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 find these comments fascinating. 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. However, these benefits clash with their current business models, creating an anti-innovation culture.
Another way to look at this is that there’s a lack of alignment between how industrial firms generate value for their customers and how they are compensated for that value.
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. Faster speed to issue resolution or project completion equals more value for the customer.
To further our example, let’s assume that building the plans for the new water treatment plan and overseeing its construction is worth $1M for the customer. That means that $1M 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 4,000 hours.