Download - From caterpillar to butterfly: how to transform your business model to turn into a solution provider
23-4-2012
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Flanders DC Kenniscentrum
From caterpillar to butterfly:
How to transform your business model to
turn into a solution provider
Marion Debruyne, Deva Rangarajan, Caroline Baert
Flanders DC Kenniscentrum
Ondernemend Vlaanderen
Creatiever maken
Flanders DC - Missie
Creatief Vlaanderen
Ondernemender maken
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Flanders DC – Bedrijven
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Flanders DC – Onderwijs
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Flanders DC – Algemeen Publiek
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Why solutions?
| 19-1-2010 |
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From caterpillar to butterfly…
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� What are solutions?
� How solution-minded is Flanders?
� The solution selling business model
� Moving towards solutions in 10 steps
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What are
solutions?
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Material Handling Automation Systems
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Material Handling Automation Systems
Consultancy
Life Cycle Services
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What are solutions?
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What are solutions?
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Adds value to the
customer's activities
Integration
Customer needs
Customi-zation
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What are solutions?
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Although there are many kinds of solutions, they are all, in essence,
integrated combinations of products and/or services that are
unusually tailored to create outcomes desired by specific clients or
types of clients. Whereas products are mostly about functionality,
solutions are about outcomes that make life easier or better for the
client.
Miller et al (2002, p.3)
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What are solutions?
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Systems integration
Operationalservices
Consultancy services
Financial services
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Why move towards solutions?
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� Commoditization & mature core product markets
� Outsourcing & demand for services
� Vertical disintegration & disintermediation
� Complex technologies & multivendor offerings
Servitization and the subsequent move downstream
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What are the benefits of providing solutions?
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� Differentiation as a competitive strategy
� Beating commodity magnet
� Create more added value
� Higher profit margins
� Continuous revenue streams
� Customer loyalty, retention and lock-in
� Access to customers previously outside the supplier’s market
� Market adoption
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How solution-
minded is
Flanders?
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Importance of solutions
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� Sample description
38,90%
37,50%
23,60%
0-50
50-500
> 500
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Importance of solutions
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To what extent is offering solutions an item on the agenda of your company?
1%
1%7% 7% 3% 6% 13% 31% 11% 21%
Not at all 2 3 4 5 6 7 8 9 Top priority
In what phase would you position your company in the development of solutions?
1%3% 11% 11% 8% 14% 29% 15% 3% 4%
Not developed at all 2 3 4 5 6 7 8 9 Reached maturity
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Importance of solutions
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Importance of solutions
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The solution
selling business
model
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The solution selling business model
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The solution selling business model
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Moving towards
solutions
in 10 steps
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
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More than paying lip service
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“It took 3-4 years before everybody understood
what we were trying to accomplish”
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
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Flanders DC KenniscentrumFlanders DC Kenniscentrum
Integrate or separate?
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Learn
Forget
Borrow
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Identifying
burning
platformDeciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
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Flanders DC Kenniscentrum35
Flanders DC Kenniscentrum36
Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company
towards
solutions
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Flanders DC Kenniscentrum© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
"I cannot give you a formula for success, but I can give you a formula for failure, which is: Try to please everybody.“Mark Twain
Flanders DC KenniscentrumFlanders DC Kenniscentrum
Step 4: Segmentation of customers
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� Need-based segmentation
� Customers with similar needs
� Focused approach
� Customers ready for:
� Longer-term engagement
� Sharing of information
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
Flanders DC KenniscentrumFlanders DC Kenniscentrum
Step 5: Engage in lead projects
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� Provide the necessary resources to realize first projects
� Partner up with a key customer in order to realize the first
integrated solution projects
� Give leading managers the freedom to explore and gain from
experience
� Rely on partners and third parties to fill the gaps in the
company’s capability portfolio
� Systematically gather and share all knowledge related to the
implemented solution projects
� Look for a signature project that will put the company on the
map as a solution provider
� Share initial successes within the organization
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Flanders DC Kenniscentrum41
Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
Flanders DC Kenniscentrum42
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire firm to
solutions
Flanders DC KenniscentrumFlanders DC Kenniscentrum
Step 7: Aligning the back end to support solution selling
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� Ensure effective communication channels between frontline
employees and back-office personnel
� Link customer value creating activities to internal business
process maps by means of solution blueprints.
� Empower the back-office employees to take more initiatives
� Transfer “transactional customers” to more inexpensive
channels.
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Flanders DC KenniscentrumFlanders DC Kenniscentrum
Example of a Service Blueprint
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Cus
tom
er
Customer
Sales Engineer and multi-skilled account teams
Solution architects or consultants
Marketing
Engineering
Sup
plie
r
Supplier/Partner
Cus
tom
er C
ente
rP
rodu
ct C
ompa
ny
Standard Production Line/Core service
Customer
Collect & AnalyzeCustomer
Requirements
PresentProposal to Customer
Receive & EvaluateProposal
StandardProduct(s) ?
Yes
Analyze and Create Special Order or
Request
Analyze request
Discuss withcustomer
Request declined
Create Solution Proposal
No
Analyze Solution Proposal
Technical Input/Validation
Commercial Input/Validation
Input from Partnerships
Standardised products or
modules
Feasible ?
