Transforming a manufacturing company into an industrial technology company
Interview with Udit Mehta, CDIO & GM Solutions, Carrier, Fire & Security
Udit Mehta is the Chief Digital Information Officer & GM Solutions at Carrier, where he is responsible for delivering digital-led top-line growth for the Fire & Security segment globally. At Carrier, he is responsible for building net new digital products, sales & go-to-market strategy, and digital alliances. Prior to Carrier, he held senior leadership roles at Siemens, Daimler, Atos (ONGC, NTPC, Bajaj Auto, Aptech) & Vodafone.
Udit has over 20 years of experience helping Fortune 500 organizations digitally transform. He is most passionate about solving complex business challenges, driving innovation, and robust sustainable growth at scale.
In today’s interview, we cover:
Key drivers of change in the manufacturing industry
How Carrier F&S is navigating this change and transforming itself
The three phases of transformation
What does success look like
How do you measure it - across the three phases
What Carrier Fire & Security might look like in years to come
Three key insights every leader should consider as they navigate their own transformation
What follows below is a condensed and lightly edited version of our interview.
Udit, so glad we are finally doing this. Let's start at the beginning, why should engineering/manufacturing companies transform? What are the drivers?
Udit Mehta: Good to be here, Thanks! Looking forward to our dialogue.
As for the drivers, there are four main ones that are propelling us to transform.
First is using new technologies to grow bigger & faster. Manufacturing products should no longer just be seen as stand-alone products. Every product today has some form of enabled connectivity. And this connectivity enables all kinds of added-value services that can drive productivity, efficiency & security for our customers. Which in turn drives faster growth for our customers & us.
Second is the need to establish a direct relationship with the end customer, learn more about their challenges, provision services closer to consumption & be able to timely close on the feedback loops. Today, we of course rely on our partners for GTM, but if we want to innovate, deliver new digital services, and build scalable solutions then we need to get closer to the end customer.
Third, any organization should want to explore adjacencies & enter new markets, and create new business models by leveraging network effects from your partners, hyper scalers & researchers. Focusing energy on opening doors to new markets can capitalize on what one is good at and turn that into a differentiator leveraging a completely new business model. Think about it, if we no longer sold just fire & security systems, but instead can now sell “Safety as a Service” & “Peace of Mind’”
And finally, You want to future-proof your organization with a technology-savvy, geographically spread, diverse talent that can help drive a people-led transformation. I would go further to say that this is one of the most important pillars of success. Every industrial company today has the risk of being disrupted except if it invests in the right talent that is going to help become the disruptor instead.
Udit, I agree. The drivers you talk about are not just disrupting your industry but others as well. Let's get more specific to Carrier Fire and Safety division.
Tell me where you are with this transformation that you just talked about across the four drivers What do you see are some of the challenges? What are the things that you guys are trying to overcome or need to overcome?
UM: Good question. Look, I would say that F&S is right in the middle of a 3 phase journey.
Great…May I ask what are the three phases?
UM: Yes of course.
The first phase is always modernization. This is where you are literally trying to pay off your technical debt, dig yourself out of the hole, and set the fundamentals for the next phase. This phase (modernization) is not an easy one, because this is where you need to convince a lot of peers/stakeholders, make a lot of painful decisions, pivot, form strategic partnerships, and modernize the core of your technology while simplifying processes. Think of this as shifting an engineering company from a waterfall mindset & disparate tools to a complete agile methodology with standardized platforms. E.g.: When I started at Carrier, we had 400+ different and disjointed applications. Over the course of 2 years, my team consolidated that down into 4 common platforms & under 100 critical apps.
The second phase is where we are today, which I call the phase of value add. Once the fundamentals are in place - the technology, the talent, the partnerships - you begin to unlock value.
For example, the investments in common platforms, integrated app landscape, cloud-based workloads & segment-wide data lake finally start to pay off. Teams are now using data to drive connected assets, create new digital services & unlock greater value. Challenges like improving factory productivity by several $M, supply chain analytics, sales & margin analytics, CX insights across customer acquisition, order management incl. eComm, customer service & up/cross-sell all start to become a reality. Connected assets have allowed for product analytics & new digital services that span the product lifecycle creating opportunities for new service contracts. This phase attends to both internal & external facing transformation leading to higher product adoption, ease of use, and higher stickiness with the customers.
