The Digital Product Pivot: Rethinking Go-To-Market for a Connected Future

Growing up in the 90’s as a kid I have fond memories of how tangible everything felt. From the satisfying click of inserting a VHS tape into the VCR to the weight of a bulky Gameboy in my hands, products weren’t just tools – they were physical experiences. I remember the first time I held a chunky Nokia phone with the monster-sized keypads, or the penetrating sounds of a dial-up modem connecting to the internet and the thrill of searching in a book at the library to find answers, long before Google was a verb.

But somewhere along the way, the world became fully digital. Music no longer came in perfectly wrapped plastic cases; it streams invisibly all around us. Books and encyclopedias became infinite search bars. Video games left cartridges behind for online cloud libraries. And products that once lived solely in the physical world now exist in an ecosystem of software, data and connectivity. This transformation is not just happening in entertainment and consumer tech – it is reshaping industries across the board. Whether it is robotics in healthcare, AI-driven manufacturing, or software-powered industrial equipment, companies built on physical products must now embrace digital portfolios to stay competitive.

The value proposition of integrated solutions and portfolios is insightful: they extend the lifecycle of durable goods when paired with digital solutions, ensuring customers don’t have to purchase entirely new models but instead receive software updates. This not only accelerates the adoption of cutting-edge innovation but also strengthens long-term relationships between companies and their customers. The shift towards integrated solutions means businesses can continuously enhance their offerings, improving functions over time rather than relying on the normal cycles of hardware replacement. The digital evolution transforms how industries operate, driving sustained value and engagement through a balanced mix of physical and digital advancements.

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How do businesses successfully make this leap?

The transition from selling traditional material products to offering digital or software-based solutions is more than just an operational shift – it is a complete transformation of business models, customer engagement strategies, and internal processes. Companies that once focused solely on manufacturing and distribution now find themselves navigating a world of data-driven decision-making, software integrations, and continuous service delivery to customers.

A common first step in this evolution is expanding the portfolio from hard goods to a combination of hard goods + digital solutions This typically happens when companies recognize that customer expectations are shifting and pressure from competition is demanding products to improve. The timing for expansion is triggered by one or more factors:

• Market Maturity & Competitive Threats – As more industries digitize, companies face pressure from digital-native competitors. Traditional organizations begin adding digital capabilities when they see a risk of losing market share.
• Shifts in Customer Demand – Customers increasingly expect connected products that provide real-time information, or automated features. Companies can respond by embedding software solutions into existing products.
• New Revenue Opportunities – Many organizations that sell hard goods struggle with consistent revenue from sales and often look for recurring revenue from digital solutions like subscription models or ways to monetize data.
• Technology Readiness & Long-term Infrastructure Investment – Some companies try and wait for the right time before integrating digital solutions until computing power or certain AI technologies have developed enough to align with their vision.

Companies that successfully navigate the timing for digital transition closely monitor market indications, assess their own teams internal readiness and look to start small – gradually testing out and layering digital offerings onto existing products before fully committing to one specific digital solution.

We will explore the challenges and opportunities that come with taking bold steps toward change. By highlighting companies that have embraced this transition head-on – some thriving and others facing ongoing struggles – we can see how businesses are navigating similar challenges and making big bets to better serve their customers.

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1. Differences Between Material Products and Digital Solutions

One of the most significant shifts companies must navigate is the difference in how material products and digital solutions are developed, sold, and maintained.

• Tangibility and Production: Traditional material products require manufacturing, inventory management, and logistics, whereas digital solutions focus on software development, cloud hosting and seamless technical integrations.
• Value Proposition: Material products are valued based on their physical attributes and durability, while digital solutions derive their value from connectivity, automation, and continuous user experience.

