Spinning-off without getting dizzy

Release Date: January 14, 2020 • Episode #99

Corporate changes such as spinning off a part of a company or rebranding can have dramatic effects on customer experience, so tooling your CX program for the disruption is critical. Pat Gibbons guests hosts with guests Rafael Chavez and Kory Weisman from Clarios, formerly known as Johnson Controls Power Solutions, to discuss how they navigated their CX programs during big changes within their company.

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Pat:
It's pretty common for large companies to be involved in substantial restructurings: mergers, acquisitions, spin offs, other big changes to corporate organizations. So how does that change the customer experience?

Rafael:
Even though our branding changed our commitment and our desire to want to help our customers win remained. And in fact and when we released our new core values, you know, at the very top of the list that say, you know, we help our customers win.

Pat:
Maintaining your CX program during corporate changes and rebranding. On this episode of The CX Leader Podcast.

Announcer:
The CX Leader Podcast with Steve Walker is a production of Walker, an experience management firm that helps companies accelerate their CX success. Find out more at walkerinfo.com.

Pat:
Hello, everyone. I'm Pat Gibbons, I'm sitting in today for Steve Walker on The CX Leader Podcast, and we appreciate your listening today. On The CX Leader Podcast, we explore topics and themes to help leaders like you leverage all the benefits of customer experience. You know, it's pretty common with companies as they grow, they acquire, they merge, and as they continue to grow, it sometimes makes sense to spin off certain parts of the company into new separate organizations. Often that includes rebranding to something completely new to the public. Naturally, that has implications on customer experience, affecting communication, managing expectations and trying to maintain customer loyalty. My guests in this episode have lived through that transition at Clarios, a world leader in advanced energy storage solutions, formerly known as Johnson Controls Power Solutions. Rafael Chávez is the manager of customer engagement and Kory Weisman is director of global commercial excellence. Rafael, Kory, thanks for being on The CX Leader Podcast.

Rafael:
Thank you.

Kory:
Thank you for having us.

Pat:
Well, I think it's interesting: I've talked to a lot of CX leaders at many different companies, particularly large organizations, and even if it's not a merger, an acquisition, a spin off, or something, they're always changing. There's always reorganizations and so forth, and it really disrupts the strategy and internally of a customer experience team and externally, it naturally affects customers. And you guys have really lived through that. So let's start by telling us a little bit about the company itself. Tell us a little bit about what you do. So people are familiar and have some context.

Kory:
Yeah. So Clarios is the industry leader and lead acid batteries. One in three cars worldwide have our batteries inside of them. To give you an idea of how many batteries that is, last year in 2018 we sold 154 million batteries.

Pat:
That's a lot of batteries. [laughing].

Kory:
To put that into perspective, that's about five batteries per second, 24/7, 365.

Pat:
Okay.

Kory:
From a staffing perspective, we have 16,000 employees across 56 manufacturing, recycling and distribution centers worldwide. Our global headquarters is in Milwaukee, Wisconsin, and we have regional headquarters in Monterrey, Mexico, Hanover, Germany, and Shanghai, China. Additionally, we're also the world's largest automotive battery recycler, with 8,000 batteries being recycled per hour across the globe, which helps lower energy and greenhouse gas emissions by 90 percent through the use of these recycled raw materials.

Pat:
Yeah, and with the organization, I assume your distribution is massive. I mean, you probably sell into a number of different channels, direct to manufacturers, to consumers. How does… how does that work?

Kory:
Yeah. So we have multiple distribution models. It's unique across each region. So each region has their own different model that we use based on how the structure of the… the region is, which is why we have a footprint in our… in different regions across the globe. So we really have a closed loop circle within each region. There's not too much cross regional interaction.

Pat:
So the company obviously has gone through a lot of change, right?

Kory:
A lot, yeah.

Pat:
Tell us a little about that.

