Let’s (not) get (too) physical, physical • 2
While the shift from products to services – often referred to as servitization – is far from new, it remains a powerful framework for manufacturing companies and digital-first startups looking to embrace customer-centric, service-dominant business models. In this blog post, I explore the Solutions Over Products strategy, one of seven ways to think services instead of products.
2. Solutions > Products
The Solutions Over Products strategy shifts the focus from merely making and selling products to delivering holistic solutions that address the broader needs of customers (based on Bau, 2006, 2010, 2011, 2015; Wirtz & Lovelock, 2016). This suggests that companies should not define themselves by the products they produce but by the outcomes their customers seek (see, e.g., Levitt, 1960). Achieving this may require a networked approach, fostering collaboration across organizational boundaries to combine complementary resources, expertise, and capabilities for mutual benefit – including partnerships with universities, suppliers, customers, and even competitors (Kanter, 1994).
Examples: From selling cameras to capturing memories. From selling cars to improving mobility. From selling fitness equipment to fostering wellness journeys. From selling printers to managing documentation.
This blog post explores three key shifts at the heart of the Solutions Over Products strategy – from minimum viable products to augmented solutions, from core products to service packages, and from one-size-fits-all to tailored solutions. It wraps up with a curated list of my favourite approaches and frameworks for achieving a strong problem-solution fit.
Shifting from minimum viable products to augmented solutions
Value propositions should account for the potential expansion and evolution of the customer offering over time.
The core benefit (big idea) represents the fundamental benefit or purpose the product serves, addressing the intrinsic need for which customers seek a solution.
Example: The Oura Ring provides personalized health insights by trcking sleep, activity, and readiness. The core benefit is about empowering users to make informed decisions that enhance their daily performance and overall wellness.
The basic product includes the minimum viable set of features necessary to deliver the core benefit.
Example: The basic product is the lightweight and discreet wearable, equipped with sensors for heart rate, temperature, and movement tracking.
The expected product comprises all the standards and features that customers typically expect when purchasing the product; these expectations are shaped by past experiences, customer reviews, advertising, competitor offerings, technological trends, regulations, etc.
Example: Features users expect from a premium wearable include accurate tracking of key health metrics; an intuitive mobile app with data visualization and daily reports; durable and waterproof design suitable for everyday wear; a rechargeable battery with a multi-day lifespan; and seamless syncing with other health apps and devices.
The augmented product includes additional features, services, and benefits that go beyond customer expectations and drive differentiation.
Example: Unique, differentiating features include automatic activity detection, sleep optimization insights, a readiness score, real-time stress monitoring, guided relaxation, personalized content, and the user community called Oura Circles.
The potential product encompasses future enhancements and transformations that the product might undergo to attract new customers or retain existing ones.
Example: Future enhancements and expansions may include AI-powered predictive analytics, integration with other health and wellness applications, collaborations with corporate wellness programs, and customization options to tailor appearance and functionality.
Models and frameworks that unpack customer offerings in this way include the Whole Product concept by Geoffrey Moore (1990) and the Five Levels of a Product by Philip Kotler (1994).
Note: While the concept of a minimum viable product (MVP) is fundamental to incremental and iterative product development, it should arguably be anchored in a clear and ambitious long-term vision for the product or business. This approach aligns well with the principle of Think Big, Start Small, Scale Fast (popularized in the innovation space by Carroll, 2010). For an insightful discussion on the concept of MVP, including misconceptions and practical applications, please see Kniberg (2016).
Shifting from core products to service packages
Value propositions should encompass the tangible and intangible elements of the offering that empower customers in their value creation process.
The core product defines the solution customers are buying and the principal benefits they seek (the ‘what’ and ‘why’). The core product may be tangible, intangible, or a hybrid of both. Similarly, the benefits it delivers may be tangible (financial), intangible (non-financial), or a combination of both.
Example: Peloton is a premium fitness brand. The core product is the fitness equipment (Peloton Bike or Treadmill) with access to the on-demand library of live and recorded classes led by world-class instructors (accessed through equipment touchscreens or the Peloton app). Benefits include physical fitness, health improvements, convenience, motivation, and positive reinforcement.
Wrapped around the core product, supplementary services add significant value by facilitating and enhancing the usage of the product or consumption of the service. Examples of facilitating services include solutions for customer support, payment processing, delivery, and installation. Examples of enhancing services encompass solutions for personalization, training, loyalty programs, and concierge services (to name but a few). Supplementary services play a critical role not only for improving the customer experience and differentiating the offering from competitors, but also for addressing the unique challenges of marketing and managing services (such as intangibility, heterogeneity, inseparability, perishability, co-creation, and timeliness).
Example: Peloton’s facilitating services include professional delivery and installation, financing options, subscription management, customer support, warranty and protection plans, and integration with health tracking tools. Enhancing services include training programs, tailored class recommendations, customized metrics, branded gear, community engagement, exclusive member events, and loyalty programs.
