Reengineering Industry for a Digital World with Rockwell Automation

Sarah Berger

7.06.2017

Recently, we had the opportunity to sit down with with Eric Rehl, Director of Digital Business at Rockwell Automation, to discuss their digital transformation journey as part of our Solstice FWD Webinar Series. It was a candid and jam packed 30 minutes full of great insights such as how to align business units to drive organizational change, keys to identifying the right digital investments, the ROI of digital transformation and more.

If you weren't able to join us, watch the full webinar here, or read the transcript below.

Jared Johnson: Welcome to today's webinar: Reengineering Industry for a Digital World. My name's Jared Johnson, and I'm a Principal Digital Strategist here at Solstice. For those of you who aren't familiar with Solstice, we're a digital innovation firm that builds digital solutions for Fortune 500 enterprises across various industries. And today I'm very thrilled to be joined by Eric Rehl, Director of Digital Business at Rockwell Automation, a leader in industrial automation.

Before we get started, I'd like to have Eric introduce himself and give you a bit of background on Rockwell.

Eric Rehl: Thank you, Jared. As Jared said, I am the Director of Digital Business with Rockwell Automation. I've been working in the digital space for 20+ years, so everything from managing web portfolios to marketing automation, to application development supporting, and customer experience. Rockwell Automation is the world's largest company dedicated to investor automation and information. We've been in that space, and leading and innovating in that space for more than 100 years. If you're not familiar with Rockwell Automation, you may know us by our primary product brand, which is Allen Bradley, but basically we're in the business of helping companies advance and optimize their plant and manufacturing capabilities, both through hardware and equipment, as well as through software analytics and intelligence and services that wrap around that. We're about $6 billion, 22,000 employees, and operating in more than 80 countries.

Jared Johnson: Excellent. Thanks, Eric. For the next 30 minutes, Eric and I are going to be discussing both the challenges and the opportunities that industrial organizations are facing today. This is due to the on slot of digital technologies and a rise in customer's expectations. Today we're going to dig into tactical ways in which organizations can reengineer their enterprise digital strategy across three areas: customer experience, technology, and processes.

So let's get started with customer experience. There's a really powerful quote that we've heard from Forrester: that one million B2B salesmen will lose their jobs by 2020. I'd love to get Eric's thoughts on this stat. I typically see that organizations don't want to lose the personal touch that their salespeople bring. At the same time, they need to balance the pressure of self service. With Rockwell offering millions of configurations, how do you see yourself striking the balance between self service and a B2B sales approach today and in the future?

Eric Rehl: Sure. I think you're certainly going to see less. I don't know what the number is, but industry will bring forward more digital capability and engagement for our customers where they can do more on their own. You're going to see some of the activities that salespeople traditionally did, move toward a more self service model or a direct buy model. That said, I'm less concerned with reducing the number of salespeople than I am with making sure that we're positioning them and enabling them to have the right conversations with our customers, and add the value that our customers are expecting from them.

What we've seen out of our customer base in terms of their expectations of what they want from Rockwell, and particularly in sales, is going from us at Rockwell knowing our products and pitching those to them, to understanding their industry, to understanding their applications within that industry, to knowing them not only as individuals, but having intimacy with their company and what their needs are, and being able to partner with them and lead them in ways that are going to help them optimize their operations and their own capabilities. To me, it's less about how do we reduce the number of salespeople, but how do we leverage digital and emphasize on customer experience so that we can engage customers in ways that they want to engage with us. This way, we can enable them on their terms on demand, and enable our sales people to do what is going to add the most value for our customers and for Rockwell, and to be having the right kinds of conversations.

Rockwell differentiates on its people and its domain expertise. It's like that now, it has been like that, and it is always going to be like that. A real value add for our customers is around the expertise that we bring to bear for them, to help them get better and improve. What we want to focus on digital efforts, is how do we strike a balance between enabling people to be able to maximize that, but also allowing the customers to engage with Rockwell in their terms. That's where I think right balance is.

Jared Johnson: So would it be fair to say that you're using digital to differentiate and augment your sales force, but not to replace them?

Eric Rehl: Correct. I think it's to enable our customers to really kind of engage with Rockwell on their terms. That may be through people and we want digital means through which they can do that, or they may want to do it on their own. The reality is that with people and domain expertise being a key differentiator for us, it’s expensive. So how can we scale that? Digital enablement of environments and capabilities to be able to scale our domain expertise is a potential real value add for both Rockwell and our customers.