Kory:
Yes. So on April 1st, the Battery Division was sold by Johnson Controls to Brookfield Business Partners, which is a private equity firm, and they rebranded the name Clarios. So although the company was rebrand, Clarios from Johnson Controls our brands in the market have not changed. So in different regions, we have our primary brands that we… that we sell and those will still remain as the key brands. So we have our global brand Optima and then we have regional brands such as LTH, Varta, Delkor, Heliar, and Mac, which are still common in the marketplace. Even though we became a new company, our brands have not changed.

Pat:
Okay, so I imagine from a customer perspective in your distribution model, obviously they're dealing with a new name, but consumers are not so much, correct?

Kory:
Exactly. Yeah. So the battery that was in the market before April 1st is still the same battery that's in the market after April 1st.

Pat:
When did you become aware that the change was gonna take place? Is it something that kind of came up on you quick or were you able to plan?

Kory:
So it was about sometime in 2017 when Johnson Controls decided to do the strategic review of the Power Solutions business. So what that means is they step back and say, is this the right business for our portfolio of what the Johnson Control strategy is and where we want to go as a company? So that involved a variety of different aspects, such as a separation to a spin off, a purchase, or a joint venture, or simply doing nothing, saying this doesn't make sense as part of our portfolio, but really taking the time to step back and say what is the best possible outcome for Power Solutions to succeed as a company for both themselves and for Johnson Controls.

Pat:
So let's talk about some of the impact on customer experience, and I think that it comes at different levels. It can be internal to your organization, internal to the distribution supply chain, but then also the end customer. You know how it affects affects that. Tell us a little internally how it affects… like was there a shift in how customer experience was viewed? Were there new people involved, new executives, for instance?

Rafael:
No. And I think that's something really important that that Kory just mentioned. You know, even though our branding changed, really are our commitment and our desire to want to help our customers win remained. And in fact, even when we released our core values, our new core values, you know, there was still top… at the very top of the list that said, you know, we help our customers win. And that was it's something that it's still innate within our DNA. You know, at a very raw form, CX is within everybody within the organization. And so we still have people that soon as the survey results come out, they want to understand how their customers are viewing our particular processes, their experiences with us. And it's really something really exciting to see that, you know, when the workshops are announced that everybody wants to be a part of those workshops, you know, you have people not just within the commercial team, but people in the operations that really want to be a part of this. Okay. I want to know how I can help. And so that… that commitment still… still remains internally and that excitement for CX still remains.

Pat:
It's probably a hard question to pinpoint, but having that type of culture, I'm sure there are a number of listeners that are envious of that. Is there… how did you build that? I mean, was there any… is there any secret sauce or is that just something over time that was just part of the culture of the organization, or was it something that senior leaders always believed? What was the experience within your company?

Rafael:
So I think… I mean, don't get me wrong, I think there's still those challenges. Right? I mean, and one of the things that we still remain challenging and I'm sure probably a lot of your listeners will relate to is we still somehow see that… that customer experiences very much tied at the end towards commercial. And so it's.. it's seen as you know, the survey is a commercial tool that they utilize to help us understand our customer experience, but it lives within commercial. And so one of the really big initiatives now wonder Clarios and utilizing these new values that value stuff that came out is really say, OK, how can each employee within their organization understand what their contribution to customer experience is? And that's… that's really something that with our new direction, new leaders that we have, you know, they really understand that part and they're really helping us drive that. One of the things that we're implementing this year is trying to take a robust annual survey and basically almost disintegrate it throughout the entire year. So there is that constant touchpoint to take that that passion that exists once a year for those workshops to make it occur throughout the year. You know, having those multiple touch points and even even though it's not as big and robust, it's small. minute pulses that we get to start saying, you know, doesn't mean that everybody has to be involved. But maybe these micro teams that start taking those results that you have to start building that… that culture. So it's a very passionate community certain parts of the year. And so we want to take that and really, you know, expand it and say, you know, let's keep that motivation going. Let's keep that passion going. And so it's something that we… we definitely have the commitment from our leaders wanting to share that and make everybody understand that.

