Strategic Analysis

Are “solutions” the right way to compete? – Part 2: Transitioning from Products to Solutions

While some companies pursue successful solutions strategies, the evidence suggests that most fail, whether for strategic reasons (described in Part 1) or reasons having to do with executing the products to solutions transition. This usually boils down to strongly interrelated problems in:

  • Setting up the organizational capacity to produce and deliver the offerings
  • Failings in the design of offerings due to lack of adequate (deep) understanding of what the actual solution should be and the critical factors for integration and customization. This in turn stems from insufficient knowledge of customers -their thinking, constraints, objectives and success factors (what, in fact, makes them “tick”)
  • Developing and implementing a capability to sell based on economic impact

A solutions business adds extensive complexity to organizational structures and imposes substantial additional costs on companies. If done well it can provide significant competitive advantage reflected in increased market share and margins. If not, it results in reduced profitability or losses and, most importantly, distracted management and opportunity costs.

Read more under Management Guidance: ARE “SOLUTIONS“ THE RIGHT WAY TO COMPETE? – AN ANALYSIS IN THREE PARTS – Part 2

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