Transcript 0:00 [upbeat music] Welcome back to the Peggy Smedley Show, the podcasting voice of IoT and digital transformation. Hello, listeners, and welcome back to the Peggy Smedley Show. 0:14 I'm coming to you live from LiveWorx on Periscope here in Boston. This has been great. My next guest you might recognize. This is Teri Lewis. She is the director of digital for power generation at Caterpillar. 0:28 Hello, Teri. Welcome. Hello. Hello, and welcome. Well- Thank you... I am excited to have you on the show. Uh, I know that you are gonna be presenting here. Tell us a little bit about that. 0:38 Um, we're gonna be presenting our transformation, our digital transformation in terms of power generation. Um, you know, really getting the distributed, uh, power plant of the future. That's exciting stuff, right? 0:49 Uh-huh. It is. I love, I love when we talk, I... We get nerdy, and we talk about all the exciting stuff here that goes on in digital transformation. 0:57 Jim Heppelmann presented this morning, and he got really nerdy talking about PLM- [laughs]... 1:01 and IoT and AI and making it all come together, so I think all of us got all geeked out when he gets up there on stage and bringing it. So let's talk about what Caterpillar is here and what you guys are doing. 1:15 And when you talk about the things that you guys do as a, an organization that comes together, and you guys all work with a lot of great companies, and you guys think about technology, why is it important for Caterpillar to do the things that you guys do when it comes to digital transformation? 1:34 I think it's, um, you know, it's multi-tiered approach. Um, Jim talked about, you know, the digital thread, right? 1:41 Starting from the product releasing and the bill of materials out to at, you know, as we go out and deploy our equipment out in the field, and getting them connected so we've got the digital thread through the whole life cycle of the product. 1:53 And, um, you know, the as-service bill of materials. But also, you know, for the space that I'm in is actually connecting product with people, right? And that, that... 2:04 I, I really like what he had in there in the slide is, you know, the transformation of process, is, you know, you're connecting people to product, but then really the transformation is in the process, and that's really changing business. 2:15 And it's interesting when you talk about that, most people don't realize how important the process of the people are. You know, you can't do things without the people, right? And the process happens. 2:25 And I thought that was interesting because when you guys talk about a partnership like that, you have to make things happen. 2:31 When you, when you have and you work with a company and you change processes or you think, it, it takes people. 2:38 Every time when you think about things, it takes the people, it takes the process, it takes the evolution of things to happen. 2:43 So talk a little bit about when you guys are doing things, and you guys have lots of partnerships. When you go out there, you... There's been some really cool things that you guys have done technology-wise. 2:55 You guys at Caterpillar, when you guys think about products and solutions, you don't have one kind of things you do, you have a lot of them. So you have a cool presentation that you're gonna do tomorrow. 3:05 Probably gonna spill the beans a little bit, but you have a lot of different ones that you've done that you guys at Caterpillar are constantly helping customers kind of reach their next people process evolution when it comes to IoT and digital transformation. 3:22 When you think about that for what you guys at Caterpillar do, and you and I have talked on this radio show and, and, and things like in the past, what's most important for what you guys at Caterpillar want to do when it talks about getting information and data? 3:37 Oh, there's, there's a lot of things that are important. 3:40 I think, you know, going back to the, if we just focus on the people and the product, and the people as part of the process is, um, one of the things we, we've learned and, and, um, picked up from a best practice out of, uh, Rick Sheridan, Menlo Industries, and he's got a job role called a high tech anthropologist. 3:57 Mm. And when you think about it, it's, you know, anthropology, it's the study of people, and then technology, and the p- interaction of people with, with technology. 4:05 And so I think one of the lesson learns that, that everybody in the industry has, has come to realize is you have to... That intersection has gotta be well designed, right? 4:14 And so we spend a lot of time upfront looking how, watching how people operate, how they work the processes, and then not trying to digitize the process as it is, but saying, "Okay, what's the transformation of process?" 