Solution business models: Transformation along four continua

• Industrial firms transforming toward solution business develop their business models along four continua.
• These are: customer embeddedness, offering integratedness, operational adaptiveness, and organizational networkedness.
• The transformation toward the solution business is rarely complete and varies greatly between different business contexts.
• Firms operating within ‘installed-based’ business logic can often make a gradual transition toward solutions.
• Firms operating within ‘input-to-process’ business logic are required to undergo more discontinuous strategic changes.

Using a business model perspective, we identify four continua that are of specific relevance for industrial firms transforming toward solution business models: customer embeddedness, offering integratedness, operational adaptiveness, and organizational networkedness. Using these continua, we explore the opportunities and challenges related to solution business model development in two different business logics that are of particular importance in an industrial context: ‘installed-base’ (IB) and ‘input-to-process’ (I2P). The paper draws on eight independent research projects, spanning an eleven-year period, involving a total of 52 multinational enterprises. The findings show that the nature and importance of the continua differ between the I2P and IB business logics. IB firms can almost naturally transition toward solutions, usually through increasing customer embeddedness and offering integratedness, and then by addressing issues around the other continua. For I2P firms, the changes needed are less transitional. Rather, they have to completely change their mental models and address the development needs on all continua simultaneously.