Solutions Success Story: How VMware shifted its go to market strategy to a solutions focus
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VMware, a software company focused on virtualization and cloud computing, recently faced a classic dilemma that many companies, especially technology-based companies, have encountered. The business model was to develop and sell software packages. These packages were created and sold as products -- traditional product development processes were applied, the portfolio was comprised of 60+ separate products that were sold separately, and the marketing programs and messages were designed to support each of the product categories independently. The reason for this approach can be traced back to its historic roots -- it started out as a single-product company. Through new technology developments, plus a succession of acquisitions, the company quickly expanded its portfolio with no shift in its go-to-market or sales strategy. In effect, VMware was doing what many software companies have always done -- focused on developing a broad portfolio of differentiated products, and then incenting the sales force to go out and sell licenses for all of them.
The problem that this traditional strategy created for marketing, however, was that they were expected to support and promote all the products equally, but none of them by themselves offered the cross-functional, high level business solutions that many of VMware's customers were really looking for. As one marketer put it, "It's hard to be relevant to customers in new markets with this model. The breadth of offerings and lack of focus results in highly diffused messages to a lot of different constituents. As we often say, 'a thousand lights blind everyone'."A 4-Step Approach to Solutions Marketing Transformation
Recently, however, the company decided to take a more strategic, solutions-oriented approach. This was a transformation for the company, not just marketing, requiring a cohesive solutions strategy. Moving to this new way of going-to-market wouldn't be easy. The company broke it down into four major steps:
Step #1: Ensure organizational alignment across Sales and Marketing.
In order to make significant changes in how VMware would go to market, there needed to be alignment around what they would do and how it would be done. One key step was to create a solutions marketing group that would have a different set of objectives and activities to focus on. They staffed the solutions marketing team with new hires that did not have specific product responsibility -- the way the company has traditionally organized -- in order to bring a fresh, cross-portfolio perspective. Not only were they expected to be skilled at solutions marketing, but they were also expected to be able to work fluidly and seamlessly across the organizational boundaries. They needed to include product marketing, sales enablement, and regional field teams, as well as all the functional teams within corporate marketing in the solutions prioritization and go-to-market activities. By having cross-organizational collaboration as part of their objectives, they were able to ensure that all of the key internal stakeholders used the same solutions taxonomy and were aligned in launching the new solutions and themes. Without the support and inclusion of product marketing, sales enablement and the regional field, the solutions go-to-market strategy would have been stopped in its tracks.Step #2: Create real solution sets out of discrete products and services
In November 2010, the organization was charged to take a new perspective -- the customer perspective vs. a product perspective. By gaining a deeper understanding of the customers' real pain points, especially at a business issue level, they were able to identify which products could and should be better integrated with other services and products, and recast as the leading solutions sets. In one of their solution areas, for example, they decided that they were actually providing software and related services that, when integrated together, provided 3 distinct capabilities: Virtualization of Business Critical Application, Infrastructure & Operations Management, and an Enterprise Hybrid Cloud. This was a major step in how VMware could re-organize and combine its technology and human assets to better address broader and more critical customer issues.
Step #3: Map the solutions offerings to the executives who are most concerned and responsible to address the business issues that VMware can impact.
Once the marketing team was satisfied that the restructured suite of solutions were better focused on a higher level of pain points, the next step was to determine who within their customer organizations were accountable for resolving these issues. This led them to a newer, higher level set of contacts at the C and VP levels. Analysis then went into understanding how they operated, their sources of information, and who/what influenced them.
Step #4: Create and Implement the Go-To-Market strategy.
Having re-defined the solutions offerings and identified the target audiences, VMware then put together the go-to-market plan. This consisted of 4 main elements:
In order to create an effective go-to-market strategy and successfully implement the 4 main elements, the organization had to make major changes in how they operated. This shift to solutions forced them to pay more attention to creating an integrated solutions program with (a) much better collaboration across the various product and solutions marketing groups, (b) better coordination between the marketing groups in all aspects of the marketing funnel, including thought leadership, awareness, global campaigns and partner marketing, and (c) closer alignment between sales enablement and the marketing teams. In essence, by thinking in terms of broader-based solutions sets, the organization became much more unified and focused on the same go-to-market priorities.
The last key element of the go-to-market strategy that was affected by the emphasis on solutions was enabling both the direct and indirect sales forces. In February of this year, VMware conducted solutions selling training across its entire sales force. They also developed the content and tools that were needed for the sales force to be comfortable in discussing the new business themes and challenges that the company's solutions sets can address.
From Solutions Insights' perspective, we've been impressed with the speed and effectiveness of how VMware has made the transition from being primarily a product focused company to one with a more customer-centric solutions focus. There is still much work to be done, but they have made major inroads in a relatively short period of time. As the Marketing group made this shift, they demonstrated unusual agility, rapid decision-making, and an intense focus that took them from the early ideas of creating new solutions offerings to enabling the sales force to deliver the goods.
This marketing transition, however, was not always a downhill ride. Some of the key lessons that they learned are:
It's good to see that VMware "gets it" when it comes to solutions. Moving from a product focus to a solutions focus was exactly the right thing to do -- and they've done it the right way.
Moving to solutions is indeed a hard, slow process. Even before any solution creation or any selling activity is conducted, I agree that company has to first ensure the cross-company organizational alignment to overcome the siloed structure. I believe that other company can definitely learn from VMware's success strategy in ensuring the cross-company organizational alignment. At the same time, VMware should also learn from other company, in particular, Avnet's ADKAR Model in their transition process in becoming a solutions company. Changing company's focus and activities is a big decision, and thus employees from all levels have to be involved. I personally think that solution is not only about educating customers about their specific problem, but also educating our own employees about how our offering can contribute much added value to the customer's needs. The employees should feel the "Awareness, Desire, Knowledge, Ability and Reinforcement" for the change during the whole process. They need to understand how the change will affect them and why it is required. The reason why some companies were facing problems aligning their marketing and sales force is probably due to the lack of employees involvement, as well as a formal, systematic process to manage the change that is desired.
It's not an easy task changing its go-to-market strategy to solutions strategy. Besides from changing how the company sell and promote its product to its client, VMware had to change its company culture as well as its organizational structure. Previously, VMware's products were standardized and they can sell as it is; however, by shifting to a solutions strategy, VMware have to customize its products in order to fit the demand of its clients. This might also lead to another conflict, pricing the customized product, which is usually hard to define since it is not applied equally to every client and product. Changing the company's culture might be or not challenging, depending on the history and how fast the company's culture can accept small or big changes. That is, companies that have a lot of military/ senior employees are unwilling to change or accept new ideas/strategies. Integrating some of the functional departments into working together might be challenging, especially from sales and marketing. Both of these departments are used to work in different ways, so VMware would have to come up with guidelines for their commission, as well as to whom they should report in the organizational structure.