4:30 But making sure that people fit in that process, and they're willing and able to adapt to those changes. Because if not, if you, if you develop something, nobody's gonna use it, and it's a waste of, of money and time. 4:41 So you, you, you absolutely have to design around the people, and that's, that's a new concept for anybody in the industrial space who's used to making iron products, right? You don't really... 4:52 You know, apart from a cab, you don't really, you're not overly concerned with how they interact with the technology. 4:56 But now that we're digitizing that interaction and that relationship between a customer and our products, it's, it's foremost in terms of product service design. Is that a... 5:07 You know, I've asked this question before to most of the guests right now. Most people don't understand that it's the people. If you... 5:14 You can have all the great technology you want, but if the people aren't understanding it, it doesn't matter because it's the people that have to be able to make it work and have to understand the technology that you're dealing with. 5:25 So when you're... Are, are we missing that part when we think about the next generation that we're bringing into all of these processes to have them understand what we're doing? 5:37 Because Jim talked about IoT, AR, uh, AI, and he talked about CAD and PLM and the whole digital transformation. 5:46 And as, as I said when he was geeking out, but the idea is, is the role of the next generation that we're bringing in, is it really gonna be a data scientist? Is it really gonna be an engineer? 5:58 What's that new role gonna be? Because we have to think about who are we training to actually run all these processes. Is that role gonna change? Who's gonna understand what all this needs to be?I think, 6:12 you know, uh, what, what we've learned is, is yes, you're gonna need data scientists. Um, but you, you need data scientists with domain experts, right? Or you take your domain experts and you train them in data science. 6:25 Um, and there's a lot of interesting... Even, you know, the Internet's transformed education, right? Mm-hmm. You can take a lot of stuff on- online. 6:32 I think one of the interesting aspects that I've seen in terms of job role changes is art. You know, artists, right? When we create these dashboards, they gotta quit looking like engineers made them. 6:45 [laughs] You know, they, they've gotta look appealing. They've gotta be intuitive. If you have to get so much, you know, it's, it's a web or it's a mobile application, right, where they're interacting with product. 6:56 If you can't, within two clicks, get to actionable insight, the... People aren't gonna use it, right? 7:03 They need-- They want the same appeal on a consumer, from their consumer product, cons- consumer life in the industrial space. So I think that that's, that's something that maybe in the industrial space people are 7:14 just coming to terms with, is that there, there is a, an art form as well that's needed. Interesting. I, I never, I never thought about that. 7:22 So let's talk about some of the things you're gonna be doing here, some of the presentation here. You had a really big experience. You went out and, uh, went to De Beers, um, uh, diamonds, I might add. Yep. 7:34 I mean, it's a diamond mine. Best friend, huh? [laughs] Yeah. I mean, everybody's best friend. I think girls, anybody's. But, uh, for those who don't know it, you know, it's, it's a diamond mine, right? 7:43 I mean, you went and, and, and tell the experience because, I mean, most of us really don't understand what diamond mining is, at least I did not until, you know, we had a chance to talk about it or really what it entails. 7:56 But I mean, I know in your presentation you guys are gonna go into a lot more detail with, with Kathleen Mitford. 8:03 But talk a little bit about what the experience was for you personally, because you got a chance to really see something that was really just out there a little bit, I think- [laughs]... just from the concept. Yeah. 8:16 It, it was out there. We were two degrees south of the Arctic Circle, so it was really out there. And so- That was out there. [laughs] Um, and it was... 8:23 And we went to the Gahcho Kue mine, which is, uh, just north of, uh, Yellowknife in Canada. Um, and it was... It's, it's very remote. You're out in the tundra. Um, you know, they- Literally. Literally. Out in the tundra. 8:36 Yeah. When people say the tundra, you were in the tundra. Yep. Yep. And it was, it, it, the De Beers folks were absolutely fabulous at hosting us there. Um, we went with Finning, our dealer in, in Canada. 8:48 Um, and they- we're gonna be presenting tomorrow, the three of us. So, uh, uh, Riaz Dawood, who is from De Beers, and then James Morrison from Finning, Canada. 