Suppliers need to make a conscious choice to break with the past – aligning your organization to deliver business outcomes won’t happen on its own.
You would think that focusing your organization on achieving outcomes would be as fundamental as getting up in the morning. But it’s not. Here’s why.
Make, Sell, Ship . . . Repeat
Successful B2B models of the past were designed to optimize a supplier’s “push” of prepackaged products to customers with big, CapEx deals. Implicit in this model was a clear demarcation of responsibilities between supplier and customer. The supplier would make sure that the asset worked and it was up to the next in line, the customer, to make sure that the asset delivered the promised ROI.
The road to supplier profitability was paved with making more product, selling as many big deals as possible, and shipping / placing product at customer locations as fast as possible. The better a supplier was at make, sell, and ship; the more profitable the company. Since everything revolved around the asset, supplier differentiation took the form of more features, more bells, more whistles.
But a funny thing happened along the way, suppliers started to lose sight of the customer’s outcome and changing business needs. Why? Suppliers were so focused on make, sell, and ship that they became increasingly removed from the actual achievement of customer business outcomes. Yeah, suppliers hinted at delivering improved business outcomes by promising customer productivity in the sell sheets. However, sales people weren’t all that concerned with how well a customer operated the asset after they received their commission and engineers started to design what’s cool vs what can help solve a customer’s business need.
In my last post, The Case for Pursuing Outcomes, I describe how this historical approach is not working so well for some of the world’s top manufacturers. While the Tech Industry has experienced years of unprecedented growth, their organizations are optimized to deliver yesterday’s model and the model is sputtering. Which means that suppliers need to make a conscious choice to break with the past – aligning an organization to deliver business outcomes won’t happen on its own.
Changing Customer Organizations
Since the customer had to own, operate, and deliver the outcome, they had large, well established staff functions to drive productivity and they had training departments that could understand new features and deploy them internally. Most of those departments are gone now, as is the promise of improved outcomes that were promised when they purchased the latest and greatest set of features from your last product offer.
Unfortunately, a supplier’s customer-facing organization is not geared up to fill this customer need. Sales people are still ‘hunting’ for the next big deal, maintenance and support contracts are attached to the product sale with the objective of keeping the asset working, and engineers are focused on the next big feature, instead of optimizing the customer’s processes that deliver better customer outcomes.
To succeed in the future, suppliers will need to focus on developing vertical solutions and they’ll need to establish ‘customer success’ organizations – all aligned to delivering customer outcomes.
Delivering Company Outcomes
Are internal organizations any better at focusing on outcomes? Not really. The Make, Sell, and Ship model reaches all the way back into the supplier’s organization.
Company goals always revolve around the three basic business outcomes: increased revenue, reduced cost, and mitigated risk. Unfortunately, most organizations do a poor job of deploying these objectives. The division of labor is well defined and rarely do employees know how what they do on a daily basis contributes to company outcomes (6 Tactics for Achieving Your Strategic Plan for how to fix this).
It’s also an executive problem. In my role at TSIA, I often receive inquiries where members are looking for advice on that one magic metric they need to manage, or the latest and greatest scorecard metrics. Every executive is busy and wants simplicity and familiarity in their management process. However, while the outcome measures themselves don’t change, the business drivers change every year and there is no magic metric.
To succeed in the future, suppliers will need to make a conscious effort to deploy / connect everyone’s efforts to business outcomes, and align budget and incentives to the new strategic focus.
Breaking with the Past
The danger for many leaders is that aligning to business outcomes seems so simplistic that it results in a ‘blind spot’, ie a subject in whichu . But, when you assess your ‘system’ and what it was geared up to do and what it is not geared up to do, you’ll see a lot of inertia pulling you in the ‘make, sell, and ship’ direction. The change will require you to make a conscious effort to retool your organization to deliver outcomes for you and your customer.
In the next post in the series I’ll introduce you to Outcome Engineering, a framework to map the value you create for your customers.
About the series
- It’s All About the Outcome
- The case for pursuing outcomes
- Why it’s so difficult to align your organization
In future posts, I’ll be digging into engineering your outcomes with the following topics:
- The importance of having a framework around driving outcomes
- Engineering your outcomes
- New organizational capabilities required