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

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From caterpillar to butterfly: how to transform your business model to turn into a solution provider From caterpillar to butterfly: how to transform your business model to turn into a solution provider Document Transcript

  • 23-4-2012 From caterpillar to butterfly: How to transform your business model to turn into a solution provider Marion Debruyne, Deva Rangarajan, Caroline BaertFlanders DC Kenniscentrum Flanders DC - Missie Ondernemend Vlaanderen Creatief Vlaanderen Creatiever maken Ondernemender makenFlanders DC Kenniscentrum 1
  • 23-4-2012 Flanders DC – BedrijvenFlanders DC Kenniscentrum Flanders DC – Onderwijs 4Flanders DC Kenniscentrum 2
  • 23-4-2012 Flanders DC – Algemeen Publiek 5Flanders DC KenniscentrumWhy solutions?Flanders DC Kenniscentrum | 19-1-2010 | 3
  • 23-4-2012 From caterpillar to butterfly… What are solutions? How solution-minded is Flanders? The solution selling business model Moving towards solutions in 10 steps7| Flanders DC Kenniscentrum | 19-1-2010 | What are solutions? 8 Flanders DC Kenniscentrum 4
  • 23-4-2012 Material Handling Automation Systems 9| Flanders DC Kenniscentrum10 | Flanders DC Kenniscentrum | 19-1-2010 | 5
  • 23-4-2012 Material Handling Automation Systems Consultancy Life Cycle Services11 | Flanders DC Kenniscentrum12 | Flanders DC Kenniscentrum | 19-1-2010 | 6
  • 23-4-2012 What are solutions?13 | Flanders DC Kenniscentrum14 | Flanders DC Kenniscentrum | 19-1-2010 | 7
  • 23-4-2012 What are solutions? Adds value to the customers activities Customer needs Customi- Integration zation15 | Flanders DC Kenniscentrum What are solutions? 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)16 | Flanders DC Kenniscentrum 8
  • 23-4-2012 What are solutions? Systems Operational integration services Consultancy Financial services services17 | Flanders DC Kenniscentrum Why move towards solutions? Commoditization & mature core product markets Outsourcing & demand for services Vertical disintegration & disintermediation Complex technologies & multivendor offerings Servitization and the subsequent move downstream18 | Flanders DC Kenniscentrum 9
  • 23-4-2012 What are the benefits of providing solutions? 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 adoption19 | Flanders DC Kenniscentrum How solution- minded is Flanders? 20 Flanders DC Kenniscentrum 10
  • 23-4-2012 Importance of solutions Sample description 23,60% 38,90% 0-50 50-500 37,50% > 50021 | Flanders DC Kenniscentrum Importance of solutions To what extent is offering solutions an item on the agenda of your company? 1% 7% 7% 3% 6% 13% 31% 11% 21% 1% 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? 3% 11% 11% 8% 14% 29% 15% 3% 4% 1% Not developed at all 2 3 4 5 6 7 8 9 Reached maturity22 | Flanders DC Kenniscentrum 11
  • 23-4-2012 Importance of solutions23 | Flanders DC Kenniscentrum Importance of solutions24 | Flanders DC Kenniscentrum 12
  • 23-4-2012 The solution selling business model 25 Flanders DC Kenniscentrum The solution selling business model26 | Flanders DC Kenniscentrum 13
  • 23-4-2012 The solution selling business model27 | Flanders DC Kenniscentrum Moving towards solutions in 10 steps 28 Flanders DC Kenniscentrum 14
  • 23-4-2012 Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions29 Flanders DC Kenniscentrum More than paying lip service30 Flanders DC Kenniscentrum 15
  • 23-4-2012 “It took 3-4 years before everybody understood what we were trying to accomplish”31 Flanders DC Kenniscentrum Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions32 Flanders DC Kenniscentrum 16
  • 23-4-2012 Integrate or separate? Learn Forget Borrow33 Flanders DC Kenniscentrum Identifying burning Moving the platform Deciding on entire organizational company to structure solutions Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions34 Flanders DC Kenniscentrum 17
  • 23-4-201235 Flanders DC Kenniscentrum Identifying burning Moving the platform entire Deciding on company organizational towards structure solutions Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions36 Flanders DC Kenniscentrum 18
  • 23-4-2012 "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 Kenniscentrum © Vlerick Leuven Gent Management School Step 4: Segmentation of customers Need-based segmentation Customers with similar needs Focused approach Customers ready for: Longer-term engagement Sharing of information38 Flanders DC Kenniscentrum 19
  • 23-4-2012 Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions39 Flanders DC Kenniscentrum Step 5: Engage in lead projects 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 organization40 Flanders DC Kenniscentrum 20