8:56 We're gonna talk about how IoT has really transformed the relationships between an OEM, you know, a distributor, and our, our customer. But so that was, you know, that was what I wanna talk about. 9:07 Actually going on site, we, we shot some of the video. We looked at some of, you know, watched the genset, watched the people interacting with what we gave for technology, keeping the equipment running. 9:17 Um, and on the site, there is no power. There's no grid. So the only power on site is our Caterpillar gensets, and they are powering the process plant that's processing all the diamonds. 9:29 Um, and they're processing, you know, if, if the, the power goes out, the processing and the production stops. And then more importantly, it's cold, and we're also heating, you know, for where people live and, and eat. 9:42 So it, it's a safety issue, right? We need to keep our equipment going. So that was, you know, that made me feel really proud. 9:48 Really proud of what Caterpillar's done and a great engineering product that we've got and then, you know, proud of the Cat dealer network that are there to support it and keep the customers going. 9:58 So from an experience, you, you've had an opportunity in your career to really see some really cool facilities. How did this one, this experience live up to just that? 10:08 You said you were really proud of being able to see this facility, you know, going up where you were because just the idea of keeping these people warm and proc- and, and, and doing the things it had to do. 10:19 But you've been involved in really some really cool facilities that you've seen over the time that you've been at Cat. 10:26 So how did this one compare to some of the other ones that you've been able to see the things you've done at Cat? You know, I think every time I go visit a customer, it's, it's always an experience. 10:36 Um, it's always interesting. It's always interesting to see. You know, our customers are out there making things. They're gonna-- They're making infrastructure. They're, they're, they're powering plants. 10:47 They're, they're making things move, people move. They're, they're doing some great work with our products. And our customers are very innovative. They've got, you know, they've got time constraints. 10:57 They've got cost constraints. They've got limited people. And the, the, the innovation of what they do to get, get the work done is just, each site is, is interesting. 11:06 De Beers was very, you know, this, the mine site was interesting. I could say that, you know, I'm always impressed each time I go out on a, on a site, job site to work with customers to see how innovative they are. 11:18 Is that something that's what's really important is it's seeing how the customers are applying the information, the data, how they actually are able to figure out what they can do? 11:29 What Cat gets them, what your system integrators are doing, what your partners are doing. It comes to a point where you say, "Look, you know what? 11:36 It takes really smart people to figure out how to apply all this," to say, "Look, we can do really great things no matter where we are, any place in the world." 11:44 They apply our technology, and they figure out how to apply it to the best way to their specific needs. Well, I think that's where I think IoT is, has transformed. 11:55 Yes, the customers are doing great things with our product. And where IoT is really transforming it, and I talked about that, was the relationship, right? It's providing transparency through the value stream. 12:06 Whereas before, you know, we were siloed in what we did. We built a product. We ship it to the dealers. 12:11 They deliver to the customer, and they support it, and then the customers use it.Now we've got, we've got transparency through that, that value stream, and so it's, it's driving some innovation that 12:23 we've never been able to realize before because we haven't had that data and that information and that opportunity to, to brainstorm around what we can do with that information. So it's really transforming relationships. 12:35 Um, and, you know, fundamentally, that's about trust. So, you know, Cat's got a great brand. Our dealers are, you know, fabulous. They've been around for ninety years plus. So it's- it's- it's really interesting. 12:48 It's exciting 'cause it, it really is transforming the business and the industry. 12:52 And that's the thing I think a lot of people don't understand, is how long the Cat dealer's been around and the relationship that you have with them and that, that trust that you have with them to be able to say, "Well, we're sharing data. 13:03 We're able to come up with new ideas and new creative ways to say, how do we go to market?" 