In business, the term “solutions” has a particular meaning. It refers to the results of conversational transactions wherein the needs and wants of a customer are identified and appropriate responses are made through a business (or multiple businesses) that satisfies those needs and wants for which the business is compensated. These appropriate responses are “solutions” in that in the moment they solve the problems of previously unmet needs and wants.
Conversational transactions between customers and business are conducted through a portal that connects “someone” having needs and wants with “something” that constitutes a solution. This concept of a portal is characterized in the diagram below as the overlap between what something and someone are not and what something and someone are. The relationships of solutions to customers are rarely anything to anyone. Instead, they are specific. While it is helpful to know what is not a viable solution and who is not a likely customer, at some point a match between someone and something must happen or the transactions will not be fruitful.
As a result, it is in the best interest of a business to know the needs and wants to which it will respond with solutions. To know them is to know the customer and to know the customer is to know the market. As we all know, businesses whose compensation is less than the cost of providing the solution are not in business for very long barring subsidization. Knowing what a solution costs is critical to business success. Along with this is the need to know what type of solution portfolio best fits a business given its culture.
Needs and wants are met by solutions of different types. For instance, if a person wants to improve the quality of their sound system they can upgrade their speakers with a new set and are satisfied with the difference they hear. In this case they are interested in a component solution. However, a person may want to make an even more substantial improvement in the sound quality by replacing all components with more advanced, integrated alternatives. In this instance, they are more interested in an equipment system solution. Some circumstances lead to an even more comprehensive approach. In building upon this example of a home entertainment system, a person may be designing and building a new home at which point it is no longer just a matter of the equipment system alone, but the layout of the space in which that system will be installed. In other words, their interests move toward a total solution.
Solutions are fractal in that depending upon the starting point, the continuum of component – system – total solution can be indexed along a scale of increasing complexity. Determining where on this complexity scale a company wants to be is critical for its strategy and organization design. As the diagram indicates, the connections through the portal vary in size depending on choice. A tendency toward component solutions places more focus on a portfolio of specific and relatively independent products and services that flow through a narrow, well-traveled pathway in the portal. The trade-off is a higher degree of similarity / commonality with the offerings of competitors; the portfolio is commoditized and competitive environment is head-to-head. A tendency toward total solutions opens the portfolio to include customized packages of integrated products and services. The pipeline between customer and business is enlarged with more opportunities. Attention must be given to the performance of the whole, which invites an entirely different type of challenge. But the pay-off comes in differentiation from competitors, which certainly carries an advantage in many circumstances.
Originally posted to New Media Explorer by Steve Bosserman on Monday, September 26, 2005