You remember the term “economic boom,” don’t you? Well, will the boom ever resume?
experienced extraordinary demand for new products in the post-war
period of the 1950s and 1960s. We bought new cars, televisions and
household appliances. Our manufacturing economy boomed.
products weren’t enough. We needed new services. We needed financial
services to tend to our wealth and health care services to tend to our
health. So our services economy boomed in the 1970s, 1980s and beyond.
technology boom of the 1990s represented an impressive fusion of
products and services in many cases. It was an era of solutions. Just
think of IBM’s striking turnaround under Lou Gerstner or GE’s long
boom under Jack Welch.
But we’re not booming anymore. The
solutions era — just like the product and services eras that preceded
it — seems to have flat-lined. So what will drive the next stage of
value creation and enable suppliers to generate new growth?
I believe the answer lies in one simple word: guidance.
are starting to see intimations of the future all around. Our cars are
increasingly loaded with navigational guidance capabilities known as
GPS systems. Polar, a fast-growing maker of heart rate monitors for
athletes and exercisers, promises “graphic guidance” in its products.
Yesterday, I heard a commercial on the radio from Wells Fargo. “The
economy has thrown you a few curveballs and you need guidance,” it
stated in its outreach to small businesses.
How Cisco, SKF and RightNow Technologies have Confronted the Guidance Imperative
Indeed, the promise of reliable guidance is particularly resonant in a business to business context.
Systems, the $40 billion maker of networking systems and solutions,
represents a great example of this point. The company managed to
eclipse competitors by
thinking of itself not just as a technology company but a “leadership
consultancy.” John Chambers, the firm’s CEO, contends that the insights
Cisco has gained by networking its own business can now be shared with
its clients to help them drive growth. “We’re really talking about
business process change,” he says. “And since we have done it for
ourselves, we can show others how.”
Over more than a decade,
Cisco has actively promoted its ideas about how to leverage networks
for business success. It has underwritten ground-breaking research. It
has published extensively. And its executives, particularly Chambers,
have been visible proponents of network-driven business. Such efforts
help to set Cisco apart from other players in the networking sector
while opening up new markets -– such as telepresence and web
conferencing –- for the company to penetrate. The company’s thought
leadership positions it as a respected authority as opposed to simply
RightNow Technologies, a hosted CRM solution provider, currently is monitoring contact centers all over the globe in
a real-time fashion. Through its ‘SmartSense’ capability, it is able to
track a contact center’s service levels and customer satisfaction
scores, and report back to client executives on a continual basis. The
company even has patented algorithms that enable it to track the
‘emotional state’ of the client’s customer in the course of an
interaction (through an analysis of key words and language structure).
company can track application usage on a continuous basis, which opens
up new, higher-value strategy and business
discussions. They can rapidly flag problems, but they also can advise
their clients on how to generate business gains. RightNow’s Business
consultants can address key client executives with a wealth of
documented findings and analysis. This leads to highly engaging
conversations, opening the door to more extensive, valuable and loyal
a $4.4 billion maker and marketer of
bearings, seals and lubrication systems has introduced what it calls
the “documented solutions program” to sell high-value offerings. Sales
engineers now expertly demonstrate the “total cost of ownership”
associated with an SKF solution relative to the next best alternatives.
As a result, the company has increased cross-selling capabilities,
enabling sales people to increase close rates by 50-60%.
I find particularly intriguing in all these examples is the way that
such companies are bulking up their consultative capabilities and
establishing what I would call a “guidance premium.”
as PC manufacturers enhanced the perceived value of their offerings by
bringing “Intel Inside,” today’s B2B powerhouses are building superior
value and differentiating themselves by, in a sense, bringing “McKinsey
Inside.” They now offer impressive guidance. They act as analysts and
advisors, coaches and consultants.
The Consultative Front Office
It’s a moment of profound advances and process innovation in the front office. Consider:
- The C-Suite: It’s no longer the CEO’s job to just tell his
or her company’s story. Rather, the executive leader is now expected to
be the thought leader in chief. What are the key issues of the day?
What should one’s customers expect to happen next? What’s the future
look like? What perils lie ahead? How does the company’s strategy
connect to these trends? John Chambers now offers guidance to a vast
ecosystem of enterprises. They are looking to him for guidance into
what investments they should be making, what challenges they must
overcome and how they should organize their enterprises.
- Marketing. “The buyer’s cycle has become decoupled from the seller’s,” argue Barry Trailer and Jim Dickie in the Harvard Business Review.
As a result, buyers now initiate their buying process on their own.
Through Internet-based research, they now have access to white papers,
case studies, webinars, web sites and research reports. They also rely
on analysts and other third-party advisors. They have become smarter
and gained greater negotiating power. Given these patterns, marketing
must take the steps necessary to provide thought leadership and
decision-driving content early in a decision cycle. They must provide
guidance at the outset if they are to engage the prospect, influence
the decision making process and position their companies as the suppliers of choice.
- Sales. The term “consultative sales” first appeared in the
1980s. It isn’t new to say that sales people should act like
advisors or consultants to their customers. But too many solution
sellers have sought to simply listen and respond to a customer’s most
obvious “pain points” with their own solutions. They haven’t diligently
diagnosed the full scope and magnitude of their clients’ problems or
offered strategic guidance, as Jeff Thull contends they should. Nor have they concentrated on “decision facilitation,” as Sharon Drew Morgan contends they should. The game is changing. Now, Geoffrey Moore and his colleagues are advocating “provocation-based selling” approaches that provide “a new angle on the situation” instead of “aligning with a company’s prevailing outlook.”
- Service. Once thought of as a necessary evil for
product-oriented firms, it’s increasingly clear that service represents
the most stable and predictable revenue lines. As product companies
grow and mature, they tend to recognize the mounting importance of
service. Software titans such as SAP and Oracle now have greater
service and maintenance revenues than product license revenues.
Companies such as GE and IBM are now as well known for their services
as products. But to capitalize on these revenue streams (and even
identify new product sales opportunities), service professionals must
become the eyes and ears of their companies in the post-implementation
phase. They must identify new needs and concerns — and guide their
prospects to new levels of performance. For this reason, client
coaching and consulting services are increasingly essential to maximize
results and identify new possibilities.
This is a decisive moment in business. Companies are now
challenged to determine how they will invest to remain profitable and
competitive. Will they continue to concentrate on conventional product and service
investments and ignore the emerging third category of guidance? If so,
they will miss the chance to establish a guidance premium in the
Companies that do embrace this vision will
have to recognize that not all guidance is directly monetizable. In
other words, you may not get to charge your clients — directly — for
the thought leadership you create — key insights, resources and
content that guide them to a successful decision. You won’t be able to
bill your clients for the diagnostic and facilitative expertise of your
salesforce. However, other types of guidance — such as consulting,
maintenance, training and technical support — can be sold as distinct
offerings. In fact, they represent a clear, predictable revenue source.
But recognize, whether you charge for the
guidance you provide or not, it is all contributing to the value you
produce and capture in the marketplace. As I see it, guidance is the
element that will drive growth and differentiation, particularly in the
B2B arena, in the coming years.
While it may be a long time before another economic boom raises our
collective fortunes, enterprises that capitalize on the demand for
reliable guidance may be expected to experience their own impressive
boomlets.Count on it.
So we are all now confronting the guidance imperative. Reliable guidance is what buyers now want from sellers — whether or not they can express it. The question is: Who will capitalize on the moment?