Service Archives - Barry Breede

Product as Service: Rethinking Consumer Behavior and Ownership

I frequently refer to the concept of a circular economy when discussing the future of utility poles—and any industry looking to shift toward a more sustainable process. Instead of thinking of a product as being created to eventually be disposed of, products can instead be repurposed as a part of a more sustainable “disposal” solution. The truth is, many companies think of themselves as merely providing a product and just that. However, there is great opportunity in viewing a product as a service that can ultimately extend its useful life.

Take the carpentry industry, which is facing many of the same regulatory and market demands regarding waste reduction as waste wood. Landfills are filled with massive amounts of old nylon carpeting, and government mandates are starting to force carpet manufacturers to divert large portions—in some cases all—of their waste from the landfill. The companies that have been most successful in meeting this challenge have done so by developing systems for both retrieving old carpet from customers and converting the nylon in that material into usable new products.

The carpet company Desso, in particular, has been a pioneer in this area, adopting a cradle-to-cradle, circular approach, employing a combination of recyclable yarn and consumer take-back programs to use the same material again and again to make their product. The carpet industry has had to react in a broad-based way to the demands for waste reduction. There have certainly been challenges, but what is being done in this industry provides a useful example of how it can be done.

The electronics industry is yet another area where this new perspective has been applied. Hewlett Packard has been a pioneer in this area, diverting millions of ink cartridges with its take-back and recycling program. The company started the program in 1995, and by 2000 they were closing the loop by manufacturing new ink cartridges out of this old plastic. Their “Instant Ink” subscription service automates this take-back process—when one ink cartridge starts running low, the company sends the user a new one along with a postage-paid envelope to send back the old one. Instant Ink represents the shift from selling products to selling services, as well.

This approach often involves a company shifting its perspective on how its products can become assets that become deployed as a service to consumers or end-users. It’s an important distinction for businesses and their customers to make: instead of the consumer purchasing the product and taking full ownership of it, the vendor simply provides the product for the time of its use and retains ownership, so that it can take the product back at the end of its life cycle and find a second use or second life for it.

There are several ways to help both the provider and the consumer make the shift to a “product as a service” approach that will benefit all stakeholders. Learn more about how to achieve this in my book, Transforming the Utility Pole: Using Innovation to Disrupt Commodity Markets and Fuel Sustainable Business.

The Impact of Chemicals on the Product Life Cycle

One of the most frequent questions I hear from people outside of our industry, particularly those with environmental concerns is, “Why do you have to put chemicals on the poles to begin with?” The common belief is that these chemicals, which are really derivatives of pesticides, will have significant negative effects on both humans and the environment.

It’s not as harmful as one may believe; it plays a significant role in extending the life cycle of a renewable resource. To recognize the true impact, it’s important to understand how much and why chemicals are used in the process.

All major pole producers abide by manufacturing standards developed by the American Wood Products Association (AWPA). This association, composed of scientists, academics, and industry personnel, collectively establishes the amount of chemical required during the manufacturing process to maintain the proper functioning of the pole. Per AWPA standards, the typical pole is impregnated with chemicals that, depending on tree species, penetrate less than four inches of the entire diameter of the pole. Given an average-sized pole based on industry standards, this means that less than 5 percent of a pole’s entire mass receives chemical treatment, a relatively small fraction.

Chemicals help extend the pole’s life span by protecting it from things like fungi or termites—basically, any organic thing that might feed off the wood and lead the pole to rot out and fall apart. If the poles went untreated, they would rot out so quickly that they would become much more likely to break, especially during inclement weather – creating extremely difficult situations for vendors, utilities, and consumers.

Consider too how this would impact the environment: if poles only lasted five to ten years, as opposed to decades, that would dramatically increase the amount of timber needed to supply these poles – roughly four times the amount harvested today. Add to that the changes in environmental impact caused by the decline of sequestered carbon in the forest, as well as the effects of logging and manufacturing to increase output, and the overall result is that chemical usage actually does more to help preserve our environment than to harm it.

This isn’t to say today’s chemicals will be the best process for the future. The idea of cleaner, more eco-friendly preservatives is being explored which could replace current processes that extend the life of a utility pole. Learn more about how the utility pole life cycle impacts the commodity industry here.

The Life Cycle of a Utility Pole

Before you can understand the significance of innovation within the utility pole industry, it’s important to better dissect the true-life cycle of a pole, from initial planting of the tree, through manufacturing, and then ultimately to disposal. In this way, we can determine whether an innovation that is designed to have an impact on one part of the life cycle might also have a positive effect on others.

