Many managers in traditional product-oriented businesses are struggling to turn their companies into solutions-oriented ones, a strategy that is widely considered the route to success in the 21st century.1 An effective first step in this direction can be to establish corporate consultancies — consulting units whose main purpose is to provide solutions based on the traditional business’s products or expertise.2 That is why computer companies such as IBM are moving toward integrated information-technology solutions, telecom-equipment manufacturers such as Nokia are providing turnkey network solutions, and the train and signaling manufacturer Alstom is offering “train availability.”
To make the transition to a solutions business, companies must develop new capabilities in consulting, systems integration, operational services and financing.3 They need to change organizational structures, strategies for recruitment and skills development, and performance measures. For some (Xerox attempting to become a supplier of “document solutions”; Hewlett-Packard struggling to integrate its broad range of products into customer solutions), making the transition all at once is problematic.4
Corporate consultancies can be a better alternative. Under names such as Ericsson Consulting, Shell Global Solutions and AT&T Professional Services, traditional product businesses now offer value-adding professional services. Some have been so successful they have outgrown their product businesses, indicating that creating corporate consultancies may be a first step toward complete reorientation of the organization. The new IBM was built around IBM Global Services, in part a corporate consultancy, which during the 1990s built the world’s largest IT service operation. With the recent acquisition of PricewaterhouseCoopers Consulting, IBM is also one of the world’s largest business-consulting companies.
But even the intermediate step of corporate consulting presents daunting challenges. Three types stand out: the mission challenge, the identity challenge and the structure challenge. New research demonstrates that enterprises mastering those challenges not only strengthen their consultative component but also gain synergies with the product business. (See “About the Research.”)