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Thoughts about B2B (business to business) Product Thinking

2022-09-24

Recently I was approached by a person who wanted advice about an idea he had for a product in the logistics and planning realm.

I started with generic product management 101 tips: The most commot pitfall I noticed is the immedaite rush to "solutioninzing" before investing enough time on the problem defintion:

  1. Clearly defining the problem they are trying to solve
  2. Validating that indeed this problem exist
  3. Sizing the problem

Business to Business nuances

In B2B the problem world is even more convoluted, and one should differentiate between the users of the system and the buyers. In the corporate world these are different people with different incentives.

Imagine a bussiness application that helps factories purchase raw materials, manage invenstory, produce finished goods, etc.

Say that the user interface of the app sucks and it takes 2X time to go through every process vs an alternate system.

Who suffers? clearly the user. It may mean that one would need 10% more personel in order to achieve the same tasks with the system.

If you interview the user of the app (say the production line worked) you will clearly get the sense of an urgent problem that must be resolved. Clearly you now have a winner 🎉 and the problem step is done.

But is it?

Let's now assumesay that other than that UX issue the systems are identical and replacing one system with the other would cost 5M$.

It should now be clear that unless the cost of your personel is 50M$ there is no incencntive on the management (the buyser) side to take any action, and they will happily pay the "tax" of 10% overhead. After all there is no good ROI at sight.

Some tips

Clearly understand who has the buying decision and her incentives. Sometimes it may even be a commitee of people. In such case, one needs to figure out the power balance within that group and the individual incentives.

It is very rare that users' issues are a good problem to go after in the B2B world. That is the reason why ERP (Enterprise Resource Planning) systems like SAP and Oracle have such old style UIs. It is not that no one cares. it is just that there is not enough ROI for SAP and Oracle to invest in these area as the buyers of these systems care more about other things such as accurate planning prediction, less defects, etc.

In fact the only exception I can think of is Slack. They were after the users' problems (the developers) and worked their way up to management, convincing them that purchasing a chat like communication system is a good idea. It is a rate case where the incentives of both sides, the buyers and the users, overlapped. For the users better communication means better outcome. And managment (buyers) ❤️ better outcome.

OK,you found the buyer. now ask yourself whether the problem you found interest her.

Usually in B2B we are talking about either cost savings or increased revenues. The latter is better as the price one can ask is not capped. In cost saving it is capped buy the saving's one can achieve. Increasing revenues however is in most cases, more challenging.

I will wrap with an insightful tweet about B2B strategy. Maybe a topic for a different post.

Made by Amir 💚