Harvesting of Trees – Generally speaking, the most common tree species used for poles in this country are southern yellow pine and Douglas fir trees. A designated group of foresters works with private landowners who grow and harvest the wood for manufacturing purposes. Together with farmers there is a collaborative effort to purchase, plant, maintain and manage the land. The utility pole industry will typically leverage the “last cut” or the oldest trees. Depending on the need from different utilities, a specific kind of tree size – or “pole” class – will be determined and selected.

Manufacturing of Poles – The trees we have cut are taken to a peeling plant, where the bark is stripped off and the diameter of the tree is further shaped and smoothed prior to being treated. The poles are then taken to a treatment facility, where they are placed on a rail tram-like device and rolled into a giant tube called a treatment cylinder. The cylinder is filled with a chosen chemical preservative, and a liquid (water or diesel fuel) is added that helps to serve as a “carrier” for the preservative as it impregnates the wood. Through a vacuum pressure treatment process, the poles soak up the liquid, and the chemical preservative with it. The poles are then removed from the tube, the chemical is pumped into a storage facility for safe handling, and the poles are then either air or kiln dried.

Final Preparations – the poles are moved to what’s termed a “framing yard,” where workers drill holes into the poles at specified locations to allow the utility to fit cross arms onto the pole. These cross arms serve an important role, allowing for power lines to be successfully strung from pole to pole.

Delivery and Use – The final output of this process is a pole that can be sold to a utility and put to use in the field. Just how long the pole will last in the field depends on multiple factors, including which preservative it has been treated with and the climate it will be subjected to.

Disposal – This is the step where recent innovation has occurred. Whether due to a pole reaching the end of the roughly forty years that it can function or due to its being removed to make way for something like a widening road, utilities need to get rid of the pole in some way. Traditionally this has meant disposal via landfills. The carbon found within these poles, however, could be used to generate energy after the end of the pole’s life as a utility pole—providing opportunities to eliminate waste and transform the pole even further.

Understanding the life-cycle of the utility pole helped expose an area of the process that provided no real value to stakeholders. It’s what led a group of innovators to contemplate the following: how do we generate environmental value downstream in the process, at the time of disposal, when traditional approaches offer zero value for everyone involved?

When was the last time you carefully considered your product’s lifecycle with the lens of value-creation throughout the entire process? Doing so will likely provide several feasible ideas for innovation and improvement that will benefit your stakeholders. Learn more about finding the right approach to innovation for your organization here.

How Sustainable is Your Business Plan?

This month is “National Write a Business Plan Month” – when’s the last time you wrote one? Whether you’re an entrepreneur, a veteran business owner, or an employee of a larger corporation, the opportunity to create a business plan is much vaster than securing funding to launch a new venture. Business plans create discussions, ideas, and new realities within businesses new and old.

An effective business plan will aide in your efforts to introduce new strategies based on a proposed future of innovation. Given the industry I am in and most of my readers are in, perhaps consider how sustainable your business plans are regarding the initiatives you’re proposing.

What does it mean to have a sustainable business plan? You’ll likely answer one of two ways: a plan that focuses on the maintenance of your business, or a plan that focuses on your business’ impact on the maintenance of the environment. What if they weren’t mutually exclusive – that both could support each other?

In an article published by Entrepreneur, it addresses this idea of building a sustainable business plan that factors in financial, environmental, and social concerns. The author proposes six ways to shape a more sustainable future for their companies and communities: building business on belief, embrace change (don’t stand still), create value proposition, growth and comfort don’t co-exist, focus on excelling in an area, and focus on constant reinvention.

Each of these areas shared by this article come back to understanding your business, its purpose, the value it brings and recognizing that value will need to continue to shift and mold as customer needs change.

Sustainability is more than just a buzzword or concept; it’s more than just “going green” for the sake of what’s trending. Sustainability is focusing on how to maintain the value of everything related to your business: the environment (that we need for our existence now and into the future), the business (that you want to grow profitability for), and the customer (who you want a continued relationship with).

As you approach the business plans you’ll likely create for 2019 goals, consider the impact they have in each of these arenas (environment, society, and economics). Be aware of the relationship they have with one another and seek to propose initiatives that create the greatest benefit in each of these areas simultaneously – that is where true innovation will exist. Learn more about integrating innovation within your organization that will have a positive impact on all its stakeholders by visiting this site.

