Leveraging Services to Grow Solutions Revenues at GE Healthcare

Moving from a product to a solutions focus is a daunting challenge for most B2B companies.  When companies realize that a product-only strategy is, in the long term, a great market-exit strategy, the challenge they then face is how to make the shift to a true customer solutions orientation.  Some of our Solutions Marketing colleagues have semi-seriously suggested it would be easier to make a U-turn with a supertanker inside the Panama Canal than change their organizations from a product focus to a customer-centric, solutions culture.

Knowing Where and How to Begin the Journey: As in most journeys, getting off on the right foot is critical.  Missteps will quickly erode confidence that the shift will be effective and derail your overall transformation plan.  A number of years ago, for example, we saw Hewlett-Packard decide to change their entire organization to be more solutions-capable.  To do so, they developed two groups – a customer-facing organization and a back-office, solutions creation “factory”.  By trying to swallow the entire elephant at once, the company almost came to a screeching halt – so they pulled the plug and went back to their traditional organization structure.   The challenges of implementing the proper roadmap to becoming a solutions company aren’t restricted to product-based companies.  We also witnessed a large systems integrator that had tremendous difficulty working across their Business Units to develop and take customer solutions to market.  After nearly a year of planning and design work that ended in a recommendation to make massive changes across the entire organization, a new executive team deemed the transition too risky and “deep-sixed” the entire initiative.

GE Healthcare:  Starting with the Service Portfolio:

GE Healthcare faced the same business problems many large, product-based B2B companies have encountered in recent years – an increase in global competition from companies with robust product and services portfolios but a lower cost structure, a reduction in margins, and global customers who wanted assurances that their large product purchases would deliver the business value they expected.  While the GE brand still opened doors, both closing the sale and maintaining long term relationships were becoming more difficult.

The response?  Move to a more solutions-based business model.  As Bret Barczak, Chief Marketing Officer for Global Services discovered, making the transition was a daunting task.  Ultimately, he adopted the following four-point strategy:

  • Develop high-end services that can support and enhance the product business – Barczak focused on developing new services that targeted business processes and activities that were particularly challenging for customers.  These services were “adjacent” to existing services and well beyond the typical support and maintenance and simple analytics.

  • Mine the installed base for the most receptive customer – Barczak started by identifying target customers that had been strong and dependable services customers for them. These customers already understood how services could complement products, and they valued the relationship since GE Healthcare’s services delivery and sales teams had been continuously engaged with them.
  • Leverage the brand and relationships to have different value discussions – Once GE Healthcare had started to develop a different story about the value they could deliver, the Services team collaborated with the account leads of the targeted accounts to begin a new kind of conversation with the customers. Barczak keenly understood that the conversation had to be different, and likely had to take place with higher level executives within the accounts. This required a different breed of sales people than what they typically had.
  • Fund the solutions development process from services revenues – As Barczak continued to build out the services portfolio to include more high-end services, the next step was to use some of the revenues from these activities to design fully integrated solutions that leveraged both products and services offerings. Instead of relying on a corporate financing mechanism, Barczak’s Services Division decided that self-funding was the most effective and expedient way to approach the opportunity.
Major Challenges in Moving from Services to Solutions:

“I’m sure you’ve seen these same challenges with other companies you’ve dealt with,” Barczak said.  “We’ve benefited by seeing how other companies have approached the problems of making the shift to solutions, but we still have to go over many of the same hurdles.”  He cited several key challenges that they had to overcome:

  • Converting the sales force to be more consultative, and to understand that the compensation timing would be different.
  • Getting the go-to-market model right; this required re-aligning the direct sales force and creating a new cadre of Client Solutions Managers.
  • Getting diverse stakeholders to understand and commit to developing and rolling out new solutions offerings.
  • Measuring the impact of the high end services and solutions, especially in terms of “product pull-through.”
The Takeaway:

GE Healthcare’s gotten it right – the best way for a large company with a strong portfolio of both products and services to make the transition to solutions is to have the services group lead the way..  Because of the nature of their offers, the skills and knowledge required to make the transition are closer services than the product groups.  In addition, services teams tend to have stronger, more long-standing relationships. So…if you’re considering making the tough transition to solutions, do yourself a favor and consider making the journey with the strong support of your services business!

Author: Steve Hurley, Managing Director, Solutions Insights Graphic credit: sterlingadvice.blogspot.com

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