B2B Innovation Curve

February 27, 2009  

In my previous article on the “innovation bell curve,” I introduced the new bi-modal innovation curve.  Yesterday I gave a speech for Babson College MBA students.  One of the attendees asked how this bell curve worked for the B2B environment (versus B2C).

Great question – and a harder one to answer.  The reason it is harder is the psychology behind the buying decision.

I wrote about B2B versus B2C innovation a while back.

B2C purchases are made for both functional and emotional reasons.  Functionally, a Lexus is similar to a Toyota.  But there is an emotional component that makes the former more appealing.  People often don’t just buy transportation, they also buy comfort, status, peer pressure and other less tangible attributes.

B2B purchases are made for primarily functional reasons.  At the end of the day, the main purpose of a B2B purchase is to solve a particular business need. Yes, there are examples of B2B companies on the right-hand side of the bell curve.  But quite often, these are luxury B2C brands that insist on high-quality, branded materials.  In this case, the B2B provider is an extension of the B2C brand.

B2B companies, for the most part, play in the left-hand side of the bi-modal curve.  Buyers of B2B products/services want:

  • Someone who is easy to do business with
  • High quality – they want it right, and they want it right now
  • Cost is always a factor

Or, as Dr. Michael Hammer (the father of Business Reengineering) used to say, “People want it fast, right, cheap and easy.”

Yes, there are emotional reasons why B2B purchases are made.  Back in the 1980’s, executives used to joke that you would never get fired for buying “Big Blue” (IBM) computers. It’s not that IBM was the best, but you knew they would not screw up.  If you bought a computer from someone else and things didn’t work out, you might lose your job.  But you were always safe buying the more expensive IBM boxes.

But even this emotional decision resides in the left-side of the curve. It is the emotional connection to the value you are getting that is at play.  Value in the B2B world is defined a bit differently.  That’s all.

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3 Responses to “B2B Innovation Curve”

  1. Joseph Hoyt on February 27th, 2009 11:00 am

    Stephen:

    Thanks for taking the time to visit us Babson MBAs yesterday. I thought your presentation was very insightful and opened my mind to different innovation methods.

    Quick question about the bi-model innovation curve: with the state of the economy and the fact that consumers are looking for less expensive goods, doesn’t this imply that the left side of the curve should be higher than the right side?

    Thanks again,

    Joseph

  2. Stephen Shapiro on February 27th, 2009 11:53 am

    Joseph,

    It was great spending time with the Babson students.

    And you are absolutely right about the left-bell curve being bigger than the right. Regardless of economic conditions, that is true. The right-hand side is a more niched and specialized consumer. There are fewer people who have the money or the requirements for something that sophisticated.

    If it were drawn accurately based on volume, even the middle would be higher than the right-hand side. The problem is, the middle tends to be lower margins. The right can survive with smaller volume due to higher margins. People are willing to pay a premium for something that performs at the highest levels.

    Thanks again.

  3. PTLdom on March 6th, 2009 1:01 pm

    And so, a “value” brand is valued.