Understanding Innovation in Commodity Markets

When it comes to the commodity market, customers aren’t typically looking for new innovative products. They want the tried-and-true product, which is essentially the same from seller to seller, at the lowest price. “Cheaper” is better than “new and improved.” How, then, are you supposed to get ahead and innovate as a company?

I’ve seen this struggle firsthand in our industry. In fact, currently, we’re the only company in the wood treating industry dedicating staff to innovation. This is not to say that there hasn’t been skepticism from some of these parties.

Consider the opening statement in a fairly recent article entitled, How to Convince Your Company’s CEO to Invest in Innovation when it says, “CEOs who truly invest in innovation aren’t just rare; they’re often self-sacrificing. How did investors reward General Electric’s former CEO, Jeff Immelt, for placing a $4 billion bet on the industrial Internet of Things, remaking GE into a model for lean, entrepreneurial management? By firing him, of course. Immelt surely knew that his shareholders wanted to see innovation; they just didn’t want to invest in it.”

It goes on to cite a concept that far too many executives settle for, “innovation theater,” or this idea of merely appearing to treat “innovation” seriously but with no significant investments or decisions to develop it. The article adds, “At many companies, then, the innovation “department” is but a shell with a figurehead. And most CEOs, boards, and investors are content for it to stay that way.”

This is a hurdle for any company looking to enact change—some parties will inevitably see the effort as an unnecessary risk with an unlikely return on investment. This is the understandably cautious, conservative impulse of the mid-sized, family-owned company. This is especially true in the case of truly disruptive innovations; the impetus toward changing the business or moving into a whole new market can easily be met with an attitude that says, “We don’t do that here.”

The key is to show the skeptics that the ability of the company to remain profitable while also growing and remaining dynamic in the market—controlling its future rather than having the future control it—is going to rest on how it utilizes the innovation process.

Innovation is more than just an obligatory hypothetical notion – it requires a real, dedicated process. This however, is difficult particularly for smaller and mid-sized companies, were corralling the resources to build a lasting innovation effort is not always an easy task, and stumbling blocks will undoubtedly pop up along the way. Nevertheless, the potential upside for such a company, especially one operating in a commodity market or a consolidating industry, is that a structured innovation effort can truly become the impetus for transforming how the business operates, fueling sustainable business and disrupting commodity markets—and bringing value not only to customers, but to the general public as well.

Learn more about how to integrate real innovation into your business strategy by contacting me.

There are Other Ways to Get Ahead: Focusing on Service

The concept of innovation and setting yourself apart is much easier said than done in the commodity market. In an industry where what is produced is largely equivalent across all competitors, the key to getting ahead is the service you provide.

Consider your business from the perspective of your customer – with utilities, in particular, a new product is often not going to add value; however, improving upon the ancillary services based on your product and thereby expanding your business model to include a service component will.

Let me provide an example…No one else in our industry used radio-frequency identification (RFID) when we first started implementing this technology in our own plants in 2011 for internal inventory purposes while manufacturing utility poles. However, we soon realized that this same technology would also allow utilities to better track, inspect, and maintain poles once they were put up in their service areas.

Eventually, this led us to form a software company, Sustainable Management Systems (SMS), that today sells the capability for utilities to more quickly and accurately maintain their inventory of poles in use. Rather than reinventing the utility pole, SMS just attaches a service that provides added value for our utility customers by allowing them to move away from traditional paper-and-pencil inspection of poles.

Evaluate All Touch Points

In the previous example, we leveraged an internal best-practice to help customers externally. Another area to uncover added value would be evaluating your delivery lifecycle – each touch point with your customer – and determine where in the process things could improve to create additional benefits for your customer.

One of the areas that have led to revolutionary innovation for our industry is the focus we’ve placed on pole disposal. By focusing on a full life-cycle approach, we provide an unprecedented approach in our industry. Our mission has been to make the removal and pickup of these poles as seamless as possible. The goal is to create a process that requires customers to only work with us and not multiple vendors or contractors. We want anyone who contracted for our services to know that they will not have the hassle of a lot of the typical issues that go along with waste disposal, whether that is cutting up material to fit into a dumpster, contracting with a dumpster company to transport that material to a landfill on a regular basis, or paying the tipping fee to the landfill operator.

Standing out from competitors in the utility and commodity industry is difficult; however, it can be done. When you step back, look at the entire lifecycle of your product, improve upon it, and consider services that would create true customer value, you will inevitably be ahead of the pack.

Category: Service