In recent years Industrial B2B companies have expended significant resources to keep up with the latest technologies, incorporating the use of AI, ML, Blockchain and IoT devices in their assets. Along with the automation of data collection, these technologies are being leveraged to create data models, digital twins and much more. But there is still dissatisfaction with the returns on these investments, along with questions around the future of the assets. Companies often struggle to commercialize what they have and to build sustainable business models from it.
With the current business circumstances and financial constraints that organizations face, we believe that businesses should focus more on unlocking the maximum value from these existing assets, rather than on investing in yet more technology or pursuing the latest trends and buzzwords.
Of course, exploiting your existing assets is easier said than done. In this post, we’ll lay out the three main obstacles that hinder B2B companies from such exploits; and we’ll provide some examples of how innovation processes can enable them to overcome these obstacles.
01. The biggest opportunities require ecosystem orchestration (and new partnerships)
The most daunting problems that societies face today, including supply chain disruptions, are systemic, and thus can’t be addressed by any one organization acting alone. The biggest opportunities for B2Bs are similar: exploiting them requires understanding ecosystems for products and services; and it requires figuring out how company assets can be combined and leveraged with the assets of others.
The bigger the problem or opportunity, the more likely you’ll have to involve multiple partners across your value chain to solve or make the most of them. In order to maximize the return on your existing investments, it’s essential to look beyond the direct relationships your company already has to better understand the wider ecosystem and to create productive new networks.
One example is VAKT, a blockchain-enabled platform, formed in 2018 by a group of oil majors, traders, and trade finance providers who came together as a consortium to streamline the error-prone experience of trading. They worked together to solve this ecosystem problem, enabled by the latest developments in technology, and transformed the way energy is traded.
In order to tackle these large-scale complex challenges, it’s important to follow a structured but adaptable approach that allows for progress to be tracked but flexible enough to capitalize on what is discovered during the process. The process should aim to identify the value to be gained for each party by participating in solving the challenge.
It’s important to find answers to the following questions: Who else could you interact with to create value? Who else could you provide value to, with the investment that you’ve already made? Could you combine your assets in a different arrangement to extract more and greater value?
And there will always be a need to find a balance between speed and impact, to extract value in a timely manner. It’s essential not to lose initial momentum, while still iteratively progressing towards a solution.
02. B2Bs must make difficult choices about whether to share their technologies
When do you keep technology as a unique selling point (USP) for your own products and services, and when do you commercialize it? In the direct-to-consumer sector, keeping technology in house usually provides a poor return on the initial investment required to develop it. But for asset heavy industrials, this is not always true. In the context of specific market conditions and technical barriers, technology can provide a key strategic advantage against competitors.
One company that has done this particularly well is a long-time leader in logistics and transportation solutions, known for manufacturing heavy lifting cranes for petrochemical sites. This heavy lifting company had developed proprietary technology that they incorporated within their existing product offering, instead of choosing to commercialize the technology for other logistic solution companies. This technological capability is now seen as a core part of their offering, of what they do and who they are as a company, and a key differentiator in their industry. Now they don’t just offer you a crane. They offer you smart access on site including information about, for example, toxins in the air. This has opened up whole new avenues for them in terms of services and business lines.
For B2Bs, these difficult strategic decisions must be made on a case-by-case basis. A key factor in deciding whether to leverage a technology asset as a USP or to commercialize it is the competitive landscape of the market. If you are in a highly commoditized market where differences between companies are hard to find, you might be better off holding on to this competitive advantage. Or you could also think about spinning out that same activity and creating a whole new business from it. There are always trade offs, with each scenario requiring an objective look at the pros and cons.
03. Are you an “AAS” (as a service)?
“As a service” (AAS) often appears to be the most promising business model for new technologies. But if you can’t set the service up, it’s doomed to fail.
Heavy industry and other B2Bs often find service models especially difficult because their existing core businesses are based mostly on high-volume product or project sales.They often have challenges with the backend of the service business: How do you set up financially? How do you set up operationally to really take advantage of these types of services and capture all the value?
So before becoming an AAS, B2Bs should ask themselves: are you being realistic in even trying to get into this space? Or should you spin the business out from the very beginning because your company is just not ready for it yet?
It’s sometimes not about the technology itself, but everything around the technology that must be set up for maximum success in pivoting from a product-driven company to a service-led business, if that’s the right step for you. As you pivot, what are the internal changes that you need to see? Is your company ready for such changes? And if it’s not, then how do you maximize the use of the technology that you’ve developed?
As the current economic situation puts renewed focus on already expended investments, maximizing returns becomes more important than ever. Companies are facing critical questions on the best course of action for their assets, while struggling to remain on top of the latest trends in technology. In this article we highlighted some of the toughest questions facing the industry, and offered some examples on how these can be overcome, so industrials can achieve the maximum returns on their investment while continuing to make what life needs next. We look forward to continuing the conversation with you!