The Evolution of B2B: Part I
The B2B industry is 5x that of its B2C counterpart, at a global $18 trillion, and as you may have noticed through our previous articles, we don’t think B2B players get the spotlight they deserve! We firmly believe that B2B marketplaces and platforms have the power to supercharge industries by offering modern, digital infrastructure that acts as fertile ground for entrepreneurship. B2B enterprises are essential to the supply chain and as such it’s crucial for global economic growth that the power of these businesses is harnessed and developed — that’s why we do what we do at Verb! This article delves into the evolution of the industry, tracing the journey from traditional, transactional exchanges to the nuanced, collaborative ecosystems and marketplaces of today. As digital platforms reshape the landscape, B2B marketplaces emerge as pivotal arenas for innovation, efficiency, and global connectivity. We explore how these platforms have become the linchpins of modern commerce, enabling businesses to cross geographical boundaries, harness technological innovations, and foster sustainable growth strategies through collaboration.
The Traditional View of B2B Partnerships
The traditional model of B2B partnerships was often a reflection of the industrial age’s linear and hierarchical approach to business. In this model, relationships were largely transactional and defined by a clear-cut hierarchy: suppliers provided goods or services, and buyers provided compensation. The roles were distinct; a supplier in the automotive industry, for example, would deliver parts to a manufacturer, who would then use them to assemble vehicles. The interaction was limited to the exchange of commodities and payment, with little emphasis on shared innovation or long-term mutual growth.
In such a framework, partnerships were often seen as zero-sum games where one party’s gain was perceived as another’s loss. Negotiations were tough, with cost and efficiency being the primary drivers. The focus was on the short-term fulfilment of immediate needs, such as meeting quarterly production targets or reducing expenditure for the next financial cycle.
However, as markets have become more global and competitive, this traditional view has been challenged. The acceleration of technological advancement and the rapid pace of change have created an environment where no single company can solely rely on its internal capabilities. Collaboration has become a vital component of innovation and success.
The B2B sector has recognised the necessity for a more integrated approach, where partnerships are not just about buying and selling but about sharing knowledge, resources, and expertise. This shift is driven by several factors:
- Complexity of Products and Services: As products and services become more complex, businesses require a range of specialized knowledge and skills that often extend beyond their core competencies.
- Speed of Innovation: The increasing speed of technological change means companies must collaborate to stay ahead of the curve. In sectors like information technology, for example, companies often form alliances to co-develop products that combine their respective strengths.
- Globalisation: The expansion of global markets has introduced new challenges and opportunities, necessitating collaborations that can navigate different regulatory environments and cultural landscapes.
- Sustainability Goals: There is a growing emphasis on sustainability, which often requires companies to work together to achieve environmental goals, such as reducing carbon emissions along the supply chain.
Evolution of B2B partnerships in recent years:
In recent years, the landscape of B2B partnerships has undergone a significant transformation, driven by the need for innovation and agility in an increasingly competitive market environment. A noteworthy example of this evolution can be observed in the technology sector, particularly in cloud computing and software-as-a-service (SaaS) industries. Companies like Microsoft and Salesforce have embraced collaborative partnerships with independent software vendors (ISVs) to expand the functionality and reach of their cloud platforms. These partnerships involve joint development efforts and integrations that allow ISVs to build and deploy applications on the cloud platforms, leveraging the scalability and flexibility of cloud infrastructure. For instance, Salesforce’s AppExchange marketplace enables ISVs to offer their solutions to Salesforce customers, fostering a vibrant ecosystem of third-party applications that complement its core CRM platform. This collaborative approach not only enhances the value proposition for customers but also drives revenue growth for both platform providers and ISVs.
Factors contributing to the increasing importance of collaboration in the B2B space
Several factors have contributed to the growing emphasis on collaboration in the B2B sector across various industries.
One significant factor is the rise of digital transformation initiatives, which have accelerated the adoption of cloud-based technologies and software solutions. As businesses increasingly rely on digital tools and platforms to streamline operations and engage with customers, there is a greater demand for integrated solutions that can address complex business challenges. For example, in the retail industry, e-commerce platforms like Shopify have formed strategic partnerships with payment processors and logistics providers to offer merchants a comprehensive suite of services for online selling. By collaborating with payment processors such as PayPal and Stripe, Shopify enables merchants to accept various payment methods seamlessly, while partnerships with logistics providers like UPS and FedEx facilitate order fulfilment and shipping. These collaborative efforts streamline the e-commerce experience for merchants and customers alike, driving growth and competitiveness in the retail sector.