13:08 That go-to-market strategy now with people sharing information that we didn't even know the information was there and ways that we can use it. 13:15 I mean, and I think that's the interesting thing, that when we think about how do we apply the Internet of things or whether now we call it digital transma- transformation, whatever Jim's gonna call it tomorrow, as we all keep moving along, it's kind of a new way for us to say, "This is where technology is just keeps moving forward." 13:34 It's how the relationships are that give us new ways in how our employees are gonna have to, are innovatively come up with new ideas, right? Yeah. Uh, and I, yeah, absolutely, Peggy. 13:46 And I, again, I go back to I, I did like what Jim had in his slide, you know, the, the, the people and the products, and then right in the middle of it is transforming processes. 13:55 So, you know, whether I call it relationships or he calls it processes, the, it's, it's people doing work. It's really transforming what we're doing. 14:03 It's almost like you went backwards, where you ca- called it proc-- you're calling it processes. 14:08 'Cause, you know, it's kind of like that whole thing that we used to do years ago and we're, we kind of some ways go back and to say processes and people. 14:16 You know, I was laughing when he, we had the, the, the media analyst conversation with him earlier, and I said to him, I said, "You know, he's kind of talking about things that we did in time, we did years ago." 14:28 We've kind of gone back a little bit into the way we think about things, and it's interesting because how do you then bring all of this together to help Cat ultimately, not saying this, but I'm asking the question, how do you ultimately then take all of these products, like now we're saying AI, AR, VR, through Vu- Vuforia then? 14:51 I mean, if we're bringing all that now even through Vuforia, do we wanna do that? Or I don't, I guess I don't wanna bring just a product. 14:57 I guess if we were looking through all of these lenses that he has, I guess maybe is the idea. 15:02 If we were gonna say any solution, not one specific product, how do you then view the future in any way that anybody would come, any partner you would have? How would you do it? 15:15 Well, you know, it's funny you say we go back to some of our, you know, the basics, right? Because maybe something that's not so sexy in the media- Yeah... 15:24 sense is, uh, I keep talking to folks about, you know, applying lean principles, right? I said that in my last interview. Yeah. 15:32 And so it's, it's really about, you know, applying lean and then how digital and IoT, AR, VR transform processes. 15:41 Um, the challenge is from a, if you do a value stream mapping, is you look at, you know, improving your process, and the challenge with the technology is sometimes we're limited only by our imagination of how that technology could transform the process. 15:55 So I think events like this are great, you know. People sharing, um, what you do, you know, in terms of your, your radio show is, and, and magazine is sharing those information, best practices. 16:07 I think that's where people get a lot of ideas and walk out of here and go, "Well, I'm gonna go back and I'm gonna try that in my company." 16:14 Would you say, would you say right now, as I forget to hold the mic, would you say right now that this for a lot of people has become, still needs to be a journey? 16:24 And I- I- I say to a lot of people that they're still not where they need to be in the journey. Do you think people have to get along in the journey on this process? Because, uh, there's so much more 16:40 that they have to do. Manufacturers are struggling to understand where they need to go. 16:45 Uh, Caterpillar has been, has, has been in this journey for a long time when it comes to data, when it comes to giving information and helping people understand what they need to do. 16:58 Where do you think manufacturers are in the journey? Are they still far from where they need to be? You know, I think we, we started on a journey, as you know. 17:10 W- We got a video out there on YouTube in, in nineteen ninety-one, you know, and internet was just starting to come on board, and we call it Ian in the Boat, you know, remote servicing our equipment, fishing in the, in Scotland. 17:23 I think it's having a vision. Um, I was-- Inside Caterpillar, we did some research in twenty thirteen. 17:30 I actually dusted off the research, uh, last week, and we made a projection from some of our industries of where they would be in terms of their IoT adoption. 17:38 And I can safely say that where we're at now, I, the forecast was out to twenty twenty, and I was probably o-- we were probably off about thirty to fifty percent, that the industries have actually adopted faster than what we anticipated. 