Honorary Professor and former CEO MAN Truck & Bus
I often say it took us (MAN Truck and Bus UK) ten years to become an overnight success. Changing the business model was a huge transformation for my team and me to lead, but having seen sales of trucks across the industry reduce by 50% in the previous 40 years, we knew we had to do something radical just to stand still.
We recognised that not only was our own profitability from product sales declining, but so was the profitability of our customers (fleet operators and hauliers); we couldn’t continue trying to sell to a customer that couldn’t afford to buy. We knew that we had to help our customers become more profitable themselves, in order to secure future business. This is something Tim and the team at Aston refer to as delivering ‘gains’ for the customer.
We set about creating a whole new value proposition, based not on the cost of selling a truck in a single transaction, but around helping the customer understand, reduce and predict the total cost of operation of their MAN fleet. One of the ways we would do this was by assisting transport operators to design and implement driver performance and incentive programmes to improve operator cost control, and ultimately profitability.
This was enabled by the new technology with which we were equipping our trucks, but our competencies in technology and data collation were just one aspect of the full business model.
We also had to build a new revenue model that fitted this value proposition- one based on paying for the capability (in this case kilometres moved) that we were delivering. This meant we became more selective about who we sold to, since we were involving external financiers and credit arrangements.
Our services, sales and marketing teams and activities operations had to buy into the new vision and be transformed to support this completely new organisational mind-set.
The organisational buy-in that my team and I generated through communication and explanation over the years were what made this work for MAN in the UK. Getting the right people in place was crucial to making the business model work in practice, and helped to differentiate us from the competition, provide a unique competitive advantage and lock out our competitors for a number of years. MAN UK went from being a £50m turnover business to a £500m business in ten years, the increase being generated from services such as financial services, service contracts , fleet management contracts and vehicle rental, which now account for 50% of the turnover.
The fleet management portfolio is made up of over 10,000 vehicles travelling 1billion kms per annum and this is now a mobile R&D function, providing real time data of customer use and experience as well as the ability to identify not only component life costs but also service competence amongst the franchised network partners.
When I left MAN, I knew I wanted to share my experiences with companies across other industries, and do what I could to help them adopt an advanced services business model. I really believe this is the best option for a sustainable future for a lot of companies in a whole range of industries. My role at Aston Business School has given me that opportunity, and I’m looking forward to a lively and challenging discussion with you at the Advanced Services Global Forum in April.