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


Ondernemend Vlaanderen

Creatiever maken

Flanders DC - Missie

Creatief Vlaanderen

Ondernemender maken

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Flanders DC – Bedrijven

Flanders DC Kenniscentrum4

Flanders DC – Onderwijs

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Flanders DC – Algemeen Publiek

Flanders DC KenniscentrumFlanders DC Kenniscentrum

Why solutions?

| 19-1-2010 |

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From caterpillar to butterfly…

| 19-1-2010 |7 |

� What are solutions?

� How solution-minded is Flanders?

� The solution selling business model

� Moving towards solutions in 10 steps


What are

solutions?

8

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Flanders DC KenniscentrumFlanders DC Kenniscentrum9 |

Material Handling Automation Systems

Flanders DC KenniscentrumFlanders DC Kenniscentrum | 19-1-2010 |10 |

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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?

15 |

Adds value to the

customer's activities

Integration

Customer needs

Customi-zation


What are solutions?

16 |

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?

17 |

Systems integration

Operationalservices

Consultancy services

Financial services


Why move towards solutions?

18 |

� 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


How solution-

minded is

Flanders?

20

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Importance of solutions

21 |

� Sample description

38,90%

37,50%

23,60%

0-50

50-500

> 500



22 |

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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24 |

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The solution

selling business

model

25


The solution selling business model

26 |

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The solution selling business model

27 |


Moving towards

solutions

in 10 steps

28

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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


More than paying lip service

30

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“It took 3-4 years before everybody understood

what we were trying to accomplish”


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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17


Integrate or separate?

33

Learn

Forget

Borrow


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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18



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

23-4-2012

19

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


Step 4: Segmentation of customers

38

� 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


Step 5: Engage in lead projects

40

� 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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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


23-4-2012

22


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


Step 7: Aligning the back end to support solution selling

| 19-1-2010 |44 |

� 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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Example of a Service Blueprint

| 19-1-2010 |45 |

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


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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Step 8: Pulling it all together

| 19-1-2010 |47 |

� 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


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

48

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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


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

| XX-XX-20XX |51 |

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


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

23-4-2012

27


Step 10: Moving the entire company towards providing

solutions

| 19-1-2010 |53 |

� 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


“The journey of a thousand miles

begins with a single step”

Ancient Asian Proverb

54 || 19-1-2010 |

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Conclusion

| 19-1-2010 |55 |

� 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


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:

[email protected]

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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:


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:

[email protected]

from caterpillar to butterfly: how to transform your business model to turn into a solution provider

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