Servitization, outcome-based services and product-as-a-service are hot topics. However, we see little examples in the industrial sectors. Too often, there is a gap between the theoretical framework and the real practice. Here Jan van Veen, Managing Director, moreMomentum, outlines 3 critical steps to boost the success of your servitization journey...

Summary

We hear a lot about servitization, outcome-based services and product-as-a-service business models. However, we see little examples in the industrial sectors. Many manufacturers face serious challenges while developing and launching new service offerings:

• Clients do not see the value, have many objections and are not ready for it
• Lack of strategic support to invest in necessary capabilities and to develop their business model

3 of the root causes are:

• The gap between academic terms like servitization, outcome-based services and product-as-a-service and the practice is not being closed yet
• Poor definition of the critical business problems of clients which will be solved with the new offering
• The impact on the manufacturer's business is not clear yet

In this article I share some of the best practices for designing advanced offerings which will help you to overcome these challenges:

• Build deeper and broader insights in your clients business challenges and pain points
• Focus on specific customer segment, based on their needs
• Approach your business models more holistic

 

The Problem

Just as an increasing number of manufacturing companies, you may be looking for ways to thrive during disruptive change in your industry. This is an exciting journey of enhancing your business models with digital solutions and advanced services.

Some of the major trends that make this mission critical for your future success are:

• Digital technologies
• Digitalisation of clients’ operation
• New emerging business models
• Shifts in the value chain / ecosystem

The vision behind these innovations is:

• Develop advanced services and solutions to develop new and recurring revenue streams and increase long-term differentiation.
• Develop better performing and more efficient predictive maintenance services.
• Meet a broader scope of (latent) customer needs, beyond availability and condition of equipment like operational performance solutions.

Most service leaders and innovators, solution providers, academics and consultants use broad and abstract concepts to describe their vision, strategy, innovations and new offerings with container words like:

• Servitization
• Advanced services
• Outcome-based services
• Remote services

I often hear from service leaders and innovation teams that they struggle with challenges like:

• Clients do not see the value of the new offering or solution
• Clients see many obstacles and risks
• Clients are not willing to pay more for the new solutions
• Clients are not ready for the new solutions
• Lack of support from strategic stakeholders and other functions in their organisation

In essence, all boils down to the following 3 problems:

• The new solutions and services do not solve (new) critical business problem of the clients. The value or impact is not clear (other than potentially lower prices for the maintenance services).
• It is not clear how these services contribute to the overall business challenges and vision of the company as a whole.
• The service vision is too abstract for internal stakeholders to understand and endorse. Words like servitization, outcome-based services, remote services and product-as-a-service are too theoretical and do not clearly articulate a vision and strategy.

This is pretty frustrating, isn’t it?

 

The Solution

In this article I share critical frameworks which many service teams miss in their service innovation strategies. These are:

• Build deeper and broader insights in your clients business challenges and pain points
• Focus on specific customer segment, based on their needs
• Approach your business models more holistic

Build deeper and broader insights in your clients business challenges and pain points

To be truly outside-in and customer driven, you need to have a deep insight in the challenges and problems your clients are facing in their business. Deep customer insights should:

• Go beyond their requirements about uptime and maintenance of their assets
• Cover a time window of 3-7 years
• Be thought provoking eye-openers for your clients

You and your colleagues already have most information at hand. It is a matter of turning this information and knowledge into a compelling customer story, for irresistible advanced services.

You can read more about this in ( “Build a Strong Customer Story in 7 Steps and Launch Irresistible Advanced Services” in the Handy Little Book, published by Field Service News.

Focus on specific customer segment, based on their needs

One size does not fit all. Different clients have different visions and strategies, different challenges and therefore different needs. When defining the (latent) customer needs for today and the near future, it is crucial to have some sort of segmentation of your important clients based on their (future) needs.

This segmentation will help you to develop a robust strategy which defines which customer segments you will target, with which new service offerings and which business models you will develop.

There are many ways to segment clients based on their needs, largely depending on the specific industry. I will share two generic patterns for customer segmentation which can be useful for you to take as a starting point. They are based on segmentations of innovative and successful manufacturers and service leaders. 

