Integrated product and service solutions often do not deliver the desired results since solutions involve joint coproduction between suppliers and customers. This leads to shifts in relational habits and task responsibilities and may cause tensions. These slides cover governance mechanisms that can solve such solution challenges.

1. Dynamic Governance Matching
in Solution Development
How B2B companies create new relationship rules to address solution-specific tensions
From: Colm, Ordanini, and Bornemann (2020)

2. The Nature of Solutions and Marketing Challenges
• What is a solution? Integration of product and service content to satisfy customer needs
• Rolls-Royce Power-by-the-Hour
• Michelin Fleet Solutions
• BASF Digital Farming Solutions
• Marketing challenges when selling solutions
• Solutions often do not deliver the desired results since solutions involve joint coproduction which leads
to shifts in relational habits and task responsibilities. This may cause tensions between suppliers and
customers:
• How can actors avoid opportunism threats that emerge from responsibility sharing and how can they prevent
information leakage during the exchange of critical resources?
• How do solution actors integrate their knowledge in the presence of potentially misaligned goals and incentives?
• How do established solution actors balance their proactivity with adaptation to deal with unpredictability?
From: Colm, Ordanini, and Bornemann (2020)

3. Governance Mechanisms to Solve Solution Challenges
• What is a governance mechanism? Tools, devices, and tactics available to managers to
regulate the conduct of an exchange relation and thus address solution-specific tensions
• Functions of governance mechanisms: Safeguarding actors from exchange hazards
(e.g., opportunism) and coordinating their behaviors
• Forms of governance mechanisms: Contractual forms regulate an exchange through
formal promises and obligations to perform future actions, while relational forms use
social processes embedded in repeated exchanges
• Governance matching: Use of multiple contractual and/or relational forms of governance
mechanisms to achieve safeguarding and/or coordination functions whose salience
changes across various solution development phases
From: Colm, Ordanini, and Bornemann (2020)

4. From: Colm, Ordanini, and Bornemann (2020)
Solution Development Phases, Associated Tensions,
and Governance Mechanisms
1. Experimentation Phase 2. Integration Phase 3. Evolution Phase
Phase
Characteristic(s)
• Supplier takes over tasks that the customer
previously performed
• Customer must provide information
• Supplier exhibits concurrent relationships with
customer’s competitors
• Single actors’ activities are instrumental
to achieving solution goals, and
strategic assets (e.g., tacit knowledge)
must be exchanged and integrated for
this purpose
• Future exchanges among solution
actors may be exposed to unforeseen
changes in upstream and/or
downstream market conditions
Tension(s)
• How can actors foster deeper cooperation while
safeguarding themselves from opportunism?
• How can customers’ reluctance due to risk of
information leakage to competitors be
addressed?
• How can the integration of knowledge
assets, which may generate exploitation
and dependence risks, be fostered?
• How can actors balance adaptive
routines to guarantee flexibility with
a proactive attitude to act in the
presence of partial information?
Governance
Mechanism(s)
• Physical colocation of assets (e.g., employees)
using temporary agreements that foster
preliminary collaboration episodes
• Collective initiatives/networking events
designed to build a non-competitive climate
among selected customers that are also
competitors in the value chain
• Generation of boundary objects that
reflect embedded knowledge (e.g., co-
developed machines) to establish
shared meaning
• Rights allocation agreements to
establish the ownership of jointly
developed outcomes
• Establishment of an executive liaison
champion, an organizational role that
ensures sufficient agency to take
proactive decisions and vision to
adapt to changing contexts
Note: Based on qualitative research examining 16 supplier-customer relationships