Charting a Path Toward Integrated Solutions

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For both manufacturing companies and service firms, the basis of competition is shifting fast. Manufacturers are finding they must compete by selling services; service firms now have to provide products as well as services. The emerging battleground is known as “integrated solutions,” and it is where leading companies such as IBM, General Electric, Rolls-Royce and EDS already compete aggressively. Rolls-Royce provides airlines with “power by the hour,” selling engines along with the services to maintain and upgrade them over many years. Services provider EDS now manages and integrates different suppliers’ technologies and products as part of its business outsourcing solutions. However, the integrated solutions approach is not simply a matter of blending products and services. Customers are buying guaranteed solutions for trouble-free operations. So the key is to develop and deploy the right capabilities — and to structure the organization so these capabilities match customers’ needs. This article offers a blueprint for implementing integrated solutions, drawing on extensive research with such companies as Alstom Transport, Cable & Wireless, Thales, Ericsson and Atkins. The article highlights the importance of four prerequisite capabilities and shows the organization structures necessary for success — structures that are no longer bounded by product, service or geographic lines. The article then lays out three levels of organizational capability to chart the journey that integrated-solutions providers must take.

Andrew Davies is principal research fellow in the Innovation Studies Centre at the Tanaka Business School, Imperial College, London, United Kingdom. Tim Brady is deputy director of the Complex Product Systems Innovation Centre and Principal Research Fellow in the Centre for Research in Innovation Management, University of Brighton. Michael Hobday is director of the Complex Product Systems Innovation Centre in Science and Technology Policy Research at the University of Sussex and professor of innovation at the University of Brighton.

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