Are B2B Companies Slower Adaptors of Open Innovation?
As I am about to do an open innovation session for a B2B company, I got to think about this question once again and since it works well for a good discussion, let me start out with a couple of remarks:
- B2B companies are actually just as good as consumer goods companies on open innovation, but the latter are just more visible when it comes to open innovation initiatives. A reason for this could be that the products and brands of consumer goods companies are better known and thus we hear more about these companies.
- B2B companies have longer development cycles and thus it takes longer for them to adapt to open innovation.
- B2B companies have more engineers working on innovation relative to fast moving consumer goods companies that have a more holistic approach, which to a higher degree include other functions such as sales, marketing and supply-chain in their innovation efforts. This could lead to a stronger focus on traditional, internal focus for B2B companies.
Personally, I lean towards the view that many B2B companies are slower (compared to B2C) adaptors and that they have an untapped potential on open innovation. The good thing is that many B2B companies have realized the value in this potential and thus there are lots of interesting initiatives going on. We just don’t hear too much about this.
Not so long ago, I also wrote a blog post on the differences and similarities on open innovation between B2B and B2C companies. Here they are:
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.
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 is your take on this topic of open innovation for B2B companies?