Wednesday, May 15, 2013

Solution Marketing -- Ensuring 1+1 > 2 (Part II)

In part one the solution model was introduced.  In part two the basic fundamentals are discussed.  The focus here on "solution" is when a company is trying to leverage more than one product to create a sustainable competitive advantage against companies with either one of the products or both of the products. 

For discussion purposed the model for a product is defined in the figure below.

H (x) is the transfer function of the product.  I(x) and O(x) are the inputs and outputs of the product.  The inputs are acted upon by the transfer function to produce the outputs.   M(x) is the management interface to the product.

It is imperative that you never underestimate the value of M.  Management or the larger ongoing operations of a product is a large continuous expense (OPEX).   It’s a dominant part of the total cost of ownership metric that is widely discussed.   Operations are embedded in the organization.  The personnel responsible for the management may not even be the people who use the actual product.  Product managers and solution managers must be cognizant of how the customer uses the product, deploys the product and manages the product.  

The solution model below is comprised of two products P1 and P2.  

The goal is to create and market a "solution" S1.  The follow is an introduction to the process. 

1.       Do not [start] create a solution where S1 < P1 + P2
a.       In other words, if you are creating a solution make sure you nail 100 % of each product in the first generation.
                                                               i.      Even table stakes
b.      Customer expectations and knowledge are based on the entire product details of P1 and P2. 

2.       Do not insert P3 between P1 and P2

3.       Ensure M’ =or > M1 + M2


Now the real challenge, real value and real competitive advantage arise.   Once the transfer functions H1 and H2 are fully understood the next step is to optimize and reduce the sum of them.   H2’(x) < H1(x) + H2(x).   The feature set and functionality is only reduced if it is determined that there are functions that are not required.  

For example:

H1(x) = A + B = C and H2(x) = C x D = E [Output 2]

Then H2(x) = (A+B) x D = E

The interim value of C does not need to be calculated and acted upon.   This overly simple example illustrates how the combination of two transfer functions can be reduced to add value.  Some higher tech examples include:

1.       Less die space on a silicon chip
2.       Faster execution of software functions


1.       Since the interface of O1 and I2 are embedded in the solution they need not comply with standards.
a.       Over time you can optimize this interface since it’s internal to the solution.

2.       M’ can also be evolved to optimize M1+M2 and to add solution-centric enhancements.

    This post begins to articulate how companies can gain a sustainable competitive advantage by creating a real solution.

Contact me if you'd like to learn more.

Greg Whelan
+978 992 2203

No comments:

Post a Comment