Andreas Schell joined Rolls-Royce Power Systems as new CEO and Chairman of the Board of Directors of MTU Friedrichshafen in January 2017. He wants to make key fundamental changes to the company to keep it competitive and improve the way it meets customer requirements. In this interview, he speaks of the challenges that lie ahead and talks about his desire to move RRPS forward and put the customer at the very center of everything we do.
How many kilometers have you run today, Mr. Schell?
I did a fairly long run at the weekend, so today's a rest day. I'll be back in training tomorrow.
Do you already have a date for your next triathlon?
I've just taken part in “Challenge in Roth”, a long-distance triathlon in Bavaria, at the beginning of July. It's a great event, indeed. I even bumped into a colleague from MTU there. Performance and staying power aren't just the preserves of MTU engines – our people can turn in quite a performance too. Roth was the highlight of my season so far.
Are you happy with your performance? After all, you spend your working hours as CEO of Rolls-Royce Power Systems.
I like to be in the top 25% of finishers, and I managed to achieve that. Now I'll get down to examining the data – I might be able to squeeze a bit more out here or there. For me, it really is all about keeping the various parts of my life in balance – work, family and friends, and the triathlons too.
Sports-wise you've chosen three specific disciplines. Here at RRPS, it's probably more of a multi-discipline long-distance challenge, when you consider all the different parts of the business. Do you see parallels there?
There are certainly major parallels between endurance sports and running a business: sometimes you put in loads of commitment and effort, and yet the short-term gains are fairly minor, and there are times when that could be said of RRPS. Sometimes success is something that is only seen in the medium or long term, and often with a mix of disciplines. The multi-disciplinary challenges of the triathlon are certainly paralleled at Rolls-Royce Power Systems. Together with my executives, I manage functions like sales, production and development, each one with its own processes and performance metrics. The experience and the enjoyment I get from endurance sports outside work certainly do help me day-to-day in my job.
You may have been with us for six months or so, but for many of our readers you're still the “new kid on the block”. What impression do you have of Rolls-Royce Power Systems?
For me, it's a great privilege to be running Rolls-Royce Power Systems and, with it, MTU. It's a superb business with superb products and fantastic people. We've put a lot of innovations on the market down the years, and still have a great many up our sleeves. I get very excited when I look at the whole raft of opportunities laid out before us. I have a huge desire to help turn them into reality, and it makes me come to work each morning with a spring in my step.
What do you see as being your own personal challenge over the next few months?
One major point of emphasis is putting the customer even more firmly at the center of everything we do. We are lucky to have a very large number of customer contacts, many of which run very deep, but we're often just not close enough to our customers: we've got to get to know the needs and interests of our customers in detail – it's the only way we'll be able to give them the tailored solutions they need. Another point of emphasis is knowing our markets – again, in detail – for example by knowing what technical set-up is in operation. And a third one is continuing to sharpen our awareness of compliance. We're on the right track there. I want us to be perceived by customers, at every turn, as an honorable company to do business with.
In what way is MTU going to benefit from your experience in other companies?
I've spent a good many years in a variety of industries, first in Germany and then in the US and the UK. These highly varied tasks and challenges in my career to date have acquainted me with different management models, different processes and different types of organization. To give you an example: the automotive industry aims to produce a mass product with short product cycles, whereas the aerospace industry is low volume with long product cycles and an R&D function which is very close to customers – direct customers. To succeed, your processes have to be razor-sharp right across the board, and have to be followed to the letter by everyone involved. Thinking in processes like this can help us move ahead here. Another example is cost-consciousness: in the automotive sector, competition produces cost pressure, similar to what we see here. Like auto producers, we'll only ever be as good as our products on the market. All in all, I bring with me a broad range of experience of managing in complex organizations with technology-driven products, and I think I have quite a lot to offer MTU in this respect.
Where do you say the challenges lie in the years ahead?
The most important thing is satisfying the customer, and having winning products, winning systems and winning solutions on hand when customers need them. Our first response should never be, 'We can't do that', but rather, 'I'll dig around and see if we can find a solution to that'. And if we do find a solution, we'll show the customer how we're going to deliver the goods – not in wishy-washy terms, but bang on the nail! Whenever we make a promise, our customers have to be able to take it for granted.
The next challenge is growth. We've experienced precious little growth over the last five years: some of our markets have had downturns, while others have seen growth which has somehow passed us by. What we now have to do is all pull together to make MTU a market leader.
What will we be offering customers in 2030?
Definitely not just products, but more solutions. Today, we're still very product-focused, but we're going to be a provider of solutions – that's also what customers are demanding. One example away from work would be: when I sign a mobile cell phone contract, what I get is a communications solution which includes data transfer – it's not all about call time. And the way I see this translating into industrial circles is: we're going to sell our products and the systems to go with them. In the future, in 2030, I see us as a solution provider focusing on the marine and infrastructure verticals.
How do you see the role of our parent company, Rolls-Royce?
Rolls-Royce is a superb company, strong in aviation and with a great reputation as a turbine manufacturer. Right now, the marine segment is battling a weak market, but there too it has winning products and innovations. Like us, Rolls-Royce has a wealth of experience and great potential. For that reason, I see a kind of iterative relationship between it and MTU, on our path to becoming a well-positioned, diversified technology group.
