In May 2020, Otto Preiss joined the Executive Board of Rolls-Royce Power Systems as Chief Operating Officer (COO). In the following interview, he looks back at key events so far, such as the company's re-alignment as part of the EMPOWER 2030 program. He also talks about future-proofing the business, and why work safety and customer satisfaction are very close to his heart.
Mr Preiss, you came to Rolls-Royce Power Systems in May 2020 in the middle of the first lockdown. How did you experience that time and was there anything that particularly impressed you?
Preiss: I recall how peculiar it felt at the beginning of May as I stood with my luggage at the border and waved good-bye to my wife, who at that point in time was forbidden by the rules to accompany me on my move to Germany.
When I got to Rolls-Royce Power Systems, I was immediately struck by how professionally our crisis team was managing the situation, and how willing staff were to go along with the measures needed to fight the pandemic. We all pulled together across the divisions and worked in a very focused way to ensure that customer orders continued to be won and shipped despite the very adverse conditions. The way people's enthusiasm for their work did not waver in the face of that exceptional challenge impressed me a lot.
Another milestone achievement was the internal re-organization implemented as part of EMPOWER 2030. A new structure was put in place and the way we work together redefined with the ultimate aim of serving our customers even better. That is the path we chose to make sure that we'll be geared to the future when the pandemic is over.
Can any positive effects of the re-organization already be felt?
Preiss: Yes - we're already starting to reap the rewards. We have a lot more transparency, which gives us a clearer view of what's happening in the individual Business Units. We also gain insight more swiftly into how the different business segments are developing, how those developments will affect our overall performance, and what changes we can make through individual adjustments. In other words, we can manage our business more effectively overall.
The new set-up with discrete Business Units also takes better account of the fact that different business segments demand different approaches, different kinds of freedom, and different processes. Integrating our Business Units and holding them together are the Operational and Corporate Units such as Purchasing, Production, Finance and HR.
What things matter to you personally at the moment and what are your chief areas of activity?
Preiss: I've always found it very interesting and inspiring to visit every corner of a company and get to know the people who work for it. Many projects gave me the chance to roll up my shirt sleeves and get down to work alongside those people – also the fastest way to gain insights into the workings of a company and build relationships at the same time. Unfortunately, due to the pandemic restrictions, I wasn't able to travel to other locations as much as I would have liked. And that's something I'd like to catch up on, because I believe that virtual meetings work best when you've already got to know your interlocutors personally. Apart from technological leadership, I also care a lot about work safety and quality, and want to see both of them being given higher priority in-house. Work safety has to become something close to our hearts and a core value of our work culture. If we could take as much pride in attaining a certain level of work safety as we do in putting a fantastic new engine into service, we'll have taken a big step forward.
You've just mentioned quality and customer satisfaction. Where do we currently stand here?
Preiss: Technological leadership, an outstanding customer experience and acceptable costs – for me, that's the triad from which no element should be missing. If each person on the workforce can feel that they're making a significant contribution to that triad, we'll go very far.
For me, customer satisfaction is not just about products living up to expectations. There's much more to it than that. Customers have to be able to report, for example, that interacting with our people is a very positive experience. And they must be able to rely on us to deliver on our promises. And I mean that in every respect! We have to supply the goods and services we promised to supply, and at the time promised. We have to answer when an answer was pledged. And we have to be there for our customers and work with them to solve any problems they encounter with our products.
Which products do we want to use in the future to preserve our technological leadership?
Preiss: Allow me to point out right away that, unlike most of our competitors, we increased our investment in R&D during the pandemic. It's our declared mission to emerge from this crisis stronger and better equipped – among other things by investing in the development of products and solutions. That's why, last year, we channeled some 25% of our development budget into new products and technologies such as automation, hybrid drive and energy solutions, the fuel cell and electric-only solutions. In this respect, we take our role as pioneer very seriously. We want to be a reliable partner for our customers and be at their side when it comes to these new technologies too.
The other 75% of our development budget was assigned to our existing portfolio in the field of internal combustion engines which shall remain a source of income for many years to come. Our engineers are developing our current engines by making them ever cleaner – aiming for C02-neutrality or freedom from C02 by using, for example, sustainably produced fuels. If we wish to meet the climate goals we've set ourselves, half of the internal combustion engines we sell must run on fuels other than diesel or natural gas by the year 2030. That's what we want to achieve. But we're also going to have to bring into the arena solutions that do not involve internal combustion engines at all – so we'll be handling several technologies at the same time.
How much interest do customers show in the new technologies, and what do we have to change in order to market them?
Preiss: As private individuals and as a business, we're all under growing pressure to use sustainable solutions, and the same pressure is felt by our customers too – be it in the form of new legal requirements or financing opportunities. So we're already noticing a lively interest on the part of customers in sustainable solutions.
Besides that, customers need the right infrastructure to become sustainable. I'm talking for example about hydrogen filling stations in shipping ports or equipment for manufacturing C02-free fuels. And we have to work on our own framework too because we have no more time to play with if we want to develop and refine brand new products and establish them on the market.
And let's not forget that with all our new products and technologies, there are competencies to be learned, so staff training has to play a central role. Service technicians, for example, need to learn how to handle hydrogen and the substances contained in batteries. The specifications surrounding safe storage and use of these substances will also bring a new set of challenges. Our purchasing experts will also have to familiarize themselves with very different types of component. And, naturally, our R&D activities will be based on a wider spectrum of engineering sciences. That's why we're training some of our engineers and recruiting new ones.
We're investing heavily in the expansion of our production sites – the Series 2000 assembly line is being re-built, for example, and the production facility in Mankato in the US extended. What is the rationale for these investments in light of the fact that sales revenues fell in the wake of the Covid-19 pandemic?
Preiss: The reasons are manifold. We have to rebuild today's production capacities for better production processes, better work safety, and better coverage of local demand for our products. We also have to prepare them for new technologies and the manufacture of our new products. In the future, some test stands in Augsburg, for example, will be set up not only for natural gas, but hydrogen too. I consider it very important to confront the tech revolution by thinking and acting strategically when investing in production facilities.
Looking to the more immediate future, is there any event you're especially looking forward to?
Preiss: Just to name one, I'm delighted that the first hybrid rail drive for passenger trains in the UK will be going into service in September. Here, we've delivered on our promise and will be the first to put a hybrid drive solution onto the rails in passenger service. And that was the result of a fantastic team effort! Many thanks for talking to us, Mr Preiss.