Situation—Two Interdependent Companies Each Constrained by the Other’s Strategy

A Fortune 100 found its ability to scale in a critical technical area was constrained because its software provider could not keep up with the demands associated with maintaining its custom software product. As a result, the Fortune 100 wanted to move to a commercial off-the-shelf (COTS) product, which would reduce software maintenance costs. At the time its small software provider, for its own strategic reasons, desired to change its business model, from developing bespoke solutions, to a COTS product provider, 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 Fortune 100 consolidated its spending in certain areas and channeled the savings to its software provider. The Fortune 100 also took some of the smaller firm’s work back in-house.

These actions stabilized the small software provider financially and freed up the resources it needed to move to the new business model and the Fortune 100 was able to influence the new product’s roadmap. In return, the Fortune 100 was able to meet its near-term demand, decreased the risk associated with partnering with a small provider, 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.