The diesel engine is still our highest-revenue product, but the expectation is that – at some stage – it will no longer be able to keep up with increasingly stringent emissions regulations, and other fuel types. How are we preparing for this potential eventual demise?
We launched the Green & High Tech program some time back, essentially setting out our stall for future propulsion technology and drive solutions. Diesel still has a lot to offer, and isn't going to disappear overnight. Exhaust aftertreatment is currently making diesels clean and green, meeting emissions regulations. In fact, Green & High Tech is about a lot more than just diesel: next-up are alternative fuels, specifically liquefied natural gas, which has the benefit of making exhaust gas aftertreatment a lot less of an issue thanks to lower levels of nitrous oxides and particulate. So the internal combustion engine still has a future. But we wouldn't be MTU if we weren't already thinking one step ahead of this. Take hybrids, for example – always a good choice when you need bursts of high power quickly but still want to be working within a low power range. Our Hybrid PowerPack for rail applications is this kind of hybrid solution – and already available. Something else that definitely falls within this category is the whole issue of digitalization. There is a wealth of potential here just waiting to be tapped: collecting data, using our skills to analyze it expertly, and then passing it on to operators to apply to their systems as required, thereby making their propulsion and drive systems even more efficient.
Is there any market or product group capable of complementing our portfolio?
When it comes to power generation, we're going to be considering solutions that go well beyond the internal combustion engine and generator combination. For example, we're going to be able to supply extra components for use in micro-grids. In marine, we'll be partnering more with Rolls-Royce to be able to supply customers with solutions that go beyond pure propulsion systems.
The hybrid rail vehicle was our first example of teaming diesel and electric technology. In powergen, we see this combination of diesel and regenerative energies, and we also have hybrid systems for marine use, complementing our diesel-electric propulsion systems. Is this mix of power sources a halfway house on the road towards new energies?
In the powergen segment, diesel or gas engines fitted with tanks are set to stay in the game for some time to come, especially for safety-critical applications. I think we're going to continue to need these as a back-up of last resort for quite some time, for grid stability if nothing else. We're certainly in a transitional phase with mobile drive systems: from conventional diesels with exhaust aftertreatment through to alternative fuels and the advent of hybrids. If the cost of battery storage systems keeps on falling like it is right now, MTU might even contemplate electric-only drive solutions.
The engines of the future are going to be intelligent and supply a lot of data, which is going to help customers operate their fleets much more economically. Are traditional mechanical engineers destined to be a dying breed in favor of data analysts?
Certainly not all of them, although our engineers are pretty good at dealing with data and information, and we've got all the right expertise for data analysis. There are a lot of businesses on the market who make a living from analyzing data, but they lack the system and segment expertise. That's our domain, and we're going to be protective of it and divulge it to no one.
How do you want MTU to come across to customers?
As simple and straightforward. I want customers to be able to rely on us without reservation, both in terms of shipment and, especially, when it comes to servicing our products in the field. That's why we have to have a detailed knowledge of our customers, their needs and their operating environments. We have to get out into the field, into countries where our systems are at work.
What is it that fascinates you about MTU's products?
Have you ever stood by the test stand when they fire up a Series 4000? Have you ever heard the sound of a ship's engine room leaping into life when they start their Series 2000s? Have you ever been on an offshore patrol vessel when an 8000 goes into action? Those are brilliant things to experience, and just three examples. The same is true of all our other applications – mining, rail and powergen. A few weeks ago, I was on a business trip to Cuba, where MTU is playing a big role in the country's power industry, given all the generation systems we have out there. I find that simply fascinating. The world definitely wouldn't run as smoothly if it weren't for MTU products. That's a pretty amazing fact.
What springs to your mind when I say the following words…
Our company has been operating for well over 100 years now – that's real staying power, and a heritage that's worth defending. My job is now to ensure, with the decisions I make, that MTU is still around in 100 years' time.
We've got to change as a company, becoming leaner and more agile – because the world is changing around us. Customer requirements and markets are changing. This isn't going to be easy for us, but we've got to get on with it.
…moving onwards and upwards?
I come to work every day feeling incredibly motivated, so for me every day is about moving onwards and upwards – an opportunity to get new things started and generate fresh impetus. And I've seen from a lot of meetings and discussions that there's a real 'onwards and upwards' feeling amongst our employees too.
The culture-shift is much needed. Putting the customer at the center of what the company does also means we have to change to become more dynamic and more agile.
Quality is a must-have, there's no escaping that. I gained a lot of experience in the automotive industry, having been responsible for development of electrics and electronics for over two million production vehicles. At the time I took over, our figures were rock bottom, but with a great team we managed to improve product quality – an experience which really heightened my awareness of quality. After all, when our products don't work, neither do the solutions our customers create for the final customer, and that's something we just can't live with.
…digitalization? Our industry is getting into this later than others.
In my experience, really going all-out for it ourselves is preferable to having it foisted on us from outside. As things stand, we still have freedom to do this under our own initiative, and that's why it's one of my hobby-horses.
If we were to publish an article on you in a year's time, what would you like to see in it?
I'd want to read about MTU, not about me. I'd like to read that we are taking account of customers differently, having turned into a dynamic, customer-led business supplying top-quality, high-performance products at competitive prices.
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