This shift is most evident every time someone steps into a car. The automotive industry, within our lifetimes, has undergone a fundamental transformation. Historically, manufacturers competed primarily on mechanical excellence, ensuring vehicles could last for decades or go from 0-60 mph in the blink of an eye leveraging their superior engineering and fuel efficiency. However, this landscape has shifted dramatically due to rapid technological advancements and shifts in what consumers have for expectations.

The rise of electric vehicles has disrupted traditional powertrain dominance, forcing traditional automakers to rethink everything from production, supply chains and sustainability initiatives. Companies that once specialized in combustion engines are now sprinting to develop battery technology, charging infrastructure and supporting software to manage all the connected systems. At the same time, self-driving technology and cruise control features are redefining what it means to be behind the wheel. The rise of information systems, AI-powered voice assistance, and personalized driver profiles has turned vehicles into personalized computers that integrate with our digital lives. These innovations have fundamentally changed how automakers compete, collaborate, and operate.

While legacy automakers like Toyota and Volkswagen continue to prioritize hardware, companies like Tesla have made big bets to help push the industry forward by integrating software. Tesla’s ability to provide wireless updates, subscription-based features, handsfree driving capabilities, highlight the growing importance of digital solutions in a once hardware-centric market.[1] This is not a case of one replacing the other, but instead, the future of the automotive industry lies in the convergence of both mechanical excellence and digital innovation. This dual transformation – where traditional automakers embrace software and software companies refine their hardware – highlights a broader shift. The competitive edge is no longer about how well a car is built, but also how intelligently it adapts, integrates and evolves over time.

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2. Challenges Around Business Models, Pricing, Sales and Service

Transitioning to digital solutions isn’t about a group of executives simply making the decisions to add software to an existing product – it requires an entirely new way of thinking about revenue, pricing and service models.

• From One-Time Sales to Subscriptions: Many companies that typically sell hardware in a single transaction must now shift to subscription-based models (e.g., SaaS, GE Healthcare Imaging as a Service).
• Monetization Strategy: Unlike material products with fixed manufacturing costs, software pricing must factor in ongoing updates, data analytics, and any ongoing hosting fees to ensure long-term scale. This requires a consultative sales approach, where teams educate customers on long-term value.
• Service Expectations: With digital solutions, companies need to provide continuous customer support, software patches, and feature updates – moving from a reactive service model to a proactive, ongoing engagement strategy.

An industry that continues to evolve post-COVID across business models, pricing, sales, and service is healthcare. Traditionally, advanced medical imaging equipment—such as X-ray machines and MRI scanners—was sold as a one-time expense, with companies like GE Healthcare manufacturing the hardware and generating only limited additional revenue through maintenance or occasional upgrades.

However, GE Healthcare has repositioned itself by integrating software and subscription-based services into its imaging equipment, much like Tesla has done in the automotive space. Through these digital capabilities, hospitals can now receive continuous software updates, more advanced imaging features, and on-device AI solutions that help to detect potential health issues that might otherwise be overlooked. By shifting to a more software-driven approach, GE Healthcare ensures that hospitals have access to the most up-to-date diagnostic technology—ultimately leading to better patient outcomes and saving lives through innovation.[2]

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3. Impact on Internal Teams, Operations, and Customer Expectations

People are the machine driving the why behind any change initiatives and they do not go unaffected. Shifting to digital solutions does not just impact what a company sells – it fundamentally changes how teams work, how operations run, and what customers expect.

• Internal Teams Must Adapt: Businesses must hire or train employees in software development, data analytics, and digital marketing, as traditional skill sets often don’t translate directly to the digital environment.
• Operational Shifts: Manufacturing cycles are typically linear, while software development is iterative, requiring a shift to be more responsive. Operating models evolve to support changing supply chain and lifecycle management.
• Organizational Identity: For companies whose identities and brands have been built on the quality of their products, craftsmanship, etc., shifting the makeup of their portfolio can feel like an identity crisis (“this is not who we are”) unless leaders and team members are lead through the shift effectively.