Jared Johnson: That's really interesting. There's another stat we've heard that 42% of buyers would rather buy direct now and another 20% are willing to pay a premium for it. I'd love to hear your perspective, Eric. Do you agree or do you see a similar trend within Rockwell, and if so, or if not, what are the factors that you do see going into businesses being willing to pay a premium price?

Eric Rehl: Sure. I agree that there's certainly a space within the automation industry and I think manufacturing in general for digital direct buying models to replace some of the more traditional market access methods that we use to deliver our products and services today. That said, it's not going to be everything. I think what the real differentiator is going to be, or needs to be, is how do you make yourself easy to do business with? In certain ways, that is through the enablement of the direct buying model. We know that works for some aspects of our business. We are seeing players within our industry do that. Our distributors particularly in North America are doing that, and so we know that there's a model there that supports direct buying.

But the real differentiator is going to be the concept of being easy to do business with, because people's time and the amount of work that they have to put into doing business with you has value, and it has money. We had seen statistic after statistic, or survey after survey talk about how customer experience has monetary value and you're seeing a lot of companies and CEOs prioritize that from an investment standpoint.

Easy to do business could mean direct buying. It may mean shorter sales cycles, and how do you leverage digital enablement to be able to shrink that sales cycle, give people access to information on their terms and on demand. It may mean efficiency in how you deliver your products and services, or how your customers consume them, and how does digital fit into that. So a lot of what we're trying to do in terms of the advancement of some of our business models is to leverage digital in terms of how we bring those to market, and how we deliver them. Things like service base, subscription based offerings, service based offerings, things that are more likely to be consumed digitally and activated digitally. They add significant velocity into your sales cycle to be able to deliver those things versus the way we used to do them. We certainly want to look at how we can differentiate to our customers by taking advantage of those things.

Jared Johnson: So it's almost as if when you think of customer experience, you're thinking time equal money and if you can save your customers time, you can price in that time savings into a premium price that you could charge.

Eric Rehl: Absolutely, so I think, to answer your question, being easy to do business with has monetary value, and we do think customers will pay a premium for that. It is worth it to them to not have to worry about if you're going to be able to fulfill their needs or if they're going to have to do more work than they should to consumer products and services.

Jared Johnson: Excellent. Something Solstice talks a lot about is that the previously long held consideration sets that businesses have used are changing. Your greatest competition is no longer what experiences your competitors are offering, but what's the best experience that your customer had previously. They're not comparing you to necessarily another business like you. They're comparing it to just whatever business gave them a good experience. I'd like to talk a little bit about what it takes to create a great experience, both from a front end experience and in the backend.

We know that backend work is notoriously time and cost intensive, so what's your perspective on transitioning some of your backend systems to the cloud? Is there pressure to do that in terms of being able to move faster and deliver that differentiated digital experience that you mentioned? Are cost savings driving that? What was the vision process look like when you're thinking about moving backend systems to the cloud?

Eric Rehl: Sure. I would back up a step in that. Before you are going to transform anything, or transition anything, you need to develop an intimate understanding of your customers, and not just what their pain points are, but what they feel their opportunities are to perform better within their own operational context, or what they're looking for from you as a company to deliver that customer experience for them. So before we even start thinking about how am I going to evolve my backend systems, or what am I going to do from a front end standpoint, developing and pushing priority on the understanding of your customers' needs and wants I think comes first. There's no substitute for that. It can save you quite a bit of time, energy, and frustration in terms of investing in the right thing versus the wrong thing.

That said, what Rockwell is finding in our own digital transformation is that there is only so far you can get on the front end from a transformation perspective without investing in the backend and transforming that. Really this comes down to, at its most foundational level, to data or information more broadly. The quality and the sustainability of the front end customer experience that you deliver to your customers, is largely a function of the quality and the availability of the data to inform that and drive it. When you think about not only offering them something that's easy to use from a digital perspective, but it having material value to them in terms of being personalized, in terms of being predictive and proactive, that's when you start to get into differentiated space of delivering that customer experience. Data is an absolute requirement for informing that.

That said, our early priorities from a digital transformation perspective at Rockwell are around three things. They're around data, both product information and customer data, and making sure that that's in a state of quality and availability that can really be leveraged with asset to the company to differentiate us in terms of our customer experience, but also help monetize our products and services in terms of how they can leverage that information.

The second is around identity management, which is how do we make sure that we understand our customers at a very personal level in terms of who they are, what role do they have within their company, their relationship to Rockwell and what they should be entitled to do with us, and how we can help them in their specific role to be more effective and be more efficient and such.

