Element's Two-Year Transformation Strategy

On June 1, 2018, Jay Forbes was named president and CEO of Element Fleet Management. Forbes assumed leadership of the nation’s largest fleet management company following a comprehensive search that included external and internal candidates.

Forbes came to Element from Winnipeg-based Manitoba Telecom Services, where he served as president and chief executive from 2015 to 2017. Prior to that role, he served as president and CEO of Teranet, Inc., a Toronto developer of land registration systems.

In addition, Forbes has also held leadership roles with Ingram Micro, Inc., where he restructured the business and Aliant, Inc., where he repositioned the telecom services provider in North America.

To learn more about his initiatives to transform Element Fleet Management into a more customer-centric company, AF interviewed Forbes at the annual Element Roundtable conference, which was held from April 10-11, 2019 in Minneapolis.

Automotive Fleet: This is your first interview with Automotive Fleet and an opportunity to introduce yourself to fleet managers who are not Element clients. With this in mind, what was your initial assessment of Element Fleet Management when you were named president and CEO, and what is your current assessment?

Forbes: I first became aware of Element in October 2017. I did a fair amount of work in advance of pitching the chairman of the board in February 2018 on a new strategy, and why I should be the person to lead that strategy.

As an outsider looking into the fleet management industry, I viewed Element as a great organization with phenomenal potential. But Element was somewhat stymied in its ability to reach that potential because of its rapid growth strategy that saw it grow from concept to market leadership in six brief years. When you’re traveling at that pace and aggregating company after company and combining book of portfolio after book of portfolio, inevitably there will be growing pains.

During my first days with the organization, I realized that all I had hoped was here in terms of having a solid backbone and industry-leading capabilities.

I’m absolutely delighted with what the core fleet business has in place, and equally delighted with the opportunities to create additional value for our clients. This is what guided our strategic assessment to transform Element into a truly client-centric organization. We have embarked on a transformational reset of Element’s business, with a renewed focus on our clients and on improving productivity. We have crafted a clearly defined plan to deliver superior customer service, generate meaningfully improved profitability, and solidify our financial position. The result will be a stronger, more efficient Element that better serves the clients and is well-positioned for future growth and value creation.

AF: Can you provide a more in-depth description of the strategic assessment and the outcomes you want to achieve?

Forbes: The plan to transform Element’s fleet business is based on a comprehensive assessment of our operations. This included customer and stakeholder interviews, extensive industry benchmarking, and in-depth review of Element’s operations, structure and balance sheet.

The strategic assessment is designed to return to our client-centric roots, which puts the client at the center of every decision the organization makes. We developed a two-year transformation program that is divided into three phases.

The first phase was called “Quick Wins”, which occurred in Q4 of 2018. It was all about building confidence and momentum with our employees, investors, and customers. We initiated 65 substantive and distinct projects to alleviate long-standing customer pain points that were making the customer experience less than it should be.

We also delayered the organization. There used to be nine layers that separated me from the clients. Today, there are only five. Delayering brought leadership closer to the client.

As a result of these initiatives, we exited Q4 with a tremendous amount of momentum. We are very pleased with the initial embrace by our employees, the receptivity from our investors, and the feedback from our clients.

We are currently in phase 2, which is called “Back to Basics.” Throughout 2019, Element will execute on the second wave of over 25 initiatives designed to improve client service delivery. Phase 2 is about process simplification, elimination of unnecessary processes, and automation. Element had a proliferation of processes after acquiring PHH and GE Fleet Services. For instance, in the past there might have been three or four different policies governing one particular routine in the organization. So in this instance, Back to Basics is about taking the very best of those policies and distilling them into a single policy that will govern the actions and behaviors of every employee.

In other cases, there were voids where processes weren’t in place that one would expect from an organization managing $15 billion worth of assets.

Across the business, we are simplifying operations and customer touchpoints to provide a better, more consistent customer experience, through initiatives such as automating manual processes to reduce error and improve cycle time.

This also includes simplifying how we work and the organizational structure we work in.

Once we have rationalized existing processes, eliminated those that are redundant, and simplified those that remain,  we will undertake automation. We want our employees to spend the vast majority of their time and effort interacting with clients, not operating a back office where the variation in cycle times and error rates inevitably increases with human involvement. Automation of our processes therefore has the dual benefit of providing a consistent client experience and driving down costs while increasing the quality of the work our employees are doing, and improving employee engagement.

