Podcast #205 Industrial Powerhouse

TRANSCRIPT

Ken: Good day, and welcome to Episode 205 of our Momenta Digital Thread podcast series. Today, I am pleased to host Jessica Poliner, the President and CEO of relayr, the industrial IoT powerhouse. Jessica is a transformational leader with a track record of leading geographically dispersed and culturally diverse industrial and tech businesses ranging from approximately $200 million to $1.5 billion in annual revenue. She currently serves as President and Chief Executive Officer of relayr, a technology company that harnesses the power of data to generate meaningful business outcomes. relayr was acquired by Munich Re Group, a $55 billion global reinsurer, in 2018.

Before joining relayr, Jessica served as the President of Molding Solutions, a prominent business unit in the plastic injection molding industry, leading approximately 2,200 global employees and being responsible for 12 global manufacturing locations. Prior to this role, she held global general management positions with Thermo King, a business of Ingersoll Rand, and later Trane Technologies, as well as regional leadership positions at Caterpillar Inc. across various functions such as general management, marketing, sales, operations, distribution, and aftermarket and connected solutions. Jessica began her career as a lawyer, focusing primarily on corporate law and mergers and acquisitions. She holds a Juris Doctorate from Marquette University Law School, a bachelor's degree from Vanderbilt University, and completed a Certificate of Management Excellence from Harvard Business School. She is an endurance athlete in the workplace and out, an avid speaker on gender parity and unconscious bias, in addition to as-a-service business models technology in the role of Industry 4.0 and Industry 5.0.  Jessica, welcome to our Digital Thread podcast today.

[00:02:29]

Jessica: Ken, thank you for the warm welcome and for hosting me on this podcast. In preparation for the podcast, I've listened to the series, and it's clear that I'm in good company.

[00:02:39]

Ken: Thank you so much for saying that. I appreciate it. I agree that you are a great addition to the cadre of industry leaders and thought leaders we've had in this podcast, so it's great. We got a chance to meet each other formally in Barcelona at the IoT Solutions World, where we did an Industry 5.0 panel, and I was very impressed with the speeches you gave and the work you've been doing with relayr. I'm looking forward to jumping into that. Of course, we always want to start with our branded question there. That is, what would you consider to be your digital thread? In other words, the one or more thematic threads that define your digital industry journey.

[00:03:16]

Jessica: Ken, it's a thought-provoking question. After some good thought, my initial reaction was that my varied experiences in the boots-on-the-ground industrial world had shaped my digital thread. It's rooted in the push for Industry 4.0. But my digital thread started earlier. As you mentioned, I began my professional career as a lawyer. When I was a young lawyer in the United States, the Federal Rules of Civil Procedure were updated to include electronic discovery. This was a big deal then. In court cases, our clients would be forced to produce emails and text messages and preserve metadata. It caused much flurry in the legal world, and I remember thinking and endeavoring at the time, what could we do to make this new rule easier and less burdensome for our clients?

If I fast forward to later, I transitioned from a law firm to working in-house and then to the business world. In my various industrial experiences, it was a while ago that digital transformation signified ERP conversions or CRM implementation for the various businesses I led. We moved on to sensor technology, platforms, smart factories, and 3D printing, and we understood that data was only as good as what you did with it. Often, we needed to create value for our customers or ourselves with it. But one of the themes that stood out the most for me and influenced why I was intrigued to join the tech world is the difficulties of addressing customer readiness around IoT implementations, particularly in the industrial space. Based on my experience, there's a clear need to educate and demonstrate value when we face customers. Similar to when I was a lawyer starting my career with eDiscovery, I committed to making customers' digital journeys simpler, easier, and more plug-and-play than what initially meets the eye.

[00:05:16]

Ken: Nicely done, Jessica. I asked the question very open-ended in terms of the digital thread. As you said, you've listened to many podcasts, and people tend to answer it differently. I would have never guessed going back to eDiscovery as the beginning of your thread there. I love how you've already woven it into a story, so I look forward to the rest of the conversation. I was intrigued by your career trajectory: corporate counsel, the CEO, from industrial to tech- your crossover role was at Caterpillar in 2011, moving from corporate counsel to commercial sales later. What inspired that change for you?

