Lean Startup in B2B: mission impossible or opportunity?

As a consultant, I often deal with medium-sized companies that often supply physical products and operate in a B2B market. I wondered how the Lean Startup principles can be applied in this B2B context. Is Lean Startup a mission impossible or opportunity?

In the past year I have thoroughly studied Lean Startup and its basic principles. I have a lot of faith in Lean Startup as a method to enable radical innovation, but you usually get to hear examples like Uber, Dropbox, Google, Yammer, Zappos, AirBnb etcetera. What do these companies have in common? Right, they are all service / software oriented and operate online. Reason enough to investigate how Lean Startup works within B2B. Here the initial result of my search - I would love to hear your comments, additions and preferably: examples of Lean Startup application in a B2B context. These examples are difficult to find, they are probably less easy to share.

Main differences between B2B and B2C

Before looking at Lean Startup, we must first recognize that the B2B market has significant differences from a B2C market. According to Etienne Garbuglic are the main differences:

  1. Relevant solutions: return on investment

If you want to sell in a B2B market, the buyer generally looks for

  • Will this increase my sales?
  • Will this lower my costs?
  • Will this increase customer satisfaction?
  1. Customer relationship

  • Number of customers is limited
  • Based on relationship
  • Trust and stability are essential factors

 3. Decision process

  • Multiple stakeholders: every stakeholder has a different role and different needs
  • Long buying cycle

Other Build-Measure-Learn Cycle

The AIM institute advocates extending the Build-Measure-Learn loop to the Learn-Build-Measure-Learn loop for B2B. I agree. As a B2B company it is too expensive, risky and takes too much time to start with minimal versions (MVP). A B2B customer has more knowledge in your domain and probably knows better what he does or does not need. This is in line with Ash Maurya's vision in Running Lean: you must first identify the problem you are trying to solve.

build-measure-learnValidation in B2B markets

Garbugli developed the B2B start-up pyramid which provides a good insight.

Etienne indicates that you must validate in the order of the pyramid. This means that you

  1. A vision must determine: Why are you actually doing this? What is your vision behind your initial idea? Once you have that clear, start with the Lean Canvas by Ash Maurya. You will have to choose a customer group. Start with the role or person who feels the pain the most.
  2. Which markten are potentially eligible for this vision?
  3. Jury: This is the decision-making unit, in which each member has a different role. Who are these stakeholders? Try to create buyer personas. A buyer person is a description of a real person who may be interested in your product or service. It's about behavior, motivation, etc. You will see that you have to adapt your message per persona to have a chance to win him or her over.
  4. Issue: the pain you want to solve. Try to relate the problem to every stakeholder for the goals they are trying to achieve.
  5. Solution: how are you going to solve the stakeholder's problem?

Now that you've established your assumptions by level, you need to find a way to validate them. That is the core principle of Lean Startup, only through validation of your assumptions you know whether you are on the right path. However, given the personal nature of your relationships and the limited number of customers, you cannot take the risk of alienating these customers.

Discovery and preference interviews

In B2B, the main tool is discovery interviews. The advantage of discovery interviews is that they also help you bond with customers, which can ultimately lead to sales. According to the AIM, the best next step is a series of preferred interviews. In this type of interview there are two basic questions:

  1. How important is it to ...
  2. How satisfied are you currently with ..

The only relevant problems are the important and 'dissatisfied' problems. The result of this quantitative research is the Market Satisfaction Gap. The calculation is indicated below.

market satisfaction gap

According to AIM, the project is only worthwhile if you have a score of 30% or more, unless you can deliver at a significantly lower price.

Misunderstandings at B2B Lean Startup

@TriKro (Kenny Nguyen) indicates that the following misunderstandings are common:

  • Lean Startup is a tactic

Many lean startup examples come from consumer products that use tactics such as a fake landing page. These tactics are usually not suitable for a B2B sale. Lean startup is a body of thought, not a series of tactics. You have to adapt your tactics to the situation. So, start learning and start with discovery and preference interviews.

  • Lean startup does not apply to complex products

Lean startup does not mean that everything can be built in a day. It's not about doing everything quickly, it's about doing it faster. This means that if it now takes 1 year to create a B2B product, that lean startup will try to reduce this cycle to 11 months, then 9 months, then 6 months and so on. It's about doing the right things. And to be able to stop your 'pet projects' if they do not solve a problem that is worthwhile.

What are examples of Lean Startup in B2B?

  • General Electric:

https://hbr.org/2014/04/how-ge-applies-lean-startup-practices/

https://www.youtube.com/watch?v=nhmQNW1mkSk

  • Do share your examples!

Mission impossible or chance?

My conclusion is that Lean Startup really offers an opportunity to B2B companies. As long as we take into account that Lean Startup is not a tactic but a body of thought, and we do initiatives and experiments based on this philosophy, the potential profit is enormous.

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