The Role of Culture
as Businesses Shift from Products to Services/Solutions
Part 1: Key Challenges
May 2015
by Mike Byrnes, Managing Partner, and Ed Petrozelli, President & Managing Partner, The Insight Group
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The INSIGHT Group, DuPont and Arizona State University W.P. Carey School of Business conducted a study to understand the impact of cultural change on a product-focused company’s ability to integrate services/solutions into its business model. The vast majority of the companies participating in the in the study indicated that cultural was a top element in their company’s transition from product led to solution/ services led. In addition to 15 companies’ participation, the study involved reviewing academic material pertaining to infusing services and solutions into a product-oriented company’s business offerings, as well as culture change in organizations.
Early Transition
Companies that were early in their transition identified upper management and leadership’s willingness to support
the transition as a key challenge, particularly where the change wasn’t initiated top-down. “As companies progressed
in their transition, buy-in had to be achieved at an even higher level. “At this point, we need board-level support”.
This laid the foundation for justifying the substantial investments that the companies would have to make to
accelerate the service infusion, particularly in terms of acquiring the necessary new talent (whether pulled from
existing talent or hired externally) to support the changing landscape of the company.
Mid Transition
Companies that were mid-way into their transition continued to identify upper management’s willingness as a key challenge but additionally identified the willingness of line-level employees and sales staff to adapt as a key challenge.
Later Transition
Companies further along in the transition found it difficult to have the right employee capabilities in place and at the same time, to align the organization’s vision, processes and incentives. In many cases, they experienced extensive turnover.
Ten Key Challenges to Cultural Change were identified in the study, which were grouped into the four main categories illustrated in the below graphic
Key Challenges to Cultural Change
In part two of this article, we will further elaborate on the process of cultural change, with a focus on the 13 Critical Success Factors identified in the study.
Part 2: Key Success Factors
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If you would like more information on this topic, contact Mike Byrnes (mbyrnes@insight-group.com) or Ed Petrozelli (epetro@insight-group.com)
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Mike Byrnes is INSIGHT’s Strategic Account Management Practice Leader. He has consulted with a wide variety of organizations where he has assisted them in improving their global account management and revamping their services organization. He has over 35 years of experience in IT, sales, business strategy and management. Mike has been a speaker at the Strategic Account Management (SAMA) annual conference and led 2 joint studies with Arizona State University's Center for Services Leadership. More on Mike at INSIGHT |
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Ed Petrozelli is INSIGHT’s President & CEO, and is responsible for Business and Market Plan Development. Ed has led numerous consulting engagements with INSIGHT clients in the areas of strategy, go-to market plans, services initiatives, developing new business models, and global coverage structures. Prior to INSIGHT, Ed had a distinguished 30-year career with IBM where he served on the Senior Management Group and managed numerous Global business Units. Ed is a frequent speaker at industry events and he currently serves on the board of advisors of Arizona State University's Center for Services Leadership. More on Ed at INSIGHT |
The INSIGHT Group is a management consulting firm dedicated to assisting product-based companies implement high growth services and solutions business plans and strategies. We help clients design and execute broad transformational initiatives including go to market strategies as they extend their product portfolio to include delivering capabilities as a service. Our partners are experienced line executives with a proven track record of helping our clients transform from a product-focused company to services and solutions led company.
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