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Jeff Smith

Episode 49: IoT Technology: What it is & How it Can Impact Your Organization, with Jeff Smith

Jeff N. Smith is the Corporate IoT Business Development Manager at Parker-Hannifin. He is focused on delivering new offerings, building out new business models, and commercialization frameworks for Parker’s Voice of the Machine™ IoT connected products. His global focus areas are Industrial Mobile Systems and Factory Automation. Prior to joining Parker, Jeff was the co-founder of a smart building IoT technology start-up focused on the commercial built environment, taking this solution from inception to thousands of controllable endpoints globally for Fortune 100 customers.

What you’ll learn about in this episode:

  • Jeff’s role implementing IoT technology (Internet of Things) at Parker-Hannifin
  • Parker’s Voice of the Machine™
  • Why IoT technology is one of the most monumental shifts for companies since the internet
  • Culture: a big factor in stopping companies from implementing IoT technologies
  • Why Parker figures out if there is a problem worth solving and then figures out if there’s a way to deliver to customers at scale
  • Winevation: Parker’s stage gate process that they use to commercialize their product sets
  • Getting the implementation team to understand the why
  • The IoT implementation documentation
  • Making sure IoT technology ties back to customers and actually solves a problem

Ways to contact Jeff:

Podcast eBooks:

The Power of Two

Episodes 1, 2 and 3 collide to bring you summary of lessons learned and systems created around Vision and Key Initiatives that help drive success to companies and businesses.

The Transition to Automation

In Episode 25, Vera talks with Heidi Rasmussen, CEO and Co-Founder of one of Inc 5000’s fastest growing companies in America – freshbenies. This eBook highlights part of the conversation to bring out the best lesson in automation and on-boarding for startups.

Using IT Strategically

In Episode 29, Vera talks with Tom Grooms, Vice President, Information Technology, and Chief Information Officer for CF Industries. This eBook is your guide for seeing IT as more than just a faster way to do your accounting.

The ZFactor Methodology

In Episode 35, Vera talks with Cindy Goldsberry, founder and partner of ZFactor Group. This eBook shows you how to take your business from vendor to value creator.

Transcript:

Welcome to System Execution, the strategy and system behind today’s successful companies. Systems can make or break your company. But here, we’ll solve your physical, technological, and psychological systems issues by connecting you with experts that have succeeded in overcoming those challenges in their own business, and providing you the guidelines and tools you need to implement those same strategies for immediate results. Now, here’s your host, Vera Fischer.

Vera: Today’s episode is sponsored by 97 Degrees West, the brand marketing agency located in Austin, Texas. 97 Degrees West serves regional and national companies in the healthcare, finance, energy, and manufacturing industries. 97 Degrees West believes that an integrated approach to marketing that involves traditional and digital strategies that fit your customer’s buying journey yields the greatest impact on your bottom line. Go to www.97dwest.com to learn more.

Welcome to System Execution, a podcast devoted to using processes and systems to drive to a better outcome for your business. I’m Vera Fischer, your host. Many of you know that business success relies on systems. Systems can be physical, such as a warehouse or a factory, or technological, think software, while other are psychological systems such as checklist, org charts, or your daily hot list.

Today my guest, my encore guest is Jeff Smith, who is now the business development manager for the internet of things at Parker Hannifin. Listeners, Jeff Smith joined me as my first interview, episode one, and I encourage you to download that episode and listen to it as he goes in depth in explaining what exactly the internet of things is.

Currently, Jeff is focused on delivering new offerings, building out new business models, and commercialization frameworks for Parker’s Voice of the Machine, Internet of Things connected products. His global focus areas are industrial mobile systems and factory automation. Prior to joining Parker Hannifin, Jeff was the co-founder of a smart building internet of things startup focused on the commercial built environment, taking the solution from inception to thousands of controllable endpoints globally for Fortune 100 customers. Welcome back to System Execution, Jeff.

Jeff Smith: Thank you, Vera, for such a wonderful introduction. It’s wonderful to be back.

More on Jeff’s Background

Vera: Well, Jeff, I just enjoyed our first interview so much I wanted to get back in touch with you and have you back on the show. Before we get started on this next iteration of the internet of things, why don’t you refresh our listeners on yourself and your experience?

Jeff Smith: Yeah, well, thank you so much. My name is Jeff Smith, as you mentioned. What I’m doing is working here at Parker Hannifin, and for your listeners, just to give them a sense of who Parker Hannifin is, Parker has been around for a long time. Matter of fact, this year we are celebrating our 100 year anniversary.

