 people, representing such companies as ABB, John Deere, Siemens, Electrolux, Air Products, Diebold, Xerox, and Bausch & Lomb. Too many nuggets of wisdom to share in one blog post, but here are a couple highlights:

• Metric that Matters. Equipment uptime/availability -- the percent of scheduled production or calendar segment a machine is available for production -- tends to dominate discussions about the Smart Services value proposition for equipment owners/operators, but Reid Jaiko of ABB Robotics reminded us that availability is just one of the three building blocks of Overall Equipment Effectiveness (OEE), along with Performance and Quality.
  
  Performance is the quantity of output produced during the machine's running time, versus the potential quantity, given the designed speed of the equipment. And Quality is the amount of good products versus the total amount of products produced. So, for all you quant-jocks out there, here's how the OEE calculation breaks down:
  
  Availability Rate = Operating time - Downtime / Total Operating Time
  Performance Rate = Total Output / Potential Output at Rated Speed
  Quality Rate = Good Output / Total Output
  
  OEE = Availability Rate x Performance Rate x Quality Rate
  
  Why is OEE important? It has a direct and substantive impact on the operator's profits and ROCE (return on capital employed). So if OEMs can demonstrate Smart Services' impact on OEE to their customers, game is on!
  
  
• Smart Services on the chasm cusp. Some of you might be familiar with or even devoted followers of Geoffrey Moore's "crossing the chasm" concept, which he first popularized in his 1991 book. As Joan Waltman, president of QUALCOMM Wireless Business Solutions, shared at the Summit, the basic concept is that with any new disruptive technology, there exists a daunting market-penetration gap between early adopters and what Moore calls the early majority. While you might not realize it, if your company has already adopted Smart Services, you are perched advantageously on the near-side of this chasm. And if your company hasn't yet adopted Smart Services, you're somewhere between just-across-the-gorge and six-time-zones-away.
  
  If the latter describes your company, what can you do about it? Joan aptly quoted Moore in her presentation, saying, "When confronted with market disruption and technology revolution, your biggest challenge is letting go of comfortable old behaviors before they kill you."

If you missed this year's Summit, you can rest assured along with all the other Cubs fans, that there's always next year. In the meantime, you'll soon be able to check out more of the highlights on nPhase's Web site.

Smart Services Adopters are Bullish on Brand

If product support is going to fulfill its promise of providing an OEM with new competitive advantage, then the brand must embody the service message. To make certain that a new Smart Services offering is favorably received in target markets, most OEMs would be well-served to organize a cross-functional brand strategy team – comprised of representatives from marketing, service, and sales – tasked with determining the most effective packaging and positioning.

Here are a couple of tactics this brand team should consider:

1. Tap R&D budget: Some level of investment will be required to define and execute a Smart Services branding strategy. Marketing dollars are the obvious source of funding, but increasingly, leading OEMs are claiming research and development funds that historically have been reserved for product-related initiatives.
   
   How can this approach be justified to a CFO? In essence, Smart Services can be “productized” and heavily leveraged to drive additional product sales. And in product categories approaching commodity status, investments in new product features and capabilities will yield far less returns than investments in new higher-margin, faster-to-market, and more competitively differentiable service offerings.
   
   
2. Create unique Smart Services brand: Most OEMs have been selling numerous flavors of service agreements for years, from extended warranties, to preventative maintenance, to dedicated call center and field service support. Among these legacy service approaches, Smart Services stand apart, able to deliver unprecedented improvements in asset uptime, business continuity, and overall performance within the asset operator’s enterprise.
   
   But one of the obstacles is that over the years, product-driven sales representatives have conditioned the market to under-value post-sales service by gifting service offerings to prospects during late-stage negotiations in order to ink a product sale.
   
   To differentiate Smart Services from vanilla service agreements and to begin to undo end-users’ misperception of the value of service, OEMs must create a new premium brand for their Smart Services offerings. Many leading OEMs have created clever acronyms, logos, and department names for their Smart Services programs.
   
   ABB Robotics uses "ARM," which stands for ABB Remote Monitoring. Respironics chose "Respi-Link" for its smart service solution. And Gardner Denver is positioning its "ESP 20/20" offering as perfect machine visibility.
   
   Let’s face it. Smart Services are not your grandfather’s maintenance agreements. Build a bold brand and stand by it.

Where's your company at in the Smart Services branding process? Post a comment and share your marketing lessons learned.