B 2 B Innovation

I heard a speaker lament recently about the difficulty that firms in the B2B space face in innovation. Many firms that create a component or product within a larger supply chain feel there's little opportunity for innovation, since their outputs (products or services) are dictated to them as part of the supply chain. As long as this is your accepted horizon, you are probably right. But that's a fairly limited worldview.

I saw a framework that I liked a lot and it got me thinking about innovation and the supply chain. The framework below uses an example of coffee and the value chain associated with coffee, but it proves that there is the possibility for innovation anywhere in the coffee value chain.

The framework looks like this:

Commodity	Goods	Service	Experience
Coffee Beans	Maxwell House	Dunkin Donuts	Starbucks
Cents/pound	Dollars/pound	$1/cup	$3/cup

Now, as the coffee grower, I may argue that I only have the ability to sell my beans to the co-operative or the roaster and accept the prices on the market. However, as a number of growers have proven, coffee beans can be differentiated and innovated, perhaps not based on physical properties but on environmental, social and economics bases. For example, fair trade, shade grown and ecologically friendly coffee is more expensive, yet at their roots the beans are the same.

In each segment of the supply chain, there exists an opportunity to innovate. Sometimes this may mean the identification of new prospects or the creation of a new product or service based on existing capabilities. Sometimes this may mean innovating around a business model or service, or differentiating around attributes like the coffee growers above.

At another level, what this framework indicates is that people will generally always pay more for the "same" product that provides a richer experience. Since most needs are reasonably well met, we seek products that not only meet physical needs but also provide an experience, and we'll pay much more for products that provide more meaning and/or experience.

For a firm in the supply chain, how does the product or service provided offer more "experience"? Are there potential prospects or customers beyond your standard supply chain that you could offer an enhanced experience to?