Two often used patterns for customer segmentation are:

• Maturity – Willingness to outsource of a business
• Maturity – Complexity of a business

 

This could be a useful pattern in industries where many of your (potential) clients tend to do most functions themselves instead of outsourcing the activities (like maintenance of equipment).

Along the vertical axis you can separate segments based on the maturity of their core capabilities and processes.

For example, in the industry of metalworkers this could be:

• Traditional craftsmen
  The entrepreneurs personally (together with their employees) manufacture the metal products themselves, love part of the manual work and working with their machines and tools. This is their pride. Little of the activities are put into structured processes.
• High tech workshops
  The entrepreneurs have invested in state-of-the-art tools to improve quality, consistency and efficiency. Their main focus is still on the technical side of the profession. Probably there is more structure in the workflow and processes, predominantly organised from a technical point of view. From a more economical point of view, the structure is not efficient yet.
• Lean manufacturers
  The entrepreneurs have a more economic view (or hired an operations director with economic competencies) and are working on efficient processes, workflow and organisation. They follow lean-six-sigma or similar approaches to optimise human resources, capital investment and materials.
• Value chain optimisers
  These entrepreneurs have a broader scope and are looking to their added value in the entire value chain, partnerships, vertical integration or specialisation. They may also develop more advanced value propositions to their clients like inventory management and delivery of the components they manufacture in small packages in the production line of their clients.

This is a very brief description. You should probably also look into functions like sales, marketing, engineering, internal logistics, inventory management, tools management, financial management, human resources management etcetera. You get the picture.

Along the horizontal axis you can segment your market into clients that tend to do as much as possible themselves versus clients that outsource many functions which are not part of their core-process. Clients in the first category probably have various dedicated departments, competence centres or teams for functions like process optimization and maintenance.

 

This pattern could be useful if you have clients with different types of operations with different levels of complexity.

The vertical axis is the same as in the “Maturity – Willingness to outsource” pattern.

Along the horizontal axis you segment your market into clients that have short and simple value chains versus clients with longer and more complex value chains. For example, again in the industry of metalworkers this could be:

• Jobbers or workshops that fulfil specific tasks like welding, cutting, bending, drilling etcetera and that manufacture intermediate components or semi-finished products
• Component manufacturers which perform several tasks to manufacture components, like engine blocks for the automotive industry
• Product manufactures, which manufacture complex products
• Machine manufacturers

Whatever pattern you use with these segmentations, you now have 4 (or more) segments in a logical structure. For each segment you can:

• Find a descriptive name
• Further describe their specific needs
• Define their characteristics to recognise them

For each segment you should:

• Decide whether you want to serve them or not. Or at least define which segments have your focus
• Develop a customer insight or customer story
• Develop specific messages to use in your marketing, sales and service delivery
• Develop and map specific services, offerings and delivery models
• Develop a specific commercial approach

When you are still in the early stages of developing advanced new service offerings, it often pays to focus on one specific segment first.

 

Approach your business models more holistically:

As soon as your advanced services go beyond the maintenance and the condition of the equipment your company manufactures and sells, you will be reconfiguring or extending the business model of your company as a whole. This means, you need to have a strategic dialogue and innovation process with strategic stakeholders.

To make this a fruitful and coherent process, you should avoid a discussion about product versus services. It starts with:

• A shared concern about developments in the industry
• The threats and opportunities for your business as a whole
• A vision about the future state of your entire business and what needs to change to achieve this

This will result in a few strategic priorities, one of which (hopefully) is services innovation.

Now I would like two share two useful frameworks that help to take the development of the business models to a more holistic – company wide – level:

• Generic types of business models for products and services
• Types of service value propositions

Note that these frameworks are not limited to services or products alone. They address the overall value proposition, which can be a combination of products, software, data and services.

 

In the matrix above, you can describe changes of your business model along two aspects.

Along the vertical axis, you differentiate value propositions:

• From stand-alone offerings (like single products or services)
• To comprehensive and integrative solutions which cover a broad scope of needs and solutions

Along the horizontal axis, you differentiate highly standardised offerings from highly customised offerings.

