Helping End Users See Hidden Value in Lubricants

Holly Fitzgerald, The Lubrizol Corporation
Tags: industrial lubricants

Today’s machine lubrication technology is more advanced than ever before, due in part, to major investments in research and development (R & D). Although R & D remains a cornerstone of innovation and fuels long-term economic growth in the technology sector, most end-users place the value of lubricants about level with or below that of a well-branded bottle of mineral water.

With today’s rapid pace of innovation, it’s critically important for companies to increase efficiencies and reduce the time it takes for an idea to be transformed into a finished product and taken to market. It’s crucial to help customers see the work and innovation that goes into developing these products throughout every step of the value chain. While this may be readily apparent to the minds behind the technology, painting a value picture for the customer is easier said than done.

In the new economy, corporations face challenges that yesterday’s managers never anticipated. Increasing competition in a globalized market, shrinking corporate resources, maturing markets, rapid shifts in technology and recruitment and retention of talented people are among the matrix of challenges associated with maximizing return on investment on R & D expenditures.

Growth of Research and Development

Since the 1960s, domestic R & D investment has exhibited strong and generally consistent growth. Total annual R & D expenditures in the United States increased from $26 billion in 1970 to $206 billion in 1997, representing an average annual growth rate of eight percent. Collateral intangible investments in other areas that impact directly on firm-level innovation – information technology (IT) and information systems, supply chain responsiveness, and improving work force skills – exhibit broadly comparable growth rates.

The situation has changed radically in the wake of recent events. A sluggish economy reeling from the effects of 9/11 sank into a full-fledged recession, adversely impacting corporate R & D expenditures. For example, in 2003, the amount invested in domestic R & D is estimated to have been $282 billion – representing an actual decline in overall corporate R & D outlays. Total industrial support for R & D was approximately $194 billion in 2003, comparable to 2002. This rate is significantly less than what has been experienced in recent years, a reflection of less-than-rosy economic factors that emerged in the past year along with uncertainties in the stock market.

In this time of economic uncertainty, there was actually a decline in overall corporate R & D funding for the first time in more than a decade – $192 billion for 2003, or 0.7 percent less than 2002. On a positive note, a new R & D model based on open innovation is clearly emerging. Despite the gloomy domestic R & D investment figures, indications show that industry is headed for a vigorous makeover.

An example of enterprises that buck the downward trend by maintaining R & D expenditures and employ new methods to enhance the perception of value-added products and services is the Lubrizol Corporation. For 2004, the company’s investment in R & D and testing stood at six percent of revenues, or $190.8 million. Capitalizing on the “open innovation” R & D model, the company has recognized that an essential part of the total innovation spending package now lies outside the traditional R & D domain in areas such as quality control, IT systems and training.

Many enterprising organizations are leveraging training technology as a basis for operating and distributing value-added goods and services throughout the entire value chain. One of the most effective methods of helping end users to benefit from R & D investments is to transfer R & D knowledge in the form of better technical product information via the learning function – specifically, e-learning. What better use of R & D knowledge can there be than to help the end customer be more successful in the rapidly evolving global marketplace?

Leveraging the Power of Learning

Customized e-learning solutions are designed to execute business strategies, drive improved field performance and achieve tangible sales success. E-learning is no longer simply an educational and training tool. It has become an archetype of the knowledge economy and a lifelong learning process that aims to develop a skilled work force. In tandem with the realities of the current economic climate, the link between R & D and customer perception of value-added products and services has become a series of shifting paradigms.

In general, the benefits of e-learning as an integrated-solutions function include the following:

Moving to Market through E-Learning

The Lubrizol Corporation has recently announced a commercially available e-learning program by introducing a new Web-based tool to its Knowledge 2 Market (K2M) learning services program. In effect, this will help to expand the market’s understanding of newer high-tech lubricants and the value they bring to businesses.

The program is designed to equip field sales staff with the technical information and selling skills they need to better serve their customers. The objective of the e-learning process is to demonstrate a product’s true value, beginning with R & D efforts and carrying through to the end users, which in most cases are Lubrizol’s customers’ customers. The goal is to help customers and end users increase their profitability by learning the fine points of lubrication technology – incorporating knowledge of fluid additives in particular – from the experts.

This customized learning approach provides information on how to use the lubrication technology R & D developments by translating technical terminology into user-friendly terms to solve customer problems. To be successful, the learning system must be integrated as a core business strategy that is dynamic, not static. And even though 70 percent of the Fortune 1000 identify lack of training as a growth hindrance, knowledgeable managers recognize the need to develop the organization’s skill set in order to accelerate growth.

Combining Technical Knowledge with Sales Field Expertise

The immediate challenge in the K2M paradigm is to align the consumer’s perception of a product’s value with its advanced lubrication technology, which, in turn, is the product of intensive R & D efforts. The key is effectively communicating a product’s added benefits throughout the entire value chain: from product development and sales and marketing to the distributor and end user. At each level of the value chain, product differentiation is enforced through methods designed to develop consistent message formats that provide product knowledge and application skills appropriate for targeted audiences.

Virtual Training

Successful salespeople never give the impression they’re selling. They know the right thing to say and when to say it. Their years of experience, accrued familiarity with specific customer needs and thorough product understanding distinguish them from their peers.

Through new learning technologies such as the K2M – which features online, lube-selling scenarios that mimic real life – companies can more effectively identify and develop sales superstars through the delivery of a learning system based on a mixture of traditional and technology-supported approaches. This multiforum learning program employs a blend of Web, classroom presentations and situation-specific PlaceWare modules. These components exploit the expertise of field and lab lubrication specialists by transferring their knowledge to field representatives who then apply it in providing practical solutions to specific customer problems.

The new online courses introduce students to virtual customers who ask relevant product and performance questions they must answer correctly before advancing. The Web site also houses an expansive current library of technical reference materials that can be accessed and printed by category for field use.

Fully accredited by the International Association of Continuing Education and Training (IACET), the K2M system’s online course tools provide access to lubrication experts who can boil down the need-to-know basics. The program blends technical knowledge with the virtual selling situations to assist salespeople, marketing professionals, distributors and installers in understanding their products and closing sales based on the product’s real value to the customer. Students can also ask questions or get further information from company experts via phone or e-mail support as well as through online discussion groups.

Value-added Dimension

In order to succeed in the lubricant market, sales representatives must be able to explain product features and functions, understand how equipment works and be able to troubleshoot lubricant-related equipment problems. This knowledge allows them to serve customers more effectively. Understanding lubricant technology through such programs as K2M and possessing the ability to use that knowledge to explain a product’s value-added features to consumers provide a firm foundation for product differentiation while allowing customers to capitalize on their investment.

In the end, training time translates into mutual profitability for the end-consumer, the lubricant company and its representatives, because up-to-the-minute R & D and product information is available instantaneously. The training technology dramatically improves operational performance by reducing costs while simultaneously increasing selling and support service effectiveness as representatives interface with customers.

The Future Is Now

As a result of new learning resources such as the K2M, the time between new product development and product rollouts is collapsing. Major product innovations are invariably the result of long-term, well-funded R & D programs. The shape of the R & D enterprise will continue to evolve as successful organizations implement procedures that promote flexibility. The paradigm shift of research down through the supply channel will continue to influence the dynamics of “research-to- development-to-implementation.” And the deployment of innovative learning technologies such as K2M will promote the perception of value associated with the R & D effort.