Amazon’s “two pizza rule” reminds us how small, nimble, tuned-in teams can outpace their lumbering, over matrixed rivals. Groups of small teams are more adaptable to customer needs, tend to foster deeper customer intimacy, and are easier to manage. We see this in the software business as large, tightly coupled suites (AKA monoliths) are consistently outmaneuvered by SaaS innovators. But this is also the case with B2B manufacturers, distributors, and retailers as they struggle to move up the digital maturity curve.
Agile approaches and small teams (ones you can feed with two pizzas!) can be the key to unlocking innovation — and being more responsive to digital-first buyers. And an ecosystem approach to value creation can similarly outpace the vertically integrated value chains. How so? By exploring marketplaces as a means to test new markets and better engage buyers. And by having the right digital product managers and API-savvy techies to play with all the capabilities and services you need to own the entire customer lifecycle.
Already, we see evidence that B2B sellers and their partners are adopting ecosystem thinking far and wide. This trend will only accelerate in 2020. Those that don’t embrace this way of thinking will be left with their own captive (dwindling) markets.
Manufacturers will need more helpers to reach digital buyers. With the shift to online selling, more sellers will engage affinity- and affiliate-type partners that are nontransactional but influential in the early buying journey. Top brands will not only double down on these relationships but will also make new investments in order management systems to plug into ecosystems. A few will outsource their marketing and sales to these digital experts or even PE firms that look to launch new types of marketplaces/next-gen distributors and go after underserved niches or emerging industry segments. (Look for more coverage of these types of vertical solutions and apps from our team in early 2020.)
Megavendors will pivot away from acquired legacy platforms. We know the cost to refactor old platforms continues to mount, not only because it’s harder to find tech talent that wants to work on the “old stuff” but also because the opportunity costs mount. We see partnerships and behind-the-scenes cloud OEM activity picking up pace in 2020 for this reason, resulting in more modern — and vertical — solutions. Meanwhile, for the big vendors (SAP, Oracle, Salesforce, etc.), investor pressure to grow revenues and margins will drive investments in both SaaS startups and the marketplaces to support them.
2020 looks to be a time of simplifying and reorienting approaches for B2B sellers and the tech and services partners that serve them. See our full predictions report to understand why ecosystems will be the unifying theme up and down the value chain. To understand the major dynamics that will impact firms across industries next year, download Forrester’s Predictions 2020 guide.
This post was written by Senior Analyst Joe Cicman, and originally appeared here.