[00:05:53]

Jessica: It's a great question, Ken, and I also have a good story. I worked for a surface and underground mining company called Bucyrus, which we sold to Caterpillar for almost 9 billion in 2011. I loved working for Bucyrus as a corporate counsel; I was able to work on commercial transactions, M&A compliance, real estate, and of course, corporate work. We were a small and scrappy legal team globally, and as we were finalizing the antitrust clearance, I was offered an opportunity to run a mining sales and support team in Latin America for Caterpillar by one of the senior Bucyrus leaders. I spent a few weeks convincing this leader that I couldn't lead a sales team. I was a lawyer, but he wouldn't take no for an answer. Moving to Miami didn't sound so awful then, so I agreed somewhat begrudgingly to flip over to the dark side into joining the business. That big push inspired the change. As a separate aside, it's interesting that the former Bucyrus executive who pushed me over to the dark side now is actually the CEO of one of our customers today at relayr. It's a very small industrial world in that sense as well.

[00:07:11]

Ken: It really is, although I might take exception to what you call the light and dark side. Having been in business all my life, I know lawyers serve many purposes, and most of them are a challenge. I was impressed. As you talked about going to Caterpillar- regional leadership roles in Latin America, then you went on to a global general management role with Thermo King in Brussels, Belgium, and subsequently as President of Molding Solutions, a division of Barnes group based in southern Germany. What was your general remit across these companies? What are you most proud of?

[00:07:47]

Jessica: It's another great question. I've been very fortunate to have had challenging positions in these large US public companies, some of which you just named. At CAT, I had the opportunity to serve as District Manager and Country Manager based in Panama, responsible for a multibillion-dollar portfolio in the region. I was also fortunate to lead a large team in the aftermarket at Caterpillar, a business unit that was newly created. In this role, I greatly appreciated the parts and service business and the power of connected assets.

From CAT, as you mentioned, I was responsible for a global business within Thermo King that needed a turnaround. We achieved this and certainly drove record growth as well. Then in my last role at Barnes, I was hired to drive growth across a large global business and more than 2200 employees in the plastics industry. The buck stopped with me throughout the business, and in such a complicated industry with highly engineered technology, we focused heavily on automation and smart factories.

What I'm most proud of- and the consistent theme across the different roles- is the growth we achieved for our shareholders and the value we created for our customers. Lastly, of course, the people that I impacted. I'm proud of the number of people I worked with at Caterpillar and Thermo King that I continue to work with today. I also enjoy seeing them grow and develop as executives over the years.

[00:09:14]

Ken: All of this culminated in you leading relayr in 2022. How did your prior leadership prepare you for relayr, and what attracted you to the company?

[00:09:25]

Jessica: To be frank, I wasn't looking for a new role. I enjoyed the breadth of my responsibilities at Barnes driving growth and six companies acquired in the last five years by Barnes and learning about the injection molding and plastics industry. It took me a little bit to warm up to the idea of leaving the industrial world and joining a tech company. What attracted me to relayr was the impact that I could create, coming from the world of its customers and its partners. I am comfortable speaking the same language and understanding the pain points of our customer base at relayr. I ran much larger and more complicated industrial businesses and knew I would bring operational rigor to the company. I also have a strong appreciation for relayr's parent company, Munich Re, and was captivated by the CEO of Hartford Steam Boiler's vision for industrial IoT.

[00:10:19]

Ken: That's interesting, that last one. We had a similar experience. I believe Hartford Steam Boiler acquired a smaller IoT platform a couple of years before Munich Re did relayr. I need to remember the name of it, but it was interesting. They were the first insurer/reinsurer to explore IoT to establish real-time information. For example, Munich Re is as forward-looking a company as John Deere is in agriculture. There's always a leader who gets it and pushes it forward. It's a good choice to end up in the company. We refer to relayr as the industrial IoT powerhouse, a technology company that harnesses the power of data to generate meaningful business outcomes. The value proposition sounds great, but what does it mean in practice?

[00:11:11]

Jessica: What this means for me in practice is that we are putting making a business impact at the forefront of what we do, and we also consider the pragmatic solution for it. You understand data's power, and data is our currency at relayr. We strive to connect technology to make a meaningful, measurable business impact for our customers and partners in industrial IoT.

