Real B2B Innovation Starts with a New Mindset

Real B2B Innovation Starts with a New Mindset

By Dan Adams

What prevents us from driving real change? For me, it’s often an old mindset I’m locked into. I once had a patented polymer breakthrough in the lab, but it took me five months to figure out how to test its properties. I’m too embarrassed to say how incredibly simple the final test was. You see, I was a victim of my outdated mindset.  If we took a time-machine into the future, I believe we would see that the way we think about B2B innovation will have changed. A lot. Let’s explore three ways of thinking that will likely become relics of the past…

1. We don’t appreciate today how difficult it is to grow organically.
2. We’ve trained ourselves to avoid surprises, when we should seek them.
3. We are far too casual in how we invest precious R&D resources.

1. Organic growth is more difficult than we think
Picture this scene: Your business is putting together its operating plan for next year. This year’s growth was 5% and someone decides next year’s growth will be “double-digit.” Is there an implicit assumption that the 5% is “in the bag”? Turns out this is a bad assumption. Future growth comes from three types of growth, and you can only control one of them.

The first type is inherited growth. Years ago, clever employees at your company developed industry-leading products. They may have received their gold watches by now, but the fact is… most of your growth and profits come from a few great product platforms they created. Don’t count on inherited growth continuing forever: Every year, purchasing agents and competitors are working hard to commoditize your specialty products.

The second type is market growth. On average, you and your competitors will grow at the same rate as the markets you serve. Don’t feel entitled to this growth. If a competitor develops a blockbuster product, you’ll be

happy to minimize your decline in sales. Assuming otherwise is like 1970’s Detroit auto-makers assuming Japanese competitors would keep producing junk.

The third type is earned growth. This only occurs when you do a better job than all of your competitors in understanding and meeting the needs of a given market. The sobering realities are 1) this is the only growth you can control, and 2) your work here probably won’t have a big impact next year.
Wait… you don’t have much of a lever to pull on next year’s growth? That’s right. You can “buy” temporary growth with low prices, but profitable, sustainable growth takes time. This may not be bad news for two reasons: 1) Developing B2B customer insight skills requires a level of commitment your competitors may be unwilling to make. Good. You need them to remain shortsighted. 2) While commercializing high-value new products takes time, you may enjoy a bonus: Many customers are impressed when you use advanced B2B customer insight skills. They feel “listened to” by an interested supplier… and this often leads to short-term adjacent opportunities.
2. We should seek surprises, not avoid them
In most areas of business, a surprise is unwelcome. Surprises in product quality or cost control are seldom pleasant. But innovation relies on surprises. The most familiar type is the “solution surprise,” such as the accidental discovery of Teflon®. Without a surprise, an invention cannot even be patented: The invention must be useful, novel, and non-obvious. Surprising.

Another type is the “need surprise,” which occurs when a previously hidden customer outcome becomes known. The discovering supplier has the luxury of seeking solutions in a competition-free environment. Companies trained to eradicate surprises in the Quality and Productivity Waves have difficulty seeking them in the Innovation Wave. This causes them to miss insights that could lead to blockbuster new products.

What do surprise-averse suppliers look like? They start with their own ideas and filter them with internal process checks and reviews. If customers are interviewed at all, the supplier—not the customer—leads the conversation with a questionnaire. In an odd twist, surprise-averse suppliers are the most likely to be surprised… by their mistaken market assumptions and by innovative products introduced by surprise-seeking competitors.

3. We are too casual in how we invest R&D
Frustrated by your lack of R&D resources? How would you like to add employees who know your technologies and markets, can start work tomorrow, and cost nothing more? It’s easy: Just kill the dead-end projects that typically tie up half your resources. Free your people to work on projects your customers actually care about.

You might ask which projects to kill. That’s difficult to say… today. But start applying the science of B2B customer insight now, and the dead-end projects won’t get to the development stage next year. Think of this as shifting resources “up and out.” You shift resources “up” in time by investing manpower earlier (understanding market needs), to be more successful later (developing solutions). You shift resources “out” by encouraging your employees to spend less time talking to each other… and more time directly engaging customers, through interviews and tours.

I believe future B2B firms will have unflattering things to say about the casual way we now apply our R&D resources. Even today, some New

 Product Blueprinting clients are practicing a new discipline: “Don’t invest R&D resources in any major product development without unbiased, unfiltered data on precisely what customers do and do not want.” By conducting quantitative Preference interviews, you can develop a Market Satisfaction Gap chart that provides this information.
When the science of B2B customer insight is applied in the front end of innovation, you can drive out most commercial uncertainty. Sure, you’ll still have technical risk, but unless you’re a thrill-seeker, you should dramatically curtail the commercial risk before the development stage.

Practical steps to changed thinking…
Do you believe—as I do—that B2B innovation winners will think very differently in the future? If so, let me suggest the job of changing minds is an important first step. And not just one mind—yours—but many minds in your organization. Consider three tools…

1. Invite colleagues to visit www.catchtheinnovationwave.com to download the white paper or watch the videos.
2. Visit our Twitter, LinkedIn, or YouTube pages.
3. Keep an eye out for my new blog, Awkward Realities, which is coming soon.

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