ARCHIVE FOR THE ‘servitization-2’ CATEGORY

Held at Fujitsu Stevenage, this event brought together 35 service professionals from around the country who listened to and discussed four excellent presentations covering various aspects of Outcome Based Services.

The excellent speaker this time around were:

• Veronica Martinez a globally eminent researcher in the area of Servitisation, presented an overview of the research she has been doing with the Cambridge Service Alliance. She told us how some of the worlds leading brands have approached developing Outcome Based Services, giving an exceedingly deep insight into the change process. Brilliant for any manager working on service transformation!
• Alex Bill gave his perspective of developing Outcome Based Service at the coal face. As a service professional in a major Power Generation OEM, he gave us insights into how the business model to make money is not as simple as just selling a service.
• Des Evans, the Ex CEO of MAN UK gave us the business perspective on servitisation, with insights from his 23 year journey to grow the business from £55M to £550M. It was a must ‘hear’ for anyone selling service concepts to their board.
• Chris Farnath Director International at Allocate Software, shared his own personal journey in leading business change toward outcome based services in the IT/Software world. Again incredibly useful to understand how he is approaching the ‘messy’ challenge of service transformation.

Thanks to all the participants for a great networking and discussion event

For a personal perspective on the event, read Martin Summerhayes’ account below which is also published in his personal blog.

 

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Service Community Conference - Outcome Based Services

[quote]“The purpose of a business is to get and keep a customer. Without customers, no amount of engineering wizardry, clever financing, or operations expertise can keep a company going.” ― Theodore Levitt

 

The first Service Community event for 2015 was held this week. There are two Service Community conferences that are held every year. They were first started by a wonderful consultant and friend, Steve Downton, many years ago and have continued to be popular and thought provoking events. Unfortunately, Steve lost his battle with cancer last year and a number of the core members of the community [including myself] decided to keep the event going - as much in Steve’s memory - as well as it gives a fantastic, open forum to share ideas, the latest thinking and case studies from the world of Services.

One of the key differentiators to other events, is that it brings together service practitioners to discuss and share ideas, changes in markets, share best practices and case studies. It is not an event where people come to try to sell products, services or companies - this is not what the Service Community is about.

So what do we mean by Services? We mean Services in the broadest sense possible. There were delegates from the widest spectrums of industries, including: Cambridge Service Alliance, Power Generation, Aston Business School, Construction, Cancer technology treatment, Sports Goods Technology, Logistics, Digital Photography, Soft Drinks manufacturer and then the traditional IT software and IT Services businesses.

 

What brought us together for this conference? The theme was “Outcome Based Services (OBS)”.

A number of points struck me during the series of four presentations and follow up discussions during the event. Obviously, the first point to mention, is what on earth are Outcome Based Services? The following points highlight the key elements of Outcome Based Services:

1. Predetermined results and predictable costs defined in agreement with the customer and are a reflection of the customers business: 

One example quoted related to the transport industry. The traditional approach is to pay separately for the truck, servicing, tyres, risk certification and then the fuel and driver. The customer then has to try to find the best deals for each of these elements. In addition, something I did not know is that a truck is only productive 25% of the time i.e. actually on the road delivering products and goods and hence making money. The OBS approach is to provide the vehicle and charge the customer on “price per kilometre”.

2. Protection of the client’s investments: 

One of the concepts discussed was leasing the product and having all of the associated services wrapped around it in a single charge. For example, the Rolls Royce model used to lease aero-engines which was shared at a previous event.

3. Short, medium and long-term savings adapted to changing client needs: 

One example was based on the savings from the production of electricity for the national grid using gas turbines. The customer could pay for either short term availability [how quickly you can turn on/off a turbine], medium term savings from the use of fuel, or even longer term savings from the ability to have upgrades build into the outcome based charging model which means the product stays in useful 2-5 years longer.

4. Use of methodologies, tools and processes to deliver outcome commitments and continual productivity improvements: 

The presentation from the University of Cambridge Service Alliance included a Service Strategy model - with examples where different customers had started the journey to “OBS”, In addition, the presenter talked about you might have to segment your customers as only some would be interested in OBS; that Risk Management and how you would deliver exactly what was required [the example given was the tonnage of rock removed by an explosives company] was critical and even giving away low margin services for “free” to be able to maintain a “sticky” relationship with your customers.

5. Operational excellence through the use of best practices, regularly reviewed to ensure their long-term applicability: 

The final example was a software company that realised that the current, traditional approach of implementing software solutions was not meeting the needs of their customers and has started on a journey to change the complete services landscape across their organisation to focus on “Adoption”. They had attended and worked with the leading industry experts, learnt the best practices and were implementing them in their organisation. The key to their success, though, was that the entire Operations Board of the company was behind the move.

My overall definition of Outcome Based Services based on the presentations and examples given would be:

Outcome Based Services are where you as the Service Provider, COMMIT to providing high-quality; customer defined and reflective of THEIR business; services; aligned with predetermined service levels and fixed prices, where there is a Shared Risk and Reward strategy in place for both supplier and customer.

 

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New infographic from ServiceMax shows how the benefits of going on the offence...

Over the past 50 years, manufacturers have focused on efficiently making good products in order to maximise their returns at the moment of sale. However, in a globally competitive market, many products are now commoditised and margins are getting squeezed, diminishing the leverage from such production-centric approaches.

That’s where a service-centric business model comes into its own. Servitization transforms companies from production to service provider, shifting them to delivering advanced services, such as selection, consumables, monitoring, repair, maintenance, disposal, as well as the opportunity to increase service revenues even further by supporting existing third party or competitive products. This creates an ongoing relationship with the customer that effectively locks out competitors.

As a business model, servitisation isn’t a new phenomenon – the origin of the term dates back to the 1960s. However, against the back drop of a global recession, product commoditisation, shrinking product margins, and major technology advances in end-to-end service delivery, servitization is providing companies with an effective hedge against market downturns, and higher barriers of entry for competitors.

As a result, service is shifting from the spotlight to the limelight, becoming a powerful offensive business strategy for top line growth and competitive advantage.

 

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The next event put together by non-profit knowledge sharing organisation The  Service Community is to be held on the 16th April at the Fujitsu's Stevenage office located at:

• 14 Cavendish Road,
• Stevenage,
• Hertfordshire,
• SG1 2DY

Continuing on from the excellent sessions that have been held at previous events the agenda is once again packed with key figures from industry and academia sharing their insights into what makes great service.

The days agenda is as follows:

• 12:00 Arrival, Coffees
• 12.30 Welcome and Introduction: Martin Summerhayes, Fujitsu
• 13:00 Presentation 1:  Dr. Veronica Martinez, Cambridge Service Alliance. "Outcome  Based Service"
• 13:45 Presentation 2: Alex Bill, "Advanced Services in the Power Generation Industry: competing through advanced services" 
• 14:30 Networking break
• 15:15 Presentation 3: Des Evans, Honorary Professor Aston Business School and Former CEO MAN Trucks. "Acheiving 'disruptive' growth in the UK Commercial Vehicle market with outcome based services"
• Presentation 4: Chris Farnarth, Allocate Software. "Customer success and outcome based software services" 

Attendance is free of charge and these events have proved to be highly engaging and thought provoking sessions in the past so attendance is highly recommended. To arrange your attendance email The Service Community on this link.

 

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While many IT experts are predicting further big things in IoT this year, Nick Frank suggests they are missing one more vital letter...

2014 saw an explosion in our societies understanding of the potential for connected devices.

Driven mainly by the SMARTphones and the ease of connection to the internet,just about everyone from your primary school kid to their grandmother is getting connected.

And is it my imagination, but utter the words Big Data, Analytics and IoT and they all seem to nod ‘sagely’? So with all this ‘wisdom’ in the world, it’s not surprising that in their struggle to differentiate, Service IT Solution providers have been falling over themselves to describe capabilities that manage knowledge, bring transparency and leverage big data.And in fairness this is not just talk.

The capabilities on offer are impressive, as Field Service, Parts Management, CRM technologies are increasingly integrated into seamless end to end solutions.

Indeed this trend is driving the next wave of consolidation in the industry. Led by PTC with their acquisition of Axeda and ThingWorx, solution providers are looking to develop the technology platforms to enable Remote Services.