[00:11:36]

Ken: What have been some of your notable use cases and wins?

[00:11:40]

Jessica: We have found success in areas that we have specialized in, specifically in the predictive maintenance space - especially for rotating machinery such as motors, pumps, and gearboxes for elevators, as well as equipment-as-a-service. For rotating motors, our system has demonstrated an ability to pick up several failures weeks to months before they occur. These events save maintenance and production costs and allow assets to run greener. A well-maintained asset is more energy-efficient, and in some cases, they also help protect employees' safety and well-being. We have shown that we can monitor elevator door system health and anomalies for elevators. Doors are responsible for 7 of 10 breakdowns and a digital twin, indicating the most probable root cause of active alerts. For equipment-as-a-service, we have end-users who purchased machines from our partners in a pay-per-use model and are seeing significantly improved productivity. We also had some earlier use cases mainly focused on anomaly detection, air preheaters, and power generators. These use cases gave us some good early learnings to effectively identify downtime events and pinpoint the underlying cause of the anomalies. We have channeled these learnings into our current product offerings and continuously seek improvement.

[00:13:14]

Ken: Interestingly, you sit right between- I'll say generalized industrial IoT platforms as an example, and full-stack service solutions and certainly much more to that, right? How do you know when an organization is ready to adopt your solution, especially how you provide it in full stack? What are some of the best practices you've seen in realizing that potential value?

[00:13:38]

Jessica: That's a great question that I continue to learn more about as we aggressively move forward in the market. We must use effective strategies to ensure that a company is ready to adopt one of our solutions. One strategy, for example, is to have the support of the company's senior leadership, who understand, or at least have a senior leader or board member who understands and believes in technology and its value creation. Another helpful factor is heightened competition in the market, a change in ownership, and a more receptive attitude towards SaaS revenue, which drives technological advancement and adoption within organizations. In terms of organizational readiness, we see success in achieving the full potential value with companies that do not maintain the status quo. The go-to-market approach may not work for adopting new tech solutions. There is a lot of change management involved in industrial businesses when it comes to adopting tech solutions, as we are well aware. Additional effective approaches include finding customers willing to pilot and adopt the mentality of "fail fast and learn faster" and focusing on a few critical options instead of trying to address every possible use case.

[00:14:57]

Ken: You mentioned as-a-service earlier, and I know this is an area in which you guys specialize. We've certainly heard about as-a-service for several years. From your perspective, where are most industrial OEMs on that maturity curve of moving to as-a-service offerings?

[00:15:13]

Jessica: I agree with you that the term as-a-service or equipment-as-a-service is not a novelty for most industrial manufacturers. It's been the subject of various speaking engagements that I've done, including what you mentioned in the opening at the IoT World Congress earlier this year in Barcelona. Then again, in Sweden this March with the ASG group. The shift from a one-off sale of capital goods with CapEx to reoccurring revenue streams based on equipment usage or output has been common in some industries for several years. Starting with the well-known Rolls Royce power-by-the-hour model. Most industrial companies are on a digital transformation journey that is advancing at a greater speed now. When I started my career, we focused on selling a product. We started to talk about bundling the product with spare parts, and then we even dove in to develop increasingly sophisticated service contracts with time. Then digital came into play, and we started to figure out how to connect our solutions and leverage data to improve uptime. This is part of the journey towards equipment-as-a-service. In general, equipment-as-a-service is moving from a niche alternative to becoming a much more strategic imperative for industrial companies. We see the increased interest in our offering as well. From my perspective, it's the next step on that transformation journey: a business model transformation.

[00:16:43]

Ken: It is very much an inset. We talk about providing products, eventually putting value-added offerings with us from an OEM perspective, and then ultimately moving to some form of product-as-a-service. I know many OEMs who talk about it; I know some boards of OEMs who tell us we should never mention that in a conversation. It's still early on the journey for most OEMs in that regard, and I was impressed by listening to your speech in Barcelona and how you guys have set yourself up to equip and accelerate that digital transformation journey for those OEMs. Thus, the question. Now you've been on a journey relayr to productize the business. What does this mean for the organization's focus?

