The Peggy Smedley Show: Shifts for OEMs

Twisthink’s CEO, Dave Moelker, had the opportunity to join The Peggy Smedley Show podcast to talk about the societal factors impacting OEMs (original-equipment manufacturers) today, including shifting customer expectations and accelerating technology cycles. Dave says there are a couple of different dimensions, especially in the B2B context.

They also discuss:

• The need to bring in muti-disciplinary groups.
• The importance of contextual data.
• Two next steps to take.

Transcript

[00:00:06] Peggy Smedley: Welcome back to The Peggy Smedley Show. Your voice for our connected world with your host, Peggy Smedley. Hello. Welcome back to the Peggy Smedley show is always on your host, Peggy Smedley. We’re talking today about a critical moment in OEMs time. As they rethink what they build, what they buy, what they must own to stay competitive. And this is really important because customer expectations are shifting very fast. Technology cycles are accelerating as the AI is actually shaping products and way they come to life. OEMs are being pushed to make decisions to go far beyond engineering or even procurement. And this is really very important because these decisions are defining customer experience differentiation and long term value. And with that, let me introduce you to my guest. He’s Dave Moelker and he’s the CEO of Twisthink, who joins me for a three part monthly series. And we’re going to really dive deeper into the challenges and even opportunities that OEMs are going to face today and into the future. Dave, welcome to the show.

[00:01:27] Dave Moelker: Thanks, Peggy. It’s great to be with you today.

[00:01:30] Peggy Smedley: So, Dave, you and I have spent a lot of time talking about the challenges, the opportunities for OEMs, and I want to set the stage for really what’s going on in the original equipment manufacturing space. That’s what we’re talking about with OEMs. And I thought maybe the first question that I would throw out to you is how customer expectations change for what an OEM can deliver today, because this isn’t a simple answer or a simple response, and I think you’re the best one to maybe help me sort through that.

[00:02:10] Dave Moelker: Yeah, I think there’s a couple of different dimensions that we see some of these expectations changing, and especially in this B2B context for I know a lot of your listeners, and I think one of the easiest ways to describe it is when we think about sometimes we call it the iPhone effect or the Amazon Prime effect, right? And so as consumers, we’ve all gotten very used to seamless experiences that get delivered to us through these technologies in our day to day. And that’s bleeding over into the business context folks now expect when they order a product for it to show up next day. And how do we as a solution providers, as OEMs, have that level of agility within our supply chains? How do we make sure that the digital side of the experience is also match what the expectations are, right? And again, in the B2B OEM space, often it’s a really complex set of stakeholders who are involved, and there’s often dealers involved, service teams involved. There’s a broad range of stakeholders and the digital experiences that are provided to them, whether that’s their ability to order easily and simply, whether that’s warranty claims. All the different elements through the full life cycle of a product are impacted by these experiences and how OEMs really deliver something that’s seamless end to end throughout the life cycle.

[00:03:31] Peggy Smedley: It’s funny, as I hear you talk about this, because when you talk about warranty claims or you talk about customer expectations, it seems we’re a society that’s very spoiled. We want to instantly that iPhone effect. You talk about our Amazon Prime, we have changed and that’s really changed the supply chain. And I think it’s pushed a lot of pressures or disruptions that are being forced with OEMs to rethink how they do things. And maybe the question that I would want is, how does that how does an OEM then compete and actually deliver the value in a B2B space? It’s just not a consumer space, but they have to meet those demands for consumers. But they’re in that B2B. So we get lost sometimes in understanding the differentiation because you’re in a B2B environment, but you’re delivering products that we, the consumers demand.

[00:04:28] Dave Moelker: Yeah, there’s a lot of complexity to that. And I think that’s underlying what we’re talking about here in this balance of what do you build and what do you own internally within your core competencies, and what do you leverage partners and your supply base for? Right. And there’s a lot of decisions to be made that are extremely strategic. And then maybe we’ll unpack that as we go. But there’s a lot there to think through. And how do you make sure, as an OEM that you are retaining and controlling those points of differentiation and value unlock? How do you partners where things are a value but not yet commoditized? And then you can really by and leverage in these areas a supply base when things are commoditized, background infrastructure, etc. So don’t spend your precious internal time and energy and resources on the things that are undifferentiated or commoditized already in the market. And we see a lot of our customers really working through that and trying to figure that out. And frankly, internal teams who have taken on and tried to build too much of the solution. When there’s great opportunity to leverage partners to deliver on aspects of what they need, and it distracts them from the core of what they really need to be focused on day to day. And that really erodes their ability to deliver value in the market.

