There’s no question that B2B companies have a lot to learn from B2C innovators when it comes to devising and implementing digital strategy. However, the subtleties that distinguish these two realms from each other are often overlooked in favor of simplified, direct comparisons (which tend to ignore the fact that it isn’t always possible to translate what works in the consumer sphere to a B2B context). The truth is, while there are certainly important lessons and opportunities to take from groundbreaking B2C companies, B2B nevertheless requires a different approach to digital strategy in determining the transformational path that is best suited to an industrial setting.
So how can B2B companies get digital strategy development right? According to a recent article from global management consulting firm Bain & Company, the first step is to understand some of the following key assumptions about what it means to do business in the B2B world today.
The difference between current and prior eras is measurable and dramatic.
It might be tempting for B2B businesses struggling with digital transformation to buy into the comforting notion that the buzz around digital technology in the marketplace is more hype than anything else, but it’s hard to ignore the fact that businesses today have changed at every organizational level due to the confluence of technologies like smart devices, low-cost networks, and powerful cloud-based computing. We now have four times more connected devices than we did just five years ago, leading to a corresponding 40-fold increase in data generation. There is no longer a clear line between products and services, and the boundary between individual customers and business customers is becoming equally blurred. Against this backdrop, dreaming big is not only possible, but it’s essential to a business’ very survival.
Disruption follows knowable directions.
The rapidly paced and dynamic changes that characterize our current era are certainly disruptive, but they don’t have to be disorienting. Actual disruption rarely comes out of nowhere; most often, there are discernable signs along the way. Innovations like smart buildings or autonomous vehicles, for example, were visible and widely discussed long before the technology was in place to make them a reality. In such a climate, it therefore becomes the job of digital leaders to read these trends, understand the impact they could have on the industry, and transform that insight into an actionable perspective on the future. It’s not an easy task, but the ability to define the direction of disruption means that there is one less uncontrolled variable to deal with in the digital equation.
Ecosystems must be taken into account.
The complexity of the business ecosystems within which today’s B2B companies operate must not be overlooked. A digital strategy that favors an idealistic vision while ignoring the facts will ultimately prove to be unworkable. In the aviation industry, for example, it’s not difficult to imagine a best-case digital scenario, where integrated IT systems support state-of-the-art air traffic control systems and cutting-edge, fuel-efficient aircraft while also driving dramatic improvements to the customer experience. But pragmatically, the pace and scope of innovation is limited by many factors, including regulation, the expense of replacing aircraft before the end of their life cycle, and concerns about how digital innovation will affect safety and security. When it comes to digital strategy, therefore, leaders and executives have difficult decisions to make about how to achieve real progress in the face of systemic complexity.
Profit pools are shifting.
It’s not clear when, but ultimately, digital innovation is going to change which players in our economy are making the most money—as well as the ways in which they are making it. In the agricultural sphere, for example, there is a great deal of speculation as to whether the profits currently going to traditional equipment makers will ultimately be diverted to the producers of connected machines and the cloud-based infrastructure that runs and supports them. Consequently, B2B companies across all industries are struggling to figure out how to tap into the most profitable segments of their changing sectors to avoid being left behind.
So where does this leave the B2B leaders responsible for digital strategy? According to Bain & Company, the biggest challenge involved in building a strong, enduring digital strategy lies in striking the right balance between vision and pragmatism. To achieve this balance, Bain recommends three key principles:
Narrowing the field of vision—To keep digital initiatives actionable, it’s important to define both the company’s starting point and their long-term digital destination, then determine what investments are necessary to get from one to the other. Concentrating on a clear road map like this helps avoid the chaos that can come from trying to do too many things at once.
Making gradual progress with stepping stones—The general rule of thumb for any complex task is to break it into smaller, more manageable pieces, and digital strategy development is no exception. Companies should focus on moving step by step, launching one wave of initiatives and assessing its impact before moving on to the next.
Organizing along pathways—When digital activity is carefully coordinated along a handful of key pathways, companies have the best chance for building and keeping momentum. Operations, products and services, and the customer experience are some of the most important focus areas, and concentrating on these will help companies integrate digital initiatives into the foundation of their business.