The processes required to deliver both the core product and the supplementary services are guided by pre-defined service attributes and measurable service standards, ensuring consistent levels of quality and productivity across all encounters in the end-to-end experience. Service attributes – such as reliability, accessibility, responsiveness, credibility, empathy, and security – serve as guiding principles or benchmarks for designing touchpoints that consistently meet or exceed customer expectations.
Example: Peloton’s white glove delivery includes professional delivery, assembly, setup, and a demo in customers’ homes, offering a seamless start-to-finish experience with added convenience, reassurance, and peace of mind. Key service attributes may include reliability (ensuring services are consistently dependable and error-free), empathy (demonstrating care and understanding during customer interactions), and responsiveness (promptly addressing customer needs and concerns).
Models and frameworks that encapsulate the tangible and intangible elements of a service offering include the Service Package by Christian Grönroos (1990), the Three-Component Model by Adrian Palmer (2011), and the Flower of Service by Wirtz and Lovelock (2016). Additionally, the SERVQUAL model by Parasuraman, Zeithami, and Berry (1988) serves as a valuable framework for identifying the key attributes most relevant to a specific experience.
Shifting from one-size-fit-all to tailored solutions
Value propositions should demonstrate how offerings are tailored to meet the specific needs and preferences of segments, entities, and individuals.
Approaches include:
Focusing efforts on serving specific customer segments or niches that mainstream, mass-market service providers often overlook. (Porter, 1980; Wirtz & Lovelock, 2016)
Examples: Focused service offerings include Code First Girls (free coding courses for women globally); Crunchyroll by Sony Pictures (anime-only streaming service); DeHaat (agri-tech solutions & services to the farming community in India); FedEx Custom Critical (expedited service for specialized, valuable, and hazardous shipments); and BMW Individual (bespoke and exclusive customizations of BMW vehicles).
Using tiered services models to address diverse customer requirements and varying price sensitivities in both B2B and B2C markets. Tiering can be applied across all dimensions of the customer offering – core products, supplementary services, and delivery processes. (Wirtz & Lovelock, 2016) This aligns with the concept of ‘flexible’ customer offerings – wrapping optional services around naked solutions – which, in turn, supports flexible pricing models (Anderson & Narus, 1995).
Examples: Spotify’s tiered subscription model (Free, Premium Individual, Premium Duo, Premium Family, Premium Student). Delta Air Lines’ tiered loyalty programs (Silver Medallion, Gold Medallion, Platinum Medallion, Diamond Medallion). Microsoft’s tiered support system (Standard Support, Professional Direct Support, Premier Support).
Encouraging active participation in the specification, creation, production, delivery, and marketing of customer solutions to facilitate deep customization and personalization. See my blog post Individualization > Standardization.
Dynamically adjusting offerings and delivery systems to respond to customer needs in real time. See my blog post Individualization > Standardization.
Ensuring a good problem–solution fit
To create solutions that truly resonate with customers, businesses must focus on understanding the problems customers are trying to solve and the outcomes they are striving to achieve.
Competing/complementary approaches to ensure a good problem-solution fit include:
Jobs to Be Done (JTBD). A framework for understanding (a) the functional, emotional, and social jobs customers are trying to accomplish, (b) the steps they take to achieve these jobs, and (c) the products, services, and tools they ‘hire’ to get the job done. Integral to the Outcome-Driven Innovation methodology, JTBD helps identify underserved or overserved needs and guides the development of solutions that address these gaps. (Ulwick, 2005)
Seeing products in motion. Thinking of products in terms of verbs rather than nouns can reveal unexpected problems or opportunities. This means shifting the focus from static objects, products, or spaces (what they are) to dynamic activities, processes, experiences, or outcomes (how they are used and what they enable). (Kelley, 2001) For example, reimagining a chair as ‘sitting,’ a water bottle as ‘drinking,’ a car as ‘driving,’ and a classroom as ‘learning’ opens up new possibilities for enhancing or rethinking end-to-end experiences.
Design thinking. A people-first mindset, methodology, and toolkit for identifying the right problems to solve and determining the best ways to solve them, based on the principles of divergence and convergence. The process typically involves the following phases (or variations thereof): Frame a Question, Gather Inspiration, Generate Ideas, Make Ideas Tangible, Test to Learn, and Share the Story. (IDEO U, 2024; Design Council, 2007; Brown, 2008) See also my blog post Lean & mean innovation machine • 2.
