Selling the Air

Digital transformation has become a life force in today’s business environment. It feels like each day, there is a roll out of a new piece of technology that will, in the words of the old PF Flyers sneakers commercial, allow a company to “run faster and jump higher.” Such claims lead business leaders to focus on technology creating value to the enterprise.

I reconsidered this focus when I had the opportunity to listen to a dozen highly placed corporate information technologists discuss digital transformation. I learned a great deal, but the most striking observation was their attention to how technology allows them to improve customer experience.

With that in mind, I suggest we hit the pause button for just a moment when teaching the importance of digital innovation. Instead of only thinking about what new technology allows us to do within our organization, we should also be concerned with how the technology creates value across the platform. How does this technology serve the customer in a way that creates value for both them and us? Extending the idea a bit further, how can we incorporate elements of customer service into the success matrix of innovation to fully capture value?

Making Money Out of Thin Air

For example, I learned how one of the ultimate old school manufacturing companies is using digital innovation to create customer value. Kaeser Kompressoren is a German company founded in 1919 specializing in the manufacture and sale of industrial air compressors. As part of the sales process, customers would pay for equipment service.

Kaeser experienced digital transformation when they incorporated predictive maintenance technology into the compressors. Using the analysis from that technology, they were able to design a maintenance program. They pivoted their business model from sales and service to owning the machinery and selling the usage by cubic meter through the compressor—in other words, selling the air. Service calls, once an integral part of the value stream, were now a cost, not revenue. However, the cost was predictive and pricing smoothed. Customers paid for air usage, not large tangible equipment, thus avoiding large capital outlay with unpredictable service costs.

The lesson learned from this example is not how to make money out of thin air (although that is a pretty neat idea!). Rather, the lesson is how digital transformation put the customer in a better position (buying the air it uses rather than incurring a capital expense for machinery) while simultaneously generating a new, predictive revenue source for the company.

This example shows the importance of not losing focus on how digital transformation better serves the customer. And by doing that, digital transformation can better serve the company as well.

This post originally appeared on LinkedIn.