[00:05:48] Peggy Smedley: And that goes to the point about we’ve changed from this engineering to procurement kind of focus. What was one to now thinking about strategic customer experience driven and that kind of decision that has to happen now really talks about that balance and then saying, how do you go about delivering it in a timely fashion, but thinking that you have to understand the right tools, the right people, the right processes, and that balance that you’re talking about is a difficult one.

[00:06:20] Dave Moelker: Yeah. And in a lot of organizations, we see the way that these initiatives in the digital AI, IoT, all of these types of spaces are extremely cross-functional in terms of what aspects of the organization they hit on. It is, like you said, no longer just an engineering function to decide, let’s say, what telematics hardware do I want to put on my equipment, and what data do I want to send from that unit? Engineering is going to make that call from a lot of different constraints, and we’ve seen cases where then the warranty teams or the sales teams, the support teams are asking for data that if the engineering teams had just known you wanted it, it wouldn’t have been hired. But now I’ve got a fleet out there with none of that capability in place, right? And so if you don’t bring in that multidisciplinary group across the organization, who’s really thinking about it strategically and again, holistically across the end to end lifecycle of these products and solutions, you’re going to have gaps and you’re going to have misses that are going to be costly to go resolve. And so that’s where it requires both a bottom up engagement within organizations, across disciplines, and that willingness of an organizational culture to break down some of those silos, but also leadership to show that they’re thinking strategically about these kinds of initiatives and investments and the build out of technologies and and really driving that top down and meeting in the middle there throughout the whole process.

[00:07:46] Peggy Smedley: Hearing you talk, it’s become a difficult process because we’ve been flattening out a lot of organizations, and because of that, top management is having to think a little differently the bottom up. So now everybody’s talking about AI coming in here and reshaping technology ownership. And everyone’s trying to make good decisions. And how do they do that with OEMs. And so we’re all rethinking the processes, those silos that you talked about it. Everybody’s trying to figure it all out. So there’s a big mix in companies and manufacturers and OEMs. And everybody coming together is trying to figure out what’s the right mix. And I don’t think anyone can honestly say they have the right answer just at this time, but they have to have the right partners, as you just described. How does an organization like what you’re saying look at this and say, where’s AI going to play in? But more importantly, who’s the right organization that helps them piece all this together?

[00:08:50] Dave Moelker: Yeah. What AI is doing right now is definitely raising a lot of questions for a lot of organizations ourselves internally, and we see it with so many of the customers that we serve asking that question, okay, if AI is this capable and can do the starts of things we’re doing, seeing it do, especially in this world of software development and bringing together these vast amounts of information and helping us process through it. What does that mean for for what capabilities I need to have internally and how do I leverage partners and to uplevel that? Where does that value accrue? Right. Am I in a position to take advantage of the value that comes from AI? And that’s where for organizations who have swung heavily towards outsourcing and leaning exclusively on external partners and suppliers to deliver core technologies, they find themselves in a position where you’re not able to take advantage of that value of AI and the acceleration and the flexibility that it can provide. And so that’s an opportunity. If you’re in an organization that’s gone heavily towards outsourcing, how do we start to bring back some of these pieces internally and empower our internal teams with these AI tools? Because at this point that’s really they’re not fully autonomous. They’re tools that humans need to be using. Right. How do we empower our internal teams with these tools and start to get some of that value that AI is able to bring to the process? I think the other dimension where this conversation around AI shows up a lot is around data and quality of data, especially for us and for you, Peggy. Being closely tied to the space of IoT for a lot of years, and just the importance of data quality as it relates to AI, right. And so I think a lot of organizations have been spending a lot of time and energy building out IoT solutions, IoT platforms starting to get a lot of data, and the conversation is starting to move, frankly, in these kind of contexts, in many away from IoT, as if it’s a totally solved problem. And it’s there’s a lot of it that’s a lot easier than it used to be, but there’s still a lot of it that’s hard. And a lot of organizations that are struggling to get IoT to the point where it’s delivering consistent value. And I think the opportunity for AI unlock on top of that value is really immense over the next few years here. But organizations need to look carefully at what’s the state of my data, particularly in an IoT sense, but even broadly, and how does that really enable me to, again, get the value unlock that AI represents with the teams that I have?