What does that mean for Parker in terms of the internet of things? We are certainly delivering what would be considered a digital transformation for the company. As you have mentioned, we have released Voice of the Machine, which is our internet of things platform and initiative. For Parker Hannifin, we are in everything from submarines to spaceships. We are a component manufacturer. For instance, at your house, we do not make the trash truck that comes by your house, but all of the things that move and take the trash from the street into the trash truck, we do all of those components. We are a critical component supplier that move everything from aerospace to pneumatics, hydraulics, things such as that.

Vera: That’s really interesting. You have been with Parker for, what, a few months now?

Jeff Smith: Yeah, so I started with Parker in February. My first task was to launch the initiative globally of Voice of the Machine. Since then, I have been on this track to commercialize various endeavors inside the organization. My focus areas are industrial automation and mobile systems. Just to be specific about what mobile systems are, it is everything from usually large excavators to vocational vehicles like trash trucks or forklifts. Basically, if it’s mobile and it’s industrial and it moves about the planet, that is what that means. Factory automation, that’s going to be everything from injection molding to industrial presses. Things that are operating in the factory environment.

And so, what I’ve been doing since arriving to commercialize in the mobile space is our new telematics system that will be able to provide optics and insights into the ways in which these machines are operating and make them operate more efficiently.

Jeff’s IoT Technology Process

Vera: Jeff, that’s a great segue into what we want to speak about today, that particular IoT technology process. The corporation as a whole has made a commitment to moving into the internet of things space. With a global company as large as Parker Hannifin, changing the rote behavior of the teams in their different groups can be very challenging. To take it out of the air, I’d like to say, and really putting it in a grounded fashion, how do you do something like that in your specific areas? Step one, the company’s made that commitment. And then what do you have to do? If you can just walk us through that process, I think that would be very beneficial.

Jeff Smith: Yeah, thank you for asking. That is really where the magic occurs. I refer to … There’s a book, Geoffrey Moore, called Zone to Win, he wrote Crossing the Chasm. I really took a lot out of that in the sense that this company and other companies around the world are going to be going through the same digital transformation, and this may only occur once every decade or 20 years, to have this level of disruptive transformation inside the organization. This would be tantamount to when ERP or the internet came into some of these organizations.

I bring that up in the sense that the capabilities around managing this type of disruptive technology are typically not internal. One of the things that has become clear is that cultural biases inside the organization can really be an impediment to really being able to adopt this type of technology. As a matter of fact, there was a recent study from ARC, which focuses on the industrial space. From a survey that they had did earlier in the year, it seemed that a full 48% of the reason that people are having trouble implementing these types of technology has everything to do with culture.

For us as an organization, we had to establish a central IoT team. That team was to deliver not only business focus and business strategy and skills wrapped around commercializing this product, but also being able to provide the technical layers necessary to be able to have at least the functional building blocks of how to connect to their systems and collect that data. No matter who you are, no matter where you start, the first thing you’re going to have to do is figure out how to connect to that piece of equipment and how to collect that data.

Once you’re able to master that, then you can do more exotic things like figuring out how to predict the future. But for us at Parker Hannifin, we have 140 some-odd different divisions across seven operating groups, so we are really good at engineering things. One of the things that we had to really figure out inside our organization is how do we orient the sequence of events? Because the way it has been done previously inside the company, in areas where there are existing mature technologies, are to take the base set of components, which could be in this instance, let’s say, hydraulic. The big innovation in those spaces have really occurred some time ago, and there’s incremental innovation that takes place over time. This is, as we may know, disrupted innovation, and it’s really a clean sheet.

So what we really had to do internally, with a central IoT technology team, is make sure that the first sequence of events are we go through our business validation, business case, problem case definition, and really taking those divisions through, ensuring that there’s a problem that’s worth solving. And then given the technical software and bits that we’re able to provide from the central IoT team, figure out what is the cost to deliver that to those customers and make sure that we have a valid business case. Because for us, we can’t build things that work for one or two customers. They have to arrive at scale. Being a $13 billion company that operates across multiple countries around the world, if we’re going to focus on something, it has to have scale.

That’s something that is out of sequence from the way in which things have been done before, is we have a product that’s engineered, and our engineers want to go out and deliver something to the market. We’re delivering software that, for the most part, they’re really uncomfortable getting in front of some of their customers with something that is unfinished and unpolished. Those are some of the first sequences. Does that help?

