Solutions Marketing: How Avnet Applied Change Management Principles to Make the Transition from a Products-Based Company to a Solutions Company

We recently conducted a poll and asked what the biggest challenge in moving from a product-oriented business focus to a more customer-centric, solutions oriented approach was.  I was surprised that an overwhelming percentage of the respondents selected   “managing the cultural and behavioral change” as the thorniest change that they had to make.

“I’m not surprised at all”, said Steve Church, Chief Business Development Officer at Avnet, Inc.  “As I look back, I think Avnet’s biggest learning in our movement from a products distribution company to one that also offers solutions was not realizing that it was first and foremost, a major change management initiative.”

Avnet is a great example of how a company can apply change management processes to ensure that the new offer development methods, the solutions-oriented go-to-market strategy, and the more consultative solutions selling methods are permanently embedded into the organizational operations and business model.  The company has moved from a pure electronics distribution company in the early 2000’s to a more diversified company that now generates significant revenues from its services and solutions offerings.

The Decision to Build its Services and Solutions Capabilities:

Avnet faced many of the same business pressures that other large, product-based companies have had to deal with -- the bursting of the technology bubble, the continuous commodization of their product portfolio that has led to fierce, unrelenting price pressures, and growing pressure from its more than 100,000 customers to offer more value than what they had in the past.

Once the decision was made to change the corporate business model and create a real  solutions capability, Church immediately recognized the culture and behavior challenge.   He needed a framework, a model by which he could get the entire employee base of the company adopting and supporting the changes that were in store.

The Prosci®  ADKAR®  Model:

After considering several options, Church brought in Prosci®,Inc., a company that specialized in change management.  Avnet applied the Prosci® ADKAR® Model – Awareness, Desire, Knowledge, Ability, and Reinforcement®.   He attributed the change management process that was applied as the core reason for the success of their overall solutions strategy.

By breaking the change management process into 5 distinct phases, Avnet was better able to handle the overall transition.   Once Avnet understood what activities and objectives comprised each phase, it was important that they understood how to move from one phase to the next:

"Awareness is created by explaining to your employees why you are making the change, as well as what will change and what will stay the same," Church said.  "Your employees need to understand how the change will affect them, and why it is necessary.  If they don’t believe you are a company that can understand customers’ problems and provide solutions, you will never get your customers to believe it
There were two keys to moving the employee base from awareness to desire.  First, Avnet had to paint a picture of what would happen if the company didn’t make the change.  Secondly, everyone wanted to know how the change was going to impact them personally.
Once the organization understood the need – and personal benefits – of making the transition to solutions, Avnet was then in a position to impart the knowledge necessary for them to begin the shift.
Once the knowledge systems were in place, Avnet then focused on developing the new skills that were required to align with the solutions model.
Rolling out the new program or initiative was only the first salvo in the battle to change the company.   All of the significant initiatives took constant and unrelenting re-enforcement.
Learning from the Avnet Experience:

Reflecting upon the change management initiative that Avnet put in place, I’d like to suggest several takeaways:

'1. Follow a formal, systematic process to manage the change    that is desired.

2. Involve employees from all levels. Leaving out middle management was a big mistake that Avnet made, for example, which is often repeated in many other companies.

3. Be prepared to retool marketing.  Product marketing is often driven by mass marketing programs.   Solutions marketing, however, requires deeper customer knowledge and customization.

4. Take the long view. While we’ve seen some companies that have been able to make the transition in 1-2 years, most companies with revenues of more than $1 billion need at least a few years to embed all of the solutions changes into the organization.

As we saw at Avnet, moving to solutions doesn’t just happen.  It’s usually a hard, slow process.  But as all of the companies that have successfully made the transition will tell you – including Avnet – it’s worth the effort.  And, more importantly, in many cases you won’t have a choice – your best customers will bid you a fond adieu if you don’t!

For more details of how Avnet successfully changed the culture and behavior of the employees so that it could become a true solutions provider, read our longer, more comprehensive paper on our website: Click here for the detailed report.

Prosci®, ADKAR® and ADKAR® terms are registered trademarks of Prosci®. All Rights Reserved. Used with permission. www.change-management.com.

Comments (4)

by
Veronica Contreras

I found this information very interesting because it highlights the organizational impact of changing from selling just products to offering solutions. This major change requires having high-level sponsor in the company that supports and empowers the solutions team to effectively integrate the offering and address customers’ needs. Solutions marketers are the right persons to lead this transition. As defined by Solutions Insight©, solutions marketers are a very experienced group of individuals, and the majority of them have both product and services marketing experience. Avnet may have had a person with those characteristics to lead the change management together with Prosci. In my opinion, Solutions marketers are especially important in phase number three “Knowledge”, where employees want to know how to: • Better understand their customers’ needs and the needs of the customers of their customers • Apply value base selling techniques • Position Avnet against its competition Those are essential issues for the transition because by doing it, the company is ensuring to stay ahead from competition by keeping employees focused in consumers rather than in products.

by
Patricia Bezerra

As soon as I saw the title of this article I stopped to read it, because I worked as a Manager of Internal Communications. Change Management was one of my responsibilities and I understand how it is fundamental for every organization which wants to pursue a change. If a company does not have the buy-in of its employees, it will not succeed. It is especially true in the process of changing a company from product-oriented to customer-centric whereas cross-function collaboration is essential to deliver the right solution to customers. Yet many executives do not understand the relevance of change management and make wrong decisions during the solution implementation process. In order to save time and hurry up to go-to-market, companies don’t: - Involve high level executives to sponsor and advocate the change; - Explain why the company needs to change to employees; - Clarify the meaning of solutions and creation of new departments (ex. most people outside of marketing don’t understand what a Solutions Marketer does – as reported at Solutions Insights survey); - Involve salespeople to develop new solutions and decide upon marketing mix.

by
Lahti Dunstan

I enjoyed this article because it focused on the "softer" issues attached to changing a company's organizational structure from one of product-selling to solutions-based. Changing the way an entire company views itself and what it does is a slow and laborious process, involving training, reassessment of hierarchy, and a redo of sales and marketing tools. The Prosci ADKAR model seems to be a comprehensive and approaches the change as a systematic process with lengthy steps, rather than a quick change that happens overnight. Step 2 (desire) was something I had not previously thought of. Getting employees to really support and want the change is easier to do when you make the benefits of the change obvious through the levels of the company, all the way to how the switch benefits them personally.

by
Chris Chan

I found this blog post very interesting because it drives at the very heart of why some companies fail to become a solutions company. Often, it's not because solutions are not compatible with their business, it's because they failed to effectively manage the change process. Attempting such a major transformation without adequate controls and procedures extremely dangerous and reckless! The ADKAR model for change management is particularly interesting, and I found myself trying to relate it in some way to Kotter's 8-step model for change. Changing a company from products/services to solutions implies a fundamental change in corporate strategy. While the hard elements, strategy, structure, and systems, are relatively easy to change and measure, the softer elements, style, skills, staff, and shared values are far more difficult. Looking at the two change management models, they are quite similar and can be related. However, Kotter's outlines a series of steps for achieving generic organizational change whereas ADKAR into much greater detail on changing the people. Because the shift to a solutions company requires a major shift in the skills, staff, and shared values of the firm, Avnet made the right decision by going with the ADKAR model.