[00:11:24] Peggy Smedley: I really love the part that you talked about IoT, because clean data, everybody has a lot of data. But the real critical point there is clean data and being able to leverage that data to take it to an advantage. And I think, and correct me if I’m wrong, I think this is where OEMs have an advantage. This is where I think they don’t even know right now. They can really do more and really show something to their solution partners that they can do many things that I don’t think they recognize right now. This is where they can leapfrog and they can shine because they have all that. And now this is where they can take things to new heights, but they have to know what to do with it. But the problem is they have so much data. They’ve got to figure out how do they leverage it, how do they do more things. And I get so excited about this. And I think you understand that. But it’s organizations like yourself who understand data is critical. How do you take that? How do you develop it? How do you use it? And how do you now say it’s not just about the AI, but AI gives you the visibility to really capture that. Talk about that right now.

[00:12:30] Dave Moelker: Yeah, it’s a great point. And I think one of those things that OEMs have that maybe their solution providers don’t, is a lot of that contextual data like you’re talking about. So we can start to bring the IoT data.

[00:12:44] Peggy Smedley: That’s the word! That’s the word Dave! Everyone’s gotta hear that! The contextual data! I think we should just go out on the road and just tell everyone to understand that.

[00:12:53] Dave Moelker: Yeah, yeah. And I think I like to use the the predictive maintenance use case as one that really highlights this. Because I think in the world of IoT, a lot of solutions have sold on the value of, hey, this is what we could do with predictive maintenance. But we’ve had customers in very real cases where, hey, we want to do predictive maintenance. We’ve got this IoT data. Great. Do you have any service records? Do you have any data around what actually happened? Any data around how we can make sense of the anomalies that we’re seeing? Great. There’s an anomaly off of a piece of equipment. But what does that mean? What is the context around that? Oh, after that anomaly, somebody came into service and this is what they fixed. That is critical rich data that needs to come right alongside that IoT data. And without it, you’re really missing on a lot of the value of what I can ultimately deliver. And so as an OEM, you get to open the aperture beyond just okay, I’ve got now this telematics data, let’s say on a piece of equipment to how does that tell data now make more sense when I pair it with service data, warranty data, manufacturing and quality data, all of these other data sources and data streams that an organization have, how do they come together to deliver something that that much better than what they could do independently? And I think that’s where the excitement of AI starts to come in. Right. And the ways that AI is making it now easier to build those insights on top of these complex data sources. But it’s got to be good data. It’s got to be clean data, right? It’s easy to say garbage in, garbage out, however you want to say that, right? And that’s still some hard work that I think a lot of organizations and we see a lot of organizations have a need, an opportunity to continue to think about how do we get that data in the right place, in the right way, usable in driving that value?

[00:14:37] Peggy Smedley: Organizations try to do projects, and they didn’t go anywhere. They just they used the line, they projects failed projects purgatory. But now when we have all this good data that you’re talking about, the capabilities become so critical to critical for OEMs. And they want these outcomes. Where does it make sense? You just describe for partners, for suppliers. But going to that next level give us more of those maybe examples. You gave us some here, but I think we’ve got to get them to think outside the box. We don’t want them to think that they can’t go further than what they think, because now with AI, the capabilities are unlimited, and I think we say that. But I think what’s holding a lot of organizations back is themselves. They don’t realize, they say this is a lot of work, but it’s not. AI is unleashing that, as you just said, the contextual side of it, but it’s doing it faster, quicker, easier than ever imagined before. Because they have it. They’ve been collecting it. They just didn’t know what they were collecting.