This results in 4 types of business models, which I will further describe with document printers as an example:

• Product Business Model
  • Only printers, probably including service contracts
  • A wide portfolio of different models to choose from
  • Additional equipment for folding documents, putting them in envelopes etcetera
  • Getting the printer for free and paying for the ink only
  • Predictive and remote maintenance
  • Cloud storage solutions and Microsoft Office 365 still fit in this model, even though you pay a small fee per month
  • Retail banking
• Project Business Model
  • An assessment of the entire business, to define how many printers, which type and where
  • Connecting the printers to the network, configuring security systems
  • Designing, building and commissioning an entire print room for high volume printing and mailing of documents
  • Designing more effective and efficient processes
• Solution Business Model
  • Taking over the entire print room from clients, which could still be at your clients’ locations
  • Connecting the Salary Administration system to the print room to print all salary slips at the end of the month, put them in envelopes, and send them to the postal services
• Platform Business Model
  • In the printer industry the example may become a bit theoretical, anyway.
  • An online platform where clients can upload templates, designs and lists of destinations and pay for the job. The platform will split this in smaller jobs for various connected and certified print facilities across the world and process the financial transaction. (I am not sure if this kind of service ever existed).
  • In the Additive Manufacturing sector, we do see initiatives in this direction to allow manufactures to print metal spare parts anywhere in the world close to the customer
  • Other examples of today are Apples Appstore, iTunes, Spotify, Amazon, Uber and Airbnb.

 

This framework will help you to better articulate the kind of value and related business models you are aiming for. 

In this framework you can define your value proposition along the horizonal axis based on the scope of the services. There are several ways to add value to your clients (deliver outcome if you like). I will use the commercial truck industry as an example:

• Better products
  For example, improve fuel efficiency of the truck and engines.
• Better availability
  Your services can maintain and improve the availability and condition of the equipment. This could be quite advanced with real time data, smart diagnostics predictive analytics or supported self-help offerings using AR.
  For example, predictive maintenance to improve availability (and maybe also improve fuel consumption).
• Better application or use
  Your services can drive the output or performance of the equipment you delivered to clients by improving the use, configurations, settings and ongoing optimization tactics. These services can be onetime projects or ongoing support.
  For example: Reduce fuel consumption by improving the driving behaviour of truck drivers.
• Better processes
  Your services can also concentrate on the overall processes and operation.
  For example: Reduce fuel consumption (and other cost) by improving the route planning, combining jobs, choosing the right vehicles for each job etcetera.

Along the vertical axis you can separate your offerings in

• Effort based offerings
  You promise to do certain activities for which your clients pays, regardless of the result of the activities. It remains the responsibility and risk of your clients to manage the overall performance and take the right decisions.
• Performance based offerings
  You promise your clients a certain result and get a fee depending on this result. In the example of commercial trucks, this could be:
  • Guaranteed uptime and availability of the truck of 99% and penalties if the performance is below 99%
  • A fee per percent-point of reduction of fuel consumption
  • A fee per transportation job

 

How to use these frameworks?

Map your current business model(s) in one or more of the matrixes described above. Also map a few scenarios for the envisioned business model(s). 

This will help you and your stakeholders to have a more structured and neutral discussion about the major trends in the market, technology and competitive landscape as well as in what direction your value propositions and business models should develop. Any choice will have an impact on engineering, manufacturing, software development, marketing & sales and services.

What are the takes

If manufactures cannot successfully adjust their business model, they run a serious risk of falling behind existing and new competitors.

Clients are developing digital capabilities in all their functions. They will have other needs for services and solutions.

This is an important opportunity for manufacturers to grow their relevance for their clients and grow their business.

It is also a unique opportunity for digital native service providers and system integrators, which offer remarkable and complete solutions to the (new) problems of your clients. They are your new competitors.

Benefit

If you use these frameworks and embed them in your service vision, your innovation strategy as well as in your dialogue with strategic stakeholders, you can develop the;

• Shared concern for the business as a whole
• The strategic priorities for the business as a whole, one of which will be services
• Shared vision for the business as a whole, which includes services
• A specific shared concern for the services business unity
• The strategic priorities for the services business unit
• A shared vision for the services business unit

Rome was not built in one day

It is an iterative journey. It takes time and work. The frameworks above will help you to facilitate and structure this journey.

Manufacturers and service leaders with successful advanced services have used these kinds of frameworks for a long time and still are. This allowed them to achieve quick, continuous and more radical innovations and thrive in disruptive times.

 

Conclusion:

For quite a few service leaders, the journey of service innovation is a tough one. Their clients do not see the value of new advanced offerings, they do not want to pay for them, and internal stakeholders do not provide the necessary support.

Some of the key reasons are;

• The critical business issues of the clients are not clear and are not addressed with the new offerings
• The business value of the new offerings and business models are not clear
• The envisioned business model(s) are not clearly described

Litmus proof

I would like to challenge you with the following questions.

Can you describe your services vision and strategy in concrete words? Without using words like;

• Advanced services
• Servitization
• Product-as-a-Service
• Remote services
• AR, AI, IoT

Does your services vision start with a description of;

• Major trends in the industry of your clients
• How challenges and priorities of your clients are changing
• How that will change their needs

 

Recommendation

If you want to be leading the transition of your business and industry, I would recommend you to;

• Define a clear shared concern with your strategic stakeholders;
• What are the developments and trends?
• How are customer needs changing? (our worksheet “Build your Customer Story” will be useful)
• What is the (potential) impact of these changes for your business?
• Does your business want to act on this by innovating the business model?
• Together with your strategic stakeholders, consider various options for developing the business model(s) and assess how these business models would help your business to thrive
• Agree on the innovation strategy and next steps
• Iterate!

 

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Further Action: 

• Read more about Servitization and Advanced Service @ www.fieldservicenews.com/blog/tag/servitization-and-advanced-services
• Read more exclusive FSN articles by Jan van Veen @ www.fieldservicenews.com/blog/author/jan-van-veen
• Connect with Jan van Veen on linked in @ www.linkedin.com/in/janvanveen1
• Follow moreMomentum on twitter @ twitter.com/more_momentum
• Schedule a discovery session with Jan van Veen @ moremomentum.eu/discovery-session

 

Jan Van Veen, founder of moreMomentum, outlines a crucial approach he has been developing within his peer-sharing community to help service organisations grow through innovation and diversification...

Manufacturers with a narrow innovation focus miss many opportunities, see more innovations fail, often see that competitors do exactly the same thing and struggle to turn their innovations into growing revenues and margins.

Leading and successful manufacturers cover a much wider scope of innovations than those that stagnate and fall behind competition. They actively search for opportunities to improve the value they promise their clients, how they deliver the value and how they capture part of the value. 

They find and launch more innovations for growth. Sounds like a good recipe, doesn’t it?

The problem: Too narrow innovation

Many manufacturers have a too narrow focus on their innovations. Their dominant focus is on improving features and functionality of the products they sell. An increasing portion of the manufacturers also improve their services, but are still focusing on break-fix and maintenance services.

There are major disadvantages of the narrow innovation focus:

• Companies miss many opportunities to better serve their clients and grow their business;
• Most innovations are not a complete solution, miss crucial aspects and therefore fail;
• If clients do appreciate the new value, they often have the buying power to benefit from this new value without paying more for it;
• For competitors it is easy to recognise the innovations and do exactly the same (or better), hence, commoditise the new capabilities and value even before the investment is earned back.

As a result, they not only fall behind competition. In today’s rapidly changing industries, they ultimately run the risk of be pushed down the “food chain”, stagnate or even become obsolete. This is pretty frustrating, but does not have to be like that.

How Many Manufacturers Struggle to Grow with IoT

A common struggle is to drive growth and monetise new remote capabilities.  Most manufacturers focus predominately on predictive maintenance, remote diagnostics and remote resolution. The aim is to increase the value they offer to clients by improving uptime of their equipment and the resolution time if a failure occurs.

They encounter the following typical challenges:

• Uptime is already quite high, so there is not much room for improving the value for clients. If uptime is already 95%, how much value will it bring your client to increase uptime to 96-97%?
• Clients recognize that you will be able to deliver maintenance services at a lower cost, so they may actually expect to pay less, not more. 
• Competitors are working on exactly the same, so there is no opportunity to differentiate
• Clients fear a myriad of IoT networks, platforms and having their data flow to external parties. Every brand and manufacturer they work with is asking for the same.
• Clients start looking for a common infrastructure and services from neutral service providers.

As a result, manufacturers invest a lot, see little value coming in return and see a declining interest for business innovation from senior stakeholders in their company.

Solution: Search along 21 innovation tracks

Leading and innovative manufacturers have a pretty broad range of areas in which they innovate for growth. They are more open to new domains, new business models and new perspectives which enables them to adapt and thrive in rapidly changing industries.

In our research, we have identified 21 innovation tracks for growth, spread over 3 clusters. You can thrive in today’s disruptive world and achieve sustainable growth by widening your scope of innovation along these 21 tracks and by making strong and coherent combinations in each innovation.

Just like the leading innovators, make it a habit to embed these 21 tracks firmly in your innovation strategy:

• Actively search for growth opportunities
• Along 21 innovation tracks
• And enrich each innovation idea by combining a few innovation tracks.
  
  

If you want a more in-depth description of the 21 innovation tracks, you can download the Job-aid 21 innovation tracks to thrive during disruption. This includes a description of the innovation tracks and a template assessment sheet to assess your current portfolio of innovation projects and ideas.

The three clusters of the 21 tracks are;

1. The value you promise to clients

Which problems or needs do you solve for which customer segments? Your growth opportunities are in solving more or other problems of your existing clients and expanding the market you serve. Alternatively, instead of expanding on scope and market, you could also specialise more in a specific niche of customer segments and needs and become the market leader in that niche. This cluster of innovation tracks also includes developing your brand to better articulate and expose the value you provide.  

2. How you deliver the value

Which activities and capabilities do you need to deliver the promised value to your clients? Your growth opportunities are in building and improving the capabilities to deliver the value in an effective, efficient and consistent way, so clients get and see the value.

3. How you capture part of the value

Which portion of the value you create and deliver do you capture? So how and how much are you being paid for the value you deliver? This involves your pricing model, earnings model and your position in the value chain. Successful and innovative companies always have these three clusters – value.

A few examples of how the various tracks are embedded in their strategy;

• There was a latent need of easy availability of tools and information and easy access to music (track 1). A lot was already available for the techies, but not for the mass market until Apple made this easy and readily available (track 2).
• Various manufacturers have offered something similar before, but Apple made it a commercial success by learning from the previous attempts of others what was needed for success (track 8)
• Apple developed an ecosystem of products and services with seamless integration as well as the Appstore (track 7). Other app-developers can offer their apps in the Appstore as well (track 15), but have to comply with Apple’s requirements. They also need to pay part of their license fees to Apple (track 19). As the app-builders are replaceable and the Apple eco-system is not, Apple can afford to ask pretty significant fees (track 21 and 18).
• Apple’s brands is far beyond “great products”. It is much more about lifestyle, ease, fashion and desire (track 11 and 12).

Back To Iot – The Opportunity

Once you have the sensors in your equipment, the infrastructure for connectivity and data and the capabilities to turn data into valuable insights, there are many opportunities to enrich your innovations and business model and hence dramatically improve the potential for your clients and your own business. To mention only a few:

• Your clients are on a journey of becoming more digital and data driven in many of their processes. This is a challenge with many unknown domains, unanswered questions and uncertainties.
• How can you identify these new needs (track 1) and reduce the complexity and uncertainty for your clients (track 2)?
• With the data and intelligence you develop on the back of these data, you can help your clients to reduce usage of energy and materials, improve efficiency and productivity, develop their products and shift their core business (track 6).
• This could start with assessment and benchmarking services, evolve in consulting and training services and further grow into business outsourcing services.
• For example, Fresenius does not only sell the instruments for kidney dialyses, but also runs entire kidney dialyses departments in hospitals, including the staff treating the patients.
• Part of this journey is also advancing your brand from being a product manufacturer to a solutions provider and being known for what problems you solve. (track 11 and 12).
• For example, Caterpillar helps clients achieve operational excellence through advanced services covering asset management, project planning, fuel consumption etcetera.
• Particularly for component manufacturers, you have the opportunity to develop unique intellectual property with which you can improve the overall performance of bigger systems of OEM’s. This will make you less replaceable and increase your ability to secure your margins from the OEM (track 21 and 18) – like Intel Inside. 
• Maybe you can even do business with the end-client buying assets from the OEM (track 19). An example is how Rolls Royce does not sell its airplane engines to the airplane builders (OEMs) but to the users of the airplanes.
• For most innovations, you will need to develop new capabilities, processes, competencies and tools to deliver these new values in an efficient way (track 14).
• As your business becomes more focussed on outcome and starts building more recurring revenues, you will need to develop your sales model as well (track 20), with more emphasis on onboarding, driving and demonstrating customer success, improving customer life time value and step-by-step growing the business with your clients by upselling and cross-selling.

