The solutions challenge
- Most Recent Blogs, Strategic Alignment
- commodity pricing, solutions challengeCross-organizational initiatives, Downward spiral, Globalization, Higher-value solutions, Rationalizing product, Refining values, Training and supporting sales in CategoryStrategic Alignment,
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Globalization and the Internet have caused a fundamental shift in business-to-business markets. Buyers now have the upper hand as sellers contend with global competition and near-complete transparency. But buyers face the same dynamics with their own end-customers. So they have greater choice in suppliers, but less margin for error.
The upshot is that business buyers put tremendous demands on their partners and suppliers to provide clear business value in every transaction. They don't want simple products or services; they want real solutions to business problems.
On the provider side, buyer demands are matched by competitive reality. If you don't offer real customer solutions, your competitors will. And the price for simple products and services keeps going down. Moving to solutions is critical to avoiding the downward spiral of commodity pricing.
Okay, so none of this is exactly headline news; we've known all this for years now.
But companies continue to struggle with actually moving to a solutions orientation. It's not easy! The reality is that companies trying to shift from a product or service focus to one oriented to customer business problems face significant organizational challenges which either slow them down significantly, or cause them to back off from the change altogether.
In our experience, the following challenges are most common:
Some other foreseeable challenges include: 1.TRULY understanding your client needs because only then do you start developing a solution. Sometimes the customer/client does not know their need or it takes time to win their credibility and therefore real need. 2. Developing the solutions fast enough to meet client needs before their needs rapidly change and declare your solution redundant. Alternatively, your competitior could pre-empt your 'solution'
According to the blog, companies want to move to solutions but they struggle. Furthermore, the organizational challenges for the firms seem to be significant. When talking about challenges to implementation, I start to think about Lean. Lean has been a very popular approach over the past decades. Now, companies are starting to implement solutions marketing. Does Lean facilitate the implementation of a solutions marketing approach or is it a barrier? I think that the implementation team of solutions marketing has to consider any existing Lean initiatives and culture. The implementation has to make sure that the Lean and solutions marketing initiatives are synchronized.
Lean is, similar as the word solution is often used, a big buzzword. Lean manufacturing is since decades a very popular approach for company to excel their manufacturing. The overlying principles of lean management followed later and became popular as well. Whereas many of these principles are more or less successfully implemented in many product-focused companies, established lean principles in service businesses are still very rare. This results mostly out of the nature of services: the process in delivering a service is quite often extremely complex and requires many decisions and customizations. Therefore, many companies have difficulties in describing these processes and improving them. However, lean principles in services and administrative processes are on the rise. So what about lean and solutions businesses? The overall philosophy of lean is quite simple: maximize customer value by minimizing waste (i.e. all unnecessary processes, materials/ resources, overproduction and others). This is totally in line with the solutions approach of creating measurable business value to your client. The focus on measuring your impact as an underlying lean principle and enhances this. I see three areas were lean principles and tool facilitate the implementation of a solutions business: 1. Understand your client needs and only deliver what increases the value for your client. Developing solutions that actually nobody needs would be avoided. 2. In developing a solution lean principles will help you to reduce all kind of redundancies, effectively utilize your assets, but at the same time make the solution so flexible, that you can easily and quickly adapt it to your client-specific needs. 3. In implementing a solution within a clients business, lean offers you a sophisticated toolbox, with tools for project management (DMAIC), measuring systems and metrics, and comprehensive views of processes and impacted business areas (e.g. Value Stream Mapping), that will clearly help you to successfully implement a solution and will enhance the value it creates for the client’s business. Therefore, I would say lean facilitates a solutions business. However, I see a downside. Lean likes stable business processes. An organization that moves to solutions for the first, however, will have to overcome significant challenges it never faced before. The first solution(s) will also be mostly tailor-made and a certain degree of standardization will need time. Stable process will need a longer timeframe to be developed. Therefore, focusing too much on lean principles in the beginning of a solutions journey could harm the success and minder the company’s agility in establishing solutions in the very beginning. All in all, lean principles and tools are likely to improve and excel established solution businesses. Focusing on lean in the very beginning of moving to solutions could, however, be a barrier.
I think solutions is still in its early stages. The process will continue to be improved and perfected as more businesses begin to switch from a product and services to a solutions models. WIth more business switching there will be more lessons learn and best practices for the solution model to be implemented successfully.
As mentioned in the article, globalization has caused a major shift in the market today. Customers are obsessed with the “S” word and on the opposite there is a high competition between companies to establish their position in the mind of their customers as the best solutions providers. Now there are a lot of challenges that are facing companies which are transforming from just product or service orientation to a solutions provider but the one that the author of article missed is how the companies are going to differentiate their solutions? It’s a heck of challenge to absorb the attention of today’s buyers without having anything different from what others are offering.