Another example of the big bets being made is GE’s multi million dollar investment in their Predix platform for Machine to Machine (M2M) communications.The effect of this hype has been to dramatically raise the profile of the potential value connected technologies could have on industry.

But I am troubled by this jargon and thinking. In my mind these technologies and capabilities have no value if you do not do anything with the information they create. Yet we are all being told that if you don’t have an Internet of Things (IoT) strategy, you are dead!

But while working on a couple of projects in the area of Analytics and Remote Services, I had a Eureka moment.

It’s about the way we think!

Ok I admit, its probably blindingly obvious to the readers of FSN, but I believe that 2015 will increasingly become the

year of S.

And that is not because it’s now the ‘Chinese year of the Sheep’!

No, I believe we have it all wrong when we talk about IoT. It should be the iotS…

S for Service Thinking!

In simple terms ‘Service Thinking’ is the culture or even passionate belief that value is only created by applying your technical or business knowledge to improve whatever it is your customer is trying to achieve.

But to do this professionals will start to adopt new ways of thinking and I am afraid new jargon.

We will hear more of ‘Co- Creation’ & ‘Service Experience’. Metric will be biased towards outcomes rather than operational inputs. ‘Continuous improvement via learning’, which is a very much part of the service psyche, will enable companies to find new ways to ‘run, transform and innovate’ their business.

Indeed this type of thinking is not just limited to field service. Already most really profitable manufacturing companies have moved away from a product dominant focus to a Service Centric approach.

These companies focus on value creation in their customer’s business leveraging their technology and inherent know how to earn better than average margins.

Indeed this is a concept I will be promoting in 2015 together with the Servitisation guru Professor Tim Baines of Aston Business School, as part of the Manufacturing Services Thought Leadership network initiative to be launched later this year.

But it also dawned on me, that it is our imagination that is now the limiting factor.

Frankly the technology is out there to do more or less what ever you want. The big gap is our understanding of what these technologies can do for our business.

Indeed it is Service Thinking and Imagination, which companies must master if they are to reap the full rewards offered by these new technologies.

Already larger OEM’s are exploring these concepts in a very pragmatic way. We see them building infrastructure that sits between their Service Management System and their devices as they discover the benefits of remote services.

In the coming year, together with FSN, we will explore the progress they are making. So in 2015 if you want to stay ahead, don’t be a sheep…. Be a Service Thinker!

 

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Servitization has been talked about for many years but all of a sudden it seems to be a key topic on the agenda of many manufacturing companies and also amongst may service based organisations as well. For those companies that tread the path being dubbed the fourth paradigm it will mean a complete rethinking of how they view field service. 

At the recent AfterMarket conference in Amsterdam Field Service News Editor, Kris Oldland hosted a panel debate with three speakers key to servitization; Professor Tim Baines, Aston University a leading proponent of the movement, Brendan Viggers, Product and Sales Support for IFS Aerospace & Defence division who has worked closely with a number of companies such as Emirates on moving towards a servitization model and Koen D’Haeyer, Global Manager Service Development & Technical Services Lely who had been through the journey himself with Dutch Farm Technology company.

Kris Oldland: The case studies we hear around servitization to date all seem to involve large organisations with quite complex or evolved business models already. Is it the case that servitization only applies to companies that have the size to make it work?

Tim Baines: I’ve worked with quite a few smaller companies which has been quite interesting first of all to break away from the myth that servitization is just about large companies. By this time next year we will have got around 70 companies within our region of the UK the west midlands engaged in servitization.

One company which helps us breakaway from this idea that it is all about delivering complex products is a company that actually delivering pallets, regular wooden pallets and these pallets are used in the automotive industry to move windscreens and cars and things like this. There business model before we got involved was they would make a pallet, sell the pallets.

 

But what they are doing now is slowly but surely getting into the space where they are making the pallets, they are designing the pallets for the application, they are working with the customer to make sure the pallets are well suited, they are actually putting the pallet in the system, they’re tracking the pallets, they are taking care of stock control and slowly and surely they are moving to a position where they are becoming the business process outsourcing partner for the customers own material handling system.

Whilst this may not be a perfectly clinical example of servitization by some definitions, but nevertheless it is a good example of a small company that has adopted the principles of servitization and then put them into practice.

