Innovation in B2B

There are many definitions for B2B innovation. Some definitions can be aimed at better understanding buyer behaviour (read our definition of B2B buyer behaviour), value creation, the design of new business models, the commercialisation of new products, or the ability of a large company to adapt to its environment, etc.

B2B Innovation: Definition, Tools, Methods, and Limitations

B2B innovation can be defined theoretically. Nonetheless, innovating in B2B markets is always, as Paul Millier would have it, marketing the unknown.

Despite our desire for ready-made recipes, innovation is, by definition, a “foray into the unknown.” Therefore, trying to find a methodology for innovation is an oxymoron.

Paul Millier declared, “The truth lies somewhere between methodology and creativity. The definition of innovation in B2B is also a matter of judgment, one could say that innovation is in the eyes of the beholder.”

In line with a company’s strategy, innovation management consists of implementing resources (financial, human, etc.), processes (project management, research planning, etc.), and audits (monitoring, marketing studies, quality, FMEA, TRIZ, feedback, etc.). By implementing these, it is possible to channel the energies of inventors, engineers, and company staff to build and develop an array of skills.

The Limitations of Theoretical Approaches to B2B Innovation

There are many limitations to innovative approaches in B2B. In his book, “The Myths of Innovation,” Scott Berkun debunks several preconceived notions and myths, including:

    1. The myth of the epiphany
    2. Innovation is a repeatable historical process
    3. Innovation is a method
    4. People love new ideas
    5. The maverick innovator
    6. Ideas are hard to come by
    7. Your boss knows more about innovation than you do
    8. The best idea wins
    9. The problems and solutions
    10. Innovation is always good

We invite you to discover these preconceived myths in the article “10 innovation myths torn apart by Scott Berkun.”

In his book « Crossing the Chasm, » Geoffrey Moore explains how to bridge the gap between the initial invention and the success of product innovation.

He starts from the following observation: when an ‘innovative’ technological product is offered to the market, initially, it may be very successful, and then, once massive investments have been made to support its commercial development, it fails.

innovation definition b2b
Geoffrey Moore’s theory humorously reviewed by Tom Fishburne
definition innovation b2b
© “Crossing the Chasm”, by Geoffrey Moore

Geoffrey Moore points out in his book that the technology adoption cycle is made of several stages and the most complicated step is crossing the gap between technology enthusiasts/visionaries (in other words, “early adopters”) and pragmatists. These buyers make up a large part of the market. They will be followed by conservatives, who are even more difficult to convince.

Trends and Innovations in B2B Innovation

As Paul Millier reminds us, there are two approaches to innovation: one is the offensive approach and the other is the defensive approach. Offensive companies are often referred to as “leaders,” and those who engage in more defensive behaviour are called “followers.”

Finally, a third strategy is segmentation. It consists in very finely segmenting the market to serve niches that competitors have not identified.

“There is no silver bullet guaranteeing success in innovation. Therefore, everyone can be successful if they take the appropriate steps. Trailblazers have an advantage over others because they learn faster from their own experiences than observers.” Beware, however, because as Paul Millier notes, you still have to choose the right experience curve to avoid fighting the wrong battle.

Tools and Methods

There are multiple methods used by B2B innovators. The three main ones are used in start-ups but also, increasingly, in large businesses:

Design Thinking

This method places people and their expectations at the heart of the innovation process. It is based on empathy, that is the ability to put oneself in other people’s shoes to understand their needs.

Unlike traditional linear projects, the logic is incremental and follows a cycle of three main stages: inspiration, ideation, and implementation. The testing phases are ubiquitous and not necessarily focused on implementation.

process
The Design Thinking innovation process (c) Wikimedia Deutschland e. V. / CC BY-SA

The Business Model Canvas

Alexander Osterwalder and Yves Pigneur invented the Business Canvas Model. As its name suggests, it is a canvas composed of 9 blocks relating to the four major dimensions of the company: customers, offer, infrastructure and financial capacity.

In the following video, Alexander Osterwalder explains that the more you learn from your customers and prospects, by asking them questions, the more you hedge the risk associated with innovation:

“Innovation is neither expensive nor risky when done well. And ‘well’ means that I admit that I don’t know if it will work and that I will test it first before implementing it. The ideation process is not the most difficult part of innovation and entrepreneurship. The crux of the problem is about transforming an idea into a value proposition that interests customers into a business model that allows me to earn money in the long run,” he explains in this video.

The Lean Start-Up Method

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Example of a Business Model Canvas © Elygren / CC BY-SA https://creativecommons.org/licenses/by-sa/4.0/

Eric Ries invented the lean start-up method which aims to change the way start-ups develop and the way entrepreneurship projects are conducted.

When the environment becomes very uncertain, a “lean start-up” must focus primarily on two growth drivers: capital and human creativity.

It is based on trial and error and a series of fast-track assessments that can help shorten product development cycles, measure progress, and learn what customers want.

The method recommends starting small with products containing only the essential functions (Minimum Viable Product / MVP) and launching them as soon as possible to test the market.

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