[00:15:44] Dave Moelker: Yeah, yeah. I think one of the places that’s most important is really that business and customer understanding and that ability, like you’re saying AI can accelerate, but if we accelerate in the wrong direction, we just accelerate ourselves further from a point of value. Right. You know, we’ve got to make sure that where we’re going is the right direction for our business, for our customers, for our stakeholder networks, whether that’s dealers or sales channels, etc.

[00:16:10] Peggy Smedley: That’s a very critical point you just made there, because we get so excited, AI is going to take us down this wonderful journey. But if the journey takes us down, we’re back to where we were square one with looking at IoT. Everybody talked about IoT being the miracle, but we got stuck and people started saying, I don’t want it, but it was because we couldn’t do anything that we wanted to do. IoT is brilliant, but you have to be right with it. So now we’re saying, look, you’ve got to be strategic. So now continue. I want you to go down that path. That’s a great point.

[00:16:44] Dave Moelker: Yeah. I think it’s really about that understanding of what the product and solutions that you’re delivering need to be. Right. And that’s at that intersection of what is the business need. What’s the business value we’re creating, what’s the value for the stakeholder that we’re unlocking. And then what’s the technology that can ultimately help us unlock that. And you need as an internal organization to have that capability to sit at the intersection of those three lenses, if you will, and be able to make decisions on where are we going and what are we doing, where are we going to put our effort towards, what are we going to build? And so I think something that we see as a third party team who’s coming in to help a lot of our clients is we can help guide and direct that. But you know your business best, right? We can come in as fresh eyes and we can support you, but you know your business best and you know your customer’s best. And that’s the way that I think it should stay for a lot of for every organization. Right. They should understand their business and be able to direct where they’re going. So you need to have that vision, that strategy, that ability to understand where you’re going. You can’t outsource that, I think, and that’s really critical. But then where that goes to next is talking about ownership. What should you own and what’s most important. And so I think back to the data conversation to an extent. Right. Having control of your data. Now this isn’t to say you have to build everything in your tech stack. You can still leverage partners in certain cases. Right? It makes sense to leverage, let’s just say, a third party telematics solution. But you need to make sure that you, on the back end have access to that data, have control of that data, can use that data and contextualize it as you need to within your business. Right? It can’t be locked away from you in such a way that it limits what you can do and what value you can deliver from it downstream. So I think making sure as an organization, you’ve got that ability to understand the data that you have, what access do you have and be able to pull that together gets really, really important. And then regardless of what you’re building again, we see sometimes organizations have swung too far towards the outsourcing side. They have a significant technology that’s part of what they’re delivering to the market, but they don’t understand any of it internally. And again, not that you have to have built it all internally, but you need folks within your organization who understand enough of what’s going on there that they can help direct where it’s going in the future and understand where that line deserves to be. As technology continues to move fast, because the unfortunate challenge in reality is where that line is of what’s commodity and what’s value. Driving is constantly changing, and you need the internal teams who can navigate that.

[00:19:21] Peggy Smedley: There’s a lot of talk now that do we need as much data? Is the data that critical? Are we overemphasizing the data? Where do we draw that fine line for OEMs to understand. They had this data and that’s data is the oil or data is not the oil going forward. How do we get them to understand that’s the competitive advantage that they need to have to continue to get the value that they need to get at the same time, with not again deciding where’s that fine line to where it is not.

[00:19:52] Dave Moelker: Yeah, yeah. I think a couple of the pitfalls that I see folks falling into in this space is the what I would sometimes call the wouldn’t it be cool if and I balk at the word cool, I’m like, I don’t care about cool. I care about driving business value. Right? And so just because it’s cool doesn’t mean we should go collect it. So first of all, and tie it back to what’s the actual business value you’re creating, right. And who’s going to pay for it. Right. Like it’s got to go back to some business value that you’re unlocking. Right. And either that can be in the form of efficiency and operational cost savings. But I think frankly, that’s where a lot of the focus gets. But you miss also the top line, the revenue growth, the business model, conversations that you can start to have when you have some of these technical capabilities in place. So making sure you’re tied into the business value and then making sure you’re tied into the value you’re driving for the stakeholders with that data. So like you said, collecting a whole treasure trove of data for the sake of having data does nobody any good. You just drown in it and you spend a lot of time and money and it doesn’t drive value. So make sure you’re tied to the business, value the dollars and cents, and make sure you’re tied to the value of a stakeholder who’s going to actually help drive that business case forward.