Koen Dyaeyer: I couldn’t agree me that smaller companies companies servitization can work. I have a history in smaller to medium sized companies, and we went drastically through servitization aspects even by a make and buy proposition through to quality assurance etc so it’s applicable for sure in all industries.

What I would say is that technology there is an extra opportunity as in complexity it is very much possible to create the value of your expertise which is also holds true of course.

Audience Question: Whenever we decide to do any transformation a big chunk of it is behavioural change, besides the software and the hardware how to you trigger the behavioural change within a company?

Brendan Viggers: For us its understanding the processes, being able to model those processes and work as a team to fully understand what the different functions and responsibilities you have within that team. But its also being able to drive down to having a piece of data that will ultimately help you deliver that new change.

Koen Dyaeyer: My experience is set directions clearly for each individual so people understand what is needed from them to achieve the goal. Also motivate people, there is a study that says people only get a message when it is [quote float="right"]There is a study that says people only get a message when it is repeated twenty three times. That’s often a slogan that I use, just repeat it and to be honest sometimes it may need to be repeated forty six times

repeated twenty three times. That’s often a slogan that I use, just repeat it and to be honest sometimes it may need to be repeated forty six times but energise it, make it engaging.

 

Tim Baines: The companies that I studied when we wrote made to serve, were all companies that were pulled into the delivery of advanced service by their customers. In some instances companies they were pulled into this space kicking and screaming, they were product based companies and they were given no option.

What’s interesting to me now is this second wave of organisations where in some instances you are not being pulled into this space by your customers, rather your looking at the benefits that organisations such as Rolls Royce and Caterpillar have got from servitization and you want a piece of that action. But you have a different set of challenges. Some of the challenges remain the same but some are very different.

For example you have to educate your customers, about the opportunity, this is the theory here, an innovation theory showing us the difference between market pull and technology push. You’ve now got to educate your customers. You’ve got to get the buy in of the whole organisation to the servitization approach. Some of the processes and tools that are out there are great once you’ve started down the path but really to start to get the traction in the first instance, to really get people at board level to buy-in to the idea is one of the biggest issues.

 

How to inspire the senior management, how to get the messaging about what it is that servitization is about both internally and externally, how to frame servitization so they know what you are talking about. Going to customers and stimulating a customer demand which then pulls everything together.

Look out for more from this debate coming soon... 

Servitization is a key trend in that is rapidly on the rise in manufacturing realm and it's impact on Field Service could be game changing. But what exactly is servitization, how can it change the way we work and will it live up to the hype?

To find out more Field Service News Editor, Kris Oldland spoke to Professor Tim Baines one of the leading proponents of the servitization movement

 

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Across December and January we asked our readers to nominate candidates for the inaugural #FSN20, a list of the twenty most influential people in field service. We received nominations from across the globe through social media, email and even a phone call or two directly into the news-desk.

Armed with a list of candidates, a Field Service News panel selected the final list of twenty based on the number of nominations, their impact on the industry (past, present and future) and their sphere of influence in both the physical and digital world.

After much long deliberation, heartful debate (read arguing) and enormous amounts of coffee we managed to whittle our list down to a final twenty which we pleased to present to you here the inaugural edition of the #FSN20. You may not agree with our selection and if you don’t tell us, tell your friends, tell your colleagues, hell tell the world - because at the heart of it that’s what this list is all about, getting people talking about excellence in field service and raising the profile of those leading us to a better future.

We will be announcing who made the list in alphabetical order in four sections across the next four days. So without further ado we are pleased to bring you the first five of the #FSN20

Colin Brown, Managing Director, Tesseract

Every generation or so a company will pioneer a new approach and then when they start to get some traction everyone else follow’s suit. Service Management Software company Tesseract under Brown’s long standing direction happen to have been that company twice, being the first company to launch a Service Management solution firstly for Windows and secondly in the Cloud.

If they head off in a new direction again I’d suggest paying attention.

Follow Colin @tesseractuk

 

 

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Professer Tim Baines, Aston University

Co-Author of “Made to Serve” and also Director of the Aston Centre for Servitization Research and Practice, Baines is one of the leading figureheads for the servitization movement, which could have an incredible impact on how field service operates for companies that adopt this approach.