Pat:
Well, I think that's fantastic. That is one of the things that didn't change. You know that. Because I think we have others. I mean, I'm sure there are listeners out there that would say, gosh, when we went through a big change, we had new people come in, new executives that now we had to rationalize or justify, you know, what we were doing. So I'm curious, even when you get new people in it at any level, how did they get embedded in that culture? Is it something they just kind of catch on to or is it through workshops and other trainings?

Rafael:
I think it's through their workshops. And I think one of the things that that we're doing this year, we brought in a new team member and we're starting the onboarding process where on there we're really saying, okay, these are the pillars that you need to understand as a new sales manager, as an example, to understand what that is. And then there is laid out customer experience and it says, OK, this is what it… what it means for you to be involved in X, Y and Z and for customer experience. It means that you need to be aware of this, this and this. And so it's… it's something that we're slowly working through. But I think a lot of it is kind of just by, you know, transferring. And, you know, they see their leader wanting to be involved and saying, you know, are CX results are important, our CX workshops are important. I want you to be a part of that. I think that's… that's a lot of it has to do with that.

Pat:
Good role modeling? right?

Rafael:
Yeah… role model.

Pat:
Nothing can replace that. Yeah.

Kory:
Yeah. And I would just jump in and kind of say that what we're doing as a organization now that we've separate from Johnson Controls, we've looked at this as a great time to review our commercial operating system. And what our commercial operating system is, is it's a set a world class commercial practices that enable competitive advantage to improve our customer loyalty, market leadership and shareholder value, as well as ultimately maximizing profitable growth for the enterprise. So that enables eight critical pillars from sales management to customer experience and channel management among a variety of other topics that really say these are the critical commercial practices that you need as a organization to succeed in… in the commercial space. We did this similarly on the manufacturing side where we've seen great success on the operation side. Now we're really trying to mirror that and grow that in the commercial space to say these are the practices that you need to follow as a commercial leader to really grow the commercial space and your maturity in that area.

Pat:
Really interesting to hear kind of how you've maintained internally to the organization. Externally to customers: now, again, your end brands don't necessarily change, but obviously your key contacts, you see that the company is going through a change and that sort of thing. Probably the people that you're gathering feedback from and so forth. How did you manage through that? And was there a big change in just even informing them? Here's what we're going through. Here's what it means for you. Setting expectations. How does that take place?

Kory:
Yeah, I think we… we did a really good job because this was about a year and a half long process of the strategic review. So our customers weren't surprised that this was happening. It wasn't a, hey, tomorrow you're gonna be a new company, but we're no longer Johnson Controls. By doing that, it kind of set… calmed the waters for a lot of our customers to really say they know this is happening. They know nothing's really going to change for the most part because of this review. And when we got purchased by Brookfield Business Partners, what really happened was our whole organization stayed as it was. It was more of a lift and shift. So our customers contacts didn't change. Our account owners were still the same. The people still went the same offices. They still got the batteries from the same people. Our customers ordered batteries on their same platforms. Nothing from… really from a customer standpoint really changed outside of the name Johnson Controls becoming Clarios.

Rafael:
Yeah, I think, you know, to add to that one of the you know… it was really a really good initiative that our leaders took, where were they really went to customers and created that assurance? You know, they said, you know, I'm here sitting with you today a month from now or a year from now, whenever this transition occurs, it's still going to be me sitting here with you today. And so we really created that assurance that to your point, the fact that it was a year even in fact, we asked the question in the survey and I think it was over eighty three percent of people knew and were aware and felt comfortable with the change that we were gonna go from Johnson Controls Power Solutions to Clarios. And in fact, when we were announcing the survey, we sent out this about a month in advance. We sent out a pre-notification video to all the invitees and saying that the survey was coming out and everything. And within that video, we had our two top leaders explain part of the transition from Johnson Controls Power Solutions to Clarios. And that also really helped us within our… the technical aspect of the survey responses where we didn't really see a dip. People still knew that Clarios was Johnson Controls Power Solutions. And so we our percentage point on participation remained basically flat.

