What are the differences and similarities on open innovation between B2B and B2C companies? This is a question I often run into during my talks and consulting engagements. Here you get some of my views.
Differences:
Crowdsourcing works better for B2C companies.
This is pretty obvious, as B2B companies do not interact directly with consumers and end-users.
This also leads many people to believe that crowdsourcing is all you need to consider when it comes to open innovation for B2C companies. This is dangerous. The key is to being able to bring more external input into an innovation process and integrate this with internal resources. This needs to go further than input from just consumers and end-users.
B2C companies have a more open mindset.
You can argue that B2C companies have a different mindset. Having to work directly with consumers and end-users seems to foster a more experimenting and open mindset when it comes to bringing out new products and services.
In theory, this should make B2C companies more open when it comes to innovating how they innovate, but in reality they can get as stuck in their traditional ways of doing things as B2B companies.
Similarities:
The real work happens behind the scenes.
So what if B2B companies are better at crowdsourcing. The real work starts behind the scenes and this goes for both types of companies. Even though you have good access to external input, you still have to integrate this into your organization in order to bring out better innovation. This is hard work.
They share many of the same issues and challenges.
Corporate innovation units in both types of companies share many of the issues and challenges including:
• getting executives to buy into and commit to innovation • developing an innovation strategy • building a strong innovation culture • making business units engage in innovation • improving communication with regards to the corporate innovation capabilities • merging external and internal resources to bring out better innovation • moving beyond incremental innovation and bring out more disruptive innovation
The approaches to these issues and challenges are quite similar regardless of the type of company.
More and more innovation happens through communities.
The future innovation winners will be those that manage to bring together current and potential innovation partners (companies rather than individuals) in eco-systems and communities. The big challenge is how to make such communities work and this goes for both types of companies.
Challenge-driven innovation can help both types of companies.
Service providers such as NineSigma, InnoCentive and IdeaConnection focus on challenge-driven innovation in which they help companies (seekers) connect with individuals as well as other companies (solvers) in order to get their problems solved. Such an approach can be applied within many different kinds of business functions and thus it can bring value to both types of companies.
In an earlier discussion on this, Kevin McFarthing also added that B2B companies have a much smaller number of customers, each of whom buys a lot. He stated that it’s true that B2C companies go via retailers who certainly have an influence, but large customers are very important in the definition of the innovation portfolio for B2B companies. This is a valid observation by McFarthing.
What do you think?
This is an informative and concise post, Stefan. Building on your clear distinctions, it also is useful to consider B2B vice B2B2C. I view the former as a business that helps another business with its internal operations such as talent management, infrastructure, etc. The latter is a business that helps another business with its customers.
CRM can be considered B2B2C, for example, to the extent that the business uses it for customer engagement. Most businesses in another’s supply chain would be B2B2C. Strategic alliances are perhaps a better example to the extent that the businesses have independent as well as aggregate value propositions. Presumably a business that is B2C would be better at B2B2C than a business that doesn’t do B2C.
In my experience, B2B2C works best in small teams (see also, bit.ly/Ward-on-FIRE) or teams of teams across companies (see also, my comment at bit.ly/Lindegaard-7-Steps). Also in my experience, B2B2C can be transformational when small agile teams from different companies (especially with different cultures) achieve a unity of action through selective inclusion of customers that ground the attendant innovation in latent demand to create new value.