Sonos built its early reputation as a leading wireless speaker brand, known for delivering high-quality audio with no issues when it came to connecting your phone or Spotify playlists. However, as the company evolved, it shifted toward positioning itself as a technology company, emphasizing the integration of software and app-based controls to enhance the user experience. Despite this strategic pivot, the transition was not without challenges. Customers began experiencing technical glitches, degraded app performance, and sound quality issues once the software and hardware became integrated. These frustrations damaged the brand's reputation, leading to widespread user dissatisfaction. The backlash ultimately contributed to CEO Patrick Spence stepping down, as the company struggled to regain consumer trust[3]. This example highlights the critical importance of aligning digital transformation efforts across product, operations, and customer experience—a misalignment can erode trust, disrupt internal teams, and create long-term business challenges.

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The Transformation Moment: How a Product Portfolio Evolves

Integrating digital solutions into a traditional product portfolio is not something that an executive team can expect to turn on overnight. This long-term strategic vision is something that requires a staged transformation requiring buy-in from every member of the organization. This effort will require a shift in company culture and will reshape how companies think about product development, customer engagement and revenue models. This evolution can be thought about in three major phases.

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Phase 1: Recognizing the Need for Change

The first step in any transformative journey is to ask the question, “Who do you want to become?”. This requires a leader and an organization to put their heads down and truly unlock their identity for the future. In this specific example, an organization has decided that there needs to be a shift from hardware-driven products to software integrated solutions. Some external factors that could drive leaders to make this shift include:

• Shifts in the market - As industries continue to digitize, customers will expect more from their products –online connection, continuous improvements from the software and automation. Companies that fail to adapt will risk going out of business.
• Competitive pressure - Legacy companies must compete with digital disruptors that are bringing cost-effective options to the market. In automative we already highlighted how Tesla’s software model has twisted the arms of traditional automakers to rethink their approach or risk losing significant market share.
• Customer demand - Businesses no longer just sell products; they are selling experiences. Consumers expect personalized, continuously improving services, which are often now delivered as a subscription.

Leadership is critical in escorting a company through redefining their vision for digital transformation. As the leaders look to make lasting change, the message culturally needs to move away from “We build product” to “We deliver solutions”. For a company to successfully adopt this new mantra it will require cross-functional buy-in from key stakeholders across engineering, sales, customer service, operations and enabling functions. As the company mindset shifts so will who they target to invest in from a talent and infrastructure perspective. Shifting from hardware to software requires hiring developers, investing in cloud infrastructure and rethinking legacy IT systems.

Adobe is a prime example of a company that successfully redefined its market position by shifting from a product-based approach to a solutions-driven model. Originally, Adobe operated under a one-time licensing model, where customers purchased software like Photoshop, Illustrator, InDesign, or Acrobat outright. While this model provided steady revenue for years, it did not scale, nor did it provide continuous value to customers as technology evolved. Recognizing the need for change, Adobe embraced the "We deliver solutions" mindset by transitioning to a cloud-based subscription model—Adobe Creative Cloud.

This shift allowed customers to access new software updates, access their information from multiple devices, and receive 24-hour support. By focusing on long-term customer relationships and continuous value delivery, Adobe successfully navigated from a hardware-era licensing model to a modern digital solutions provider, by going deep into the strategic thought-provoking cave and coming out on the other side with the answers to the question of, “Who do we want to become?”.[4]

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Phase 2: Building Digital Capabilities

Once the executive leadership team has clearly identified the need for change and defined who they want to become, companies then must build the capabilities to support a hybrid hardware and software business model.

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How Companies Start Integrating Software into Their Offerings

• Layering Software on Top of Physical Products – Many companies look to start by adding software-enabled features to enhance existing products (e.g., smart home devices or connected vehicles).
• Developing Ecosystems & Platforms – Moving beyond standalone products or features and creating full platforms embedded in companies that connect multiple devices, services or AI-enabled technology.
• Shifting Toward Automation – Advanced software solutions continue to leverage machine learning, automation and predictive analytics to make themselves more competitive in the market.