[00:17:26]

Jessica: You're right; we have recently been productizing our business and focusing on some critical products. This means we are moving away from the startup mentality of trying to be everything to everyone and instead homing in on a few key verticals where we have experience and expertise. Specifically, we are focusing on three domains that I mentioned earlier: rotating equipment, elevators, and smart buildings. Although equipment-as-a-service is more of an asset-agnostic business model, domain knowledge is critical to making it work effectively.

This shift to productization has been challenging for us as an organization historically focused on a horizontal platform play. We have had to rework our technology platform, team setup, technology skills, positioning, and selling. However, this shift makes good sense for a number of reasons. For one, we see a market-wide shift towards hyper scalers becoming de facto IoT platform vendors and market incumbents moving up the stack. Additionally, horizontal plays need to scale better in development and maintenance and can become very complex, which leads to uncertainty around costs and scope. Hyperscalers are recognizing this and are thus incentivizing IoT companies to develop solutions that tackle more domain-specific complexity.

To support our new focus, we have taken a step back in the last year and focused on productizing our business and homing in on those few critical areas. Our technology platform now offloads most of the complexity around collecting and storing IoT data to the underlying cloud provider and focuses on a data-driven design that accelerates AI work and puts data at the forefront of everything we do. We have also redrawn team boundaries and focus, which has been a meaningful shift in our engineering culture.

[00:19:47]

Ken: Sounds like you've already impacted the business since joining them in 2022. I'm curious. When you're not running relayr or physically running as an endurance athlete, which I'm very impressed with, you are an avid speaker on gender parity and unconscious bias. What is your work here?

[00:20:06]

Jessica: Sure, Ken, I appreciate the opportunity to talk about one of my passions. During my years working in industrial companies, I spent much time mentoring other women, sponsoring employee resource groups, discussing my experiences growing up in the industrial world, and advocating for women in line leadership roles. I even started a series called "She Said, He Said," where men and women shared their perspectives on various topics. Through these sessions, I realized that men and women often experience the workplace differently. Around the same time, I met a senior Caterpillar executive, Bonnie, and during a customer trip to Chile almost ten years ago, we realized that without moving the needle with men, we could not advance our organizations as almost all executive and leadership positions at that time were held by men. We collaborated on a book called "(Un) Skirting the Issues: A Guide for the Well-Intentioned Man," published in 2017 and still available on Amazon. The book provides tips and tricks for men to work better with women.

Since the book and even before the book, I've done a variety of external speaking engagements and hosted a training on unconscious bias and gender inclusion.

[00:21:33]

Ken: All your topics are relevant to men and women working in any arrangement. But man, they take on a sharp point when discussing industrial and tech companies, especially those crossover ones. As you know, we have Jane Arnold as one of our venture partners, and she comes from a background in Covestro, Stanley Black and Decker. She also advocates for gender parity discussions and plays a very active role. It intrigued me when I saw that you had a similar passion, especially as relevant as this is too industrial. In closing, I always like to ask where you find your inspiration.

[00:22:14]

Jessica: It's a great question again. I am a learner and certainly on an endless continuous improvement journey. I've been so fortunate to work and interact with tremendous people in the industrial, private equity, and tech worlds. I make a point to maintain connections genuinely. I get great energy from my network and interactions with smart, interesting, and provocative people. I'm also a voracious reader, so I've been devouring books on agile and managing software developers recently. I also just finished Angela Merkel's biography. I'm now starting to tune into podcasts more often and am open to recommendations and plugs on podcasts.

[00:22:56]

Ken: Excellent. Obviously, Digital Thread is a pretty good one, especially our most recent speaker, so highly relevant. Jessica, thank you for sharing this time and insights with us today.

[00:23:08]

Jessica: Thank you for asking me to join and for the thoughtful questions. It's my privilege to be here with you and, certainly, with your listeners.

[00:23:16]

Ken: No, thank you so much. It has been a privilege to have you. This has been Jessica Poliner, President and CEO of relayr, the industrial IoT powerhouse. Thank you for listening, and please join us for the next episode of our Digital Thread podcast series. Thank you and have a great day. You've been listening to the Momenta Digital Thread podcast series. We hope you've enjoyed the discussion, and as always, we welcome your comments and suggestions. Please check our website at momenta.one for archived versions of podcasts, as well as resources to help with your digital industry journey. Thank you for listening.

[The End]