Less is more when a focused market selection boosts solution business growth
Author Heini Vassinen
Published on November 10th in categories Blog.
Transforming the business model from selling products to selling for instance service solutions requires firms to alter their current business models or to develop capabilities to manage parallel business models. The change should occur not only inside the firm, as also customers may need to adapt their processes and operations in order to be able to buy solutions and benefit from them in their own processes. However, not every customer is either capable or willing to do this, especially in case of complex life-cycle solutions.
Therefore we suggest that a solution business development should begin with focused market identification and prioritization. Transforming towards solution business may imply seeking new markets or, to be more specific, creating new definitions for the markets that go beyond the traditional market definitions, such as geography and customer segment. The key to unravel the growth opportunities and potential markets lies in increasing the granularity of market definitions, i.e. widening the scope for viewing markets from multiple perspectives. The potential markets for the solutions should be viewed from various viewpoints in order to explore growth opportunities and market readiness for the solutions.
When mapping out the desired market for the solutions, it should be done with an open mind and outside-in attitude, without losing focus of the characteristics of the solutions in question. This kind of approach enables designing markets where solution business could be especially successful in terms of growth and profitability. The market dimensions can consist of for instance position in the value chain, different types of actors in the value network, process phases to be impacted with solutions or customer needs related to the solution’s added value – e.g. customer pains related for instance to energy saving.
Kaleidoscoping these combined dimensions reveals the markets that offer growth with solutions and which can then be assessed for instance in terms of business potential, competition, marketness, potential for scalability and the firm’s clout to drive the markets. This kind of analysis provides insight to further prioritizing the market selection and to create market portfolios – e.g. which markets to focus on first (quick wins), or which markets require major market shaping actions in the long run (future markets). It also builds a foundation to plan the needed actions and investments for market development and provides pre-requisites to create profiles for customer types most likely to benefit from the solutions.
Applying a multi-dimensional view to the potential markets and narrowing down the market selection boosts more specific business planning and enables more robust target setting, as well as promotes more focused resource allocation in terms of sales, market shaping and solution development efforts. Instead of trying to sell the solutions to everyone, narrowing down the market selection and focusing the action points should enable faster market entry and accelerate commercialization of solutions and solution business growth. Thus, in this case the old proverb less is more is probably more true than ever.