INNOVATION CRITIC
What are the strengths of the idea?
Long term leasing. We have many times talked about pursuing this avenue, but have never done so because of the financial constraints of capital costs.
- We already have technical expertise in this area.
- We manufacture equipment that could be incorporated into the lease, and expendables that must be purchased to get things going.
- It will make money.
- The entire power generation market is moving to an asset management style and this would play directly into that.
- This could be developed into a complete compliance strategy / package and with the help of SAIC could be developed into a multi media solution as well.
- I agree that the ability to enter into long term lease agreements is a key benefit. We set up a leasing arrangement when Jerry Murray was here. It involved no capital expenditure on our part. The leasing agent purchased the equipment and took care of the lease maintenance. As far as I know, we never tried selling this concept.
- With leasing, we get our money up front.
- This idea could tie into aCleanAirown/operate plan. If necessary due to capital expenditure constraints, we could lease the equipment and roll the lease fees into a total service package.
- What are the weaknesses of the idea?
How do we distinguish this department from our Rentals group?
We haven't had a lot of success maintaining our own on-line system. How will this be different?
We need to expend some big bucks on new assets. Long term leases (from competitors) usually incorporate new assets.
How can we maintain the high level of success at rentals and still pull a person or two from it, and into the new leasing group?
I’m not sure how much we currently know about capitol acquisition and lease back.
In response to the first question -- We need to get out of our Rentals/Express, rent/buy paradigm. We supply equipment and services. We offer a whole spectrum of payment/ownership options. While it may make sense from a management standpoint to differentiate the technical components, customer service should be independent of any particular group.
In response to the third question. I’m not sure I agree that this entails capital expenditures for new assets. See above.
One possible weakness, we make more on long term rentals than we would on long term leases. If all we do is convert our existing business, we lose. To succeed we must find new business that is attracted to leasing that we couldn’t attract to long-term rental.
- What are the key issues for success?
Good planning.
Leasing leadership hired from the outside (we don't know a thing about the leasing business).
Dedicated team members.
A clear and very defined set of boundaries from corporate in determining what success is and what is not success, including a time frame.
Making sure we don’t loose site of this as a leasing business and not get bogged down on the technical aspects i.e. selling to top management not the doers at the plant level.
A clear business and marketing approach and strong, dedicated sales effort.
- What suggestions would you make to improve the idea?
Get engineering services buy-in. Ideally, they are involved in the set up and maintenance on site.
Get John Chapman and Don Allen involved. See if John is up for a new challenge… he and Don work well together. Currently the only way to do that would be to incorporate the leasing idea into rentals, which may or may not be ideal. Don Allen is a significant part of Rentals (as is JC), and the loss of both would potentially be devastating.
Move this operation off site.
Maybe not useCleanAirpersonnel at all, buy the "system" and lease it out. Remember this is a money business .
Regarding Comment 1 — Why?
Regarding comment 2. John and Don are technical folks. The technical challenges are not the issue here. We need strong, proactive sales to make this work.
Regarding Comment 3--I would agree that all equipment customer service (rentals, express, leasing) should move offsite. Right now they’re too inbred with the individual groups The technical aspects of the plan are identical with our existing operation. I don’t think it makes sense to move that part off-site.
WIW - Find those who want to make it their highest pro\iority.
- What are the overall chances for success for this idea?
90% (We already know it will work! The only hitch is the "on-line" part. We can make that part optional.)
Not much if it is part of any existing group, this is a complete paradigm shift forCleanAir
The paradigm shift is that we supply an integration of equipment and service. The payment method and ownership status is irrelevant. Equipment services is not structured the way it is because of any conscious decision making process. It just fell together as the various businesses were created and evolved. It’s time to take a serious look at how to maximize the value of these assets for both ourselves and our customers.
To maximize this idea, we are talking about a restructuring of the company (or at least equipment services). I’m highly skeptical thatCleanAircan make that shift. That’s not to say that it won’t work at all without this restructuring. It will just be more inefficient and less profitable. On some level, it will work.