Archived Articles The Solutions Strategy Evolution, Part III: Implementing Solutions Selling | The Solutions Strategy Evolution, Part III: Implementing Solutions Selling |
|
|
|
Solutions selling requires a different kind of organization
By Chris Gormley, COO, Tiversa and Contributing Writer In an earlier article, I outlined the initial phase in transitioning a company from a product-based enterprise into a solutions-based one. In essence, it called for a learning strategy - one designed both to establish your company's domain expertise and secure a practitioner-level understanding of the challenges facing your customers' industries. This article focuses on the next phase: Solution Selling. It builds on the expertise acquired in the previous phase and applies it through a consultative approach to customers - one designed to profitably combine exactly the right products and services to solve that customer's problem.
Solution Selling has been around for a while now. As a result, a great deal has already been written about it, and a lot of it is good. So rather than addressing the topic directly, I want to focus on the distinctive blend of selling, delivery, and solution design that's required when a company begins a true Solution Marketing Strategy, as distinct from a faux solutions sales approach - one which claims to be a solution approach, but actually has little to do with the solutions concept as we understand it. Architecting Solutions Solution Selling represents a fundamental shift in the way a product-centered company sells and delivers its goods. It is characterized, first, by a rigorous focus on determining a customer's needs; second, by one-on-one consultation; and third, by designing and delivering a solution that puts the best combination of products and services together to address that customer's unique issues. This approach can only occur with a highly skilled and supported sales force. And it requires significant pre-work, customer understanding, and external validation. During this stage, many companies bring someone in to serve as a sort of solution architect. These are typically highly skilled individuals, such as former management consultants, who understand products, services, and the customer's industry domain. They can also design creative solutions and build business cases for the customer. Some of them may have emerged as experts during Phase I. However by now, the company's sales team is focused on crafting unique solutions and creating an ‘unfair' advantage. Part of that requires refraining from going after the standardized RFIs, RFPs, and RFQs that customers often use in selecting vendors. So unless the solutions company had written those RFI and RFP documents themselves, they often decide not to compete. But before a customer can decide against using the RFP process in selecting a supplier, they need to see an advantage to limiting competition. What is that advantage? It's knowing that a solutions company can solve their problem so precisely that no one else in the marketplace is really qualified to match it. No competition Creating an environment in which you are comfortable avoiding the temptation to compete where no unfair advantage exists takes an incredible amount of discipline and expertise. However if you succeed, the resulting advantages of pricing power and account control are obvious. But be forewarned: Adopting a Solution Selling approach can be a huge cultural shock for organizations accustomed to a purely product or services approach. Major organizational conflicts and confusion can and do occur as companies enter the Solutions Selling Stage. Hard choices need to be made about how effective the existing sales force will actually be in leading and executing that sort of approach. And the role of any ‘solution architects' must be defined vis-à-vis the roles of product management, pre-sales, or consultants and professional services organizations who are already on staff or on retainer with the company. Whatever is promised in the sale of a solution has to be clearly spelled out. But even though a solution may be expertly defined and sold in the field, the groups responsible for actually delivering on those promised services and products often find themselves put on the spot. Why? Because this is precisely the point where costs can skyrocket and customer quality can plummet as teams scramble to deliver their promises to the customer. Since unique solutions are implemented through custom contracts, the company's Finance and Legal departments frequently find it difficult to keep up with those contracts and with the companion need to achieve gross margin targets. At best, they will show the same flexibility that their sales force demonstrated; at worst, they slam the brakes on every deal until their own analyses are complete - which can sometimes be too late. Tough questions Over time, astute product managers and marketers will see patterns of solutions emerging. As a result, they can begin prepackaging solution elements. However, at this early stage of the transition there is typically a great deal of flux. As a result, a fluid coordination of selling, delivery, solution design/marketing, and finance/legal will be critical to making Solution Marketing a success - both for the organization and the customer. That's why the Solution Selling Stage is the most difficult in realizing a Solution Marketing Strategy: it involves the greatest organizational change and demands a consistent operational focus. Many organizations have neither the leadership, the patience, nor the skills to make this transition. So before taking the leap, you need to ask yourself some hard questions:
Based on my own experience, here are some approaches to answering these questions: Leverage outside advice - seek help from those who have actually made the transition - ideally more than once. Set-up a Solutions Steering Group - consisting, at a minimum, of your heads of World-wide Sales, Professional Services, Product Management/Marketing, Legal, and Finance. This group should be chaired by an executive to whom each functional member reports - typically the chief operating officer. Its purpose would be to guide the cross-functional role conflicts and emerging issues that inevitably arise as Solution Selling is introduced to the organization. Over time, this group can be disbanded. At FreeMarkets, a steering group consisting of Sales, Corporate Marketing, Product Management, Professional Services, Finance, and Legal was used to introduce new products and later to serve as the nucleus for a fundamental solutions selling shift. Conduct "Sales Professional" Skills Audit - Evaluate your existing sales team to determine if they are sufficiently skilled for the transition to a Solutions Marketing approach. This will help you identify whatever gaps must be overcome. Remedial training can help elevate the skill sets for sales professionals who are already close to ideal. But even with training, some sales people will never make the transition. New sales professionals with the right skills will be required. In my experience, as much as 40 percent of a traditional sales team will not be able to make the transition. Create Solution Architects Role - Especially in the early stages of a transition, Solution architects can play a key role. They can either be consultants or senior staff