Understand the three reasons for B2B bottlenecks and how different operations call for unique solutions.
B2B products are not immune to bottlenecks. The best method is to analyze the root cause and confront it head-on. Here are some views on how we can deal with a B2B bottleneck.
Why are B2B products stuck in a bottleneck?
There are three reasons for this: first, the relatively stable business form and management mode; second, the saturation of the B2B market; and third, the diminishing marginal effect of developing B2B products.
1. The business form and management mode are relatively stable
According to industry elite Zhou Xiang, "B2B products are digital tools that reflect the business management thought." B2B products are not just products for enterprises or back end operating systems. They reflect the management thoughts of enterprises under a type of business structure. To realize a sound management system, you need to digitize abstract business ideas and turn complex business processes into measurable data. The purpose of digitization is to bridge the information gap among production, operation, and other business processes such that digital value can turn into commercial value.
When the business environment is stable, and solutions are readily available in corresponding fields, there will be limited prospects for developing successful B2B products. In such situations, the performance of a B2B product manager depends on the breakthroughs in business operation and management.
First is the breakthroughs in business operation. When entering a new business area, there is a need to re-digitalize the business processes and gain insights through new projects. One example of such would be the expansion of the distribution business in e-commerce platforms.
Second, breakthroughs in the mode of management. This can happen due to changes in organizational structure or business priorities. A breakthrough here means an improvement, optimization or making better decisions in business management. The shift in business structure and mode of management will result in changes in B2B products. However, if both drivers are present, we need to look inwards and dive deeper into B2B itself.
2. The marginal effect of B2B products starts to decline
The second factor for B2B product stagnation is related to the marginal effect of B2B products. As a B2B product reaches its mature stage, there is little room for improvement, and therefore its marginal effect will begin to decline. This generally occurs at the platform stage.
With the diffusion of demand, B2B products will gradually evolve from a function to a system and a platform. For example, the demand to view transaction data is met by the corresponding functions of reporting, storage, sorting, output, and data presentation. A case report will show such a demand at the initial stage.
When the demand is gradually diversified, accompanied by the increase in dimensional query and data type, the existing functions will form a reporting system progressively. This system is not complete as it solves only one kind of problem.
Platforms are integrated solutions that collate systems to solve more problems in a complete and closed-loop way. When a B2B product reaches the platform stage, the product is approaching maturity. At this level, a side branch way of development is possible, but the rewards are little. Another way is to jump from one product to another. Yet, we may encounter other boundary-related problems. The demand that needs solution could have already been well-solved, or it may be the case that we do not have the right capability to address the demand. As a result, a mature B2B product should maintain its stability.
What are the solutions?
If it is inevitable or highly possible for B2B managers to experience bottlenecks, what are the available solutions? Which option is more meaningful and valuable? The obvious answer is to go for a more efficient solution.
The above image is a quick summary of the efficient solutions available. It is crucial to note that high efficiency does not make something more valuable, and being valuable does not mean that it is essential, do not blindly follow solutions for the sake of doing it.
The transformation from offline to online business can be understood as standardization and digitalization, which are also one of the core directions of Internet products. We can think about which business process within the product's range are still being done offline and digitalize them accordingly.
Automatic, parallel, and intelligent operations can run separately or combined. Manually operated processes should be optimized into automatic and parallel step, while manual decisions should utilize models to realize intelligence and automation. The above methods apply to low-end B2B products. For mature B2B products, more is needed.
The ultimate goal of platformization is commercialization, and this is done by shifting the focus from internal to external. Yet, only a few firms are making efforts in this direction. Therefore, firms with mature B2B products need to run deep in their operations, tie in the KPIs, and help the businesses grow.
Why dive deep into the business operation?
As the value of B2B products reaches the ceiling, we need to consider a sustainable form of value creation. As B2B products serve to grow business value, a deep understanding of operations is crucial. Currently, this understanding is incomprehensive and superficial, but this is due to the characteristics of B2B products and their revenue scale.
1. Characteristics of B2B products
Enterprises or organizations use B2B products to solve problems in a specific field. As they focus on helping clients complete part of their work, B2B products are strongly characterized as a ‘tool’, which provides a form of capability. Often, B2B products only transform a business model into a product, and they rarely interfere with the actual operations. As a result, it is hard for B2B firms to understand the client's business. When addressing a specific client need without an in-depth understanding of the importance of the project and the underlying logic, the impact of the B2B product will remain superficial.
2. The B2B revenue scale
Revenue scale is related to the product stage.
The first product stage is construction. At this stage, the goal is to digitize the business, which starts from scratch. The next stage is growth. This happens after the construction period when the business is up and running. We then quantify the benefits of this product. The last stage is expansion, which occurs after platformization. At this stage, the platform can seamlessly link upstream and downstream processes, provide services and even commercialize the platform. If there is no commercialization or commercialization fails, the economic benefits reaped may be less than 1% of business growth.
The failure to commercialize does not mean that the B2B platform lacks efficiency or effectiveness. It suggests that growth is limited as it targets only a specific group, and businesses scale quickly. Based on the two factors above, B2B products need to create business value continuously.
How to dive deep into operations
Without essential resources, it is impossible to intervene in the business in-depth. Therefore, you need to master the long tail business and have a say in the core business.
Yet sometimes we choose not to start from core business mainly because we cannot. Without any achievements or foundation, a lot of time and effort will be wasted on networking to have the chance to run the core operations. Under such conditions, we need to switch a method. Long-tail business can be discovered by establishing our own set of measurements. We need to know the current operating situation and which parts have been effectively operated to target the undiscovered or ineffective processes. Afterwards, we can generate suitable strategies and achieve success. This allows us to get involved in the core business.
While this method feels difficult, there is a chance to gain fundamental knowledge in practice.
Conclusion
To combat anxiety, we should identify the cause and deal with it. However, do not be overly bothered if nothing is done. Businesses always move from disorder to order and from infancy to maturity. B2B bottlenecks are inevitable, so stay patient and give ourselves more time.