An engaging and passionate speaker, with unbridled passion for his topic, Baines is one of the most significant figures in what is potentially one of the most significant industrial concepts in the twenty-first century.

Follow Tim @ProfTimBaines

 

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John Carroll, CEO, The Service Council

As founder of The Service Council Carroll’s impact on the field service industries stretches far beyond their home shores of the U.S. and right across the globe.

Having rapidly evolved from a good idea to a community spanning across 6 continents and representation in more than 30 countries, Carroll finds himself spearheading one of the most influential groups dedicated to field service in the world.

Follow John @tservicecouncil

 

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Alastair Clifford-Jones, Managing Director, Leadent Solutions

For perhaps too long Leadent Solutions have been one of the industry’s best secrets as Clifford-Jones has quietly built his managing consultancy with a team that, unlike some of his better known competitors, is populated with people who have worked in similar roles for their clients –so they inherently ‘get it’.

Therefore, it is not surprising that they are putting together an enviable track record of working with some big names and I think soon many more are set to follow.

Follow Alastair @LeadentSolution

 

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Sumair Dutta, CCO, The Service Council

In his previous role with Aberdeen Dutta headed up the organisation’s Customer Experience and Service Management Group and was a significant key figure in the launch of Aberdeen’s Chief Service Officer Summit Series.

Now in his role as Chief Customer Officer for The Service Council Dutta is one of the most widely seen commentators on the industry.

He also has field service’s best avatar.

Follow Sumair @suma1r

 

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See the rest of the list here:Part Two, Part Three,  Part Four. 

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Rolls Royce once reinvented service in the aerospace industry with ‘power by the hour’ they are about to do it again with ‘disruption based availability’ writes Field Service News Editor, Kris Oldland...

When it comes to creating real value through service and integrating your service offering and product into one holistic package that generates far greater value for your customers and far greater long-term revenue for yourselves, there is one company whose name is come across in almost every conversation.

One company who are the ultimate example of what getting it right looks like.

One company who revolutionised not only the way service operates in their industry but indeed how an entire industry operated.

That company is Rolls Royce Aerospace.

So when we were asked if we would head down to Bristol to record an interview with Dave Gordon, Program Director for Rolls Royce’s Defence Aviation division for a series of interviews for the International Society of Service Innovation Professionals (ISSIP) we leapt at the chance. And we were not disappointed.

Accompanied by Service Management Specialist Nick Frank we arrived at the Bristol Base, after submitting an array of additional paper work to allow us to film in what on the surface seemed a fairly regular corporate building, although the strict restrictions on where we could and couldn’t be and the detailed examination of our equipment relayed that this was still for all intense purposes an integral component in the Royal Air Force’s operations and therefore access was neither granted or to be taken lightly.

And as we met with Gordon he too carried this air of being somewhere between corporate and government official. As we got set up he spoke with a relaxed and comfortable manner of the experienced corporation man. Getting our coffees personally, making light-hearted small talk about a recent decision to have laser-eye surgery etc.

You felt this was a businessman who had sat in many meetings such as these before, that was calm, relaxed and in control. Yet when we begin the interview and talk about the role Gordon plays he speaks about the UK client, he touches on their engines performance in ‘extreme conditions’ and you suddenly realise just how much pressure he and his team must be under to deliver, when your customers are some of the worlds leading military forces and we live in troubled times where the air strikes in Syria, would be just one example of where both Gordon’s and Rolls Royce’s reputations are put to the test in life and death scenarios that will effect the lives of thousands.

 

Yet still one gets the impression that Gordon would remain the same calm and amiable figure fixing the coffees before the meeting begins, if he was a meeting with a group of RAF Air Marshalls, US Marine Core Generals or as in this instance a member of the trade press.

The other early observation is that he is clearly very proud and passionate about the work he and his team are doing for Rolls Royce.

“Rolls Royce within defence has been on a journey over the last ten to fifteen years, we were a fairly traditional provider of the service we sold a product, we sold a very time and material based service solution, it was very driven by the customer and their management of our product” Gordon begins

“However, it became clear to us that that wasn’t the best fit for our customers” he continues. And it is this attitude, this belief that they can stand in the face of a customer driven process and say ‘hold on, we think we should be doing all this a bit differently’ that has separated Rolls Royce from the rest of the pack in the sectors they operate in.