 

Conclusion

For sustainable success in today’s rapidly changing world, there is no single silver bullet. A great product or great service will not bring much value. To thrive in these disruptive times, you need diversity in your business innovation with initiatives in different innovation tracks as well as initiatives with a rich and coherent set of innovation tracks. That way, you will launch innovations which:

• Provide clients a complete, remarkable and desirable solution
• Are hard to replace by other actors in the value chain, like OEM’s or system integrators
• Cannot be easily copied by competitors
• Your clients will love to pay for

If you want to take your business innovation to the next level, I would like to recommend you and your team to;

1. Assess your portfolio of innovation projects along the 21 innovation tracks. How well are the 21 tracks covered?
2. Enrich each innovation idea and project by adding a few more innovation tracks to it.

Feel free to use our job-aid “21 innovation tracks to thrive during disruption”. You can download it here. 

It contains:

• A description of each innovation track with some examples
• An excel sheet to map each innovation to the 21 innovation tracks and get an insightful graphical picture of how diverse your innovation is
• Slides you can use to brainstorm with your teams to enrich your innovation projects.

Good Luck!

 

 

 

 

Regular Field Service News' contributor Jan van Veen says surrounding yourself with those on the same wavelength can foster high performance, innovation and change.

Silicon Valley thrives as its own ecosystem exists on disruption. Each start-up flourishes with individuals all moving in the same direction; keen to change what's gone before. Each person has the same values, habits, goals and mindsets. As a collective it's no surprise this part of California is one of the most creative hubs in the world.

In this edition of the Field Service Podcast, moreMomentum's Founder and MD (and long-time Field Service News' Collaborator) Jan van Veen urges service leaders to choose their network wisely if they want to change the status quo. Citing the aforementioned Silicon Valley and high-performance judo athletes van Veen lays the foundations of a successful social environment for your business.

Also, for the first time this series, the podcast incorporates input from a LinkedIn discussion on this topic before the podcast was recorded. One of those who contributed to that discussion, Rohit Agarwal shared this diagram with us. It's handy to reference this image at the appropriate point of the podcast.

You can reach out to Jan on LinkedIn here and find out more information about moreMomentum here. 

moreMomentum's Jan van Veen suggests service professionals need to avoid the pitfalls around commodity as falling in could lead to missing out on big growth opportunities.

MoreMomentum's Jan van Veen suggests once you embrace and accept cannibalism it might actually be good for your business.

A burning platform is bad for innovation and change because it focuses on an urgent necessity to change. This triggers a defensive attitude causing higher risks for failure, has a lot of collateral damage and does not drive fluid, continuous innovation for sustainable success. Jan Van Veen explains why... 


Quite often, when talking with business leaders and clients, I hear the problem that the organization and its people are not that open to innovate and change as they already have good performance and there is no clear threat visible yet. They experience it as a lack of “sense of urgency”: there is no “burning platform” for innovation and change.

A common approach is to either wait until the situation gets worse or construct a (mini)crisis to increase and maintain a sense of urgency.

However, the question is:
• Do we really need a burning platform to innovate and change? And;
• What are the downsides to building change and innovation around a burning platform?

In this article I will share five reasons why a Burning Platform is bad for sustainable innovation and change.

Why a burning platform is bad for innovation? 
1.You are too late
Typically, the trends which create threats or opportunities develop a long while before becoming an obvious burning platform. First, there are the first weak signals for a trend. At this time, it is still hard to accurately predict what will happen and when. Maybe different way signals are contradictory.

So often, these weak signals are being ignored by the majority. After some time, we see the first competitors moving, but actually also struggling to successfully address the threats of opportunities. Their initiatives seem to be failing. As a result, the majority still waits. Once the leading competitors are having their first successes and the trends become emerging, the burning platform becomes visible.