Phase 3, which we will execute throughout 2020, is called “Building for the Future” and it is all about pivoting to growth. In readying for phase 3, an important undertaking in 2019 is our strategic consulting and data analytics efforts. Right now we have more than 60 employees dedicated to strategic consulting, data analytics, and data science. It begins with making sure the dataset we’re operating from is complete and accurate, and that we have the necessary tools and capabilities to mine that data to provide valuable insights for our clients.

This is one of our main objectives, to demonstrate meaningful value creation for our clients. We measure it in the dollar magnitude of savings opportunities that we have both identified and communicated to our clients.

Last year, our strategic consulting group in the U.S. and Canada was able to generate over $500 million worth of productivity improvements for our clients on a totally proactive basis. Clients didn’t come to us looking for it. Of our own accord, we did the work, utilizing the data repositories available to us, applying our expertise and tool sets we’ve developed to identify over a half-billion dollars’ worth of savings opportunities.

We want to continue to round out that capability, improve the completeness, and enlarge the dataset; all the while purifying the data quality to work with our clients to lower their total cost, enhance productivity, and improve the safety records of their fleets. We have the necessary insights to work hand-in-glove with clients to achieve that.

AF: When will phase 3 be completed?

Forbes: Year-end of 2020. It is a very hard stop for us. This is, for all intents and purposes, a nine-quarter program. Fourth quarter of 2018 was the first quarter, but we’ll wrap up everything as we exit 2020.

Thus far, we’re ahead of plan. We exited Q4 achieving 40% more than what we anticipated. This has set us up very nicely for 2019 and further success in 2020. As the organization sees results, it builds confidence, which allows us to envision more opportunities.

AF: What other initiatives do you have in place to enhance the customer experience? 

Forbes: Truthfully, what aren’t we doing to enhance the client experience? There’s not a single facet of the business that isn’t actively engaged in re-examining what they do and how they do it in the eyes of the client. We’re in the process right now of a detailed mapping of how our clients and their drivers experience every aspect of Element each and every day. We’ve challenged our own teams to go top-down and think about how their actions, decisions, and routines impact our customer experience. We’ve gone to our clients and engaged them in this exercise to go bottom-up and make sure we’re not missing any possible points where the two organizations brush up against one another, that either leaves a positive or negative experience as a consequence.

Every facet of the business is being scrutinized to find ways to reduce cycle time, reduce error rates, and ensure that every single client has a pristine and consistent experience with this organization. We can, and indeed we do, deliver an outstanding client experience. But it can be more consistent. It can be more predictable. In this industry, a lack of consistency ends up creating issues and problems for clients.

AF: Where do you see the company being 10 years from now? How will it differentiate Element from its competitors in the marketplace?

Forbes:: We will continue to be leaders in our industry. For us, it is all about client centricity. This isn’t a fad or buzzword. It isn’t what we think people want, or need, to hear. It is the essence of who we are. It is that ability to design the entirety of the organization, in terms of its policies, processes, and systems, against the needs of the client, and, as a result, earn their trust and respect, such that we are co-thought partners as we go forward. We see it as a privilege to serve our clients. We’ve become a partnership.

AF: How do you envision vehicle connectivity and data-centric fleet applications impacting the evolution of the fleet management industry?

Forbes: Data will become exponentially more important. But I think the law of diminishing returns will kick in, in due course. As we provide the insights and help our clients put into action those insights, the incremental returns one is going to get in terms of buying better or operating better are going to diminish.

The real value to them comes in determining how fleet positions itself in terms of that larger operational model, so that the organization is advancing its own customer-centric strategies, driving its own productivity.

The telecom industry is a perfect example of this. We’ve been talking about dynamic routing of repair personnel for decades. It is still in its infancy stages, and what does that repair-person setup look like? A van, a very talented technician, the ability to know their location, and how the service call is progressing in order to dynamically shift resources to meet the expectations of the client. But it has never matured, in part because the fleet component of the business hadn’t matured.

We’ll continue to operate and maximize efficiencies, but truly, this is a source of diminishing returns. The bigger opportunity really comes back to the overall business model and finding a way to better integrate fleet into that business model. We need to provide real-time inputs for a very costly and critical tool for the organization – namely, a vehicle and its utilization within the organization – to fulfil the service requirements that meet the customer expectation.