Value Proposition Design. A framework for creating alignment between the Value Map, which represents what the business offers (core offerings, pain relievers, gain creators), and the Customer Profile, which represents what the customer needs (jobs, pains, gains). This approach ensures the customer offering directly addresses customer needs, resolves pain points, and delivers added value. (Osterwalder et al., 2014)
Customer Development. A methodology for building and scaling startups based on four iterative steps. Customer Discovery: Identifying and validating a significant problem that customers are willing to pay to solve. Customer Validation: Ensuring the proposed solution effectively addresses the problem and customers are willing to pay for it, ideally by developing and testing a minimum viable product (MVP). Customer Creation: Generating demand for the validated product through targeted marketing and outreach. Company Building: Transitioning from a discovery-focused startup to a scalable business with established processes and teams. (Blank, 2005) See also my blog post Lean & mean innovation machine • 2.
Other interesting approaches include Blue Ocean Strategy (Kim & Mauborgne, 2005), Solution Selling (Eades, 2003), Mass Customization (Pine, 1993), and One-to-One Marketing (Peppers & Rogers, 1993).
Benefits:
Addresses the specific requirements, expectations, and price sensitivities of various segments, entities, and individuals
Aligns offerings with customer priorities, ensuring solutions feel meaningful and valuable
Offers richer and more engaging customer experiences by combining tangible and intangible elements
Ensures consistency across all encounters with the brand or service
Sets realistic customer expectations, reducing the gap between expected and perceived service
Fosters customer trust, satisfaction, and loyalty
Builds strong, lasting relationships, enhancing NPS and CLV
Drives brand differentiation in crowded markets
Supports flexible pricing strategies
Facilitates upselling and cross-selling
Creates potential for new and recurring revenue streams
Encourages innovation in value creation, value co-creation, and value facilitation (see my blog post Get the balance right! • 2)
See also:
Access > Ownership
Individualization > Standardization
Experiences > Transactions
The Individualization Over Standardization strategy will be covered in the next blog post.
References
Anderson, J.C., & Narus, J.A. (1995). Capturing the value of supplementary services. Harvard Business Review, 73(1), 75-83.
Bau, R. (2006). Design av tjänster och upplevelser [Design for services and experiences]. Part of Executive education in Design Management [unpublished training material]. Berghs School of Communication.
Bau, R. (2010, December). Ten strategy paradoxes in service Innovation and design. Paper presented at ServDes 2010 (Service Design and Innovation Conference), Linköping, Sweden.
Bau, R. (2011, December). Strategy paradoxes in service innovation and design. In: Cai et al. (Eds.), Design Management: Toward a new era of innovation. Proceedings from the 2011 Tsinghua-DMI International Design Management Symposium, Hong Kong, China. IDMA.
Bau, R. (2015). Thinking services instead of products. In: Service Design Boot Camp, Day 1 [unpublished training material]. Veryday.
Blank, S. (2005). The four steps to the epiphany: Successful strategies for products that win. K&S Ranch.
Brown, T. (2008, June). Design thinking. Harvard Business Review, 86(6), 84–92.
Carroll, J. (2010, May). Innovation: Think big, start small, scale fast. Jim Carroll.
Design Council. (2007). Eleven lessons: Managing design in eleven global brands. Desk research report. Design Council, UK.
Eades, K. M. (2003). The new solution selling: The revolutionary sales process that is changing the way people sell. McGraw-Hill Education.
Grönroos, C. (1990). Service management and marketing: Managing the moments of truth in service competition. Lexington Books.
IDEO U. (2024). Design thinking.
Kanter, R.M. (1994). Collaborative advantage: The art of alliances. Harvard Business Review, 72(4), 96-108.
Kelley, T. (2001). The art of innovation: Lessons in creativity from IDEO, America’s leading design firm. Currency/Doubleday.
Kim, W.C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Harvard Business School Press.
Kniberg, H. (2016, January). Making sense of MVP (Minimum Viable Product) – and why I prefer Earliest Testable/Usable/Lovable. Crisp.
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Levitt, T. (1960). Marketing myopia. Harvard Business Review, 38(4), 45-56.
Moore, G. A. (1991). Crossing the chasm: Marketing and selling high-tech products to mainstream customers. HarperBusiness.
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design: How to create products and services customers want. Wiley.
Palmer, A. (2011). Principles of services marketing (6th ed.). McGraw-Hill Education.
Parasuraman, A., Zeithaml, V.A., & Berry, L.L. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12-40.
Peppers, D., & Rogers, M. (1993). The one to one future: Building relationships one customer at a time. Currency Doubleday.
Pine, B.J. (1993). Mass customization: The new frontier in business competition. Harvard Business School Press.
Porter, M.E. (1980). Competitive strategy: Techniques for analyzing Industries and competitors. Free Press.
Ulwick, T. (2005). What customers want: Using Outcome-Driven Innovation to create breakthrough products and services. McGraw-Hill.
Wirtz, J. & Lovelock, C. (2016). Services marketing: People, technology, strategy (8th ed.). World Scientific Publishing.
