B2B is over! The manufacturing industry is shifting to B4B, where suppliers no longer focus on selling things to customers but rather on creating outcomes and value for their businesses. In B4B models, customers pay much less up front for a product or service, sometimes nothing at all. Instead, the supplier gets paid when customers use their products and often only according to the benefits they receive.
So where does the value come from and how can businesses reinvent themselves to stay in the game? For suppliers value will come from knowing what outcomes customers really want, creating solutions to meet those needs and making their value-add visible. It’s also about finding win-win outcomes balancing both supplier and customer needs, which we are seeing more of in new partnership-based businesses.
Digitalisation must go deep into the DNA
These B4B models require transparency, which digital technologies enable. Digitalisation is also a big part of the solution where products can behave more like digital platforms that bundle data to enable outcomes to fit customer needs. So once you’ve sold a product it can become a launching pad for new future products and services for your customer.
Digitalisation is critical, but on its own it’s not enough. If it’s used like a sticking plaster, only quick fixes can be achieved whereas B4B models require real and sustainable value add. Real change needs to go deep into the DNA of a business, reflecting the most critical customer needs in a real operating environment.
B4B much more than just nice apps and XaaS offerings
We all know the story of Air BnB and the two guys with one extra room who couldn’t make rent. They launched a web site and disrupted the entire global travel and hotel business. Doing the same in big industry is much more complicated. Most of us understand how the hotel business works. You take a room, have your stay, and pay the money, and then you leave. But how many know how to run an electricity grid? If you really want to change the DNA of a smart grid, something critical for society, you need to know about much more than just digital technology, you need to know all the technical ins and outs of the business, how it’s run, where the valued add or beef of the business is, and all of the many technical restrictions that come with it.
In B4B we’re better together
As no single entity can overcome these complex challenges alone, effective networking is a core success factor in B4B. Just as you a consumer might consult a social media network to share or learn more from crowd knowledge, at industry level, companies big and small are also jumping into sharing partnerships to develop their competitive advantage. Partnerships can be with researchers, ICT providers, sometimes customers, and even with competitors, in the growing spirit of coopetition.
Take an example of Company A: a small business with a big idea. They’re in the healthcare industry where the fail-fast approach is not a viable option. In order to test and prove their idea they need a cutting edge 3D printer but the cost of purchasing one upfront would be a prohibitive especially with no guarantees that the idea will actually fly. In this case, an effective innovation path can be found through sharing partnerships with shared infrastructure and expertise networks.
VTT testing and piloting platform can help
VTT, together with Tampere University of Technology, has developed an open ecosystem platform that will help Company A take their idea and run with it. The platform, called SMACC (Smart Machines and Manufacturing Competence Centre) brings instant access to a 3D printer to test their idea. If glitches arise, help for small or large questions will come from a joint knowledge network. Finally, when the time is right, Company A will have its own collaboration team to help pilot the new solution cost effectively and at speed.
Using the power of partnership platforms, VTT is well-positioned to play a central role in helping business make the shift toward outcome-driven B4B products and services. We want to work like genetic engineers, drawing on our extensive knowledge networks and research, and applying rapid solutions not just to quick fix your business but to transform it over time.
The shift to B4B will be one of the big topics of the Manufacturing Performance Days in Tampere at the end of May. I look forward to taking it up with you there!