Situation—Two Interdependent Companies Each Constrained by the Other’s Strategy
A Fortune 100 company found its ability to scale in a critical technical area was constrained because its software partner could not keep up with the demands associated with its custom software product. As a result, the broadcaster wanted to move to a commercial off-the-shelf (COTS) product, which would reduce software maintenance costs. The software partner also aimed to get out of the custom software business and transition into a product-based company, but they were constrained by cash flow and depended on revenue from their custom products. Both companies had the same goal, but couldn’t find the path to reach it.
Solution—A Synaptic-Shift in Thinking Fosters a Win-Win Solution
Using the Synaptic methodology, the client, with Capto’s guidance, was able craft a deal and develop a set of financial incentives that allowed both parties to achieve their strategic objectives. The broadcaster consolidated its spending in certain areas and channeled the savings to its software partner through changes in software licensing model. The broadcaster also took some of the partner’s work back in-house. These actions stabilized the software partner financially and freed up the resources it needed to move to the new business model. The broadcaster also provided advisory assistance in the development of the new product. In return, the broadcaster was able to meet its short-term demand requirements, decreased the risk associated with partnering with a small vendor, and effected a strategy that put them on a path to achieve their long-term goal of moving to a COTS product, one that was designed with their input.
By changing their way of thinking—what we call “the Synaptic Shift”—and focusing on the root cause of the problem both parties reached a win-win.