When an organization transitions to digital, it faces significant cultural and operational challenges. From an engineering and product development perspective, hardware teams typically follow long development cycles, while software teams operate in sprints. These differing mindsets create immediate friction when working across different teams. Similarly, sales teams accustomed to one-time transactions must adjust to selling recurring services and software updates, requiring a shift in their sales strategy and how they engage with customers.

Farming is one of the oldest industries in the U.S. and remains the backbone of how countries feed their citizens. John Deere, a well-known brand for providing tractors and farming equipment, traditionally operated under a one-time sales model, with additional revenue only coming from maintenance and replacement parts. Over time, John Deere identified a demand for efficiency and sustainability in how people were farming. In response, the company introduced Precision AG Technology, a solution that connects their machines, produces data, and allows users to optimize farm operations. This innovation helps farmers increase efficiency, lower costs, and maximize profits, marking John Deere’s shift from a hardware provider to a technology-driven solutions company.[5]

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Phase 3: Scaling and Monetizing Digital Solutions

After understanding how far the organization can push the company with their technological vision, companies must scale their offerings and ensure the long-term revenue model is in line with their Go-to-Market approach to protect the investment:

• Early Pilots and Beta Testing – Companies often introduce software solutions as optional additions to test customer response before rolling them out entirely.
• Early Adoption Markets – Somewhere between pilots and full integration, companies identify early product-solution packages that resonate with key market segments, proving the use case and driving initial adoption.
• Integration Across the Portfolio – Over time software becomes a core element of every product line rather than an isolated feature.
• Expanding Digital Ecosystems – The most successful digital forward companies don’t just sell a single software powered product; they build a network of solutions.

As companies begin to look at their GTM strategy for their digitally aligned portfolio, pricing needs to be reimagined. Organizations need to align on the opportunities that exist with software as they grow. Companies that sell physical products typically have looked at one-time revenue opportunities rather than, chances to bill continuously with software as a service or having companies pay for premium features or adds. Depending on how technical the work, there could be a paid version that allows for access to 24-hour technical support or consultation. This new line of thinking opens the doors for companies to grow and provide meaningful service to their customers in more depth than in previous years.

If you look at Peloton as a company, at face value without software they sell bicycles. A company that sells bikes would typically not have many repeat customers, you might buy an additional part or the occasional helmet, but this does not go much past that. Peloton is an interesting example because through software, and a unique customer engagement strategy, they were pioneers in how a company that sells bicycles could leverage software to directly impact the bottom line of their business and the market.

The founder of A16Z Andreasen Horowitz, said in an article he published in 2011, that “software is eating the world”. What he meant was technology is impacting everyone daily and affecting industries in a way that we did not know was possible. For a lot of companies who might not be technologically advanced or even have two lines of code associated with their brand outside of their website, there are steps you can take. This begins with asking the internal question, “Who do we want to become?”. If the answer to that question lives with a more integrated, technology aligned company, then the good news is there are strategic steps that can be taken to ensure when your organization is ready to Go-to-Market that it is a slam dunk. The better news is that you do not have to do this alone, and there is an organization that from its foundational roots was built to serve their clients specific needs.

At BizLove, we don’t just consult – we partner with you to deeply understand who you are as an organization, where you’re headed, and what it will take to bring that vision to life. True growth isn’t just about adopting new tools; it’s about aligning your evolving identity with your evolving portfolio and ensuring every function of your business accelerates toward that vision, rather than resisting it.

Tech can feel threatening to companies built on a legacy of high-quality, durable goods, but transformation doesn’t have to be. We’re here to guide you through it – thoughtfully, strategically, and with a clear roadmap.

If this article resonated with you or you know a leader in your organization who would benefit from this perspective, please pass this message along. We’re always excited to take on the next challenge!