Monday, February 7, 2011

Using Systems Thinking in Bundling Products and Services


By David Rosenbaum

MIT System Design and Management (SDM) student Aravind Ratnam constantly looks for connections and bundles.

Ratnam believes in connecting products and services—as well as products and products—to make offerings more attractive to customers. "Restricting your strategy to selling one-offs is both myopic and obtuse" Ratnam says bluntly. "You can add more value bundling as a package. Look at the telecommunications industry, adding service on top of service. This is basic consumer psychology: the more complete your package, the more attractive your value proposition."

Ratnam observed this effect at an entirely new level during his stint in high fashion retail: luxury is not about just the clothes and accoutrements themselves, but also about the refined in-store experience provided by the ambience and the discerning sales force. "It's all about getting the fine details right," Ratnam observes.

SDM's focus on multidisciplinary systems thinking stimulates the ability to perceive these connections. Ratnam came to SDM because as he progressed from roles in laser science to strategic account management at Cymer Inc., which makes powerful UV lasers, he saw holes in the business side of his own education. He would come up with whiz bang technical solutions to problems, but ones that often did not speak to the company's business leaders.

"As engineers, it's easy for us to get siloed within the aura of all the cool stuff we create," Ratnam said. "However, engineering doesn't have marketing's customer focus, and marketing doesn't have engineering's product excellence focus. Each group thinks that they know best and end up blaming each other when business is down. The sad part is that both are on the same team.

"At the end of the day, it doesn't matter how good your product is if you can't sell it," he continues. "The way to do it is to be open about the technical side of the product (its strengths and weaknesses) and work closely with your customer, while being authentic in your sales and marketing. In doing so, you offer a personal package that your competitors cannot match. In this day and age where you're typically one of the many players in the market, signature is everything. Without uniqueness, your product doesn't exist since there is no personality—customers buy from people, not from nobodies," Ratnam says.

SDM has taught Ratnam to see his deep technical expertise in a broader context as he applies the finishing touches on his management and systems thinking skills. Ratnam's career goal is to excel in designing and managing technologically complex products, while nurturing his innate creativity and flair for self-expression. It has also taught him how to penetrate the psychological dance of negotiating and given him the soft skills necessary to lead teams, not to mention recognizing the importance of making connections.

Applying his systems thinking skills, Ratnam is helping develop unified strategies for sustainability for the Azores, as part of the Azores program. Using Prof. Ed Crawley's decision support tools, Ratnam is finding optimal ways to connect Azorean resources to architect sustainable systems to improve Azorean life. "This isn't exactly my core competency, but that doesn't matter" he remarks. "I have now been trained in how to think more broadly. Now it is just a matter of putting all those connections together."

Ratnam graduates from SDM later this year and is looking for all these connections in a career that will allow him to use the end-to-end management tools that he has gained at MIT/Sloan within SDM and grow as a leader in a role that is "unquestionably global."

As Meyer Wolfsheim told Gatsby in "The Great Gatsby," life is all about "gonnections."

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