Johnson Controls and Accenture
Building intelligence-based capabilities together and addressing sustainability related outcomes.
A different path to becoming a technology company
“We were a traditional industrial company that is becoming a high-tech company,” commented Phil Clement Global Chief Marketing Officer at Johnson Controls Inc (JCI). He observed. “Traditionally we would have approached the transition from a position of doing and making everything ourselves. We would have built the equipment, the API’s, the cloud services on our own. However, we realized that approach was less desirable than building an ecosystem of partners.”
“Ten years ago there was no subscription business in JCI. We sold equipment and other products with maintenance contracts,” said Clement. Subscription services are now JCI’s fastest growing business as it shifts from product to outcome-based pricing and results. Clement points out that “a deeper relationship with a technology provider makes sense as now our business models are more alike than they were in the past.”
In 2015, JCI started a long-term partnership with Accenture that grew from a traditional technology implementation into a generative partnership. Together, JCI accelerated its transition into a technology company oriented around issues of sustainability. “In the partnership, we pool resources and investments with a joint focus on being a sustainability company,” added Vikrant Viniak, Managing Director at Accenture.
Sustainability as the shared commitment and outcome of the relationship
A joint commitment to sustainability is held by both companies as a societal and business goal. “Our relationship starts at the top,” Clement commented, “JCI is a sustainability company and Accenture shares that goal as well. Our CEOs meet about this topic on a regular basis.” The JCI Accenture partnership is the embodiment of that shared commitment.
JCI and Accenture evolved their long-term relationship into a joint partnership two years ago with solutions for Return to Work, Security and Sustainability. Clement pointed out an important shift in the way JCI thought about its products. “We recognized that CEOs and companies were investing in highly productive work environments, not controls on an HVAC chiller or sensors. The services we offer transfer capital and operational risk from companies to the outcomes that they value.”
These solutions came together through a combination of insights, skills and resources from both JCI and Accenture. These solutions represent new ideas and opportunities resulting from this relationship.
JCI Return to Work, Security and Sustainability Solutions
The solutions they have created together build on the strengths of each partner and have created technologies that neither would have built working independently. The examples include:
Accelerating buildings & operations sustainability services; supplying C-suite visibility into real-time environmental, social and governance data.
Partnering on JCI’s “OpenBlue” brand, an open architecture and cloud-based solutions enabling go-to-market transformation through digital enablement.
OpenBlue Healthy Building integrated or deployed modularly, include a combination of hardware & software to manage spaces and occupant experiences.
Amplifying customers physical & cybersecurity capabilities creating a new market, “cyber-physical security” that surface threats below normal.
When JCI reached the decision to create an ecosystem rather than going on their own, they began looking for potential business and technology partners. “Originally, JCI considered partnering with pure-play technology companies. We did not consider a systems provider for a partner, said Clement. “Many of the pure-play providers we talked with were willing to invest, but only if we had figured everything out. We knew that was not possible in a dynamic environment. We needed a partner who was willing to deal with ambiguity and was focused on repeat/ongoing opportunity rather than winning individual deals.”
We needed a partner who was willing to deal with ambiguity and was focused on repeat/ongoing opportunity rather than winning individual deals.
– PHIL CLEMENT, Global Chief Marketing Officer, JCI
The relationship runs based on managed outcomes and defined objectives related to developing the technology, evolving the technology and then building the business together. Vikrant observed, “we evolved our working together from questions of what we do, to how we do it together, to how we execute in the market.” The principles for this relationship revolve around the following:
The relationship gives both parties flexibility in how they go to market. “Sometimes JCI is in the lead, sometimes Accenture, but more often it is the two of us together working on something neither party would have readily gotten on their own,” Vikrant commented. Each party manages its costs independent of the other. Both feel that approach is fair to the other partner. Regarding revenues and margins, they commented that the margins on these joint solutions are at least equal to or better than other products in JCI.
The relationship has accelerated the pace of closing deals from a year or more to less than a few months. Clement shared, “Our deals are bigger, close faster and have better close rates when we work together. Much of this comes from the way both of us see this opportunity. It is not a zero-sum game or dividing a pie between us. It is all about how together we make the opportunities bigger.”
The JCI-Accenture relationship reflects the realities of a technology company in an information-intensive solution space. Neither side controls the other. JCI is dedicated to providing open and interoperable products and solutions. The relationship is not exclusive with Accenture, which likewise works with other partners in the sustainability space. Traditionally, this open relationship would reduce the potential and power of working together. “We stick together because we are better at this together in ways that best benefit our customers,” observed Vikrant. There is no need to tie the two companies down.
Clement described this aspect of the relationship in this way, “we are friends with Accenture, but we have other friends as well. We know which friends you can count on to deliver and do more business with them than our other friends. Only so many people can actually deliver on this type of outcome.”
A generative relationship requires a different level of leadership and organizational maturity
Overall, the relationship runs on a clear understanding of each party's strengths and a joint commitment to a shared outcome. The two leaders observed that this requires a greater level of leadership and organizational maturity than traditional customer-provider relationship. Intellectual property is one illustration of this maturity.
JCI protects its IP, but it knows the pragmatic difference between the IP they need to protect versus protecting all IP. Clement commented, “IP literacy is critical, you need to know what it takes to protect IP while getting value from it. Those who are less literate are the ones who default to being overly protective.” This is an example of the level of maturity involved in supporting a generative relationship.
Lessons and Advice from this Generative Relationship
The JCI and Accenture relationship is an example of a generative partnership. Each party brings their own strengths and working together they create something new in the marketplace. In this case, it is a new set of return to work and sustainability offerings. Clement described the relationship in the following way. “Relationships exist across a spectrum. There are average ones, ones at the bottom of the distribution, others at the top. We are shooting for that top of high-performance relationships.” This context shapes the advice both Clement and Vikrant shared.
At its foundation, both companies need to have a level of maturity around their strategy, leadership, and operations. A higher level of maturity is mandatory as an effective generative relationship requires thinking and working in new ways. Thinking about achieving an outcome via a relationship with a generative partner.
This requires working in ways that maintain that joint focus together without devolving into issues of control. As Phillip Clement put it, “A high-tech provider who is able to partner beyond the next incremental sale, is able to deal with the natural ambiguity of creating something new, and is willing to commit themselves to the same degree as we do, is a partner of choice.”
About JCI, Inc:
Johnson Controls (JCI) is a $22 billion-dollar industrial company focusing on building management products and services. It employs 100,000 people in more than 2,000 locations across six continents. Johnson Controls is transitioning from product focuses on an intelligent buildings company. Their joint working relationship with Accenture is an important part of that transition to being a high-tech company.