[00:21:04] Peggy Smedley: So how do the OEMs balance the need for speed with their partners, with the need for long term? I guess you would say control and differentiation with what comes from building. It sounds like there’s a lot of complexity there. And the challenge is knowing how where they fit in the marketplace with that. That’s what I’m hearing you say, because you’ve got what’s cool and what’s not. It’s that kind of question. And yet at the same time, right now, we’re hearing everything go fast. But everything needs to be a journey strategy. You need to know what you’re doing and have the right people. I always say it’s people process technology, and I’ve been saying that the IoT days. I don’t really think it changes with AI, but at the same time, you’ve got to keep up.

[00:21:57] Dave Moelker: Yeah, it’s definitely a tension. It’s definitely a tension. I think one of the biggest things to make sure is you’ve got the right partners at the table who you can really craft a win win with. And and moving out of a supplier mindset sometimes is how we talk about it. But somebody who you can really work closely together and find a way to balance that internal team, right. Like you say, those people that you have internally with that capability and that leverage point that you could get from the outside. So I think as in any sort of lever, to use that metaphor analogy. Right. Like you need something on both sides of that lever, right? You need an internal team who knows how to push that lever. And on the other side, you’re getting the leverage and the motion through the partners that you’re able to use and work with. Right. So finding those right partners I think is really, really important who enable you to have that ownership of those key pieces long term, but bring something of value to the table. Right. So make sure they’re bringing those key aspects of either a technology stack or an expertise, whatever that might be to the table. And recognize partnerships are a great way to to honestly upskill your your internal teams. Right. And so build your internal teams capability faster. Right. So we see folks where they want their internal teams to be using maybe AI more consistently in the way they develop software. Well, partners who are already demonstrating even just those day to day realities of how to use AI and software development, working with them, your team’s going to get that much better and that much smarter on how to use these tools. Just by seeing somebody on the outside and how they use it, and really go in the trenches with them and see how that works. And that can be a really great point of value and leverage as well for organizations.

[00:23:40] Peggy Smedley: There’s no question about it. The best companies recognize they have to collaborate. They have to partner. There’s no question on that. And we’re seeing that with AI. You don’t have to do it all alone. You’ve got to have partners. So what are the first steps that you would recommend OEMs can take to elevate their capabilities without massive investment? Because that’s what many are thinking without throwing through all of this, right?

[00:24:06] Dave Moelker: I think there’s two things you want to do in parallel. One is assess where are you at from a data perspective? What data do you have? What’s the state of it? Is it usable? Is it clean? So assess where you’re at from a data perspective. And you could even expand that to your overall tech stack if you want. But I think data is probably the tip of that spear. And in parallel again like I’ve been saying, make sure that you’re engaging your stakeholders of who’s going to be getting that value from these kinds of systems that we’re talking about and these kinds of solutions and understanding where that value lies. Maybe one thing I’ll just pile on there, that is, again, one of these pitfalls that we see is focusing entirely on the value created for internal stakeholders. And that’s great. But when we talk about being an OEM and delivering a product or a solution to the market, we’ve got to make sure that what we’re building isn’t just for ourselves as OEMs. It’s for my sales channel dealers, third party service teams, etc. and ultimately for those end customers. And if what my initiatives are that I’m investing my time and energy in are entirely for myself, that can definitely be an area for you to maybe take a second look, step back and say, where can I use the data that I have to deliver value outside of my four walls?

[00:25:16] Peggy Smedley: What’s it typical framework, practical decision framework that an OEM needs to look when they’re trying to determine what to build, how to build all these things that you’ve been talking about? Is there something that we have to get them thinking about this? Because it sounds like to me this isn’t just one, two, three. There’s some steps they really need to be following here.