Then the third is that front end. It's how do we take the touch points and the engagement that they have with Rockwell, and make sure that they are integrated and they are connected, and that they are personalized to the degree that we can do that across their full experience with us. What you see in a lot of industrial companies, and a lot of companies in general, is a category of experience around their buying journey. Then you may see a category of experience around how they buy from you. Then you see a category of experience around how they consume your product once they become a customer or how you support or sustain the relationship with them. The problem is that those are often business units or function led touch points, and they're not connected or integrated.

Our emphasis and priority from a front end perspective in terms of digital transformation is to provide connectivity across those touchpoints and experiences, as our customers move through the full life cycle of Rockwell. As they mature in the relationship with us, and we engage with them over time, each step of their relationship with Rockwell is informed by the prior experiences that they've had with us, online and offline. In the pursuit of being easy to do business with, digital is all about reducing the burden of engagement that your customers have in terms of engaging with you as an industrial supplier. What we see in a lot of industrial companies today is that we're doing things separately and in silos, and we're actually adding to that burden of digital engagement for our customers.

Our priority at Rockwell is to remove that and make some early investment in at least connecting and consolidating that full life cycle digital experience. So it’s data, personalization, and then how do we make it easier for them to engage with us across the full life cycle.

Jared Johnson: So how would you describe that connective tissue across that holistic customer journey? You're mentioning that there's the buying journey, the actual buying process using Rockwell's offerings, and then the maintenance journey, and then kind of all looping back again. To make that experience more holistic, is that a matter of certain roles handling that that didn't exist in a more siloed organization, frequently marketing in silos from products or from sales, etc. What is making that experience more connected? Is that a matter of offering more tools to your customers? Is that a role that Rockwell assigns to make sure that experience is more holistic? And how do you go from that siloed customer journey where you're hopping from one bucket to the next to having it be more seamless?

Eric Rehl: Sure. I think it's two things. The first is, and the way we articulate digital transformation at Rockwell, at least for our leaders and for the company when we try to explain what we're trying to do here is that it's two things. It's technology and tools, or platform if you will, of capabilities that enable the delivery of that full life cycle connected experience. Just putting some technology in place isn't enough. There's the organizational transformation that you have to go through, which means you have to begin looking at things like customer experience, and disciplines like information management as enterprise capabilities. That regardless of the manner in which a customer is engaging with Rockwell, we are driving forward a strategy and a platform that makes those points of engagement connected and consistent as they move across their full lifecycle.

At Rockwell, what we're doing is introducing what we call an Experience Management Platform, which is a set of technology that is intended to engage customers and be sort of their common access and engagement points across the many different digital touch points that they have with Rockwell. So we’re providing the company with an enablement capability through which they can deliver and manifest digital services, and the digital touchpoints that they have with customers, and have it delivered in a way that ensures connectivity across what previously would have been siloed touchpoints.

In parallel to that, it’s an organizational capability that is able to drive that out as that strategic differentiator for the company, and not just a platform that everybody consumes on their own terms, it also provides some intentional strategy and leadership in terms of how to deliver that or how to structure that in our customers.

Jared Johnson: Good. Great insight. Thanks, Eric. Let's move on a little bit to how technology is driving that change. We find companies are clustered on one end of the spectrum or the other. They're either vastly under utilizing technology or they've built up a labyrinth of an immense web of different technologies and systems, and now they're trying to streamline all of these systems that they've built. We can quote the Forrester Report, "Enterprises with more than 5,000 employees," which includes Rockwell, "Have over, on average, 275 front end websites and apps."

So Eric, my question for you is, how do companies move from these one off projects to continuous improvement when it comes to digital initiatives? What does that transition look like going from one off to continuous improvement and what are the hurdles to getting to that?

Eric Rehl: Sure. For this I go back to the answer I gave to in the previous discussion: the reason that you see business units function spinning up one off solutions or siloed approaches to things is that there isn't that enablement platform there for them to leverage. Generally speaking, our experience at Rockwell has been that entities within the companies come looking for that enablement program or platform. We want to do this and we need this set of capabilities to be able to activate that. Before we started our digital transformation, that platform of capabilities wasn't there. So what do they do? They go off. We all do it. We all go off and we pursue the goal that we are intending to reach and we do it in a way that we can get it to the market.

So one of our approaches to alleviating that is doing what I talked about, which is creating that platform capability that takes the nuts and bolts out of the consideration that a silo or a business unit has to think about when they're going to deploy something to the market. So infrastructure, data, and customer experience strategy is already there for them. All they have to worry about is business strategy and activation of that, and how to operationalize it. They can do that within this experience enablement context and platform that we've created. That's again, both from a technology and an organizational leadership standpoint. That's one way we think we can reorient Rockwell's approach around how we take digital touchpoints to market, because we're taking some of the burden and the onus off of the prior silos that deliver that also.

