About the Author

Geoffrey Moore

Managing Director, TCG Advisors Venture Partner, Mohr Davidow Ventures

Geoffrey Moore is a best-selling author, a Managing Director at TCG Advisors and a venture partner at MDV.  More...

November 2008

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Product, System, Solution? Not Exactly.

Large engineering-driven product enterprises like Cisco, Intel, and Microsoft are all struggling these days with the competing demands of three business modelsproduct, system, and solution.  All three rose to economic prominence on the back of a core set of products that proliferated on the back of a killer app.  They all made their money, in other words, as products.  But now their customers are beating them up to step up to systems responsibility and integrate end-to-end the domains which today they have anchored as platforms around which complementers have filled in the cracks.  While this architecture works well during growth periods, because it is highly flexible and adaptable, it is too complicated and expensive to maintain during periods of stasis or retrenchment—hence the demand for systems that will absolve customers of this responsibility. 

At the same time, the sales and marketing forces in all three companies, with strong encouragement from investors and top management, are off trying to find and climb the next hill.  That effort requires a solution mentality.  New markets come into being because of unmet needs and unsolved problems.  Chasms are crossed, in other words, by solutions.  Only when the market wants to replicate those solutions at scale does it turn to the product form factor, which trades off the pleasures of customization for the reliability and cost reduction of standardization.

Unfortunately for both the current customers wanting systems, and the sales and marketing folks wanting solutions, the inertial vector of all three corporations is firmly directed toward products.  That is, despite the well-intended proclamations of all three executive teams, at the ground level engineers are organized by product, sales quotas are assigned and recognized by product, marketing budgets are allocated by product.  All of which leads to nightmares for the services function which is expected to perform superbly at all three levels concurrently.

All this poses the question, where do we go from here?  But before we get into that, I’d like to hear other people’s thoughts about this issue.



Is it not the inability of the product company to provide a solution that drives the rise in services in the main street phase of a product life cycle. The extreme form of this ultimately makes the end user realize it might just be simpler to buy the whole thing as a service in the first place next time around?

Lo-Ping Yeh

One impediment that does not receive the focus it needs when moving from products to systems to solutions is the need to re-skill the sales people. Selling products is mainly about features and functionality. Selling systems and solutions is more about consulting and requires more of a consultative sell. Companies that want to move from products to systems and solutions need to think about training their sales people or hiring new skills to consult about business problems and not about features and funtionalities. Solution selling also requires the sales person to penetrate a much higher level of decision maker at the customer. The combination of consultative selling and selling to C-levels can then become Core if this can differentiate the vendor.

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