  • 23-4-2012 Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions41 Flanders DC Kenniscentrum42 Flanders DC Kenniscentrum 21
  • 23-4-2012 Identifying burning platform Moving the Deciding on entire firm to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions 43 Flanders DC Kenniscentrum Step 7: Aligning the back end to support solution selling 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.44 | Flanders DC Kenniscentrum | 19-1-2010 | 22
  • 23-4-2012 Example of a Service Blueprint Customer Receive & Evaluate Customer Request declined Proposal Customer Customer Center Sales Engineer and multi- skilled account teams Collect & Analyze Yes Present Standard Discuss with Customer customer Proposal to Product(s) ? Requirements Customer No Solution architects or consultants Analyze and Create Analyze Special Order or Solution Request Proposal Commercial Marketing Input/Validation Product Company Engineering Technical Input/Validation No Yes Feasible Create Solution Analyze request ? Proposal Standard Production Line/Core service Standardised products or modules Supplier Input from Supplier/Partner Partnerships45 | Flanders DC Kenniscentrum | 19-1-2010 | Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions 46 Flanders DC Kenniscentrum 23
  • 23-4-2012 Step 8: Pulling it all together 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 solutions47 | Flanders DC Kenniscentrum | 19-1-2010 | AT&T’s Process Map for Measurements Example of Aligning Metrics Business Process Customer Need Internal Metric Reliability (40%) % Repair Call 30% Product Easy To Use (20%) % Calls for Help Features / Functions (40%) Functional Performance Test Knowledge (30%) Supervisor Observations 30% Sales % Proposal Made on Time Responsive (25%) Follow-Up (10%) % Follow Up Made Solution Delivery Interval Meets Needs (30%) Average Order Interval Quality 10% Installation % Repair Reports Does Not Break (25%) Installed When Promised (10%) % Installed On Due Date No Repeat Trouble (30%) % Repeat Reports 15% Repair Fixed Fast (25%) Average Speed Of Repair Kept Informed (10%) % Customers Informed Accuracy, No Surprise (45%) % Billing Inquiries 15% Billing Resolve On First Call (35%) % Resolved First Call Easy To Understand (10%) % Billing Inquiries Source: AT&T General Business Systems 48 Flanders DC Kenniscentrum 24
  • 23-4-2012 Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions49 Flanders DC Kenniscentrum Step 9: Performance Management Move towards Solutions Company factors Environment - R&D - Market growth - Operations - Competition Solution Effectiveness drivers - Finance - Consolidation - Marketing - Government - Product offering - Technology - Pricing - Random Shocks - Services - Channel Definers Shapers Exciters Enlighteners Controllers - Strategy Segmentation, Blueprints, Incentives, Solution structure Customer Company Value Coaching and Offerings Propositions results results IT,CRM,EDI,KPIs Implementation Diagnosis 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 Flanders DC Kenniscentrum 25
  • 23-4-2012 Set up a balance scorecard to prioritize HIGH Fix it. NOW. High five! Impact of the drivers on performance You can afford There are bigger to procrastinate fish to fry LOW LOW HIGH Current performance on the drivers51 | Flanders DC Kenniscentrum | XX-XX-20XX | Identifying burning Moving the platform entire Deciding on company to organizational solutions structure Developing and Performance reinforcing a management customer- centric mindset Aligning the back end and Segmentation pulling it all of customers together Systematic Engaging in development first projects of front end Developing with lead and project adequate customers teams value propositions 52 Flanders DC Kenniscentrum 26
  • 23-4-2012 Step 10: Moving the entire company towards providing solutions 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 53 | Flanders DC Kenniscentrum | 19-1-2010 | “The journey of a thousand miles begins with a single step” Ancient Asian Proverb 54 | Flanders DC Kenniscentrum| 19-1-2010 | 27
  • 23-4-2012 Conclusion 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 partnerships55 | Flanders DC Kenniscentrum | 19-1-2010 | Caroline Baert 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: Caroline.Baert@vlerick.com56 | Flanders DC Kenniscentrum | 19-1-2010 | 28
  • 23-4-2012 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 Contact me: Marion.Debruyne@vlerick.com For anything related to the strategic side of innovation and the innovative side of strategy Follow me: MarionDebruyne Flanders DC Kenniscentrum © Vlerick Leuven Gent Management School Deva Rangarajan 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: deva.rangarajan@vlerick.com58 | Flanders DC Kenniscentrum | 19-1-2010 | 29