One of the obstacles to that kind of thing though, is that everybody has their own budget. There's nothing like a checkbook that gets in the way of trying to be more enterprised in terms of how you go about some of these. So the way we've tried to alleviate that is connecting our digital business transformation initiative and the initiatives we're trying to drive through around experience management, around data, and around identity to business strategies that our business units have saying "We know you want to bring this digitally enabled product or service or capability to market, but to do that you need A, B, and C. You need data, you need a manner in which to get it to market and digitalize it, and then you need to understand who you're going to be working with." That digital enablement platform brings those capabilities to bear.

I keep bringing it up and I keep mentioning it, but it's hard to overemphasize how important that is to overcoming those obstacles, because it's ready for them and they can just worry about that strategy and activation rather than about some of those nuts and bolts of bringing something like that to market.

I think the last thing is that ultimately a lot of this has to do with culture change, which is a real tough nut to crack. That's where you really do need to go to your organizational leadership and try to get them to understand what you're trying to accomplish here and how impactful it can be to the business and that they need to support and endorse it and drive it down to their organization. That's a difficult conversation, but it really is kind of required to be effective in this regard.

Jared Johnson: Excellent. Thank you. There's two emerging technologies that I wanted to touch on in this conversation and we're ready to see them have a real impact. The first is the Industrial Internet of Things (IIoT), and even more recently, Conversational Experiences, things like chat bots, Amazon Alexa, Google Home, and Siri. What impact do you see these technologies having on Rockwell in the future and furthermore, if you're thinking about building some sort of conversational user experience, how would you go about identifying the right scope? I know you've talked a lot about holistically thinking about the customer experience. What is identifying the right scope for an emerging technology like a conversational user experience look like for Rockwell?

Eric Rehl: Sure. I think there's a couple things. The first comment I'll make is that we expect Conversational UX, AI, and things like that to have material impact on, not only the experience Rockwell brings forth for its customers, but on a differentiated product and service portfolio that we can have available for them. We have released a couple products into the marketplace already that leverage Conversational UX around analytics and understanding what is happening on your plant floor. Essentially what happens is that you connect the product to a series of machines on your plant floor, and then you can simply ask this product what is happening with machine A, what's happening with machine B, and it'll respond to you with sort of a voice prompt of its current status.

So that's sort of the thing I would consider to be an entry level usage of where conversational capability is going, but where I really see a value add from a digital customer engagement standpoint is around search. The more natural language oriented and conversation enabled we can make search, the faster and more effective it's going to be. To me this is all about what we talked about very early on in the session today, which is ease of doing business and low barrier to entry. How easy is it for me to work with Rockwell, use their products, and engage with them digitally to accomplish my goal or what I need to get done? We view Conversational UX as being a key part of that journey for us, and something we're keying up on our roadmap to figure out how we can work that into the engagement platform to provide more customers.

Jared Johnson: That sounds like a really cool experience, being able to talk to chatbots and ask questions like that. So when it comes to doing something on emerging technology, or even something as large as digital transformation, we've seen a lot of organizations struggle with getting stakeholders on board. I'd love to hear your perspective on what does it take to actually get stakeholders on board with something like working with an emerging technology or doing a digital transformation? Is it all hard ROI numbers, is there a leap of faith element, is it more about storytelling to get the stakeholders on board? What does that decision process look like?

Eric Rehl: Sure. The first comment I'll make is that digital transformation can't be all hard ROI. It doesn't translate that way. In a course of digital transformation, you're going to make investments in things that the day that you have them available don't return a dime, because they are enabling capabilities of what allow you to transform digitally. So there's an aspect of this, which is an investment in the backend, that out of the box or out of the gate, doesn't offer you a return. It's what you do with it, how you activate it, how it enables the strategies that you have within your business that are going to return value to the company. That's where the ROI is. It can be difficult to measure. It's even harder to articulate from a value standpoint when you're asking for funding to go do this.

We spent two to three years talking through digital transformation with our leadership before we actually got going. All of that time was spent kind of teeing up the idea that there isn't an immediate payback period for this investment, that this is an investment in the future of the business and that we were going to have to be okay with not knowing all the answers when we get started. There's an ambiguity in this that is just a reality of what digital transformation is. That said, I don't want to call it a leap of faith, because your roadmap here needs to be grounded in strategy and in understanding of your customers, and an understanding of where your business wants to go and aligning it to that.