Additionally, the interconnected nature of global supply chains has made collaboration essential for addressing sustainability and ethical considerations. Companies across industries are partnering with suppliers and industry stakeholders to promote responsible sourcing practices, reduce environmental impact, and ensure compliance with regulatory standards. For instance, in the food and beverage industry, companies like Nestlé and Unilever have established collaborative initiatives with farmers and agricultural suppliers to promote sustainable farming practices and improve supply chain transparency. These partnerships focus on implementing initiatives such as responsible sourcing programs, farmer training workshops, and supply chain traceability systems to enhance sustainability and resilience in the food supply chain. By working together with suppliers and other stakeholders, companies can mitigate risks, enhance brand reputation, and create shared value for communities and the environment.
These examples illustrate how collaboration is reshaping traditional views and practices regarding partnerships in the B2B sector, driving innovation, sustainability, and value creation across diverse industries.
Examples of collaborative efforts driving innovation in B2B:
- IBM and Maersk’s TradeLens: TradeLens is a blockchain-based platform developed by IBM and Maersk to digitize and streamline global trade processes. By collaborating, the two companies have transformed traditional paper-based trade documentation, reducing delays and errors while increasing transparency and security. TradeLens now boasted over 150 participants, including port operators, freight forwarders, and customs authorities, demonstrating the power of collaboration to drive innovation across the entire supply chain.
- Philips and Nuance Communications: Philips and Nuance Communications collaborated to develop AI-powered solutions for healthcare providers. Their partnership resulted in the creation of the Philips IntelliSpace AI Workflow Suite, which uses artificial intelligence to assist radiologists and clinicians in analyzing medical images more efficiently. By combining Philips’ expertise in medical imaging with Nuance’s natural language processing capabilities, the two companies have accelerated the adoption of AI in healthcare, improving patient outcomes and driving operational efficiencies for healthcare providers.
- Google and Nest: Google collaborated with Nest, a startup focused on smart home technology, to integrate Nest’s thermostats and security cameras with Google’s ecosystem of products and services. This collaboration enabled Google to expand its offerings in the smart home market and provide customers with seamless integration between Google Assistant and Nest devices. The success of this collaboration led to the acquisition of Nest by Google’s parent company, Alphabet, in 2014.
- Salesforce and Slack: Salesforce, a leading provider of customer relationship management (CRM) software, announced its acquisition of Slack, a startup known for its collaboration platform, in 2020. By integrating Slack’s messaging and productivity tools with Salesforce’s CRM platform, the two companies aim to create a unified digital workspace for teams to collaborate and connect with customers more effectively. This collaboration enables Salesforce to enhance its offerings and compete more effectively in the rapidly evolving digital workplace market.
- Amazon and Ring: Amazon acquired Ring, a startup specializing in smart doorbell and home security systems, in 2018. Through this collaboration, Amazon expanded its presence in the smart home market and integrated Ring’s products with its ecosystem of devices and services, including Alexa and Amazon Key. The success of this collaboration has enabled Amazon to offer customers innovative home security solutions and drive growth in its smart home business segment.
- Microsoft and GitHub: Microsoft acquired GitHub, a startup providing a platform for software development and collaboration, in 2018. By integrating GitHub’s code repository and collaboration tools with its Azure cloud platform and developer tools, Microsoft aims to empower developers to build, collaborate, and innovate more efficiently. This collaboration has strengthened Microsoft’s position in the developer community and accelerated its growth in the cloud computing market.
- Uber and Visa: Uber partnered with Visa to launch the Uber Visa Card, a credit card tailored to the needs of Uber customers. The card offers rewards and benefits for Uber rides and UberEATS purchases, providing additional value to users and strengthening customer loyalty. This collaboration also allowed Uber to tap into Visa’s extensive network of financial institutions and payment processing capabilities.
Evolution of collaboration…
It’s important to understand the nuances and different forms of collaboration that have formed over recent history. B2B has evolved through innovation and as such this extends to entrepreneurship with regards to how relationships are built. There are three key areas of collaboration that have emerged; Joint ventures, strategic alliances and eco-system partnerships
Joint ventures
Joint ventures involve the creation of a new entity by two or more companies, typically with shared ownership and control. These entities operate as separate legal entities and often have their own management teams and governance structures. Joint ventures allow companies to combine their resources, expertise, and capabilities to pursue shared objectives while sharing risks and rewards.
