Monday, May 21, 2007

For solutions providers, Account Management is king

Every product company wants to sell solutions. Packaging products with useful complementary services can elevate a firm above commodity-provider status and provide more value to customers. Customized solutions also are more difficult for competitors to replace than standalone products.

Moving to a solution focus is not easy to do, of course. Ranjay Gulati of Northwestern University takes up the issue in his article, "Silo Busting: How to Execute on the Promise of Customer Focus" (link - $$), in the May Harvard Business Review. Prof. Gulati focuses on issues that most large product companies face when trying to move to a solution orientation--specifically, that solutions typically span multiple groups (or "silos"). Selling and delivering a coordinated solution requires close cooperation between those groups--an unnatural act in most large companies.

What most struck me was his observation that customers worry because the account managers they are assigned don't have the clout to influence the groups contributing to these integrated solutions. And this worry is not misplaced: my experience with large companies indicates that only very senior people can drive coordination among separate business units that manage their own P&L. Writes Gulati of one company that succeeded in selling solutions across division boundaries:

The account management group was staffed with high-ranking officers who had the authority to negotiate the pricing and delivery of [its] solutions, and the experience to help clients with strategic planning.

Dedicating senior people to a strategic account management role is a large investment for companies. But if you want to move from a product focus to an integrated solution focus, it's one you have to make.

(Photo: "Silo2" by saulinis via stock.xchng)


Glenn Gow said...

John, nicely said.

The reason every product company wants to sell solutions is that every enterprise client wants to buy a solution to a business problem, not component parts that just might – maybe – provide a solution (until it breaks).

I agree with Ranjay that it takes senior executive commitment. However, we have found that the coordination needs to occur not so much within account management, but much more in product development and marketing.

Silos need to be broken down to coordinate the development of multiple products (or product lines) into a solution. But who gets to say what a solution is? It’s a combination of sales and marketing. Sales needs to have input so they can commit to selling it.

Marketing, ultimately, has to own solution definition and solution marketing. Senior execs need to defend and sponsor this approach or the silos will go back to being independent non-solutions in search of a problem.