Avoiding the Anti-Innovation Trap in Business
As part of the work that we do at Kognitiv Spark, we get to interact with many industrial engineering firms, either as customers or partners.
By nature, industrial engineering requires significant on-site travel for its staff. As an example, an engineer that builds the plans for a new water treatment facility is typically required to travel to its construction site several times (inspections, troubleshooting, change requests, project management, etc.).
You could be forgiven for thinking that any technology that helps make this engineer more productive or cut a few avoidable trips would be warmly embraced by any engineering firm. Think again!
Here are comments that we heard from engineering firm managers:
“I wish I had access to this technology a few years ago. Traveling less might have saved my marriage. The problem is that if we travel less, we charge less to our customers too.”
“Travel is a positive expense for us. We charge full hourly rates for time spent traveling.”
I find these comments fascinating as not only do we hear them often, but they are also somewhat in contradiction to each other. Engineering firm managers typically regard innovations as beneficial if they can allow them, their team, or their organization to increase efficiencies and reduce time spent traveling. Yet, they struggle to adopt new technology due to a fear of it altering the way in which they generate revenue. What we’re currently witnessing, is a lack of alignment between how industrial firms generate value for their customers and how they are compensated for that value.
To further our example, let’s assume that building the plans for the new water treatment plant and overseeing its construction from an engineering perspective is worth $500K. That means that $500K is the maximum amount that this customer is willing to pay to the engineering firm. The traditional way for the engineering firm to get paid is at a pre-defined hourly rate. If the firm charged $250/hour (including time spent traveling), it could theoretically work and bill up to 2000 hours.
However, in its truest sense, the added value a firm brings to its customers is the ROI generated by getting a job done, and the time required to complete said job. By adjusting the traditional way of thinking, there is untapped potential in providing faster speed to issue resolution or project completion. This has a direct and immediate impact for your customer by providing more while simultaneously elevating your unique offerings exponentially.
Interested in learning how an industrial service firm implemented MR remote support (RemoteSpark) to deliver guidance to their technicians located on client sites? Read this case study. Spoiler: they reduced customer downtime by 30% and solved 60% of issues on client sites without sending a senior resource to the job site.