Recent Articles The Solutions Strategy Evolution, Part IV: The Final Solution | The Solutions Strategy Evolution, Part IV: The Final Solution |
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Identify the common pieces, then assemble, commercialize, and support them
By Chris Gormley, COO, Tiversa and Contributing Writer Earlier this year, in an article called, "The Solutions Strategy Evolution, Part III, Implementing Solutions Selling", I described the process by which many firms introduce solutions – a market approach which can, under the right circumstances, help them gain competitive advantage. But it is neither a fixed nor a simple formula. Actually, it’s just the opposite: it is typically a highly fluid and messy process. And not all solutions – which are unique by definition – achieve their desired results. Even those solutions which do succeed usually achieve that success with just one customer in one vertical market at a time.
Over time, however, solution architects, sales professionals, and product managers find they can borrow elements from earlier successful solutions in helping them define new ones. Those results sometimes end up as components that work within clearly-defined customer situations and specific vertical industries which are very different from the ones where they were initially deployed. Stage IV, Solution Commercialization, begins when the dust starts to settle on the experimentation stage of various solutions. That’s when a stable core of successful solutions – or at least solution components – begins to emerge both within and across different industries. That’s also how the set of processes, practices, and infrastructure which collectively constitute the common elements of good solutions become part of a company’s scalable delivery and promotion system. This article provides examples showing how to execute at this stage. Componentization Componentization is the way I refer to the process of finding common elements within and across solutions. It is based on predictable behavior. The components which are identified through that process can be either services or tangible products. And they can be repeatedly assembled to create other solutions without losing their individual component boundaries and identity, especially in the case of finance and legal functions. Once they’re identified, these components can be mixed with one another or ‘glued’ together through custom services that create scalable solutions. While no one should expect a solution to be entirely component-based, the higher the component content of a solution, the more highly scalable, the higher the quality, and the lower the cost that solution provides. At least that’s the principle. Services Any solution is composed of both services and tangible products. While tangible products, such as software components, come with clearly defined characteristics and boundaries, the componentization of services remains one of the most difficult tasks associated with commercializing a solution. That difficulty relates to the inherently amorphous nature of services. Typically, services that are poorly suited for componentization represent the ‘glue’ that makes a solution unique. These services address the distinctive needs associated with a specific customer’s situation and add the special ‘seasoning’ that is characteristic of their particular solution. Think of those services which can be efficiently componentized as ‘black boxes’ distinguished by the following elements:
Common examples of highly componentizable services include call center operations, technical support, and tele-sales. Office cleaning, home repair, and construction services can also be easily ‘componentized’. But management consulting, investment banking, and other highly specialized services are much more difficult to componentize. Products In contrast to services, tangible products and software are relatively easy to componentize. H-P offers a great example. The company has componentized its printers so that a few common elements can be mixed to satisfy multiple global markets and product configurations. Enterprise software is typically modularized with a multiple layers, each providing different functions that can be assembled to create unique solutions. So one layer might provide overall process management while a separate application module plugs into that layer to specifically enable contract management. Support Functions The core of componentization resides with the individual service and product modules themselves. However, it is critical to consider how to support overall solutions with components which are well-suited to modular contracting and profitable pricing.
Organization I’d like to offer a word on Solutions Commercialization governance. It’s this: someone in your company needs to guide the overall solutions effort, and Product Management/Marketing is often suited best for this task. However, conventional product management organizations – whose responsibilities traditionally revolve around the hardware or software components of a solution – are generally not structured to provide this guidance. That requires a different type of organization. To create a Product Management/Marketing structure that is up to the task, consider adopting a matrix structure that will: A) be responsible for formulating families of solutions that include both products and services, B) making sure your company’s products are designed to support those solutions, and C) ensuring that the services needed to support your solutions are delivered. When I was at FreeMarkets – now part of Ariba – we created a matrixed Product Management organization. The structure is shown below: Illustration 1: Organization Matrix
In it we had different teams assuming complementary functions. This structure is actually similar to a traditional Product Management/Marketing organization. However here, Solution Managers are really key to the new arrangement. In it, our most senior level personnel became Solutions Managers who were responsible for managing and/or coordinating all aspects of a solution family. That included making sure they had the software, service, and hardware components needed from each of the Product Managers. In addition, they had to ensure that that Product Marketing provided proper sales, channel, and marketing materials to support their solutions. As depicted in the accompanying illustration, different Product Managers were focused on ‘components’ - either the solution’s software, service, or hardware components. Each Solution Manager had to provide his or her requirements to their respective Product Managers. Those Product Managers, in turn, were tasked with creating their particular components of the solution – taking the requirements they had been given and working with the appropriate engineering or operating team to ready those components for commercial use. So, for example, the Software Product Manager worked with software engineering, the Service Product Manager worked with service delivery and operations teams. Product Marketing personnel worked with Marketing and PR to make sure their solutions were properly supported with sales collateral, launch planning, and channel support. Through this structure, operational efficiency and product differentiation were simultaneously maintained at the solution, component, and service levels. The company’s senior leadership would help to adjudicate any tradeoffs that might arise. And those components which showed the broadest applicability and greatest profit potential across different solutions were given the highest priority. In essence This fourth and final phase in the Solutions continuum applies to organizations which have reached a mature state – one in which the higher overhead costs of managing a more complex organizational structure and componentization process are justified by a highly realized increase in revenues, profits, and market competitiveness. 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 variety of industries. He is currently Chief Operating Officer of Tiversa, Inc. - an early stage technology security company which helps protect organizations from the disclosure and illicit use of sensitive, confidential and classified information on peer-to-peer file sharing networks. Before Tiversa, he was Vice President of Marketing and Business Development for Haley Systems, a leading business process and middleware software provider. 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. He was also General Manager of FreeMarkets Asset Management Business, a global exchange for industrial goods and equipment, and helped take the company through a successful IPO in 1999. Previously, he worked as a consultant with McKinsey & Company and held positions in engineering, finance, and marketing with General Electric. 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’s Board of Advisors. |
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Previous articles in this series outlined the initial phases in transitioning a company from a product-based enterprise into a solutions-based one: Solution Marketing, where companies often talk the talk, but typically fail to walk the walk in proclaiming problem-solving leadership; and in Solution Selling, which relies on a consultative approach to combine products and services into unique, but often costly answers to distinctive customer issues. This article addresses the concluding stage of a successful transition: Solution Commercialization, which is characterized by greater standardization of parts and cost-effective delivery of what were initially provided as custom solutions.
