One of the most important elements in technology ventures is efficient integration of market systems. In short, most times, companies win based on the quality of integration into customer ecosystems. Integration is a key component of business model, and does matter a lot, on differentiating consumer-focused and enterprise-focused businesses.
A consumer-focused business (e.g. Facebook, Nairaland) builds its integration to serve mass-produced solutions. Usually, the best solution in the sector is adopted massively by many users, and over time, it wins the market. An enterprise-focused company (e.g. IBM, ATB Techsoft) delivers solutions to companies but must customize them to meet the specific needs of the enterprises. Doing that means that winning is no more just about technology, but support, sales force, and capacity to close deals and sign contracts.
Facebook is a consumer-focused company. It has built its integration to focus on making the best product that serves mass market (of customers). These products are largely uniform. It does not have to customize anything from one user to the other. The marginal cost in the business is very low – distribution is non-convoluted – and it can just scale really fast because it does not need to have many sales people.
But when it comes to IBM which is mainly an enterprise-focused company, the products, though similar at core, are designed to be customizable for customers in order to meet their specific business technical frictions. It cannot just expect the web to do the job. So, it needs to have sales force, contract team, etc for it to thrive.
The implication is that the architectures of Facebook and IBM businesses are different because the customers they serve are different. If Facebook wants to start doing enterprise business, it will fail before it restructures its system to become like a company that can support companies. Similarly, if IBM wants to start doing consumer business, it will struggle until it recalibrates to become like a consumer-focused company. Those changes are at the heart of integration – linking solution value into users to solve their frictions. The value could be connecting with friends (Facebook) or implementing a new database (IBM).
This is the reason why great companies like Google, a leading consumer-focused business, will struggle when it moves to enterprise-market. Think of Google Cloud where it continues to struggle as Amazon AWS and Microsoft Azure leap ahead. Google will be fine, but to do that, it must build a sales team which is not typical in Google in its consumer search-driven business. The realization has not much to do with technology: Google does have extremely great cloud technology with many suites. But that is irrelevant: its integration does not fit the ways it can deliver value to enterprises.
You will say the same as why Microsoft has struggled on leading any major sector in the consumer business: it is a company wired for enterprises, working with OEMs to bundle Windows in laptops and desktops. It was never in the business of dealing with end customers at scale. Bing is there but it continues to struggle while Azure became a runaway success because Azure is just like Windows – an enterprise business which Microsoft understands.
Integration is at the heart of a business model. Most times, the way a company is structured affects its capacity to win. Even when the competing product or technology is at the same level of quality, the integration system with customers is what really determines success.
Google Cloud is just as good as Microsoft Azure but the business model of Google has not been well integrated to serve enterprise customers, leading to Google Cloud struggles. Similarly, Microsoft despite any great technology it can make is yet to understand how to do consumer business at scale. So, Facebook, for instance, can go enterprise but it will struggle until it re-integrates, since its current integration is biased for consumer business.
The message is this: as you build, understand your market so that you can have the right integration with your customers. It is only when you get integration right that you can deliver higher level of values to the business frictions of customers. At that equilibrium framework, your reward will come: business success.
Hello, Ndubuisi Ekekwe, This is particularly true as there’s a very distinct customer journey between B2B and B2C. Apparently, only the right integration can help businesses (B2B or B2C) deliver a customer experience that move hearts and wallets.