Many product companies fight tooth and nail to keep their profits and propel business growth to higher levels to fulfil customer’s expectations. That being the case, many have embarked on the transformation journey – switching from product to services-oriented firms with a dedicated transformation team.
For a successful transition, it solely depends on a company’s ability to foresee long-term risks and scale services capability. Renault Group is one of the companies that went on board to develop new services for better customer experience under the leadership of Jean-Francois Labal, the Digital Marketing and Partnership Head.
Take a look at this interview, where Jean shared how they accelerated transformation projects, ways and challenges of transition from a product to a service-oriented company.
- Jean-Francois Labal’s Career Journey
- From Tech to Telco, to “Auto Industry”
- Telco Vertical as a Source of Inspiration for the Auto Industry
- Four ways of transitioning from product to services-oriented to fuel growth
- The role of mobile in the quest of becoming more service-focused
- Lesson Learned
- Who is Jean-Francois Labal
Jean-Francois Labal’s Career Journey
Jean-Francois currently holds the position of Digital Marketing & Partnership Head at Renault’s Group, focusing on the digital customers’ experience. He started his career as a Telecom Project Manager for Alcatel-Lucent, which he worked for 8.5 years before joining L&T Technology Services Limited in the role of a Sales Director for Southern Europe to offer IoT, Analytics and AI solutions.
After Alcatel’s merged with US-based company Lucent, Jean-Francois returned to work as their Senior Marketing Product Manager, transitioned to Business Development head and became the Vice President of GSMA initiative (a worldwide consortium) to make mobile evolve to rich applications and to handle go-to-market through all service providers.
His playground at that time were communication, web services and entertainment.
From Tech to Telco, to “Auto Industry”
Coming from a tech and telco background and joining an auto industry was a whole different ball game, and was not a smooth ride for Jean-Francois when he first joined Renault more than four years ago.
“It was quite a challenge because I wasn’t a car specialist nor familiar with the industry. I come from a tech and telco background, having previously worked with companies like Nokia and Alcatel.”
As part of Renault’s corporate marketing team, his focus was on marketing their surrounding services, not the vehicle itself, which include functions like connected services and new mobility services.
“I can’t say that my role is purely marketing or product-focused, but more of an all-around business role.”
Jean-Francois was more focused on setting up new revenue streams for the company to achieve their target goals. To do this, he has placed numerous effort into marketing and building strong partnerships.
Telco Vertical as a Source of Inspiration for the Auto Industry
There are lots of similarities between the auto and telecommunications (telco) industries, except that the telco world is way more advanced than auto.
In telco, all the big mobile network operators (MNOs) had a huge panic a decade ago when looking at how new players (Amazon, Netflix, etc.) took ownership of customer relationships. This led to massively reinventing everything they were doing to catch up.
Learning from how MNOs responded to industry challenges to keep their market value and started introducing the concepts of bundles and subscription models, Renault group is also looking to do the similar way.
The main question we ask today: Are we going to get bypassed by players like Google and Amazon? They’re already part of the onboarding experience, built into our car systems and interacting with our customers.
Jean-Francois foresee the similar process to happen in the auto industry, whereby consumers accepting the idea of vehicles as services.
“We’re transforming in the same way as telcos, in terms of managing relationships and distribution models.”
Projects That Reshape the Car Industry
Jean-Francois, who led a dedicated team of transformation contributed to these 2 projects that helped reshaped the car industry.
Our recently developed smart home service allows you to connect your smart assistant (like Google Home) to your car. For example, you can tell your home service to heat the car up to 21°C before you get in.
We wanted to integrate our customers’ cars into their existing tech ecosystem as seamlessly as possible and avoid a situation where people will have well-connected, completely integrated home environments and completely ignore their cars.
Global API Marketplace
We’re looking to expand on the value-add services we offer via our partners. We’re not sure which specific value-add services will be attractive to our customers in the upcoming years, so we won’t be building these ourselves. Our job is to simply allow our partners to develop and commercialise their services on our platform while we focus on what we do best.
It might seem slightly strange our focus is set on services rather than the product itself: our cars. But this just reflects the general direction our business is heading in. We need to make the switch from being a product service to a market of different services.
People don’t often buy a car, but they purchase services and experience that make their life easier and exciting. If we can bolt these services onto the cars, and provide new and innovative ways to give value, we’ll continue to be successful.
Biggest Challenges When Switching Over to a Services-Focused Business
Being in the auto industry is a tough row to hoe – dealing with manufacturing, distribution through dealers, research, development, and rethinking the fundamental way of daily operations.