Why Mindset is Important When Implementing This Process

Vera: No, that’s wonderful. And Jeff, whenever you talk … It sounds like there’s two different types of events that have to work within the sequence. Number one, it’s the tangible stuff, right? It’s the building blocks, the software, the things, the components that are going to send data back, or retrieve information, that type of thing. But there’s also this other component where it’s a mindset. It’s you have to think a little differently, and you have to act a little differently. Do you separate those out, or is that something that is just part of that process together?

Jeff Smith: Yeah, Vera, that’s a good question. There are two, if you will, swim lanes that are running in parallel with one another. We do somewhat separate them out functionally in terms of the central IoT team. I have technical counterparts that are working on things like gateways. What are the gateways that we’re going to use? How do we support them, how do we provision them? What are they sensors and where do they go on the piece of equipment? What type of operating parameters do they need to have if they’re going to operate on oil rig, or if they’re going to operate on a front loader, or a trash truck, what are those things? Where do we get them from? What are the signals that come off of them?

On the business commercialization swim lane, it’s really working with how are we going to go to market? For us, Parker Hannifin, we do a number of things, which is we work directly with original equipment manufactures, like a Caterpillar or John Deere. Those would be examples that people would probably know. We have a whole slew of other original equipment manufactures that we work with around the world to deliver critical components to them.

Are we going to sell our product directly to them, or do we have products that we sell through distribution? We have 13,000 distributors around the world, and we have tiers of distributors. We’re working through this now to figure out what kind of distributors would be the ones that we would have to work with, and better yet, do they have the capabilities to really understand this technology and support it? And if not, what kind of capabilities or capacity building do we need to go through to ensure that they are able to sell it and support it moving forward?

Does that provide you some relief in terms of … or some depth as to the separation with that?

The Separate Organizational Divisions You Need for IoT Technology

Vera: Absolutely. The next obvious question, at least to me, is do you have someone within each of those divisions or groups? The divisions are the more micro ones, right? And then you have your bigger groups that I think there’s seven or eight of them, through my research. Do you have someone that’s appointed within those areas that will handle the internet of things, or is there a separate group? What is working for Parker Hannifin right now?

Jeff Smith: That’s a great question. For us, we have this internal system, they call it winnovation. That’s an internal Parker term, you certainly see it from our website or annual reports. But essentially what this is is it’s a stage gate process that we take through to commercialize our product sets. What we’ve had to go through internally is to overlay this commercialization of IoT technology products within that framework. We’re really kind of snapping on an additional layer of what that looks like.

As I work with a division, there are going to be people that are identified within that organization that are going to have certain either technical or business commercialization responsibilities. The cadence that really takes place is for us as a central IoT team, that we are a shared service throughout the organization. It is to be able to script out exactly what they are going to do in this process and provide artifacts and deliverables for them to work through, and what we are going to do.

At every stage of which for us are about six, go on from discovery all the way to general availability, every one of those stages, we want to ensure that they’re committed, they’re moving forward, they have resources that are attached to it, and that they are committing budget to go through this commercialization process. Because for us, we subscribe a bit to the leading startup principles. If we’re going to fail, let’s fail fast and cheap. One of the things we realized is that since these other organizations and people do not report to us, I can’t really force them to do things that they don’t want to do unless they’re committed to do so. Building out this stage gate framework through this process has really helped us to ensure that they’re committed each step of the way as we walk through this process with them.

Why it’s Important to Communicate Internally About IoT Technology

Vera: So Jeff, are you doing anything internal from a … I guess for lack of a better term, touchy feel good stuff to let them know that this is not necessarily changing your world, as in you’re still safe here, you still have value here in the organization? Do you come across any of that?

Jeff Smith: Yeah, so there is some internal messaging, and we’re having to work through that in the sense that we’re a company that produces really discreet, tangible parts. They’re physical things. For us, we have this initiative, Voice of the Machine, that has some building blocks that you can kind of snap together to build the solution. That’s a little bit antithetical to the way in which we’ve worked inside the organization. There is some cadence of being able to communicate internally with our application engineers, with our sales companies and sales folks, and to really help them understand what’s coming, what does that mean to them, and more importantly, what is the why? Why are we doing this? What do these sets of solutions do for your end customers? Why do they care? Really trying to make it very focused as to what’s the purpose and the reason for going forward, to help them understand what it’s going to mean in their lives.

Vera: And Jeff, is there any documentation that’s going along with this huge implementation? Are you documenting it each step of the way? Is it, oh, this worked and let’s repeat this, or this didn’t work? Any insight there?

