One of the oldest clichés in business school is the statement that “customers want ¼-inch holes, not ¼-inch drills.” That’s a pithy way of reinforcing the idea that your primary focus and messaging in presenting your product or service to the customer-; and ultimately, properly setting and meeting customer expectations-; should be as closely aligned as possible with the results and benefits they seek. People don’t want copiers; they want clean, quick and inexpensive copies from machines that never break, jam or run out of toner.

 Harvard Business School professor Clay Christensen describes this type of exercise and investigation as one where you are trying to correctly identify what the customer wants the product or service to do. It’s often not what you think it is. In his classic example concerning breakfast beverages at McDonald’s, Christensen said the task was to figure out the job that the customer was “hiring” a milkshake to do. Refreshment? Nope. Nutrition? Hardly. It turns out that that job was largely related to keeping early morning customers who face long commutes from becoming bored as they drove. The milkshakes gave them something to do for an extended period of time and something to suck on while they whiled away the miles. So don’t ever say that McShakes don’t suck.

In earlier times, this results-oriented approach was known as “solution selling,” but for me that particular phrase has taken on an interesting new meaning that grows out of a pretty fundamental change in the nature of many of the products we are now making.

In today’s economy (except for consumables like toner and ink for our printers), the in-service life of all kinds of products has been extended so dramatically that the basic underlying business models of major manufacturers and entire industries have been changed. Instead of the planned product obsolescence that manufacturers could once count on to maintain sales, product lifecycles have become nearly infinite, so companies have had to start re-envisioning their businesses.

No one with any smarts thinks that they can simply sell a single product anymore. If you want to survive, you sell services and solutions -;lifetime relationships and continuing connections-;rather than transactional and occasional encounters. I wrote recently that the book business these days isn’t about books anymore. (See The Case for Pursuing Massive Growth) The point was that the former publishers were all morphing their businesses into learning management companies that could sell protectable systems and services rather than individual books. The need for similar product migration is even clearer in various manufacturing sectors.

Take light bulbs, for example. They don’t burn out the way they used to. That means bulb manufacturers have basically improved themselves out of a major portion of recurring revenues in selling replacement bulbs. In any given cycle, they’re selling fewer and fewer bulbs and there’s zero prospect of a return to the old days. Even more importantly, after you’ve solved the power consumption issues and the longevity concerns, what do you really have left to sell to your customers or to differentiate your bulbs or fixtures from anyone else’s?

 The answer is that-;and this is exactly what the big bulb guys like Philips are doing with their biggest institutional customers-; you sell bundled “lighting,” which is really the turn-key, all-in, “solution” that the customers are looking for rather than bulbs, fixtures, lumens, etc. This is how you avoid getting your brains beaten in and your margins crushed by price-based competitors selling commodity light bulbs.  Lighting customers (big and little) just want to see where they’re going and not worry about anything more than that. This approach is actually a return to the old days when the electric companies used to hand out free bulbs from time to time as long as you’d come get them. Even back then, they knew that they were selling a solution and a service rather than a bunch of bulbs.  And this is just the beginning.

Once you start thinking about a solution for a given problem like transportation - how, for example, do I most efficiently get from here to there-;  you start to focus on a broad range of available choices for intermodal movement (planes, trains, buses and Ubers) rather than on the need to rent or own a particular vehicle. (See Why Gen Y Doesn't Care About Cars). It’s the same story with hotels and Airbnb. You’re looking for clean, safe, inexpensive shelter, not a particular chain or brand of hotel.  Utility, mobility, convenience and speed are all far more important to consumers today than possession or ownership and there’s really no going back.


Published on: Jun 2, 2015