But now, the leading competitors have learned and built capabilities and can scale. While the lagging majority is still trying to find the right questions, let alone the right answers. They are dropping behind the leading pack in their industry. They are too late. 

2. You get a deeper performance dip
The urgent situation of a burning platform means there is a critical situation which requires a rapid response and rapid results.
The topic is becoming increasingly dominant in the daily activities of everyone in the organisations. All hands on deck!

It starts distracting attention from the daily work of running the business. The overall performance will suffer more and longer than if the urgent can critical situation would have been prevented by innovation and change at a much earlier stage.

3. You disengage your valuable people
In general, a necessity to change – the burning platform – will create higher stress levels which will impact altitude and behaviour towards change. The more critical and urgent the necessity, the bigger the chances are for stress levels which will trigger defensive reactions like fight, flight or freeze.

Too often, we see the stress levels resulting in internal fights, pointing fingers, pushing problems to other teams and the best talents moving to other companies.

These are negative sentiments, which can be transformed into a positive and bonding sentiment within teams for a while, but not for long.

4. You miss the best solutions
The defensive fight, flight or freeze behaviour mentioned above, also triggers short term reactive thinking and blocks constructive and creative thinking.

When solutions require deeper analysis, being open to new types of solutions and require collaboration between different teams or department, this reactive short-term thinking is counterproductive.

The high level of stress increases the risks of not seeing the real problems or opportunities, not finding the right solutions and not doing what it really takes to get the results.

"It starts distracting attention from the daily work of running the business..."

5. You increase the risk for failure
During the first attempt of implementing a new solution, we should expect hiccups. Instead of experiencing this as a failure, everyone should see this as learning.

They should be able to have a constructive and forward-looking mindset to collectively understand why it is not working yet and what interventions are required to get it right. With a flight, fight or freeze attitude, the chances are bigger people will blame others or the conditions, find reasons to justify the disappointing results and give up.

For sure, we know about success stories where companies successfully pivoted their business during a crisis, like IBM. We also now the examples where companies miserably failed during a crisis and did not survive. 


The better alternative: Purpose
The better alternative is what the leading and dynamic manufacturers do very well: the rally their employees, their clients and their partners with a strong and compelling purpose which makes continuous innovations and change the natural, logical and compelling thing to do.

Like everyone at Philips Healthcare is committed to transforming our healthcare by offering and developing integrated solutions (hardware, software, services) for people to live healthier, prevent deceases, be diagnosed quicker and more accurately, receive better and less intrusive treatment and receive the care they need at home.

Or like Tesla is accelerating the transition of sustainable energy and transportation with electric vehicles, better batteries and solar panels. This approach will be more rewarding for everyone, lead to sustainable success of the business and reduce the chances of entering periods of critical decline of performance. It will avoid you being on a burning platform.

The Essence: People Do change!
I believe that people do change and drive innovation, if there are compelling reasons and not too many obstacles. After all, that is the only reason the world is changing so rapidly.

Too many organisations do a bad job in providing compelling reasons and good job in creating obstacles. That is the reason organisations struggle in keeping up the high pace of changing world.

Leading, dynamic and innovative companies set themselves apart by maintaining a clear and compelling purpose, direction and strategic intent as well as e great environment for collaborative change and innovation.

Conclusion and recommendation
In this article, I described five reasons why the common practice burning platforms and sense of urgency are bad for innovation and change. I also briefly described the best practice alternative: build and maintain a compelling purpose for everyone to be proud of and to work on.

If you are on the same page and would like to take next steps, I would recommend you to:

• Assess what your personal view is on the reason your business or department should change and innovate differently or quicker.
• Assess to how compelling this is for the 1) shareholder, 2) boardroom, 3) employees and 4) clients.
• Evaluate and enrich (your view of) the purpose of your company or your department. What is your relevance for the industry, for your clients and for the society?
• Reach out to me for a discovery or sound-boarding session. I am happy to help and also curious to learn from your experience.

I am confident this will bring you actionable insights for your department - if not for the business as a whole. Good luck!

Jan van Veen is Founder and Managing Director at moreMoumentum.