competitive differentiation

Could a New Channel Model Lead to Sales Amplification?

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Over the years I have helped both successful companies and start-ups improve and strengthen their Channel and Strategic Alliances programs. Those companies do a great job closing deals but have concerns about not generating or receiving enough new business leads, or they develop strong relationships with one or two vendors, only to find later that the vendor is now sending work to a competitor. You may not have experienced this yourself, but if you have please read on.

Word cloud for strategic thinking.

Most traditional channel models support Distributors, Resellers, OEMs, and ISVs. Business mainly flows upwards to the main vendor. If that vendor has popular and widely used products then business can be good because there is sufficient demand. But when that is not the case your sales pipeline usually suffers.

Doing something the same way as everyone else may not be a bad approach when there is enough business for everyone and your growth goals and aspirations are aligned with your competition.

Sales Channel business is usually not the main source of revenue for most companies, but it does have the potential to become the largest and most scalable revenue source for nearly any business. Just think about the money that is being left on the table by not adopting a growth mindset and executing a new and better strategy.

In the summer of 2016 I attended the “Sage Summit” in Chicago. It was impressive to see the Sage Group’s efforts to build, strengthen, and protect their community of Customers and Channel Partners. They made the effort to foster higher levels of collaboration between the various types of partners – implementation services, consulting and staff augmentation services, complementary product vendors, etc. They had created their own highly successful Business Ecosystem, which is an excellent proof point.

When designing a channel partner program my personal focus has always been on finding the balance between promoting and protecting the business of partners with helping ensure that the end customers have the best experience possible (and have some recourse when things do not work out as expected). There are a variety of methods I have used to accomplish those goals, but the missing component has always been the inclusion of a systematic approach to seed relationships between those partners and facilitate an even greater amount of business activity.

Nearly a year ago I began working with a management consultancy run by Robert Kim Wilson, which has a business vision based on his book, “They Will Be Giants.” I will provide links at the bottom of the post for this book and other relevant resources. Kim asserts that Entrepreneurs with a Purpose-Driven Business Ecosystem (PDBE) are more successful than those without one and provides examples to prove his point. Having experienced Kim’s own PDBE I see how purpose fosters trust and collaboration.

As I did more research I have found that, especially over the past two years, there has been a lot of focus placed on Business Ecosystems and Business Ecosystem Organizers (such as Sage in the earlier example). Those findings reinforced the PDBE approach, and external validation is always a good thing.

Just as important from my perspective is that this concept applies to businesses of any size, and it is especially helpful to small to midsize businesses. The fun part for me is exploring a specific business, analyzing what they do today, and quantifying the benefits of adopting this new strategy.

So, how does this new type of Business Ecosystem work?

  • The Business Ecosystem Organizer expands the overall network, vets new “Business Ecopartners,” and provides a framework or infrastructure for the various Business Ecopartners to get to know one another, exchange ideas, and discuss opportunities.
    • This can become an incredible source of sustainable revenue for companies willing to invest in the necessary components to grow and support their own Business Ecosystem.
  • Business Ecopartners will have access to trusted resources that can augment existing business and take-on new, bigger projects by leveraging the available expertise.
    • Suppose that you have products or services that work with commercial CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), or SCM (Supply Chain Management).
    • You have seen a growing demand for functionality that relies on highly specialized technologies like:
      • Cryptocurrency support.
      • Blockchain for both financial transactions and things like traceability in your supply chain or IoT data.
      • AI (artificial intelligence), ML (machine learning) to detect patterns and anomalies – such as with fraud detection, Deep Learning/Neural Networks for image recognition or other complex pattern recognition.
      • Graph databases to better understand a business and infer new ways to improve it.
      • Knowledge Graph/Semantic databases to assist with Transfer Learning and deeper understanding.
    • It would not be practical or cost-effective for most businesses to build these practices in-house so partnering becomes very attractive to your company.
      • This type of business can also be very attractive to a Business Ecopartner because someone else is handling sales, billings, account management, etc.
  • Other Business Ecopartners could leverage your products or services for their projects and engagements, thus becoming another source of revenue.
  • By leveraging this network your business can essentially compete on imagination and innovation – something that could become a huge source of differentiation from your competition.

Value realized from this New Business Ecosystem model:

  1. These new sources of business and talent can become a real competitive advantages for your business.
  2. This becomes the source for Sales Amplification because your business is extending its reach and expanding its growth potential – directly and indirectly.
  3. The weighted (based on capabilities, capacity, responsiveness, and Ecopartner feedback) Business Ecopartner network model could lead to exponential business growth over time – and that is a winning strategy for any business.

References:

https://kimwilson5.wixsite.com/theywillbegiants/the-book

https://www.bcg.com/publications/2019/emerging-art-ecosystem-management.aspx

https://www.gartner.com/smarterwithgartner/8-dimensions-of-business-ecosystems/

https://sloanreview.mit.edu/article/the-myths-and-realities-of-business-ecosystems/

https://www2.deloitte.com/us/en/pages/operations/articles/business-ecosystems.html

https://www.accenture.com/_acnmedia/pdf-56/accenture-strategy-your-role-in-the-ecosystem.pdf

https://www.bain.com/insights/shifting-from-assets-to-ecosystems-video/

https://hbr.org/2019/09/in-the-ecosystem-economy-whats-your-strategy