Although their famous power-by-the-hour service system that is at the heart of their success as a serviced provider required a leap of faith from another global player in the industry.

“There was a very strong pull from American Airlines, who approached Rolls Royce and said we would be far more interested in you providing a solution that kept your engine on wing and we incentivised you for doing that” Gordon explains

“So we worked very closely with that customer and developed a total care solution that very much focuses on that end-to-end need and during that process Rolls ourselves have gradually taken on more of the risks, more of the responsibilities for managing those assets”

And Gordon’s own department in defence have followed this path now themselves taking a strikingly similar journey forward with the those he refers to as ‘The UK Customer’

“Within defence we’ve taken some of those core tools and processes and embedded them into our own value offering to our customer and we particularly use the UK Customer as a testing house to work with them.” Gordon continues

“They themselves were going through a major transformation looking to downsize the scale of their operation and drive efficiency. We were very much up for that journey as well. Very much a collaboration we went about introducing a far more availability based solution, which has been very successful”

However yesterday’s revolution is today’s best practice. And the only true revolutionaries are those who continue to innovate, continue to push boundaries and continue to look for ways they can further improve tomorrow.

Both Gordon and Rolls Royce fit into this camp.

“As we look to the future, we’re starting to work with the customer to go beyond just an availability solution and say what’s really disrupting that customers operation? What is really stopping them doing their job?” Gordon comments before taking a moment to pause.

[quote float="right"]We want to get to a point where they are no longer thinking about my propulsion system they’re just focussed on prosecuting their operation. To do that we need to know a little bit about the nature of the disruption and what we can do to help

“We want to get to a point where they are no longer thinking about my propulsion system they’re just focussed on prosecuting their operation. To do that we need to know a little bit about the nature of the disruption and what we can do to help.” He adds with a definite hint of excitement of that future being within touching distance. It is this concept of ‘disruption based availability’ that Gordon and Rolls Royce clearly believe to be the next evolution of there service offering as they continue to lead the industry from the front.

 

“Disruption based availability is something that we been very focussed on”

“Disruption based availability, or sometimes we refer to it as project zero, as in zero disruption to the customer, is something that both us in Defence and our colleagues in Civil have been very focussed on.” Begins Gordon.

“Understanding that it’s not just about guaranteeing the engine time on wing but actually understanding when the engine does have an incident that causes some disruption to the customer, even something as minor as a delayed take off, still that clearly has a cost. What we have been trying to do is work with our customers to understand very clearly what that cost is.” He adds.

It is a bold vision of where the Aerospace giants next steps will be, yet at the same time it feels like a natural evolution from where they are today. It’s also an approach that will yield a number benefits both hard and soft according to Gordon.

“The benefits are both the tangible where we can build an offering around saying ‘We understand the impact around cost and therefore if we are able to reduce that we can develop that into a value proposition...  but also there is an intangible piece to this as well as it helps me to motivate my teams to understand the exact impact an event will have on a customer. To help them see the fact that there are repercussions way beyond a flight not being able to take off. It will feedback into the impact such an event has on the wider operation, the planning that went into it, the need for contingency planning, and so on…” Gordon explains with enthusiasm

“Understanding the whole eco-system that sits around not just my product, but the system it’s working in and how the customer is using it, and then understanding how we can reduce the impact, you can clearly demonstrate the value to the customer, and we’re working with them to do that….”

He takes the briefest of pauses, giving his next thought some consideration before committing to it.  But when he does it sums up exactly what both Gordon and Rolls Royce are all about

“It’s a real motivator for me as the team really starts to understand what customer service actually means.” He adds in an almost solemn tone.

And this for me is it, there is a point in any interview where you grasp the heart of the story, and you see your subject in their truest light. Dave Gordon and Rolls Royce are a perfect fit. Look at the DNA of both the man and the corporation and you’ll find service deeply entwined.

In the heart of each you’ll find a desire to innovate, to keep pushing the boundaries, and to keep on being revolutionary.

Which is why I expect both to succeed.