The move towards service-based business models has been notable for a number of years, with companies like Rolls-Royce being among the pioneers, with their “Power by the Hour” model.  It’s a shift defined by a transition from buying a product to an outcome, which results in the consumer relationship becoming more of a collaborative quest to unlock value.

It’s a business model that has been especially hard hit by a Covid-19 pandemic in which so much activity has been curtailed.  New research explores the future of the business model and how service providers can learn from the pandemic and come out stronger.

The paper highlights how the pandemic exposed a couple of key shortcomings of the business model.  Customer relationships were typically anchored in customized solutions, which while it provides great service to each customer, also renders each solution largely non-transferrable between customers.  This was a problem when customers hit challenging times and scaled back activity significantly.

What’s more, the often complex solutions that were developed made it tricky to rapidly adapt to the changing circumstances wrought by the pandemic, thus making the kind of plug-and-play adaptions so sought after difficult to achieve.

Long-term prospects

The paper is at pains to point out that this should not mean that companies should abandon this business model as underlying factors, such as the rise in cloud computing, enables solutions-based business models in a growing number of sectors.

The experience of Covid should not be wasted, however, and it’s likely that companies will try to improve the resilience of their offering should other crises lie in wait.  For instance, the growing array of digital tools is likely to make solutions more technologically advanced so that real-time and remote responses to customer needs can be delivered.

It’s also likely that new organizational roles will come into being to help with the design and deployment of solutions.  A recent paper highlights the growth of customer success management as a dedicated field.  These professionals work closely with a range of functions, from business developers to key account managers, but their primary focus will always be on value delivery.

It’s a role that requires a unique skillset that combines technical, sales, and business advisory capabilities.  As such, the authors argue that it could eventually morph into something approaching an in-house management consultancy.

As with so much, it’s quite possible that Covid-19 has accelerated many of the trends that were already beginning to form, and the solutions-based business model will take on a more mature and sophisticated form in the years ahead.