Develop Solutions: Identifying New Value-Creation Opportunities

Abstract

More than ever, organic growth is high on the agendas of chief executive officers. It is also largely known and accepted that growing the share of wallet at existing customers gives—all things being equal—a higher return on investment than many other investments for growth. Wallet-share growth at existing customers goes well beyond selling products or reaching new geographical markets through globalization. In the long term, growth essentially depends on customer-driven innovation. Recent research by academics, experts and business practitioners indicates that, in most cases, customer-driven organic growth comes from customer-specific services and integrated customer solutions. Until the publication of Kaj Storbacka and Risto Pennanen’s book, there was no comprehensive literature on customer solutions as a business. It is amply clear that Solution Business: Building a Platform for Organic Growth fills a big hole in a very thorough, professional manner. This book not only gives a holistic view of solution business but also focuses on the key element of success: capabilities. As the authors efficiently demonstrate, sales and industrial capabilities are crucial for optimizing premium pricing and minimizing the costs and risks inherent to solution business. Customization often leads to increased costs and lower margins while simultaneously making price premiums difficult to obtain. Storbacka and Pennanen address this matter in considerable analytical detail, showing that through sales and industrialization capabilities, we can achieve price premiums and reduce costs, respectively. They explain very effectively the critical stages and milestones—developing solutions, creating demand, selling solutions and delivering solutions. In the last section of the book, they focus on practical tools that allow companies to assess their performance when developing solutions, making money with solutions and evaluating the organization’s capabilities to sell and deliver integrated customer solutions. Integrated customer solutions are a game-changer for most companies.