Both of these advantages are essentially defensive in nature. Second, establishing deep and efficient service/solution relationships takes time and effort for both parties, thus creating switching costs for customers.

It enables a supplier to better understand and meet its customers’ needs. First, it provides a company with relational and informational advantages in terms of its customers.

The move to services/solutions has its benefits. So, companies are looking for salvation from product commoditization hell in “services” or, even better, “solutions.” Any product differentiation is quickly noted and matched by competitors. Many firms across industries are beginning to realize that they cannot maintain significant product differentiation. Moving from products to services might help but might not be enough This experience is becoming increasingly common as competitors replicate one another’s product value propositions more and more quickly. Your company strives to innovate and differentiate, but do you have a sneaking suspicion that your buyers see less and less meaningful differentiation between your offer and that of your competitors? Is your pricing power eroding? “Innovate! Innovate! Innovate!” It’s become a numbing mantra. “If I hear the call to ‘innovate’ one more time.”

Business models