There’s an incredible amount of effort involved in switching Renault’s business model. SaaS models, where you make the customer pay for what they consume, are on the rise.
As a result, many of our partners are proposing using SaaS models to optimise our cost structure. This is good, except they might not be compliant with our internal processes. For example, our purchasing and billing systems are not set up and designed to accommodate SaaS models.
Adopting SaaS-based service models involves introducing a conversion layer to work with Renault’s legacy infrastructure. For that reason, we need to reshape the entire organisation: our manufacturing processes, the way we approach purchasing, HR, hiring policy, etc.
On top of that, we need to rethink what the customer wants and transform our distribution models accordingly. Up until this point, we’ve always been B2B focused with over 50% of our customers as dealers, rental, and insurance agencies.
Our internal teams are sometimes slightly confused about the distinction between dealers and customers, so we need to start defining our end-users more clearly. We want to be in charge of the entire end-to-end online selling process but to do this, we need to start understanding our customers on a deeper level. This takes a cultural revolution more than anything.
Even though, I’m desperately trying to avoid using the phrase “digital transformation” because, in reality, it’s business transformation -We’re reshaping everything we do, not just for the customer, but internally too.
Four Ways of Transitioning to a Services-Focused Business
Jean-Francois has an incremental approach to switch over from product to a services-focused business:
Convince everybody within the organisation to jump on board and embrace this transformation: the decision-makers, those in charge of production, the financial controllers, etc. You need top-down support before you start. Get the top-level executives on your side or you won’t succeed.
2. Focus On Small(er) Wins
Prioritise smaller (but fairly high-value) goals. For example, our smart home service might sound like a fairly limited project in the grand scheme of things. But to introduce this type of service, you need to rethink the way you manage the cycle of services and educate the company on how to maintain an application like that.
What’s the structure that will support it? How will you promote the service? You need to rethink everything.
You learn from the field, engage people internally, and you pave the way for grander projects in the future. Introducing limited services allows you to master the same elements you will tackle for larger projects.
This is how you gain momentum for organisation-wide change. Start by selecting a project that will touch as many different parts of the business as possible.
3. Build a transformation team
Renault has set up a dedicated transformation team at the corporate level to introduce agile within the group and share good practices to enable the wider company to adapt and evolve quicker than before.
It’s always a good idea to have a dedicated team leading transformation efforts. As much as we all buy into the need to transform, every employee has thousands of things going on, so transformation can fall into the background unless you have a specific team pushing it forward.
4. Build a project team
Renault Group’s new policy is to gather people from different teams to accelerate transformation projects (a bit like the special forces of internal transformation). We used to rely on standalone organisations to help us with these sorts of projects.
For instance, when rolling out our connected cars, we created a standalone organisation (ACMS) in charge of all connected services to help us get around the heavy processes and bring in external talent when needed.
However, it didn’t work out as well as I thought. There are three main reasons why:
- ACMS had to work closely with other legacy teams from the Renault group, who were still using legacy systems and methods. This greatly hampered their effectiveness.
- There was a big cultural challenge. When people from legacy teams joined ACMS, they stuck to their tried-and-tested ways of doing things (their legacy methods).
- ACMS wasn’t a recognized business unit, couldn’t make decisions, and wasn’t accountable for its performance.
The key lesson here is that if you want to make something happen, you need to be business-oriented. Revenue and profitability are the only KPI you should care about.
The role of mobile in the quest of becoming more service-focused
Mobile is essential in a service-oriented transformation because these days, customers’ entire lives are on their phones. Renault developed an app called “myRenault” that enables customers to entirely manage their car, subscriptions, and mobility services remotely.
We’re working to make this app a hub of all our services, rather than another touchpoint amidst an increasingly interconnected world.
Customers already have a way of managing their services and they don’t need another app. Instead, we need to figure out a way to integrate the functionality offered by the Renault app within the ecosystem they already use. If you want to access it via Alexa, you should be able to do that.
Your car is an extension of your home and your city, so why shouldn’t it be an extension of your life too?
- 4 ways to transition from a product to a service-oriented company: evangelise your people, focus on small wins, build a dedicated transformation team, and gather people from different teams to accelerate transformation projects.
- If you want to make something happen, be business-oriented. Revenue and profitability are the only KPI you should care about.
- Have a dedicated transformation team at the corporate level to enable the company to adapt and evolve quicker than before.
- As much as we all buy into the need to transform, every employee has thousands of things going on, so transformation can fall into the background unless you have a specific team pushing it forward.
Who is Jean-Francois Labal ?
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