Pump It Up: EU Summit Speaker Opens the Valves on Sustainable Water Alliance Program
You can make the case that old-guard commodity-product-driven industrial companies might have the hardest time with what the business world is calling “digital transformation”—that is, the process of converting products, go-to-market strategy, customer service, and internal business operations to being completely IT-based. If that sounds like a complete corporate makeover, it’s because in many respects it is. Many industrial companies have been selling roughly the same set of static products for decades, in some cases to companies that have been clients that entire time.
Change is naturally hard, so you can imagine that earning buy-in from employees in large, established organizations to embrace a new way of doing business can sometimes feel like an exercise in getting a leopard to change its spots. However, so much is at stake. As Søren Bro, group director and head of digital ecosystems and partnerships at Grundfos, told 2021 ASAP European Alliance Summit attendees, “[The transition to digital] is a challenge and an opportunity for our company.”
Bro was speaking specifically of his employer’s new digital transformation office, which consists of 500 employees who are dedicated to digitizing the organization’s entire product line—Grundfos is the world’s largest manufacturer of water pumps. However, Grundfos’s market cap for environmental change, if you will, is voluminous. As Bro mentioned toward the beginning of his presentation, “How to Leverage Innovation Vehicles and External Talent to Increase Speed and Innovation,” 10 percent of the world’s energy was used by pumps, as of a few years ago.
“Whatever we can do to optimize our products and our customers’ systems will have a significant impact,” said Bro, perhaps understating this powerful reality.
Shared IP? Sure—“as Long as We Own Everything”
In sharing Grundfos’s digital transformation journey with the conference audience, Bro revealed some challenges that are common to companies like his that have been around since the 1940s. For instance, although the digital transformation group sees great potential in Grundfos combining its wealth of domain knowledge and world-class pumps with the startup community’s digital competencies, speed, and agility, not everybody in the rest of the organization is as receptive to external innovation.
“We see ecosystems forming around us that require us to be much more open in our thinking, [but] I’ve been met a lot internally within our company with the not-invented-here syndrome,” said Bro. One might guess that Bro is met with blank stares when talking about the concept of codevelopment. As he described it: “‘Shared IP? That’s fine, Søren, but as long as we own everything, then we’re good with shared IP.’ Yeah, but that’s not exactly what I meant. It’s really a change in mindset and a change in the way we do business.”
Eliminating Technical Issues—and Excuses—Overnight
Nonetheless, Grundfos’s partner program has begun to accelerate innovation. It has also shortened time-to-market for the company, which at times has exposed its own salespeople’s reluctance and aversion to stepping out of their comfort zone. Where once a good portion of the sales team eschewed learning how to sell the company’s independently designed digital offerings because they were rife with shortcomings, partners quickly filled key functionality gaps, leaving the folks in sales with no excuses.
“We hear a lot of this, ‘Yeah, but our products aren’t good enough. Let’s wait,’” Bro explained. “[Now,] we have solved technical issues overnight by partnering up. That puts a lot of pressure on our marketing side and our sales force.”
Bro added that these partnerships haven’t just illustrated the power of the old “1+1=3” adage to the rest of the organization, but also “1+1=2” because Grundfos has incorporated several of its partners’ design elements into its products. “We can start to leverage, incubate, and get the learning from the customers.”
Partners Deliver Customer and Product Harmony
“Operational excellence” and “market leadership” are also goals of the Grundfos alliance program, and Bro explained that certain collaborations and consortia have helped the company achieve it by easing its transition to selling new subscription-based digital services. This has also presented a test of change management skills for a company that has sold products to customers, gotten paid in full on the spot, and sometimes gone 30 years before seeing some of those clients again.
“In these new business models, we need different capabilities within the company. Customer Success has never been a thing for Grundfos,” said Bro. “We need to nurture, we need to make sure [customers] subscribe to the subscriptions next month, next year. Follow-up on ROI cases after six months is a new thing [to us].… Partners are key enablers for us to deliver that to our customers.”
Bro briefly outlined some key partnerships with Global 200 companies like Alibaba and Siemens, as well as startups like CopperTree Analytics, Augury, and Baseform, the latter of which significantly reduces water waste by harmonizing hundreds of pieces of equipment and components so that they work together—for example, ensuring that pumps aren’t running full throttle against a closed valve.
Showstoppers Won’t Prevent Grundfos from Reducing Energy Usage
Yes, Grundfos evaluates its alliances on core quantitative metrics, such as market share and whether partner technologies complement its offerings. However, the organization is discovering that people can be a showstopper if there isn’t a cultural fit.
“We monitor [relationships] over time. It was a great cultural fit or ‘these guys were [jerks].’ That kills a partnership in two seconds,” said Bro.
Above all else, Bro is excited to be a part of an alliance practice that could effect dramatic change.
“When we put a digital overview of a city, we save 50 percent of energy usage on water in that city, and that’s substantial,” he said. “The opportunities we have as a company to really [make an] impact are incredible.”
Moreover, in his view, Grundfos has a wonderful problem: “No matter which [market opportunity] we pick at Grundfos, it’s a multibillion-dollar business because it has a multibillion-dollar impact for our customers,” said Bro. “If we can’t make a business out of saving 50 percent of the energy in a city, I think we should find another job.”