17:52 So I think that, you know, we could always do better, but I think the reality is most factories are brownfield, so you're, you're dealing with a lot of legacy equipment. 18:02 You know, in industrial applications, there's no data standards. We've had that discussion, right? There probably never will be. So it's hard. 18:11 So, so I think in, in most sense, if somebody's started on the journey, that's the hardest part.Um, and, you know, depending on the challenges that each company's got to go with, I, I'm pretty proud of the, you know, the industrial marketplace is adopting it and pretty open-minded in most parts. 18:30 Why all of a sudden has everybody been talking about brownfields? It's come up a lot. Is it because recent research has come up that brownfields are popping up, that we've discovered these brownfields? 18:41 No, it's just old factories. Brownfields are all just old factories that we- Yeah. They, but I mean, why, why all of a sudden? They're just- Well-... discovering them all, all of a sudden we're doing analysis? 18:49 No, I think that the people are on their digital transformation, and they're looking around as like, "I've got to transform all of this old stuff," you know? Old equipment. Uh, you know, we call them low IQ, right? 19:00 Low electronic IQ, right? There's not a lot of data from it. So how can you go to transform your, your processing plant if there's no electronics on it? 19:09 Um, we've got, um, some gensets in one of our building, um, that were installed in 1976. There's no electronics on there. They're still running. They s- were great, but they're just old, so. What do you do with those? 19:23 So does this come to a point that you've got to do something, or you gotta, you know... Well, you can decide whether it de- depending on the problem you wanna solve, you can go back and instrument them. 19:32 You can add electronics and sensors. You know, we do the Asset IQ Kits, what we call those. Or you can update controls, or you just, you know, say, "Hey, it's not a..." 19:41 We, we go through an assessment with customers, criticality of the asset, and decide whether it's worthwhile to add the electronics or not. 19:47 And is it coming up now that companies have to, manufacturers have to say, "It's, it's do it or die," kind of thing. You know? 19:54 Either you're gonna make a decision or not because you're, you, you got, you, you have to do something. Is it at that point? I, I think most companies if, if they don't come to that realization, 20:06 they're probably not gonna be around. I think, uh- How long? How long would you say? Do they got a five-year lifespan? It depends on the industry, right? It depends on the competitive nature of the industry. 20:16 But I think industrial has got the benefit of being able to look at retail as an example, right? 'Cause we've been saying that for a while, if you don't do something, you're gonna be out of business. 20:25 But how long can we keep saying that? Well, I think, I think that's why you see a lot... I, I think that's why you see so much acceleration in industrial space, but I think it is linked back to the in, to retail, right? 20:36 We've seen the internet destroy retail. [laughs] Nice. Right? And so, so, you know, you look at that from a- So we've been saying like the behemoths- Yeah... why they've been struggling, right? Now we're knowing why. 20:46 And, and you look at the how that, and it's like, you know, anybody that's in a business, right? 20:49 So whether it's, you know, utilities that look back and say, "I don't want to be Kodak of the utility business," or, or, you know, it's, I think we, industrial space has the benefit that the consumer marketplace has gone first. 21:01 So that's why I think that you're really seeing a lot of ac- uh, acceleration in industrial space. So are there lessons then to be learned from that, as you're saying? 21:09 That there's things companies should be doing differently, or they are going to be a Kodak, or they are gonna be a Blockbuster, you know? I mean, those are the lessons that you're gonna learn or fa- or, or feel the fate. 21:21 Well, I think one is that, you know, we all get used to in the consumer space interacting with brands through a digital relationship. The same's gotta be true in the industrial space. 21:33 You know, you better figure out how to create a relationship with your customer in the digital because it, it's just an expectation. So then there's the answer. 21:43 So as all of these things, going back to your processes discussion, is you have to figure out what that relationship is because there's your people, your processes. 