Selling Solutions Isn’t Enough

B2B companies need to focus on helping each customer achieve better outcomes.

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The word solution needs to be retired from the business vocabulary. What was once a meaningful, buyer-defined term that meant “the answer to my specific problem” is now generic jargon that sellers have co-opted to mean “the bundle of products and services I want to sell you.”

Management guru Peter Drucker made this observation nearly a half-century ago, when he said that customers are always more interested in their outcome than in your solution. “What the customer buys and considers value is never a product,” Drucker wrote. “It is always utility, that is, what a product or service does for him.”1 In the business-to-business (B2B) environment, many companies have moved away from this truth. They develop products and services (often described as solutions) from an internal view, and they attempt to sell them to the widest possible customer base.

In this article, we describe how four companies have chosen to move away from selling solutions in favor of identifying and delivering outcomes that customers want. The companies are State Street, which manages investments for large institutional investors; Avnet, which supplies electronic and semiconductor components to technology manufacturers; a large U.S.-based manufacturer of building products; and a leading U.S.-based construction, engineering, and specialty service company for the power and process industries.

We’ve observed that B2B customers define their desired outcomes in widely different ways. Beyond the obvious financial metrics (such as revenue growth and profits), goals might include delivering a better experience to buyers, fostering a more vibrant internal culture, achieving efficiencies, or revamping the company’s reputation. In each case, the desired outcomes represent leading indicators of that customer’s future business performance.

Becoming an outcome-oriented B2B business isn’t easy. It involves going beyond the organization’s comfort zone as a technical problem-solver to engage in a more tailored form of collaboration with customers. Rather than relying on self-serving rhetoric to describe their solutions, providers need to better understand their customers’ specific challenges, objectives, operating practices, and competitive environment. Armed with these insights, the four companies discussed here assembled the relevant resources (both internally and through third parties) to create offerings that deliver value within a customer’s specific business context and culture. (See “About the Research.

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References

1. P. Drucker, “Management: Tasks, Responsibilities, Practices” (New York: HarperBusiness, 1993).

2. A. Klaassen, “Eduardo Conrado Talks About Motorola’s Move to Marry Marketing-IT,” Advertising Age, May 8, 2013.

3. For a basic description of Net Promoter Score, see Bain & Co., “Measuring Your Net Promoter Score.”

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Comments (7)
Pk Koduri
The question of value is even more convoluted in healthcare. How do you measure outcomes? Over what time period? How and what costs to capture? Do you capture outcomes on a per patient or population basis? We have been grappling with this monster for a long time but there is no clear path forward. Until then many device manufacturers will continue to push solutions with hard to capture outcomes. Some companies are trying but in a very narrow way by focusing on one chronic condition. Can it be scaled or is it a clever PR exercise to give cover for other high priced therapies where the outcomes may be hard to prove?
Manoj Mittal
I agree more and more B2B customers are moving towards an outcome based model , however business customers are still vary of bringing in their suppliers as trusted partners, who can collaborate and contribute through the entire journey of product or services commercialisation.

I think a mind-set change needs to happen at the customers end where-in they start treating there vendors as partners, aligned to a single objective.

Actually the other question also is how do you engage with business customers in an out come based model or basically how do you monetise the engagement model such that partners products and services are aligned to customers success, there by establishing a long term Win-Win RELATIONSHIP.

I think this model is still in it's infancy and shall mature as both customers and providers mature in terms of engagement models.
Hadi Taheri
The more the Products/Services-consumer relationship B2B=C in the supply chain becomes smaller and more integrated, The word solution needs can be retired.
1_B2B
2_B2C
3_B2B=C
JONATHAN KNOWLES
Hi Hakan
Thank you for the astute observation that a focus on outcomes necessarily involves a change in the focus of management and the types of information that are gathered.
Most importantly to my mind is a change in the approach to ROI - traditional approaches frame the issue in terms of the minimum improvement in business performance required to justify the investment (isn't that the whole purpose of the "goal seek" function in Excel?). An outcomes approach involves reversing this "left to right" approach to begin with the desired outcome (the "why" so to speak) and work backwards to the investment required to achieve it (the "how" so to speak).
JONATHAN KNOWLES
For readers interested in learning more about Hannah Grove's views on business and career management, below is the link to her recent interview with Business Insider:
https://www.businessinsider.com/state-street-cmo-hannah-grove-says-everyone-needs-to-be-the-ceo-of-theirown-brand-2018-8
Hakan Altintepe
Excellent research, and timely article, thank you. In a digital world, the outcome-based approach rests on two fundamental assumptions: you can measure business outcomes, and you can manage speed of delivery.  Traditional operating models are not equipped for these challenges, hence there is a tremendous need for management innovation during digital transformation.

For example, most organizations cannot measure the business outcomes of their technology investments, or articulate the management trade-offs between ROI vs. throughput, speed vs. cost, productivity vs. efficiency.  When these deficiencies are not addressed, traditional management reflexes start taking charge at the expense of business outcomes.
JONATHAN KNOWLES
For SMR readers who are interested in seeing some of the research data that informed aspects of this article, you can view a summary of our 2018 Q2 survey on B2B Customer Outcomes here:
https://type2consulting.com/wp-content/uploads/2018/08/CustomerOutcomes_2018Q2.pdf

The survey is still live and can be accessed from the home page of the Type 2 Consulting website (type2consulting.com).  We would welcome participation from SMR readers!