What makes a successful B2B business model? If you’re downstream in the supply chain, addressing this question with finesses is perhaps the most critical decision that most companies will make. Thoughtful companies make these choices as a matter of strategy. Their less thoughtful cousins tend to fall into ways of working as the path of least resistance.
One key strategic choice is the amount of collaboration with customers designed into the model. A purely transactional approach lies at one end of the spectrum: supply the customer with what they’ve been buying at a competitive price. While there are many goods and services where this is hard to avoid, it often isn’t the most value creating and it certainly is risky. Your market always one step away from disappearing to another supplier that competes on price. Not good for margins. Also, not good for innovation. Not ultimately good for the customer in the end.
At the other end of the spectrum lies close collaboration with buyers. This can take many forms – joint development, joint ventures, shared IP, shared risk and shared reward. What really matters is that the value of a product is enhanced by some type of value added expertise that can allow the client to succeed Maybe it’s a way for the downstream product to differentiate. Maybe it’s a reduction in time to market, process inefficiencies or the cost of change. Maybe it comes in the form of iron clad commitments that offer exclusive benefits. It has to come down to something collaborative.
Thanks to globalization and vastly higher pricing and delivery transparency, there’s less and less space in the market for the commodity player to wiggle. Someone will always be cheaper. Only collaboration allows you to be part of the fabric of your customer’s delivery success.