21:53 Your whole way of doing business has to go back with that feel, that relationship- Mm-hmm... that you have. Because if you don't, that goes back to that initial statement that you started our, our discussion with. 22:05 Because you better have a clear understanding, or you're not going to be here. Whatever that is, two, five, 10 years from now, you will not be, your business will not be here. Yeah. 22:15 And I, I think in, in the consumer, in consumer marketing is people will buy a product based on emotion. 22:21 In the industrial space, the difference is they're gonna, they're gonna buy a product because they, they make money with it or they, you know, lower their risk. 22:29 So you've got to interact with your customer in a digital space, and it can't just be emotion. You've got to figure out how to help them be s- customers be successful with your products. 22:38 So we were teaching them in manufacturing, saying you have to have an as service, a software as a service, so that as service now better be as good or better than your competitor, or you're not going to be there, and you better know what the customer wants, and you better be faster, quicker, know the size, shape, demand, and you better have a partner that's going to help you get there, or you're not going to be able to meet those demands that we've des- that you just described too. 23:07 So there's, there's a lot of moving parts that you're just describing there as well. Yeah. 23:12 I, uh, Michael Porter did an article, you know, smart connected product in 2014, was, which is, you know, basically looking at how a smart connected product is transforming competitive strategy, and I think it, it goes back to that's a good starting point for any company to go look at it and say, "Okay, what is our strategy? 23:30 Am I a differentiate myself, or am I be low cost? And then how can IoT and ARVR, how can that, how can those technologies, you know, enable that strategy?" And then after that, it's just execution. 23:43 And, and then now we're going back to that whole execution way of doing things, and we're looking at what do we have to do as a part of all of this right now. 23:51 So as we start seeing, as, as I say we, the entire manufacturing population, you really have to then make some real long-term decisions or short-term ones to be successful. Yes. 24:04 And I think you have to make those decisions. It's a journey, right? You're gonna have multiple work streams. 24:08 And I think in the tech space, you've got to start thinking too is like always at that, because the, the obsolescence is gonna be critical, right? Uh, two is you pick a technology, and you go down this path. 24:19 You gotta always question is like, when do I throw it away? What... When do I... When is there something new?That I should adopt. 24:27 You shouldn't maybe always chase the next s-shiny penny, but you're gonna have to stay abreast of this technology space. It's moving really fast. Well, that's Caterpillar for you. 24:36 Well, Terri, I love having you on always. So thank you. Terri Lewis, director of Digital and Power Generation at Caterpillar. Where can our viewers, listeners go to learn more about what you guys are doing at Cat? 24:47 Um, we've got a lot of stuff on cat.com. Cat.com. [laughs] All right. Well, and what time's your presentation tomorrow? Uh, one o'clock, I think. Yeah. One o'clock su- e-Eastern? All right. Well- Eastern. If... 25:00 All right. There you have it. So check out Terri's presentation tomorrow. She will be live on the main stage. All right. And you can tweet at Terri and us at connectedwmag. 25:10 I'm sure Terri would be happy to answer any of those questions. So stick around. We're out of time for this segment, but we've got more to come right here coming to you live at LiveWorx. 25:20 And this is The Peggy Smedley Show, the podcasting voice of IoT and digital transformation. And remember, with great technology comes great responsibility. We will be right back after a few short minutes of a break. 25:31 [rock music] Looking to be a- Constructek TV, your fierce advocates for construction. 26:05 Constructek TV digs into infrastructure, drills into global economic conditions. 26:11 It is changing the talent gap narrative, adopting a new vision and a voice to the new skilled worker in construction, all with the help of technology. 26:21 Constructek TV, everything you need for infrastructure, labor, and technology. Like, share, and subscribe to Constructek TV at youtube.com/constructektv. 26:36 [upbeat music] IoT is here, AI and machine learning are catching on, and they are all changing our world. But what's next? How will you be impacted? 26:47 Let The Peggy Smedley Show keep you up to date and looking ahead for your business. Tune in every Tuesday at noon Central Time at peggysmedleyshow.com. 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