96% of all B2B companies have changed their go-to-market model since the pandemic hit.

Are you one of them? According to McKinsey’s B2B Decision-Maker Pulse survey 96% of all B2B businesses have changed sales model and a striking 32% believe it’s very likely that the changes will stay post-crisis. The covid-19 crisis has hit all businesses to a different extent – some have seen their demand and livelihood vanish overnight, others have seen reduced sales, revenue and increased cost and others have flourished as customers have shifted their behaviors due to lock-downs etcetera.

Being prepared – fortune or the result of strategic approach?

Some were fortunate – I have facilitated many workshops with B2B management teams the last 3-4 years discussing eg. e-commerce – whether they could risk the channel conflict with their distributors and sell directly to the end-customers or not. Often, they were reluctant. I tried to argue that in the end it’s about meeting your customer’s demand – if they prefer to buy online directly from the producer, it means the distributor is not adding enough value. And if you are not offering the possibility, the customer might turn to the producer who can. The ones who decided to make a move already then and start building an e-commerce channel, are the fortunate ones today – they had an additional channel where they could direct their customers as the crisis hit.

But is this about fortune? Is it not about being innovative, about taking the time to evaluate not only what you can improve in your business today, but actually strategize and define where you want to be tomorrow and create the roadmap and plan to achieve it?

In normal circumstances you will have the time to reflect, evaluate and decide which direction you want to choose. But the crisis forced companies to become innovative overnight.

We have all heard that “crisis is the mother of innovation” and as many struggle, it’s at the same time extremely fascinating to see how creativity and determination to find solutions to problems that have never occurred before, can be solved in a very short time-frame.

We can join forces, remove hurdles, co-operate over industries and collaborate even with competitors to find solutions and ways forward when the threat is imminent. Have a look at our Hello World episode with Yngvar Ugland, Head of DNB New TechLab, to get one great example of agility and cooperation.

Making agility second nature

Agile is the new black – and we did not even see it coming. Suddenly we are happy with releasing small solutions, testing and learning, improving and scaling as we learned more. There has frankly not been time to develop or evaluate the full solution when the need is here and now. If the crisis is the mother of innovation, then agile approaches are the methodologies of innovation. So how do we ensure that agility was not just a spur of the moment? How do we reshape the many crises “war-rooms” to a methodology that is a natural part of how we conduct business, innovate, and strategize about future business models, products and services, customer experiences and more?

Mc Kinsey’s article Innovation in a crisis: Why it is more critical than ever identifies an apparent risk. Only 25% of businesses are focusing on innovation today in comparison to the normal 60%. It’s natural, we have been forced to address issues in many areas and of different magnitudes to cope with the situation. And if you did not belong to the hospitality, travel and service industries and had to adjust overnight, your survival might not have been dependent on innovation.

But, as many as 90% believe that COVID-19 will fundamentally change the way they do business over the coming 5 years and very few (only 21%) feel they have the needed expertise, resources and commitment to explore new growth possibilities post-COVID-19. And as many as 2/3 believe this will be the most challenging moment in their careers!

Source images: McKinsey Report

How to get started?

So where do we start? How can we create processes for innovation that becomes a normal way of working, rather than an activity that you do at a certain moment because it’s part of your strategy process? How do we create a culture that encourages innovation – where innovation is a key activity – like sales, marketing, manufacturing or logistics? Yet maybe not a function of its own, but as a natural part of the previously mentioned functions’ work?

I will try to elaborate on this in a couple of coming blog posts. But for now, I just want to give an example of where you could start right now. As we come back from vacations, many businesses are looking forward to a “new normal”, starting to look ahead instead of solving the acute problems here and now. It’s a perfect opportunity to collect, identify and evaluate insights about what will be happening in your environment post COVID-19.

Few companies do a proper insight analysis regularly – evaluating market and industry forces, key trends and macro events. And if you do, even fewer are reflecting on in which way it could affect their business model – either as threats or opportunities.

Taking actions and defining initiatives that you want to pursue and evaluate – in an agile matter – as part of a business innovation? I’ve only seen this happen in a structured way in large enterprises. In my experience, middle sized B2B companies are very operative and seldom take the time, have the processes or the resources to drive a more structured innovation approach.

Take action

  1. 1. Gather the management team or why not an extended team including different parts of your company’s functions. Cross-functional teams will give you the greatest understanding of both your current business model but not the least the effects on it when you have identified what is happening in your business environment. Set aside half a day for the workshop.
  2. 2. Start using tools like the business model canvas by Alexander Osterwalder to describe your current business model. It will help you visualize, create a shared language and common understanding of your business model, the dependencies, and patterns. Not the least important if you have more than one business model.
  3. 3. Map your current business model and then divide into groups and start addressing Market forces – what is happening on the market side that can affect your business model, Industry forces – what is happening in the industry or adjacent industries that might affect you and last but not least which key trends and macro events will have an impact on your business model. Then you need to do exactly that – not only identifying the factors, but actually considering how it affects you. What are the threats and opportunities, which scenarios could play out and how should you prepare to react to those? Conclude in a SWOT and define actions to be taken to continue evaluating and understanding the scenarios you find most likely – both in terms of threats as well as opportunities.

You are on your way

You are now on your way to a more structured approach to business innovation! You will need more tools in your toolbox to continue the process and I will describe the next steps in coming blog posts.

I will end this blog post with emphasizing the headline of the McKinsey report – Innovation is critical, now more than ever! What do you want to continue doing post-crisis, what do you want to scale up, what do you want to reduce, and not the least what do you HAVE to remove?

If you have reflections, questions or want some help getting started, maybe with the exercise above – reach out to me at kim.hedberg@stratiteq.com or via the below contact form.