Rolls-Royce and the need for speed - a digital first program built on culture change

Profile picture for user slauchlan By Stuart Lauchlan May 8, 2018
Summary:
Rolls-Royce has a world-class reputation, but it needs to up its game when it comes to agility in a disruptive climate.

Rolls Royce logo
Rolls-Royce

Ironically for an engine manufacturer, Rolls-Royce isn’t going fast enough and that’s a challenge that Chief Digital Officer Neil Crockett has set out to tackle.

Rolls-Royce has an aerospace business model that’s dependent on data analytics to cope with the risk-based aspects, he explains:

We sell our engines in aerospace pretty much at a loss, that’s the way the market is. Then we recover our money in the following circa 20 years, where we sign service contracts which are paid by the flying hours. It’s a risk based model to our customers, that is basically protected because we have very complex domain expertise required to maintain those engines. We have this product called ‘TotalCare’ which is this risk space for our service. To back that up, you clearly have to have a lot of data analytics to manage it through its life-cycle.

We collect data from all over the place - from how the engines are designed, tested and manufactured, all the environmental data we can get. We are trying to pull together as much data as possible to get as many insights, but also think of new services that we can add to our customers during the 20 year relationship after they buy an engine.

But there’s a need for speed that has to be met, he adds:

I was at a meeting a couple of weeks ago. Basically that meeting was talking about how we are using AI and machine learning and multi-variable analysis to continually look for anomalies and 20 variables simultaneously, with 7,000 aircraft on the earth. This is quite complex data analytics stuff. The truth is that it is not anywhere near fast enough. We are not going fast enough. We are focused on delivering. We are focused on incremental improvements over 30 years. And we basically have to get faster.

There’s an ever-present danger of being outpaced, he explains:

Things are changing fast in all aspects of our life. For us it is happening more than you might think. In terms of the pretty strong revenue, we have to think about our competitors who are innovating in this area. We have lots of digital start-ups emerging who say they can use AI to reverse engineer that magic complexity about the engines. It’s not a reasonable expectation to think you will be better than the customer. Our partners who collect data might be seeing an opportunity for themselves to get into that market. The marketplace is exploding in terms of external pressures.

Culture change

But there are internal stresses to be dealt with as well, says Crockett:

We had this engineering culture, this TRL culture, where you have to do a business case, show me what you will achieve at the end of it and when I’ve got that I will let you move forward and get on with it. Digital is not like that. Digital is not a linear thing.

Digital is more like a jacuzzi which comes at you from different directions. You have to get into that mindset of trying and learning and moving forward. And being continually agile. We have mainly built and bought. We are engineers, we can build. We did not think about partnering and going outside.

This sort of cultural mindset has significant implications for talent management, he adds:

We had to think about talent flow. How does someone coming into our world as a data scientist feel about an engineering career? Is everyone in Rolls-Royce willing to take up the digital journey?

When Crockett joined Rolls-Royce 18 months ago, he came to an important decision - give delivery over to IT and free up others:

Let’s take the people who may be data scientists and engineers, and move them into a new area which we call the R-Squared Data Lab where they can think of new ideas to new services. Of course, [they are] working with IT and everyone else in a DevOps way, but working towards new innovation. We decided to go halfway between outside and internal.

That included selecting TCS as Rolls-Royce’s preferred partner for data innovation. Crockett recalls:

We decided to pick one platform we were going to work with. That will be our data collaboration. We went with TCUP - TCS Connected Universe Platform. Working with TCS, we have an amazing set of services and capabilities that also allows us to be open and collaborate with customers and partners in an easy way. That is what drew us to it. The pool of resources is also amazing.

That was the basis. Then we have the cells and sprints. Rather than working on a five-year plan, let’s go out and be radical and take value points in the business or if we fix the problem, we get revenue.

At the end of the day, this is a cultural change story and that has its own challenges, says Crockett:

What it’s about is showing people and not telling them, moving forward on a value-based approach. Rather than trying to sell people services, we are building new capabilities…We are setting up guilds. There are experts stuck away in some parts of the company, lonely. We are now performing guilds or communities across Rolls-Royce where they can learn, develop and experiment together, and feel part of a community.

Then we are building a digital academy. It is called AMOOC - an open online course - which is focused on the training that the community wants. We have 4000 people signed up to use it and we want to use it as the basis for our willing and able digital first capability.

We have champions deployed in the business world who are now the local champions of digital first. The principles we are working on is not about building a big central organisation. It’s very much about focusing on value, focusing on business, focusing on empowering the business units in our group to be self-service and automated. We are looking at distributing it, not centralising it.

And all the time, looking at going faster.

My take

The realization here that a hefty chunk of digital transformation success is going to be down to cultural change and organizational overhauls is hugely important. This isn’t a case of chasing after ‘silver bullets’ and hoping they’ll solve the world’s problems. It’s about re-inventing the organization’s approach to long-established practices and processes - think People First to get to Digital First.