Are you a B2B or B4B company?
(5 minutes. Lengthy and hard hitting with examples.)
Couple of weeks ago, my article on Business FOR Business (B4B) resonated well with many of you. Don’t know why but at some level, deep inside, we seem to agree with the larger principle that businesses should exist for other businesses to succeed.
Not just for our shareholders, employees and partners who just continue to extract value from the market. This is so industrial era thinking.
Well, if we agree on this premise, then we should have some kind of assessment or validation that allows us to evaluate our business in its current state. Thought that it will be a good exercise to come up with a set of questions that allows us to do the same. A litmus test.
Here are a set of questions I came up with to do this:
Question #1 – Why are you in business?
Do you know the real reason why you are in business? For profits? To reward your shareholders? To earn bonuses?
Again businesses come in different shapes and sizes. All the way from one person Solopreuner to multi billion dollar conglomerate. Many of these businesses have been created in the industrial era (pre 2010).
If I am not wrong, most of the businesses have been built to reward share holders. Period. Built ‘inside out’. Totally interested in themselves and their success.
The underlying narrative is that we should make products and services we should sell to customers. Most of the businesses are still run by elite executives who decide strategy and spread instructions down the organisation structure using power points and emails.
Until now – Size mattered. Stability ruled. Strategy governed. And Customer was always at the other end of the line.
Not any more.
In the social era, if you have not redefined your existence – most likely you are going to be a toast. Don’t believe it? Click here. Why half of the S&P 500 companies will be replaced in the next decade?
On the contrary, let’s see how two companies have stood out and defined their existence:
An example of a digital native company – Uber.
Uber exists to connect people who need reliable ride with people looking to earn money driving their car.
An example of a digital immigrant who was paranoid – GE Digital.
GE Digital connects streams of machine data to powerful analytics and people, providing industrial companies with valuable insights to manage assets and operations more efficiently.
Don’t you think that both Uber and GE Digital have their ‘why’ in place?
Aren’t their whys based on ‘outside in‘ philosophy where the customer is at the center? Aren’t they a Business for Business company?
- What is your why? Is it outside in? Or still inside out?
Question #2 – Who is your customer and what do they value most?
The second question to ask – who are your customers and what do they value most.
The only way you are going to know what a customer will place value in is by asking them and getting them to tell you what they’re looking for. Sounds simple enough, and yet so many businesses get this wrong.
To illustrate this point let’s deconstruct Amazon’s vision statement:
“To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”.
Today as customers, do we value finding anything and everything at our finger tip? Ofcourse YES.
Do we value discovering new stuff, both reactively and pro-actively, by simply clicking a button? Ofcourse YES.
Do we value buying what we found and discovered the way we want it online? Ofcourse YES.
Don’t we feel powerful enough to buy or return goods at will when we transact in Amazon? Don’t we feel the ease with which we get things done?
Don’t we all feel that we are central to Amazon’s plot? Where we are fully in-charge (commenting, collaborating) and not the company? Ofcourse YES!
In the social era, your customers now want to be co-creators in the value equation.
Customers should be bang in the center of your business model.
The social era will reward organisations that don’t create value all by themselves but through collaboration. This is the biggest difference between B2B and B4B companies.
If Industrial era is about capital, assets, strategy and hierarchies; Social Era is about connecting things, people, network and ideas.
- Is your business built around customer value eco-system? Or your customers are chasing you and are at one end?
- Does your business model extract value or create value? B4B companies create value. Not extract it.
Question #3 – Is your organisation structured for your customer’s success?
Briefly speaking, organizational structure refers to the way that an organization arranges staff, jobs and resources, so that its work can be performed and its goals can be achieved.
Different organisation structures will result in differences in operating mode and work efficiency, which can impact on the organization’s performance and even determine its success or failure in the market.
So far, most of the B2B companies are organised around investors and shareholders. At the very top are the board and CEOs. The work force who engage and deliver customer satisfaction are further down the chain.
Haven’t we seen CEOs (at the top) miss innovation signals while they are busy managing financial numbers? Don’t they explore many ways to keep share holders happy (Share buy backs, sending tons of reports upwards, staging 90 day cycle) than keep customers happy?
While companies like IBM, HP, Dell and so many others were busy doing this – they completely missed to sense the signal on the ground. Either they are now dying or in a state of turmoil.
This is B2B thinking. It’s about me and my share holders. Industrial era organisation structure. Bound to fail very soon. This is built to manage sustainable advantage using command & control hierarchical structure.
Now, let’s look at how a B4B company could look like:
Organisation should be structured around the customer. All resources – management, sales, delivery – wrapped around the customer. Sense and respond at lighting speed. No approval required from a central command and control center that reports to investors.
Just like a cell structure. A trust based network that responds to customer success. Not a CEO who shoots interaction from the top.
The structure should allow open collaboration, openness, co-creation both within and across the network.
Am not an expert in organisational design, but hope I have communicated the spirit of it.
- Is your organisation structured around your customer’s success? Or around your success?
- Is your business model linked to your customer’s success?
Question #4 – Do you create products and services for your clients to be successful?
Here is another fundamental difference between B2B and B4B thinking.
B2B company creates products and services and sell to customers. B4B company creates customers by addressing their needs.
Let’s take two examples to illustrate this point.
First a B2B example – Dell technologies.
DELL completed acquisition of EMC this month. With this acquisition, Dell changed its name to Dell technologies and positions itself as a one-stop shop for information technology sold to businesses.
So what has Dell or EMC done? Are they creating value or extracting value?
They are consolidating and extracting value from the consolidated book of business. period. They are playing the card ‘size matters‘.
Are they creating new markets or customers? No. They are simply buying time by aggregating resources.
A classic B2B company interested in itself. It’s own value.
Now let’s take a B4B example – GE Digital.