Pat:
Yeah.

Rafael:
And so I think, you know, we really have to give credit to the marketing, the communication and really our leaders that, you know, created that assurance that said, it's still… it's still us. You know, we're still going to make high quality batteries. You're still going to get it from the same place and it's still going to have that primary contact, the service that you need.

Kory:
preferredYeah. I should just throw a little bit of kudos to your guy's way. Not only did we switch to a new company, but we also had this was the first year that we use Qualtrics to conduct the survey. So not only are they getting a survey from a new company, they're getting the survey in a new way that they historically had not gotten to before. So… and so in order to keep our at our response rate flat through all of these changes has been not only, a good job by our own internal team. But the support we've received from both Walker and Qualtrics has been fantastic throughout the survey process.

Pat:
It's obviously always good to hear. So I'm intrigued with… you know, anytime we talk about a change like this, I think a lot of people think of brand. Now sometimes I think they take a shallow approach to that and say, oh, brand is the name, you know, but the brand is so much more. And it sounds like the brand is pretty integrated with the customer experience at your company. I mean, part of the brand is really the experience that customers have. Do… is that a conscious effort at the organization or are you working with marketing and communication to make sure that they're kind of intertwined and you guys are in touch with each other?

Rafael:
I think yes. However, I think we could do better.

Pat:
OK.

Rafael:
And I think, you know, our our brands, you know, not necessarily as Clarios, but our our individual battery brands, you know, Optima, Varta, Heliar, Delkor, that… that have really have that much weight overall that even when that shift occurred, those branding still remained, you know. So I think that definitely helped us to… to remain that loyalty towards the brand because they still saw, you know, the emblem in their… in their preferred battery choice throughout each of the individual regions.

Pat:
So we're kind of embarking on a on a new year. In fact, you're here in our studio today because you're talking CX with some of our people. What are… what are some of your plans as you move forward and kind of reinforce some of the good work that you've been doing?

Rafael:
I think the biggest plan this year, we narrowed down it could be three top three. The first one is really to relook at our annual survey. And as I mentioned, kind of expanding it throughout the year. You know, not relying just on that annual touchpoint, but creating a post like touchpoints so we can have more reactive action plans and ultimately create predictive analytics off of that. It's something that will help us drive, I think, that interest internally to say, you know, I don't know, just have to wait a year to have that robust process. And so that's one. The other one is… is really to simplify the message, to really help the leaders and everybody within the organization to take advantage of what those results mean. Ultimately, instead of going away from just the statistical part of it and really understand what that impact like in terms of numbers, does the loyalty create more of a narrative that says, okay, what… what exactly is is going to do towards the behavior that our customers are looking for? And ultimately, we want to take that shift to go into what I had mentioned, which is take that message to everybody outside of commercial to say, how can I contribute to CX? You know, I don't necessarily just be need to be the person that visits the customer to understand that I have an integral part to… to CX. It's anybody that it's putting a label on a battery to the person that's ultimately closing a deal. And so that's really the message that we want to be able to have that… that if you're within the four walls, not necessarily leave, that you're still proud of that that brand and and ultimately is when I'm going to drive CX. You know, a strong employee engagement: being proud of where you work, being proud of what you do ultimately feeds into that; having that positive impact into… towards the customer.

Pat:
Yeah, that sounds like a great progression. You know, good progress as you've gone through big changes, but lots more to come…

Rafael:
Absolutely.

Pat:
…sounds like as well.

Rafael:
Right. I think it's one of those you have to evolve. Right? You know, ultimately, you know, in the last, you know, 15, 20 years, the customer's behaviors have shifted, you know, considerably. And so, you know, it's for us to be able to continue to provide that strong service, we have to adapt and we have to learn and be consistent with that.

Pat:
Yeah. I assume in your business, because in everybody's business, expectations change. Right? You know, we keep talking about things like the Amazon effect that people expect to be able to order quick and get things quick and all that. And sometimes people restrict that to just the consumer world. But I'm sure you see it in your world, too. They want to be able to click and purchase and do things just like they do online with their consumer purchases. Do you do find that as well?