But there is a third phase that we eventually need to move to. And in my opinion, this also is the most enriching phase, which is the evolution of your existing business into a new company. This is where a business starts to shed its old skin and transforms very comfortably in adopting new markets, new business models, and building new products. By this phase, the technology, process & talent have matured enough to organically organize around key goals, prioritize for value, and that helps make the shift for a product engineering company to become an industrial technology company. This is where we would no longer be selling point products but rather different outcomes as a Service. This allows us to get into the “XaaS” business.
When I presented the business plan on taking a solutions approach to customer problems, everyone was eager to lean in. I led my team to work closely across functions, customers & partners to launch a solutions roadmap, which would be time-bound, margin accretive, expanded our TAM and allowed us to create a trusted & lifecycle-focused relationship with our customers.
That is impressive. It is also a lot of changes to push through. I am curious how did you define success? And what types of metrics did you use to measure this success?
UM: Yes…that's a very good question. I strongly believe that every business that wants to grow & successfully undergo a digital transformation should always have key success criteria defined upfront.
I have been fortunate enough to have led large-scale transformations multiple times in my career. So let me share with you what we did across my last three organizations.
Starting with Daimler, this is when we were going through the Chrysler separation, the key metrics were the process efficiency & automation across product design, manufacturing, operations, investment planning, product delivery & customer success. The success was measured in terms of technology adoption, time taken from design to delivery, reduction in manual touchpoints & improved working capital.
At Siemens Energy, it was all about growth through digital services. Success was measured by # managed contracts with digital services attached to them & their value, improving win/loss ratio for new & brownfield programs, digital marketplace revenues, data-driven pricing upside as well as a business model shift from regular time-based services to condition & performance-based services.
Finally at Carrier F&S, where I am right now, the key success metrics are holistic from driving past due backlog reduction, inventory management, manufacturing efficiencies, and advanced analytics to drive improved A/R, higher margins, connected devices, digital services attach rate & recurring subscription revenue.
You know what I like about your metrics is that it is very much focused on business impact. I am sure there are technical metrics below that. But I really liked how you laid out success.
UM: Absolutely. Throughout my career, I have always focused on the business metrics first. And that has served me well. Too many technologists focus on technical metrics. And that is good, but the business metrics must always come first as Technology is a means, not the destination.
Agree too many people measure technology for technology's sake. Let's take this conversation in a different direction. Given where you are now, what does the future look like? Say a decade from now?
UM: As a tech-business leader, I think about this question every day (laughing).
I’ll say this, the Fire and Safety business has a vital purpose. We ultimately exist to provide safety & security for our customers, their tenants & assets. It is as basic as that when you drop your kids off at school, you want to make sure the building they are in is 100% safe. The same can be said when you work in an office building, a government office, or airport, or anywhere else where people gather & collaborate.
And so, if I had to project out let’s say a decade from now, we will not just be selling devices, systems & services but rather, we will be in the business of delivering ‘peace of mind’ when it comes to life safety & security aspects related to any space - be it home, office or public space.
I want to continue to take it to the next step and provide that peace of mind. This is what I was getting at when I mentioned “XaaS”. Where the X is ‘Safety & Security as a service’ that is intelligent, intuitive, and innovative.
I love the vision. One last question, before we go. Any lessons learned as you have transformed this organization?
UM: Oh yes, quite a few & learning btw is a lifelong friend.
The first is to get closer to your customer. Figure out how you can make it part of your organization’s DNA. Too often in industrial companies, we are one or two degrees separated from the end customer. That has to change. Through Carrier F&S as well as my prior experiences, it's evident that the next innovative design of our products actually happens in household living rooms & in customer offices vs. in corporate board rooms. So stay close to the customer.
Second, be hyperaware. What I mean by that is that not only do you need to know your customers but you need to have a deep understanding of your customer’s business situation as well as your peer functions. The processes, the constraints, the markets, etc. If you want to transform you need to be aware of everything that is going on & can affect the business.
Third, is leverage partners. Look, I have a great team but we can’t claim to know or be able to do everything. Technology is moving so fast. So we need to find the right partners. From building digital services to digital experiences to innovation & AI. We don't need to do it all by ourselves. We need to find & collaborate with partners who can add value. Building out a thriving partner ecosystem is very important.
Udit, unfortunately, we have to end it here. We could have gone forever. Thank you for being a guest. Very much enjoyed our dialogue.
UM: Mustafa thank you for having me. I am glad we finally got to do it. This was a lot of fun.
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