It seems that many (if not most) sectors are suffering from a deadly combination of new player entry, margin erosion, and/or consolidation. This combination is forcing leadership teams to re-visit their assumptions and look for different business models in search for growth and/or profits.
One of the most common moves to combat some of these pressures is to move from “product to solution.” Basically, solving problems for customers instead of giving them the tools they need to solve them themselves. Stories abound about companies that have done it successfully: from IBM’s “solutions for a small planet” of the 90’s to GE’s “Industrial Internet” of today.
However, this move is difficult, to say the least. Why? Because it changes not only what you offer, but also how you offer it. Because it changes not only how you think about your organization, but also how you act to serve your customers. And, honestly, rarely anybody has all the answers going into the journey.
“Let’s build it. Let’s see if we can be good at it. We may be wrong. We don’t think so, but we may be wrong. But let’s not sit back and just say, ‘Look, that’s somebody else’s job,’ or ‘We’re not good enough to do it,’ or ‘We can’t change.’ We’re unwilling to take that as a fait accompli.” — Jeff Immelt, Former CEO and Chairman, GE
For leaders that are just embarking on the journey, it can feel like jumping into an abyss. “Why focus on developing solutions when we can just sell more of what we have? What’s in it for me?” For leaders that have been listening about a shift to solutions with limited results, it can feel like being stuck in quicksand. “Why are we doing this? We have tried this for a couple of quarters now, and I don’t see the light at the end of the tunnel. Not sure if we should continue pushing this.”
5 Ways to Go From Product to Solution
There is no magic bullet to go from Product to Solution. But here are 5 key learnings (from my studying and working with leadership teams that have embarked on this journey) that hopefully can be useful for your own:
1. Build solutions for the “right” customers, not ALL your customers.
Think about your customer base. Your solutions are unlikely to be successful if you try to serve all in the same way and with the same solution. The first step is to segment your customers to understand their need for solutions — some might want them, some might not. And within those that want them, target those few a) which represent the largest financial opportunity and b) which you have the greatest ability to “win.” In a recent engagement, I found that 74% of the solutions market was concentrated on just 25% of the customers in the space.
Are we focusing on the sub-set of customers that need our solutions, have resources to spend, and that are receptive to hear from and work with us?
2. Create relevance with your solutions.
Now that you have identified your target customers, the next step is to develop the solutions that are going to make you relevant in this space. It is not about being different from incumbents, but about being closely attuned to the needs of customers. This means developing a clear and compelling positioning of your solutions — the unique benefit you bring to customers. And also, being specific on how you will deliver such benefit. For the engagement mentioned above, I found that how we helped customers from a financial, operational efficiency, and innovation perspective was essential to being relevant with customers.
Are we creating relevance by offering solutions that are aligned with unmet or underserved customer needs and communicating the solutions in a clear and compelling way?
3. Enable your sales team.
One of the classic mistakes in moving from product to solution is not considering the significant shift it will require on your sales team. Capabilities, process, and incentives need to be carefully reconsidered and re-aligned to drive growth. But my point is simpler and more focused. Companies that have successfully built a solutions offering have helped the sales team identify not only what to sell and how to sell differently, but also where to find those opportunities. In one of my engagements, sales teams were significantly more likely to engage with solutions after we gave them specific leads and materials to use within their accounts.
Are we pointing our sales team to the largest solution opportunities within their accounts and equipping them with the necessary resources to be successful?
4. Think more Evolution and less “Big Bang”.
Declaring “we are a solutions company” with a big bang rarely works. Partly because it over-promises and partly because it’s hard to know the exact destination without embarking on the journey. A better way of doing this is to establish and communicate strategic intent and then design and activate a set of pilots to realize the intent. Why pilots? Because they are nimble enough to quickly generate momentum, they do not raise too much (unwanted) internal attention, and also, if done right, provide customer feedback that can help refine the strategy and approach. In one of my engagements, developing pilots with two key accounts was essential to not only test early hypotheses, but also generate credibility within the organization.
Have we established a learning agenda for our evolution from product to solution?
5. Use storytelling to gain momentum.
The dirty secret about building solutions is that it is not only a journey about building capabilities and offerings, but also re-shaping culture. The culture that is effective at selling widgets is not necessarily effective at solving customer problems. Successful evolutions engage leaders early, define desired outcomes and behaviors, and actively shape the corporate narrative with learnings (read: successes and failures). Successful evolutions integrate solutions into the rituals, stories, symbols, and beliefs which make every organization unique. In one of our engagements, we created a 2-day summit with the top 200 leaders of the company to gain buy-in and develop a joint vision for the journey.
Are we using our in-market learnings to re-shape my organization’s culture?
Moving from product to solution is a journey that can open up significant profit pools for organizations. But doing so successfully requires an agile approach that leverages in-market learnings to gain internal buy-in, generate excitement and develop solutions that are relentlessly relevant with customers.