How to Go From a Product Company to a 'Solution' Company
Are you running a product company or a solution company?
Ever since IBM's Lou Gerstner first introduced the slogan, "solutions for a small planet," in the '90s, companies of all sizes are aiming to become "solution-based" organizations.
There is a subtle difference between providing "products" and providing "solutions." Solutions imply an integration of service and products. For each customer, companies go through their inventory of products and configure them to address that customer's specific challenges. Each customer may have slightly different needs and slightly different constraints. The customers don't all fit in a cookie-cutter, one-size-fits-all mold. A single product will no longer serve. What is necessary is a combination of products.
Whether you run a large corporation like Intel or Cisco, or a 50-person security business, the challenge is the same: How do you take your existing knowledge and products to come up with solutions that meet the customer needs? Moving from providing products to providing solutions demands a new type of organizational structure and a new type of culture. Here are five best practices you should keep in mind as you shift from a product company to a solution company.
1. Break down the ownership of products. Most individuals master one or two products. They know how the products inside out, they know how to sell them, and they are heavily invested in them. They identify their role in the organization by the products they represent. In moving to a solution-based culture, the challenge is help product-owners understand that the future viability of their product depends on their products being integrated into a larger solution. Celebrate individual products, but show the product-owners the potential their product has to be part of a larger, integrative solution for customers.
2. Create a formal process. Many companies talk about solutions, but fail to actually provide them. That's because organizations neglect to establish a process to arrive at solutions. When a customer expresses a need, your company needs to frame that need. In other words, ask, "Who are the people available to work on a solution? What products are critical?" Figure out how much time it will take to come up with a solution. If you have to recreate this process every time, it can result in chaos. To establish a solution-based culture, you need to define this process.
3. Encourage a coalition mindset. In a solution-driven culture, employees are exchanging ideas, creating agile relationships, and working as a team. Unfortunately, in many companies, it's the norm for employees to stake out their own turf. If you want a solution-based culture, you must change this mindset. Coming up with solutions that address the needs of the market--and satisfy the needs of the customer--requires critical team members to work together and to understand that their success is linked to the success of others. Only by operating as a coalition will you achieve the best result.
4. Reexamine the way you reward employees. Moving toward a solution-based culture often requires reevaluating your mechanisms for rewarding and recognizing employees. For instance, bonuses based on individual performance may need to be replaced with bonuses based on collective achievement. Recognition and reward should go to the group that worked on a successful project. This means that individuals may at times find themselves on projects that will be highly rewarded, and at other times find themselves on under-the-radar projects that go largely unrecognized. Moving to an incentive system of collective recognition is not easy, but it's a necessary step as you move toward a solution-based culture.
5. Make consultations a critical part of sales. In a product culture, relationships are often short-term and highly focused. A solution culture demands a tighter partnership between your company and the customer. The relationship is one of helping the customer to define--and redefine--the problem. It becomes a consultative relationship of continuous dialogue, in which both parties come to a common understanding of what needs to be accomplished.
A solution-based company isn't for everyone; sometimes just selling a product is enough. But if you are looking for a market advantage, you may want to consider supplementing your product-based culture with a solution-based culture. Above all, it will result in a more agile relationship between you and your customers.
SAMUEL B. BACHARACH | Columnist | Director, Cornell's Institute of Workplace Studies
Samuel B. Bacharach is the McKelvey-Grant professor in the department of organizational behavior at Cornell University's ILR School, and is director of Cornell's Institute for Workplace Studies in New York City. Among his books are Get Them on Your Side and Keep Them on Your Side. His latest volume, A Good Idea Is Not Enough: Leading for Change and Innovation, will be published this November by BLG.