What we found to be successful, or what we have found to be successful are three things. One is again, I have mentioned this earlier, attaching our digital transformation roadmap to specific strategies and intentions that our business units have. Saying, how can we leverage this investment we're going to make in digital, and connect it directly to a goal or a priority that a business unit has so it can be attached to something that was intended to return value and help activate that? Some level of attribution of return based on how it contributed to the delivery of a product or service or other touchpoint, that would intend to be differentiating for our customers.

The second is looking for opportunities around quick wins and early successes that can be had that can be used as proof points that there really is value in this digital transformation stuff, and it's not just about them having a nice website. It's important that in your digital transformation, you find opportunities to return value quickly. Again, some of these investments are foundational and large in nature, but you can't wait three years to return any benefit back into the organization for that investment.

As you go, how do you this in a way that you can incrementally release capability back into the organization that is being leveraged in some regard. So a very agile, a very flexible development and deployment mechanism that allows you to realize benefit early.

Then the third is really kind of driving messaging and understanding throughout the company, top to bottom, on sort of the monetization of customer experience and how that is becoming, not only an expectation in the marketplace that you do that well, but that a competitive differentiator for your company and building a business case around that. Again, it's not something that has a hard ROI, but it's a reality.

Bringing that understanding to bear, especially with senior leadership for us has been very effective. We're all consumed by messaging and information around digital transformation these days. We can't walk out of our office without hearing a new statistic or learning something new about it. Where that benefits us is that, as decision makers at Rockwell and people at levels of leadership get inundated with that stuff, it reinforces the messaging we around a differential customer experience and how that brings value back into the organization.

Those three things can't be exclusively ROI based. Really trying to understand the value of customer experience has been a way we've found to be very effective in not only telling our story, but getting people to stand behind it and advocate for us on our behalf.

Jared Johnson: Excellent. It's less about the hard numbers, although there may be some hard ROI numbers available. It's more about being able to differentiate your business and enable you to deliver on your strategic goals.

Eric Rehl: Correct. Exactly, and I don't want to say that it's not about ROI. If you can get it, by all means, because ultimately that's probably going to be the most effective. However, for a lot of these investments with digital transformation, it just isn't available. It's actually not the intention of the investment. The intention is to create a capability and transform your company in a meaningful way so that it can gain value and return based on this transformed state. It's an important point for transformation to be successful, especially within industrial or B2B companies, that is understood at some level by people in decision making roles.

The way we've gotten in the position we're in is that our technology investment is prioritized on how are you going to save me money. How are you going to take cost out of the business, not our own growth?  We have our digital area governed by a separate steering committee around this key set of investment priorities and deliverables. And that is working very well. It's allowed us to create program relationships with our partners around a set of goals and objectives rather than around a set of deliverables. And that's a very, very big difference. I've stopped publishing road maps beyond like 18 months because I don't know what we're gonna do in 24 months. It's gonna be completely different.

Jared Johnson: No one does.

Eric Rehl: No. Exactly. And we're gonna release this platform that could go anywhere based on where the company wants to go.

What has been very helpful for us was this idea of storytelling. Where do we get stories? Do we get them from going out and talking to customers? Solstice has helped us with some of that, where it's like “how do you craft the research that you've done with your customers into a story you can tell that creates urgency?” That is really helpful because it adds some concreteness to it.

This is really ambiguous stuff especially when you're an engineering company where there's a formula for everything. There's a black and white answer and outcome for everything that we do. That is not the case with this. The more you can sort of present it in story form and things that they can understand, at least the more successful you're gonna be in helping them understand what you're up to. They still may want an ROI, but at least they understand it better.

What's been interesting is when I have conversations with other companies that are going through this, I'm finding less that are doing it like we are trying to do it, and more that are trying to sort of do this within pockets of the company. And that worries me a little bit. The long term value in this digital transformation is one: being easier to do business with for our customers through a much less burdensome platform for them to engage with us, and two, to create capabilities at scale across the organization. And that everybody just dips into them right when they need them. And when you don't do this in a program fashion, you kind of sacrifice that scale or you just leave it up to everyone else to somehow organically create it, which is very difficult to do. It'll be interesting to see how companies, what their experience is like as they go through that. 

Jared Johnson: Excellent. We're happy to continue this conversation. Please reach out to Solstice or to Rockwell. I want to thank you, Eric, again for joining me and thank you everyone for listening.

Eric Rehl: Thank you.