CEO Jeff Immelt declared in 2011 that GE needed to become a software and analytics company or risk seeing its hardware products become commodities as information-based competitors took over.
Jeff saw both IBM and Amazon as its competitors. Not Pratt & Whitney or Rolls Royce.
Jeff also saw new sources of value in allowing its customers use equipment ‘as a service’ business model.
“We’re no longer selling customers just a jet engine, a locomotive, or a wind turbine; we’re bringing data and actionable solutions along with the hardware to reduce costs and improve performance.”
So GE hired 1,000 software engineers and data scientists to provide enhanced software and analytical skills across GE’s many businesses. GE is now approaching $1 billion in new revenue annually from their expanded software and data activities.
In doing so, did GE create value or extract value?
Ofcourse it created new source of value. GE wanted their customers to benefit from the insight derived from data and also transition into a ‘equipment as a service’ company.
Classic case of a B4B company and thinking.
- Is your company creating products & services or creating customers by solving their problem?
- Are you spending tons of money to market and sell your products or are your customers co-creating new products and services?
Question 5 – How are you connecting, engaging and offering great experience to your customers?
If you haven’t gotten questions 1 to 4 right, then you probably have a huge marketing and sales budget and having a BIG GO at your customers. The following way.
Revenue budgets -> Go to market -> Integrated marketing -> Channel Strategy -> Direct Sales -> Campaigns -> Events -> Social Selling -> Fill the Funnel -> Close the deal.
You probably are spending 20% to 50% of your sales in chasing customers for revenue.
Nothing wrong with this. It’s just that you will end up focussing more on your revenue than on your customer’s success.
This approach has worked splendidly till now since customers didn’t have much of a choice. The social era powered by digital tech has changed everything.
Suddenly customers and consumers are at the center of the universe now. They don’t have to choose you anymore.
They have choices. Hard hitting frontal sales is not working anymore. Anyhow billions of dollars are being poured to chase, nail and close deals.
We need a new narrative and language to engage and work with customers. Here are a few alternatives.
Because language encodes our thinking and behaviours in the long run.
Let’s try this:
Purpose of a Go to Market is to provide a blueprint for delivering a product or service to the end customer, taking into account such factors as pricing and distribution.
This is again a product forward approach. First you make a product and then chase customers.
How about calling it ‘Connect to Market‘ instead?
Purpose of Connect to Market is to define how you engage, understand your customer and find ways to collaborate, make, co-create, crowd source products and services that meet their needs.
In here customers are central to your product development strategy. You collaborate and co-create with them.
Is any company following this approach? Ofcourse yes.
Atlassian is a 5B dollars company and has no sales staff! Though Atlasssian is an extreme example, we can all learn from the company’s approach to selling.
They connect to their market. Not go to their market.
- Are you pounding your customer and installed base with your products and solutions? Or are your customers pulling you in to buy?
- Are you selling your customer their success? Or your products and services?
- Is your commercial and compensation model tied to your customer’s success or your TCV/ACV/MRR?
- Is your customer thrilled to see your sales rep at their office? Or they detest it?
Question 6 – How are you inspiring your organisation to stand up for your customer’s success?
With great respect to the company I admire, I am taking SAP as an example.
We all know SAP has ruled the roost since 1992 and has been a 80% gross margin company. For the past two decades they have named their price and they got it.
I suppose that this is the first time in their history they are facing a serious challenge. Not a technology challenge but something much deeper.
The feedback received from top 30 CIO’s from the biggest companies around the world this year has not been good for SAP.
In Sapphire 2016 Keynote, Bill McDermott said, “They basically told me we weren’t empathetic enough, we weren’t listening or hearing their problems, in their terms, on a consistent basis.”
This is real deep. When customers don’t get a feeling that you understand them – they can simply leave.
Social era is all about empathy.
With great respect to the company, I humbly believe that SAP cannot get away this time with a slogan or campaign – ‘Run Simple. Run Live‘.
Before you run simple, you got to ‘Run Real‘.
SAP has to ask if its is really a ‘Business for Business’ company. Will it underwrite its customer’s success in the era of disruption?
Will it partake a share of its margin with its customers? Will it structure itself around customers – just like GE? Will it inject empathy in every transaction and make their customers feel it?
Can for a change Bill McDermott play Jeff Bezos card and say:
“We think we’re better aligned with our customers if we make money when people use our product, not when they buy them.”
Let’s not even go closer to the dollar value of shelf ware sitting in companies inventory.
It’s time leaders stands up for customer success. When they do so the whole organisation will stand up behind him or her.
You become real. You go above your earnings per share and market cap.
That’s how you inspire and become a ‘Business 4 Business’.
- As a leader do you stand up for your customer’s success first or yours?
- Does your key note pitch resonate with your actions and behaviours?
- Are you real?
Use these 5 questions to ask if you are a B2B or B4B company?
- Why are you in business?
- Who is your customer and what do they value the most?
- Is your organisation structured for your customer’s success?
- Do you create products and services for your clients to be successful? Or yours?
- How are you connecting, engaging and offering great experience to your customers?
- How are you inspiring your organisation to stand up for your customer’s success?
I firmly believe B4B companies will outlast B2B companies in the coming years. The customer just got smarter!
Follow through articles on B4B idea
1) B2B is dead. B4B is born. [5 Minutes read. Plenty of examples and inquiry].
2) Why B4B Selling is the way to go? [3 minute read. Challenges B2B seller’s thinking]
About Agility Nexus
Agility Nexus is a Sales and Business Consulting and Coaching company serving business leaders in Technology Industry to accelerate revenue generation. We consult, coach, train and solve problems at the intersection of marketing and sales. We blend various strategies including Emotional Intelligence to help sellers better connect, engage with customers and offer great customer experience.
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