- Prime Planet Energy & Solutions (Toyota and Panasonic): Toyota and Panasonic formed a joint venture, Prime Planet Energy & Solutions, to develop and produce high-performance batteries for electric vehicles. By combining Toyota’s expertise in automotive manufacturing with Panasonic’s battery technology, the joint venture aims to accelerate the development and commercialization of electric vehicle batteries, supporting the transition to sustainable mobility.
- Sony Ericsson (Sony and Ericsson): Sony and Ericsson formed a joint venture, Sony Ericsson, to develop and manufacture mobile phones. This collaboration allowed Sony to leverage Ericsson’s expertise in telecommunications technology and expand its presence in the mobile phone market. Sony Ericsson became a leading player in the industry, producing iconic phones like the Sony Ericsson Walkman series.
- New United Motor Manufacturing, Inc. (NUMMI) (General Motors and Toyota): General Motors (GM) and Toyota established the New United Motor Manufacturing, Inc. (NUMMI) joint venture to produce vehicles in the United States. By combining GM’s manufacturing facilities with Toyota’s production methods and quality control systems, NUMMI became known for its innovative approach to manufacturing, producing vehicles like the Toyota Corolla and Chevrolet Nova.
- United Launch Alliance (ULA) (Boeing and Lockheed Martin): Boeing and Lockheed Martin formed the United Launch Alliance (ULA) joint venture to provide launch services for government and commercial satellite missions. ULA combines the launch vehicle fleets of both companies to offer reliable and cost-effective access to space, supporting missions for NASA, the Department of Defense, and commercial satellite operators.
Strategic alliances
Strategic alliances are collaborative agreements between companies to pursue shared objectives while remaining independent entities. Unlike joint ventures, strategic alliances do not involve the creation of a new entity but instead focus on cooperation and collaboration between the partnering companies. Strategic alliances allow companies to leverage each other’s strengths, resources, and networks to achieve common goals and create mutual value.
- Walmart and IBM: Walmart partnered with IBM to use blockchain technology to enhance food traceability and safety in its supply chain. Through this strategic alliance, Walmart and IBM developed a blockchain-based system that enables real-time tracking and tracing of food products from farm to store. By collaborating, Walmart and IBM can ensure transparency, integrity, and compliance with food safety regulations, enhancing consumer trust and confidence in the food supply chain.
- Apple and Nike: Apple and Nike formed a strategic alliance to integrate Nike’s fitness tracking technology with Apple’s devices and ecosystem. This collaboration led to the development of the Nike+ app for iOS devices, allowing users to track their workouts and sync data with their Apple Watch and iPhone. The partnership enhances the fitness experience for Apple and Nike customers, driving engagement and brand loyalty.
- Starbucks and Spotify: Starbucks partnered with Spotify to integrate Spotify’s music streaming service into the Starbucks mobile app. This strategic alliance allows Starbucks customers to discover and play music while visiting Starbucks stores, enhancing the in-store experience and driving customer engagement. The collaboration also includes personalized playlists and promotions for Starbucks Rewards members.
- Nestlé and Starbucks (Nespresso Starbucks): Nestlé and Starbucks formed a strategic alliance to create and market Starbucks-branded coffee products for home consumption. This collaboration combines Nestlé’s distribution network and marketing expertise with Starbucks’ premium coffee brands, expanding the availability of Starbucks products in grocery stores and online channels worldwide.
Ecosystem partnerships:
Ecosystem partnerships involve collaboration within a broader network of companies to create value for customers and stakeholders. These partnerships leverage the strengths and capabilities of multiple companies to deliver integrated solutions and seamless experiences to customers. Ecosystem partnerships often involve the integration of platforms, products, and services to enhance the overall value proposition for customers.
- Amazon and Whole Foods Market: Amazon acquired Whole Foods Market and integrated its products into the Amazon ecosystem, offering benefits such as Prime member discounts and grocery delivery through Amazon Fresh. This ecosystem partnership expands Amazon’s reach in the grocery industry and enhances the value proposition for Prime members, driving customer loyalty and sales.
- Google and Android ecosystem partners: Google collaborates with a wide range of ecosystem partners, including device manufacturers, app developers, and service providers, to create and maintain the Android ecosystem. This collaboration enables device interoperability, app compatibility, and access to Google Play services, enhancing the overall Android experience for users and driving adoption of Google’s products and services.
