How B2B2C Drives Digitalization and the Innovation of New Business Models

n the 1990’s, chess was often brought in as a useful tool for talking about advanced business concepts. Strategic vision was superimposed on an eight-by-eight block to determine how much time, space and material were required to successfully deploy business initiatives and gambits.

Those days are gone. Lessons from chess are valuable, but the Asian-Pacific game of Go better represents of the market’s seemingly chaotic complexity. While chess grandmasters regularly look 20 moves ahead, the most sophisticated ninth-Dan masters of Go sort through 30 million potential moves.

Defining B2B2C

To find a signal in all that noise, B2B companies have joined forces with B2C to form a new business model: B2B2C. Think of the B2B2C business model as a form of cooperative competition where the end-user experience is the primary concern and data sharing generates original market intelligence.

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This was never possible before the forces of digitalization and globalization collided to drive more intense demand for consumer contact. In turn, the democratization of information and consumer interactions have driven deeper digitalization and the cycle starts all over again.

Business continuity depends on forward integration, even for traditional industries like manufacturing. Only companies that satisfy the end-consumer have been able to say competitive and hold onto their margins. Going forward there will be more intense pressure for them to raise entrance barriers and stay relevant to the next generation of consumers.

Leading Firms in This New Space

In a recent statistical analysis, Superbrands UK compiled a list of hundreds of the world’s leading B2B brands within all major industry verticals. Here are the top 10 across verticals: Visa, Google, Apple, Mastercard, British Airways, Microsoft, BP, Samsung, Virgin Atlantic, Shell.

None is B2B only. All have moved into the B2B2C model. Using strategic placement of tools like branded content and branded apparel, these firms drive consumer demand to their partners for fulfillment. As B2B2C exemplars, they pursue forward and backward integration by cooperating (even while competing) with their partners in order to better serve consumers.

Industry 4.0

This entire chain of events may simply be another feature of what the World Economic Forum in Davos this year, termed Industry 4.0. The Fourth Industrial Revolution has already begun to restructure the world in fundamental ways. The interconnecting network of machines to machines and machines to end-users demands a more intelligent means of production.

Prosumers, who are both consumers and producers at the same time, want to be involved in the entire process from design to production process. Prosumers guide strategy, inform development and redirect the course of entire industries.

Case Study: Amazon

Business model innovation has involved wider applications of digitalization and integration into every part of the supply chain. This allows for individual customization in real-time with the help of predictive analytics, massive data centers and AI decision-makers. Amazon is a clear example in two ways.

First, Amazon spun off its high-level self-publishing services in 2009, just three years after introducing Amazon Web Services. Second, with Amazon’s self-publishing, consumers finally gained access to the benefits of a traditional publisher, like a professional editor, artistic layouts and famous speakers for audio books. Similarly, Amazon’s public cloud has done virtually the same thing for e-commerce, allowing businesses of all sizes to ramp up to profitability faster with high-level data processing and consumer recommendations based on AI analysis.

Letting Go of the Past

B2B can no longer afford to cling to traditional, conservative business models. Design firms, wholesellers, manufacturers, media companies, med tech producers, etc. have all experienced how societal changes alter the behavior of buyers, significantly impacting how B2B does business.

Market leaders in the new B2B2C space brought in innovative concepts from start-ups and online marketers, such as brainstorming ideation, rapid project development for commercialization, smaller repetitive iterations of prototypes, A/B testing and simultaneous project portfolio management across the 3 Business Model Innovation Horizons.

B2B must upgrade their base level thinking from materials-first to customers-first. Platform Thinking and Design Thinking are now imperative to B2B success, which is evident from results in Innovation360’s global database InnoSurvey (tm). Why? Because the firms that don’t upgrade their thinking are ending up with breakdowns in the aftermarket, such as spare parts, unused services, knowledge shortfalls and so on.

The best B2B2C firms in the world apply both platform and design thinking in wholly original ways. A good example is Scania, which cranked up its innovation drive to file 357 patent applications in 2014 alone, almost one patent per day. One key success factor was that their modules always fit together over time. As they build out new designs, they make sure to add adapters or converters for forward and backward compatibility, even for parts they don’t manufacture. In some cases, Scania had to simply file the 3D-print files or the CNC machine files. Scania’s Harald Ludanek explained, “We recognize that we are facing an upcoming paradigm shift in the automotive industry. With a foundation of a solid and sustainable powertrain technology and an electronic platform, connectivity opens new areas for optimizing our customers’ business. Innovations in all of these areas will define our success in the future.”

The Global Position

One of the 10 ancient and golden rules of Go is “Dong Xu Xiang Ying” (动须相应) which roughly translates as “Always keep in mind the global position.” Seemingly random Shicho or patterns on the other side of the board can suddenly impact your position locally. Everything matters. B2B2C encapsulates this new understanding of maximum awareness in a world that is more connected than ever before.