[00:25:40] Dave Moelker: Yeah, yeah. I think really stepping back and looking strategically is the first step of that process. Right. What do we need to own? Where do we see our ability to create value in the market? Having that as your guidepost, we see cases where sort of the tyranny of the urgent drives a lot of these decisions that are made from an ownership and a partnership perspective. They got to get this product launch by this date or these sort of urgent things, but you’re not thinking about it strategically and what the long term ramifications are. So step back and have some of that internal framing of what do we believe we need to own. And then assessing, like I said, the current state of things, but it looks like you got maybe something that in there.

[00:26:18] Peggy Smedley: I was gonna say, do you have to make sure you have by in top down, bottom up, that entire way of making that work?

[00:26:25] Dave Moelker: I think that’s one of the key values of having a clearly articulated strategy so that you can articulate to your organization and even to your outside partners. Why are we doing it this way? Right. So internal teams aren’t asking themselves, hey, why don’t we go higher? Those people outside, I want to do that. I want to do that cool project, or I want to go develop that new solution, or why aren’t we investing our own efforts into to building these capabilities internally? As leaders, we need to be able to articulate the strategy or the why behind some of these strategic partnership kinds of conversations. Or conversely, if we are asking the team to build a new capability internally, right. There may be resistance to that. Man, we tried that before. Why is now different right. Or man, that’s going to be a lot of work. You’re asking this division to take on something that they’ve never done before, right. And so if you can clearly articulate the strategy and the why, I think it’s really, really important to drive that value up and down and really streamline the whole process and keep the organization moving in the same direction throughout.

[00:27:23] Peggy Smedley: So looking at that Dave, you definitely are indicating that there’s you have to understand and you have to understand what the challenges are in the marketplace. So for our listeners right now and those who are watching this, what would you tell them they need to have as a call to action? I don’t want my listeners to just feel they heard us talking, and that’s what they do with every show. I want them to feel like there’s something that they can do now. Are there some things that you would encourage them to say? It doesn’t matter what industry you’re in, what these are the things that will help them move forward and they at least can start. They feel like I’ve learned and listen to this now I feel like you walk away and do something.

[00:28:01] Dave Moelker: Yeah, yeah, I think really there’s two number one, go out there and talk to your customers. There’s nothing more important than I think you can do than going and talk to your customers. And then as you then come back to your organization, take it back to the teams who have access to a control of your data and understand what is the data that I have, and how can I use that data to help solve the pain points of those customers that I was just talking to? Right? So engage your customers. Make sure you’re understanding where you’re producing value that way, and then look at where do you stand from a data perspective. And honestly, for most organizations, there’s an opportunity there to get better on the data quality side. And you’re going to find that delivers a lot of dividends as you make the next steps into building solutions and delivering for your customers on top of that data foundation that you’re building.

[00:28:49] Peggy Smedley: Dave, I really enjoyed this conversation. I’m very excited. We’ve got two more of these in the next couple of months. So Dave Moelker, CEO of Twisthink, where can our listeners go? I know you guys are doing so many different things, so many different verticals. Where can our listeners go to get in touch with you and to learn more about what Twisthink is doing?

[00:29:07] Dave Moelker: Yeah. That’s great. You can come right to our website, www.twisthink.com. You can find us on LinkedIn and follow us there. Or you can even find myself and reach out. Be happy to have a conversation directly with you as well. So those are all great channels.

[00:29:20] Peggy Smedley: Dave, this was a great conversation. Thank you for joining me today.

[00:29:24] Dave Moelker: Yeah, thanks so much, Peggy.

[00:29:26] Peggy Smedley: All right, listeners, that is all the time we have for today. Make sure to share and subscribe to our episodes each week. Share your thoughts with me on Exit Connected World, or follow me on LinkedIn and continue the conversation there. We’re also on YouTube. You can watch us there. Please check out our website at www.connectedworld.com, our show website at www.peggysmedleyshow.com. Remember we broadcast live every Tuesday at 12 p.m. central, and we also host our podcast every Thursday. This is the Peggy Smedley Show, your voice for Connected World. And remember, with great technology comes great responsibility.