Jeffrey wrote a recent post “No walled gardens in B2B platforms” and started with this: “Paul and I have noted throughout our writings on platforms and ecosystems the key differences between companies that interact primarily with consumers (B2C) and companies that interact primarily with other corporations (B2B)”
I wanted to highlight some key differences as a follow-up post and was beginning to work on this when up “pops” a really valuable article by McKinsey “Finding the right digital balance in B2B customer experience”.
Jeffrey and I have championed the idea that customer experience is the ultimate innovation outcome, based on strong ecosystems and platforms so this caught my attention. The article does a good job of focusing the B2B companies to putting customer-centricity and experiences at the heart of their strategy. This offers good advice on the one-to-one model but less on the complications of many businesses working with other business on a two-sided platform of multiple participants
The writers for this McKinsey article, rightly point out the root of the problem is that while the role of customer journeys is central to both B2B and B2C, their incidence and importance are different for B2B and they go on and explain the chief differences.
I’d like to “lift out” these four chief differences McKinsey defines and discuss these more in the multi-sided platform context and ecosystem needs, going beyond the customer experience ones.
McKinsey offers the four critical points of difference operating in a B2B environment compared to the B2C yet we see differences on a more complex level, as these four are not are enough for the Multiple Collaboration. There is a host of differences that need to be required in the many-to-many collaborations we are seeing emerging today that have a real complexity to them. These are ones determined to change industry dynamics and disrupt or radically alter the existing market landscape. A separate post explores these.
The four important aspects to consider in any relationships, be these partners or customers suggested by the article from McKinsey are:.
- Relationships often go deeper in B2B
- Longer, more complex B2B journeys involve more individuals
- Customization is more widespread in B2B than B2C
- The stakes are usually higher in B2B deals
I think there are many differences in the coverage of experiences, many beyond the customer ones.
Relationships often go deeper in B2B
McKinsey points out that codeveloping a product or redesigning a whole new experience requires the partners to form really deep relationships so they can compliment and feed off each other to build the radically new offering that working on a platform of collaborators can provide. The relationship needs to form and build a longer-term trusting one as the work goes way beyond a simple reoccurring but into pioneering, discovering and sharing knowledge, insights and even valuable intellectual property to be able to be ‘pooled’ for the greater good and need. B2C relationships are simply transactional as McKinsey points out. Building a thriving ecosystem of relationships needs the powerful “network effect” of mutual identification and this constant feeding off and sharing knowledge to push the existing boundaries that often constrain the one organization.
Longer, more complex B2B journeys involve more individuals and organization engagement.
It is the growing complexity of any ecosystem (B2B) and this requires an incredible level of collaboration and exchange. You might appoint a ‘point person’ in each company evolved in the ecosystem working on the platform design but it becomes increasingly them reaching back, deep inside each organization, to find the best expertise, seek permission and their time to work on solutions so these can be feedback out to the network. The work grows in this complexity and the greater the engagement, the higher the need to exchange and manage this into the project itself. Decision-making and knowledge provision become critical to decide on allowing outside your “walled garden” to help advance the ‘greater good’
Customization is more widespread in B2B than B2C.
When you are totally redesigning your offering, often from the ground up there are many decisions of what can be used, reused or completely redesigned. As McKinsey point out it is recognizing the “value-creating” potential and when you are thinking completely differently what you have had previously to serve your own business is not adequate for multiple ones. You need to think radically differently. You might get into trade-off decisions but designing something from scratch often becomes the ‘fit-for-(new)purpose’. Requirements, specifications, need to suddenly think scale in different ways, build in more robustness, and adaptation. Collaborations become far more complex.
The stakes are usually higher in B2B deals.
One of the reasons individual companies enter a platform collaboration and engage in these ecosystems is the sheer cost is far too much in risk, resource and commitment than they alone can absorb. Costs can quickly escalate as complexity ‘kicks-in’. The ultimate belief is that what you are attempting to build is so much bigger in potential than what you are giving up. You see a ‘walled garden’ differently, it needs radically opening up. You need a stronger belief in what you are committing too, you sometimes need nerves of steel. Not only in the resources, this collaborative platform initiative might ‘suck up’ but in what it might be impinging on your own business as you trade-off what you own with what you contribute.
Collaborating across an ecosystem of vested parties is something uncomfortable and difficult to do. You are sometimes throwing into the ‘collective pot’ some of your past beliefs and competitive positions. As you let go, you do need to be utterly convinced what you can potentially gain is worth the pain and disruption
Yet we think this goes deeper. For a starter how about a new one – Equity?
Additionally, I’d like to add one more difference here, that B2B transactions have more equity and value exchange between the participants. Most B2C relationships are ultimately one-sided. A consumer acquires entertainment or information from Facebook or Google, but in exchange these B2C walled gardens obtain more value by harvesting data, selling information or ads. What appears as a simple exchange often isn’t, and the exchange lacks equity. B2B relationships, on the other hand, take place between large and small companies but the exchange has transparency and value in proportion for all sides. This means that establishing and building the relationships between partners and platforms takes more time and should sustain at a completely different level that the more transactional B2C relationship.
What becomes clear is the need for an increasing focus on delivering the seamless customer experience where the customer is within a business (B2B) or consumer (B2C) environment. Relationships are paramount in both. Interactions are governed by experience, be it a customer, collaborator or consumer of a businesses service, be this a Facebook or a Supplier providing a product or service, or a multiple of collaborators working on a more radical solution seeking to improve the experience.
Yes differences get a whole lot different, they get increasingly complex when you attempt the many-to-many far more complex ecosystem solution (M2M) and these I will explore in my next post