members with an in-depth knowledge of the company's products, services, and delivery capabilities. When designing unique solutions, they know how much each product or service can be ‘bent' before breaking. They are also skilled at listening to client needs and using their knowledge of your company's products, services, and delivery capabilities to create solutions the company can actually deliver on time. Solutions architects enjoy high creditability with clients, sales, product management, services delivery, legal, and finance; of course, they are also in short supply. Solution Architects are critical during the formative stage of transition. They can shuttle between groups and solve solution design and delivery issues, keeping the process and organization moving forward. In essence, they play a product management role. From my experience, people who are former management consultants, or from the company's Professional Services staff, or from its Product Marketing/Management organization can all make excellent solution architects. Ideally, these could include some of the same individuals who drove the earlier stage transition efforts. At the outset, Solutions Architects should be organized into a ‘swat' team to share best practices among themselves and to spread those practices to regional sales groups. But avoid the temptation to start out by decentralizing solution architects into regions. Create Program Management Function - In most traditional companies, once a sale occurs, a service team installs the product and then leaves with little follow-up client contact. But with a Solutions Marketing approach, there is typically an ongoing reason to remain with the client and provide ongoing solution delivery. If the economics allow for it, companies should consider a sales and delivery role focused on building an intimate understanding of the account as part of its solution. The person who plays that role is called a Program Manager, and he/she is often welcomed by the client because they provide ongoing value as part of the services they deliver. They can also identify new opportunities for solution sales. But Program Managers are not Solutions Architects; instead, over time, they deliver solutions created by Solutions Architects. At FreeMarkets, Program Managers helped build high levels of customer trust and provided a pivotal understanding of client issues, organization, and politics - all of which helped in designing highly effective solutions. Many FreeMarkets Program Managers later moved into sales or professional services organizations where they brought an outstanding level of client insight coupled with solutions knowledge they could never have gained in a purely sales role. Consider Organizational Alterations - With the addition of Program Managers and Solutions Architects, a number of related organizational issues need to be considered. First, to whom do these positions report and who is ultimately responsible for solutions implementation and design? Program Managers, who serve in a professional services or consulting role, typically fit within existing regional sales or professional services organizations. But in my experience, Solution Architects should form their own organization, initially reporting to the head of global sales or professional services. Over time, Solutions Architects become part of a company's normal regional sales or delivery organizations. In addition, Solution Architects should initially be responsible for Solutions - both implementation and design. Solution design will eventually pass to Product Management, but initially, it should be located in the field to keep in step with the pace of change and learning. I'll have more to say about this transition to Product Management in the next article. Establish Flexibility in Finance/Legal - In most global product companies, the Finance and Legal departments have well-established contracting, pricing, and margin approval processes in place. Creating flexible solutions challenges these processes to their core. In my experience, Finance becomes most concerned with the apparent ‘free-wheeling' pricing practices and unclear margins that are associated with selling solutions. And it's true that until a number of solutions have been delivered and historic data complied, it is very difficult to calculate margins to the same level of precision as previously calculated. In addition, legal is often faced with an array of custom contracts which are different for each solution. But unless Finance and Legal buy into this process, solution teams can become bogged down by the legal and finance approval process, losing their enthusiasm and blunting their creative edge. The answer is to define ‘modules' of solutions that are, in most cases, consistent across different customers. Within each module, margins and legal terms and conditions can be well understood. These modules can then be combined to form unique solutions where over 80 percent is comprised of these common modules. This helps to guard margins and speed up approvals.
To read our latest articles in Inside Product Strategy™, click here. About the Author: Chris Gormley has more than 15 years of experience building and leading technology, manufacturing, and services operations and companies across a wide array of industries. Mr. Gormley is currently Chief Operating Officer of Tiversa, Inc. - an early stage technology security company in Pittsburgh PA - where he is responsible for marketing, strategy, product management, service and sales operations. Before Tiversa, he was Vice President of Marketing and Business Development for Haley Systems, a leading business process and middleware software provider, where he was responsible for guiding overall strategy of the company, building alliances, partnerships and channel relationships. Prior to joining Haley Systems, Mr. Gormley was Vice President of Product Management at Ariba/FreeMarkets, a world leader in purchasing and supply management technology and services, where he was responsible for worldwide creation and commercialization of $150 million of software and service-based solutions. Mr. Gormley was also General Manager of FreeMarkets Asset Management Business, a global exchange for industrial goods and equipment, and an early employee who helped take the company through a successful IPO in 1999. Previously, Mr. Gormley was a consultant with McKinsey & Company and held positions in engineering, finance, and marketing with the General Electric Company. Mr. Gormley holds an MBA in Finance & Strategy from the Wharton School at the University of Pennsylvania and a B.S. degree in Chemical Engineering from Worcester Polytechnic Institute. He is a member of the Product Strategy Network and serves on the PSN Board of Advisors. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it |
|||||
Traditional product-oriented companies that want to transition themselves into solutions providers need to change more than their advertising tag lines. In fact, according to Tiversa COO Chris Gormley - a veteran of FreeMarkets/Ariba, McKinsey & Company, and GE - it requires major changes in the company's structure and culture. And a lot of people and organizations simply can't survive the change. But for those who insist on trying, he offers some specific strategies in Part III of his series, The Solutions Strategy Evolution.