Jeff Smith: Yeah, there is. As we go through this, and we’re starting with a number of divisions, a very small set of divisions internally, and taking them through this process that we’ve created, this stage gate process, everything from discovery all the way to general availability, and scripting that very tightly. We’re looking to go through and do a retrospective after each stage, and then at the end of this, to make sure that we can take and we can refine and make some changes along the way to make it more efficient and easier for both parties involved.

We’re at the first generation of this process. We’ve tried to take everything from lead startup to agile development and other things from processes that have worked internally, and we’re going to see how that works out.

What Jeff Has Learned From This Process

Vera: Awesome. Anything that you can tell our listeners that you’ve learned through this process? I know the process is not in any way complete, but any of the pitfalls or things that you have learned through this experience thus far that you would advise our listeners to watch out for?

Jeff Smith: Yeah. For me, what I’ve learned is it can be very seductive to think about all of the possible solutions that you can work through with the internet of things. All the possible problems you can solve. What I mean by being seductive is the sense that you can literally operate in a vacuum and go and get all of these bits, like a raspberry pie. Go get some sensors and connect it to a breadboard, and how to connect to the internet, and see some dials on your screen.

That’s all very wonderful to do, and I certainly encourage that exercise to build capacity within an organization, but there has to be some tying back to customers and being able to understand what problems they’re solving. So making sure that you don’t go through this effort and spend lots of money to solve a five dollar problem.

Vera: Mm-hmm (affirmative).

Jeff Smith: You want to be solving $500 problems.

Vera: Exactly.

Jeff Smith: Instead of five dollar problems. Because the things that’s really clear for us as an organization are we’ve been selling technology as an asset for 100 years. Now what we’re looking to do is to sell technology as a service to customers that have never got that before. We have never delivered that before. So there’s a lot of joint capabilities that are having to be worked out, not only with our end customers, not only with other original equipment manufacturers that we deal with, but also with us.

I would suggest for people that are looking to go down this journey is simply go out and talk to your customers. There’s nothing wrong with not having it figured out, because the thing that I had figured out is if I had that thing … If I had a black box that was the solution, and I had a price on it and I could sell it to them, the majority of our customers wouldn’t even be able to consume it or buy it. Because they’re still trying to figure this out. I’ll tell you that from this other research that had been given, a full 58% of all industrial original equipment manufacturers and factories, 58% of them were still in the strategy and discussion phase. And another 23% are really just in the pilot stage, just trying to figure out what all this means.

It’s a very special time, and I would certainly tell people to operate with a certain amount of confidence that it’s okay not to have all the answers, but you’re going to have to listen to your customer, and you’re going to have to hear and understand what the costs are and the problems that they need to solve in their lives.

Next Challenges for Jeff and Parker Hannifin

Vera: Well, Jeff, I think that’s a great closing in the sense of really talking to your customers. I think a lot of larger companies may overlook that in the rush to implement. Before we go, can you tell us what your next challenge is as far as implementing this within the organization?

Jeff Smith: Yeah. The next challenge for us is really to understand this layer of distribution. For us, being able to sell from us to an original equipment manufacturer, that’s pretty clear, it’s just us to them. But then once you add this layer of having to sell through other people and really figuring out what that looks like, that’s the next thing that I’m going to tackle within the organization to ensure that we’re able to do that successfully and roll that out globally.

Vera: Well, Jeff, you’ve shown us that processes are needed to get the work done and you’ve provided some great nuances that our listeners need to hear regarding the execution of the internet of things within your organization. Before we go, let’s close out today’s discussion with any final advice you want to share, anything we may have missed, and then tell us the best way we can connect with you.

Jeff Smith: I can tell you how to connect with me. My email address is simply jeff.n.smith@parker.com. And any final words of advice would be down the pathway of just get out of the office. The answers that you’re looking for are not inside the four walls of your organization. They are outside of your office, in the real world. I think if you do that, you’ll serve yourself really well.

Vera: Well, System Execution fans, no matter how many notes you took or how often you re-listen to this episode, remember; every successful business uses systems to drive to a better outcome. Jeff, this encore interview has been fantastic. I hope to have you on the show again. This is episode 50. You were episode one, so hopefully we’ll have you back for episode 100.

Jeff Smith: I look forward to it. Thank you so much, Vera.

We hope you found this episode of System Execution enlightening. For free examples, case studies, e-books, and more, be sure to visit systemexecution.com/resources. Contribute to the conversation by reaching out to Vera directly on email at Vera@SystemExecution.com. Until our next episode, thank you for the privilege of your time.

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