- Microsoft and LinkedIn: Microsoft acquired LinkedIn and integrated its professional networking platform into the Microsoft ecosystem, offering features such as LinkedIn integration in Microsoft Office applications and personalized recommendations in Windows 10. This ecosystem partnership enhances Microsoft’s productivity and cloud offerings, providing value to enterprise customers and driving user engagement on LinkedIn.
These examples illustrate how different types of collaborations — joint ventures, strategic alliances, and ecosystem partnerships — enable companies to leverage each other’s strengths and capabilities to achieve common objectives, create mutual value, and deliver innovative solutions to customers. Each type of collaboration offers unique benefits and opportunities for companies to drive growth, innovation, and competitive advantage in the market.
Collaborative efforts offer several benefits compared to traditional partnership models, including:
Access to complementary resources and expertise
Collaborative efforts enable companies to access resources, technologies, and expertise that they may not possess internally. By pooling their strengths, companies can innovate more effectively and develop solutions that address complex challenges.
- IBM and Apple: The partnership between IBM and Apple to develop enterprise mobile applications is a prime example. IBM brings its industry-specific knowledge and enterprise software solutions, while Apple contributes its design and user experience expertise. Together, they create innovative solutions that meet the needs of businesses across various sectors.
- Novartis and Alphabet’s Verily: Novartis partnered with Alphabet’s Verily to develop smart contact lenses for managing diabetes. Novartis, with its expertise in pharmaceuticals, collaborates with Verily’s advanced technology and data analytics capabilities to create a revolutionary medical device that monitors glucose levels in real-time.
Shared risks and costs:
Collaborative efforts allow companies to share the risks and costs associated with developing new products or entering new markets. By sharing financial burdens, companies can pursue ambitious projects that may be too costly or risky to undertake alone.
- SpaceX and NASA: The partnership between SpaceX and NASA to develop commercial spaceflight capabilities is a notable example. By collaborating, SpaceX and NASA share the costs of research, development, and infrastructure required for space exploration. This partnership has led to groundbreaking achievements such as the Crew Dragon spacecraft, which transports astronauts to and from the International Space Station.
- Mercedes-Benz and NVIDIA: Mercedes-Benz collaborated with NVIDIA to develop an advanced AI-powered computing platform for its vehicles. By leveraging NVIDIA’s expertise in artificial intelligence and autonomous driving technology, Mercedes-Benz reduces the costs and risks associated with developing in-house solutions. This collaboration accelerates the deployment of advanced driver-assistance systems and paves the way for autonomous vehicles.
Enhanced market reach and customer value:
Collaborative efforts enable companies to reach new markets and customer segments more effectively, expanding their market reach and enhancing customer value.
- Starbucks and Nestlé: The partnership between Starbucks and Nestlé to distribute Starbucks branded coffee products through Nestlé’s global distribution network is a compelling example. This collaboration extends Starbucks’ reach beyond its own retail stores and enhances customer value by making its products more accessible to consumers worldwide.
- Amazon and Berkshire Hathaway and JPMorgan Chase: Amazon, Berkshire Hathaway, and JPMorgan Chase formed a collaborative healthcare venture called Haven. This partnership aims to improve healthcare outcomes and reduce costs for employees of the participating companies. By leveraging their collective resources and expertise, Haven seeks to disrupt the traditional healthcare model and create a more patient-centric and affordable system.
Faster time-to-market and agility:
Collaboration accelerates innovation and time-to-market by leveraging shared resources, expertise, and best practices. Companies can respond more quickly to market demands and adapt to changing trends, increasing their agility and competitiveness.
- Pfizer and BioNTech: The partnership between Pfizer and BioNTech to develop and distribute a COVID-19 vaccine exemplifies the power of collaboration in addressing urgent global challenges. By combining Pfizer’s vaccine development and manufacturing capabilities with BioNTech’s expertise in mRNA technology, the companies accelerated the development process and brought a highly effective vaccine to market in record time.
- Ford and Rivian: Ford partnered with electric vehicle startup Rivian to develop an all-electric Lincoln SUV. By collaborating with Rivian, Ford gains access to Rivian’s electric vehicle platform and battery technology, enabling faster development and production of electric vehicles. This collaboration allows Ford to expand its electric vehicle portfolio and compete more effectively in the rapidly evolving automotive market.
These examples demonstrate how collaborative efforts offer numerous advantages over traditional partnership models, driving innovation, reducing costs, expanding market reach, and ultimately delivering greater value to customers and society as a whole.