Kory:
Yeah, I would say that our digital strategy is expanding every day. We're… we're seeing that the future of the space is e-commerce. And we're really trying to identify what the best way to enter that space is. In certain regions where… we have a pretty good presence in there. We're rolling out various different digital strategies across the globe to… to grow in that space. We see the challenges. It's not necessarily easy to ship a 60 pound battery. The cost there is more expensive than purchasing a variety of other products. So that's where we see the challenge from a transportation perspective. And shipping an individual battery for a customer, and more than likely, when you need a car battery, it's not because you need it two weeks from now – you get a car battery because it died on the road. Not too many people think about purchasing a car battery that's on sale or because they're searching through Amazon. You purchase a car battery when your car doesn't start and you're… you need one right now. You can't wait for a battery to come through next-day shipping on Amazon.

Pat:
Yeah, interesting. Well, we've come to that point of the program where we ask for a tip. We call it our Take Home Value question. So if each of you could share one or two things that our listeners might find interesting about how to manage through restructuring a piece of advice that might be helpful to them.

Kory:
So as an organization, you know, as you mentioned, goes through times of change and mergers and acquisitions, everything, as a company is being reviewed and analyzed. There's two key pieces that I would say that are important that I've noticed and I can hand over to Rafael to… to highlight as well. First of all, you want to make sure that your CX program is aligned to the organization's strategy as a company, primarily structure follows strategy. So if CX is not part of your company's strategy, the structure won't follow. Secondly, you must be able to show the value and the ROI that a CX program can bring. With everything being reviewed and analyzed, the leadership of the company is looking at what provides the most value and it can seem like everything's on the chopping block. So be able to say this is the value that it brings to… to the company, to the customers, to the relationship, and really highlight what value it brings as well as the ROI is critical to say this is why we do it, because I'm sure a lot of your listeners can confirm that customer experience is a large investment. It's not a $5000 purchase order that you're doing. It's a investment that has a return, and it's not just dollars, but it's people, it's resources that is really critical to… to show that this is the value it brings to the organization and to really grow with your customers.

Pat:
Excellent advice. Rafael, what do you have to add?

Rafael:
I think, you know, looking at from… from the CX perspective, because it's something that we're still working on, but we definitely have found the value. And it's just two things that we have as an objective this year: it's, you know, simplifying the message so ultimately, you could deliver to the masses. Because it's… it's one of those where, you know, anybody can put a PowerPoint with numbers on there but it's really saying, okay, well, what do I do with that number? And so it's… it's the drive to try to say OK me that as they… as I mentioned with the example of putting the label on the battery, have them really be aware that what they're doing is ultimately going to drive a positive experience. And it's something that we're still learning today to see how can we make that transition, you know, how can we really focus on that behavior to… to make sure that people are doing that and unaware of that?

Pat:
Well, I'm inspired by the progress that you guys have made and also what you've got planned, and I'm sure our listeners are as well. So, Rafael, Kory, thanks for being on The CX Leader Podcast today.

Kory:
Great. Thanks for having us.

Rafael:
Thank you.

Pat:
If you want to talk about anything you've heard on this episode or how Walker can help you with your business's customer experience program. Feel free to email me at pgibbons@walkerinfo.com or email Steve at steve.walker@walkerinformation.com. Or give us a call here in the U.S. at 1-317-843-8890. Check out our website: we've got a new website, it's cxleaderpodcast.com and you can find links to iTunes, Spotify, iHeart Radio, Google Play and YouTube. All the ways to subscribe so that you can regularly listen to the podcast. You can also find our previous episodes, podcast series, contact information, and you can also let us know how we're doing. The CX Leader Podcast is a production of Walker, we're an experience management firm that helps companies accelerate their CX success. You can read more about us at walkerinfo.com. Thanks for listening and we'll see you next time.