No
Yes
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
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Flanders DC KenniscentrumFlanders DC Kenniscentrum
Step 8: Pulling it all together
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� Align back and front end IT systems
� Align back and front end rewards and incentives
� Align back and front end business performance criteria to
reflect customer criteria
� Stimulate the move towards modules, building blocks or
platforms
� Facilitate knowledge sharing within a business unit and across
business units
� Facilitate your salespeople to sell integrated solutions
Flanders DC KenniscentrumFlanders DC Kenniscentrum
AT&T’s Process Map for Measurements
Reliability (40%)
Easy To Use (20%)
Features / Functions (40%)
Knowledge (30%)
Responsive (25%)
Follow-Up (10%)
Delivery Interval Meets Needs (30%)
Does Not Break (25%)
Installed When Promised (10%)
No Repeat Trouble (30%)
Fixed Fast (25%)
Kept Informed (10%)
Accuracy, No Surprise (45%)
Resolve On First Call (35%)
Easy To Understand (10%)
Business Process Customer Need Internal Metric
30% Product
30% Sales
10% Installation
15% Repair
15% Billing
% Repair Call
% Calls for Help
Functional Performance Test
Supervisor Observations
% Proposal Made on Time
% Follow Up Made
Average Order Interval
% Repair Reports
% Installed On Due Date
% Repeat Reports
Average Speed Of Repair
% Customers Informed
% Billing Inquiries
% Resolved First Call
% Billing Inquiries
SolutionQuality
Source: AT&T General Business Systems
Example of Aligning Metrics
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
Flanders DC KenniscentrumFlanders DC Kenniscentrum
Company
results
Solution structure
and Offerings
Customer
results
Blueprints, Incentives,
Coaching
IT,CRM,EDI,KPIs
Segmentation,
Value
Propositions
Definers Shapers Exciters Enlighteners Controllers
Solution Effectiveness drivers
Move towards Solutions
Step 9: Performance Management
Source: « Sales Force Effectiveness : A Framework for researchers and practitioners » by Andris Zoltners,
Prabhakant Sinha and Sally Lorimer, Journal of Personal Selling and Sales Management, Spring 2008
Implementation
Diagnosis
Company factors
- R&D
- Operations
- Finance
- Marketing
- Product offering
- Pricing
- Services
- Channel
- Strategy
Environment
- Market growth
- Competition
- Consolidation
- Government
- Technology
- Random Shocks
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Set up a balance scorecard to prioritize
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Fix it. NOW. High five!
You can afford
to procrastinate
There are bigger
fish to fry
Impact of the
drivers on
performance
Current performance on the drivers
LOW HIGH
LOW
HIGH
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Identifying
burning
platform
Deciding on
organizational
structure
Developing
and
reinforcing a
customer-
centric
mindset
Segmentation
of customers
Engaging in
first projects
with lead
customersDeveloping
adequate
value
propositions
Systematic
development
of front end
and project
teams
Aligning the
back end and
pulling it all
together
Performance
management
Moving the
entire
company to
solutions
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Flanders DC KenniscentrumFlanders DC Kenniscentrum
Step 10: Moving the entire company towards providing
solutions
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� Bust silo mentality by:
a) Co-ordination
b) Co-operation
c) Connections
d) Capability Building
e) Clout
Source: Silo Busting by Ranjay Gulati, Harvard Business Review, 2009
Flanders DC Kenniscentrum
“The journey of a thousand miles
begins with a single step”
Ancient Asian Proverb
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Conclusion
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� End of the “better mousetrap model”
� Segment the markets and choose the best segment to focus
� Identify areas to create value to customers and differentiate from competition
� Identify potential partners to help deliver customer value wherever appropriate
� Develop value proposition and set prices to capture value
� Coordinate activities between internal departments and external partners to deliver better customer value
� Foster cooperation both internally and externally
� Build capabilities and connections to ensure flexibility to meet customer needs
� Constantly monitor customer metrics and use this to shape internal/external partnerships
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Caroline Baert
| 19-1-2010 |56 |
� Research Associate at Vlerick Management School
� Research cluster Marketing Strategy and Innovation
� Research interests: strategic innovation, design as a
strategic resource in new product development, the
customer decision journey in financial services
Contact me:
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Flanders DC Kenniscentrum© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Thank you!
Prof. dr. Marion Debruyne
Associate Professor & Partner Vlerick Management School
SWIFT chair in Market Driven Innovation
Program Director of the Master in Marketing Management
MarionDebruyne
Contact me:
[email protected] anything related to the strategic side of innovation and the innovative side of strategy
Follow me:
Flanders DC KenniscentrumFlanders DC Kenniscentrum
Deva Rangarajan
| 19-1-2010 |58 |
� Associate Professor and Partner, at Vlerick
Management School
� Research cluster Sales Excellence Center
� Research interests: Sales force effectiveness drivers,
after-market strategies, Services Marketing,
Customer experience management.
� Please visit our sales club website to see things we
are trying to achieve at Vlerick in the domain of
sales management: http://salesclub.vlerick.com
Contact me: