Deep Dive: Innovating business experiences
Can a digital-age platform business model improve business experiences among B2B partners, and achieve the same (or more) impact as innovative customer experiences?
In this edition, I share insights from an in-depth conversation with Keith Williams, founder of Factrees, a digital startup on a mission to improve connections and collaborations between manufacturers, distributors, and reps. By “reps” I mean the class of independent businesses that represent manufacturers as sales agents to gain market access to customers through distributors. My goal is to explore how a digital-age platform business model (Factrees) may modernize and improve a traditional business experience. I hope to add the phrase “business experience” to B2B innovators’ lexicon, as different from “customer experiences.” Business experiences are about partnerships for creating mutual benefits. Customer experiences are about serving customers. In B2B ecosystems, there are many variations of business and customer experiences. Still, in this newsletter, I will focus on innovation opportunities in just one—the three-way “triangle” collaboration between manufacturers, distributors, and reps. I will offer what I have learned about Factrees from its founder, add ideas from my previous newsletter editions, and push further.
What is the undiscovered secret about rep-enabled business experiences?
As a digital startup, Williams is laser-focused on offering value that is immediately embraced by B2B practitioners, while at the same time remaining flexible to pivot if a better idea or add-on value emerges. In my judgment, he combines Peter Theil’s imperative to search for undiscovered secrets to transform how business is done with the tech community’s prototype-to-iterate process. In Williams’ words:
Manufacturers need reps because reps have the relationship with distributors, dealers, retailers, and any other reseller that sources products and sells them to the end customer. It’s astounding, but businesses in this triangle–manufacturers, distributors, and reps—is almost exclusively done by word of mouth and tradeshow marketing. Our idea is to build a user-friendly, scalable platform that allows these businesses to first find and then interact with each other. Our idea is not revolutionary. There are many consumer unicorns like Twitter, Facebook, Instagram, and YouTube, but our platform will be specifically for B2B, the triangle relationship. We might have elements of what LinkedIn offers as a networking platform, or be like Slack for better, faster, and secure communications. We will build, test, iterate, and pivot, but we are focused on keeping it simple, improving the ability to find and connect with reps, as a platform.
Williams is on to something. He has discovered a secret hiding in plain sight. Rep firms play a vital role in helping many manufacturers create and manage essential relationships with distributors, but finding and evaluating reps is a time-consuming and frustrating process. Manufacturers find reps by attending tradeshows, making phone calls, chasing leads, identifying potential partners, looking for recommendations, then gathering largely qualitative and unprovable information about the rep’s business acumen, buyer relationships, and customer reputations. Finding and evaluating reps through informal networks and a manual effort is a hugely inefficient process, one that is accepted because there isn’t a better alternative.
Williams’ idea is to think beyond a simple online directory and build a platform business model with features for creating and managing B2B partnerships. Unlike many platforms, Factrees is not a marketplace. Factrees does not connect sellers and buyers in the way of Amazon Business. Factrees does not offer products or services for sale. Prices are not offered or compared. The ability to select delivery options is not a feature. As a platform, Factrees is not about transactions. Instead, Factrees’ first priority is to allow manufacturers to find and evaluate rep firms and facilitate business relationships that can, in turn, help the manufacturer gain presence through distributors to the ultimate customer. By solving this secret, Factrees may gain a toehold and replace old, outdated practices and establish a new way of doing business.
In a way, Factrees’ offer may be similar to Vender Neutral, a business that offers “an easy-to-use resource that suggests sales technology solutions based on [a technology buyer’s] requirements and needs.” Vendor Neutral gathers information on technology vendors, allowing technology buyers to match features and benefits with their company’s unique sales model and business priorities. Factrees does not aim to improve a two-way relationship (like Vendor Neutral), but instead focuses on one that is three-way, represented as a triangle in the image above. Just as Factrees helps manufacturers find and evaluate distributors (through reps) to gain market coverage, it also helps distributors find and evaluate manufacturers (through reps) to fill out their line cards of products and brands. These are the first two legs, each enabled with the active help of reps at the triangle’s tip.
The third leg is about ongoing business relationships between distributors and manufacturers, represented by the horizontal leg as a direct relationship between manufacturers and distributors. Having connected both parties, Factrees may grow to help maintain lasting business relationships designed to meet performance objectives, expand to new markets, launch new products, bring other technology solutions to bear (CRM, for example), and jointly serve business customers with coordinated offerings through an efficient value chain. And perhaps more, as the non-marketplace network benefits of a platform model are put in place. Based on my B2B experience, I can imagine the future Factrees platform enabling a two-way flow of performance data to move back and forth between distributors and manufacturers, with reps jumping in when necessary to identify opportunities or fix problems. In a Thiel-ian way, Factrees may upgrade the existing manual way of finding and evaluating reps with a digital experience, and then enable human/virtual collaboration between manufacturers, distributors, and reps as the new normal.
What are the new measures of value created through a platform model?
Writing here, I introduced a revolutionary idea that platform business models are defined not by their digital technologies and network benefits, but by their ability to help users create value for other users. This is a shift in mindset about the relationship between digital technologies and human benefits. Yes, digital technologies can create exponential gains measured quantitatively such as breakthrough efficiency, productivity, and quality. But the ultimate goal is to create human benefits where business is ultimately done, in the real world. Williams offers this perspective:
Our value is created at the company-to-company level. In the triangle, each needs the others for different reasons and create value in different ways. Manufacturers need to get their products to end customers who want them. Distributors need to act as a supply chain and offer quality products they can trust. Distributors can deliver sales volumes and handle returns, if the pricing, marketing information, and product content from the manufacturers is right. But things are happening. Disruption from Amazon Business and other e-commerce platforms is making it much easier for customers to buy virtually and taking away the difficulty for manufacturers to sell direct. That domino has fallen. Distributors are threatened and manufacturers feel freer. This is a challenge for reps because they are a go-between for manufacturers and distributors. If the manufacturer/distributor partnership falls apart, reps are in a tough position. So, reps need to find ways to offer new value beyond leveraging their relationships and some of the other things they do around marketing, product management, CRM, and sales training.
As a digital startup, Factrees must create real, measurable value now in order to survey and offer even more value later. Williams’ first priority is therefore to help partners find each other and evaluate a potential fit for their business objectives. As a seasoned B2B pro, he understands current practices and issues. He seems recently focused on “keeping it simple” by solving the most pressing problems even as he iterates through experience. Over time, Factrees can help reps play a more powerful role in the triangle relationship, and by so doing, help the traditional value chain stick together and compete against the forces of disruption.
My role is to help B2B innovators think over the horizon to imagine the future and then work back to today’s plans. With that in mind, and knowing that B2B demands hard and fast measures to justify investments, I offer three futuristic measures for evaluating Factrees’, or any similar platform’s, created value:
Volatility smoothing. In my years as a channel strategist, I helped manufacturers find and recruit distributors as an old-school researcher and consultant. I created decks with evaluations of individual distributors and strategies that recommended the overall number and mix required to support the manufacturer’s brand and achieve growth objectives. And while my work was necessary and valuable, I knew that it would not last. Every manufacturer’s channel is a volatile collection of partnerships, changing almost daily in response to evolving product technologies, competitive offerings, customer preferences, economic conditions, and more. Clients hired me again when conditions changed enough to justify the expense. I suspect that Factrees’ emerging platform will provide a real-time, all-the-time alternative to the work I delivered as a consultant or that large enough manufacturers with sophisticated channel management organizations achieve without consulting help. And the platform will do the same for distributors looking up the value chain to suppliers—resulting in a more smoothly operating value chain that delivers improved services and profits for distributors, manufacturers, and ultimately, business customers.
Enhanced mindfulness. Mindfulness is about paying attention to purpose and being in the moment in a non-judgmental way. As digital technologies enable new business models, resulting in disruption and disintermediation, every B2B innovator must be mindful of changes in their marketplace and the economy. Innovators must avoid tunnel vision, which is looking only where change is expected. They must eschew personal or organizational judgments about what works and what doesn’t and seek to understand change as it happens. As new ideas gain traction, intentional mindfulness is needed to stay aware of how value is created for customers, and whether change enhances or diminishes the traditional role of value chain partnerships. By monitoring, tracking, and perhaps predicting changes on its platform, Factrees may nurture a kind of measurable mindfulness for manufacturers, distributors, and reps.
Value chain harmony. Outside disruptors win by finding friction in the status-quo business processes and product/service offerings forced on powerless customers in B2C and B2B markets. Customers change buying preferences and sources when a better mousetrap comes along. B2B innovators also look for frictions and attempt to solve them as a method for creating competitive advantage and fending off disruption. By smoothing volatility and enhancing mindfulness, Factrees may reduce frictions and reinvigorate the traditional value chain. Looking for a measure, I found that one antonym for friction is harmony. In music, harmony is defined as a “combination of simultaneously sounded musical notes to produce chords and chord progressions having a pleasing effect.” I can imagine these words repurposed to set direction and define programs for building unprecedented harmony among B2B partners.
Can community enable progress?
Communities are an established capability for digital startups and are fast becoming a critical resource for B2B innovators. In another article, I offered this explanation:
Communities satisfy essential human needs. Participating in communities creates a feeling of fellowship formed around common interests and goals. Humans create communities where none exist because of requirements for safety, belonging, and making a difference. For real-world businesses, communities are not a tool for cynically creating sales but a sincere opportunity to assist and, by doing so, to earn trust. In the best executions, communities motivate every employee and function to create value around what matters most to customers. Involvement in communities leads to a culture of service and provides meaning for work. Communities are not a means to the end but a purpose for being.
At digital startups, technology product managers enlist communities to help design the product as it is offered, iterated, and refined. For B2B innovators, communities can be used in the same way, helping to reposition incumbent brands and reinvent traditional offerings through close collaboration with business customers. Williams understands the power of communities and leveraging their capabilities for developing the Factrees platform.
It is worth saying that the core community of the triangle partnership is, of course, the manufacturers, distributors, and reps that are on the platform. The platform’s product is the connections it makes. Its services are the interactions the platform enables. These interactions may include conversations that are enabled, such as chats, scheduling of face-to-face meetings, and performance metrics measuring volatility, mindfulness, and harmony. I suspect that quantitative data may be offered, perhaps with analytics and heads-ups made possible by artificial intelligence and machine learning.
As with all communities, member involvement generates ideas, offers feedback, and promotes buy-in. Community members are on the platform, and the community will be its heart and soul, if not its brains and brawn. Factrees faces competition in the form of established practices and other digital startups. Williams’ ability to create, nurture, and leverage a community may be an essential capability for his platform’s success. Moreover, informed and forward-thinking manufacturers, distributors, and reps should inquire about community formation and plans from the start.
Join the community (by asking questions)
In what has become my habit, I am morphing my previous “ideas for innovating B2B” into questions and including them as part of joining our journey. By asking each other questions, we commit to discovery and find more secrets worthy of innovation (as Thiel encouraged in his excellent book, Zero to One.) For this newsletter, I suggest six questions for your consideration and look forward to finding answers or, perhaps, discovering better questions:
Is my distinction between business experience vs. customer experience meaningful for your innovations? Should we add business experience to our B2B lexicon?
Are you mindful of digital startups, like Factrees, attempting to innovate business and/or customer experiences in your marketplace?
Independent of Factree’s innovations and platform vision, are the reps in your marketplace looking to create new and improved value for manufacturers, distributors, or customers? (Many are, a subject I will explore in future editions.)
Is Factree’s focus on helping manufacturers find and evaluate reps as a first priority the proper focus for creating immediate and recognizable value? Why or why not?
How can Factrees’ platform (or another) create value not just for value chain partners, but for business customers? (Consider each of the business customer roles as obtainers of products or services, listed in the graphic above.)
Thinking over-the-horizon to a fully functional platform with enhanced yet-to-be-discovered capabilities, can you see volatility, mindfulness, and harmony as essential benefits? Would you suggest others? Why?
As always, please add comments or reach out to me directly (mark.dancer@bn4bi.con) to discuss this edition. I welcome your feedback, ideas, and experiences. I can arrange a conversation with Keith Williams, or you can reach him on your own at keith@factrees.com. Together, let’s kickstart the B2B revolution!