Product professional and instructor Will Scott talks about product innovation, B2B innovation, and how companies can balance the need to innovate with the need to grow.

in·no·vate

/ˈinəˌvāt/

verb

• make changes in something established, especially by introducing new methods, ideas, or products. “the company’s failure to diversify and innovate competitively”
• introduce (something new, especially a product). “innovating new products, developing existing ones”

I was teaching a class the other day and ended up in an engrossing conversation about the expansive topic of innovation. This got me thinking more about the nature of innovation, specifically how the innovation paths that a company chooses to follow are intimately related to how that company intends to grow. 

A company’s growth strategy, which outlines its plans for expansion and market dominance, doesn’t operate in isolation. It is also deeply intertwined with its product innovation strategy, its blueprint for creating and driving adoption of its novel solutions.  

As B2B companies chart their path forward, the choices they make in pursuit of growth invariably shape the way they approach product innovation, and vice versa. There is an intricate relationship between expansion and innovation strategies. The drive for expansion shapes and sometimes constrains innovation strategies, while disruptive innovation ideas can open new avenues for growth. 

You can start from the beginning or skip the to section that interests you the most:

• Platform-led growth
• Sales-led growth
• Product-led growth
• Partner-led growth

Finding Alignment Between Expansion and Invention

How a B2B company chooses to go to market and grow its market share is of course a strategic decision based on the investment hypothesis behind a company and its capabilities. In fact, I would say that growth strategies precede innovation strategies.  Looking at the most common growth strategies I see the following innovation vectors that are most aligned with a particular growth strategy. 

We should note here that we live in the real world of grey where bright lines are the stuff of theory and academia. We also live in a world where it’s not a matter of “either/or” but that of “both/and”. So with this premise in mind, the following are by no means mutually exclusive. Indeed, upon closer inspection many precedents, antecedents and complimentary connections reveal themselves. 

Platform-led Growth

Platform-led growth is a strategy where a company offers a foundational platform for other businesses to build their products and services. This approach allows these businesses to reach their end customers more effectively. 

Examples of Platform-led Growth

Notion: By offering a versatile workspace platform, Notion enables businesses and individuals to customize and build upon its features. This leads to wider adoption and increased reliance on its platform.
Salesforce: As a leading CRM platform, Salesforce allows third-party developers to create applications within its ecosystem. This expands its reach and solidifies its central role in business operations. 

Strengths of Platform-led Growth

Customers tend to become more loyal and engaged due to the integrated solutions provided by the platform. This enhances its overall stickiness in the market. 

In the realm of platform-led growth, the expansion of the ecosystem is a significant strength, paving the way for a diverse range of services and offerings. This growth strategy often enjoys the benefit of recurring revenue streams, thanks to third-party developers who build upon the platform. Furthermore, customers tend to become more loyal and engaged. This is due to the integrated solutions provided by the platform, enhancing its overall stickiness in the market. 

Weaknesses of Platform-led Growth

This approach to growth is not without its challenges. Relying on third-party developers can sometimes result in inconsistent quality across the platform’s offerings. Maintaining the platform and ensuring compatibility with a myriad of third-party solutions can also pose significant risks. A poor experience with an application built on a platform will often reflect poorly on the platform vendors themselves. 

Available Innovation Vectors 

A modular architecture becomes indispensable, allowing for a wide variety of integrations. To thrive in a platform-led growth environment, certain product innovations are crucial. Open APIs are essential as they facilitate the development efforts of third parties. A modular architecture becomes indispensable, allowing for a wide variety of integrations. Lastly, to provide users with a smooth and cohesive experience, robust integration capabilities are a must. 

Sales-led Growth

Sales-led growth is a well-trodden path for the B2B companies. This strategy emphasizes direct sales efforts, often using a dedicated sales team to approach potential clients, especially in the enterprise software domain. 

Examples of Sales-led Growth

Oracle: Oracle’s vast suite of enterprise solutions is primarily driven into the market through its robust sales teams. This ensures deep penetration into businesses for Oracle solutions.
EMC: EMC’s growth in storage solutions was propelled by its direct sales force, establishing strong relationships with enterprise clients 

Strengths of Sales-led Growth

Sales-led growth allows for tailored pitches to potential clients, fostering deep relationships and ensuring that the product meets specific client needs. This approach often results in high deal sizes, especially in the enterprise space. 

Weaknesses of Sales-led Growth

Growth rate might be limited by the scalability of the sales team, and it can be slower to adapt to market changes than more agile strategies. It is also resource-intensive, requiring significant investment in and dependence on sales personnel and training. Moreover, the growth rate might be limited by the scalability of the sales team. It can also be slower to adapt to market changes than more agile strategies. 

Available Innovation Vectors 

For sales-led growth, a significant direction in product innovation should pivot towards customization or the illusion of customization through configuration. By closely listening to direct feedback from the sales team, businesses can develop features or modules tailored to the unique needs of specific clients.  

Another critical avenue is the integration of products with other enterprise solutions. Such integrations can be a compelling selling point, enhancing the product’s appeal during sales pitches. Lastly, this innovation strategy should emphasize investments in sales enablement tools, such as advanced CRM systems, insightful sales analytics and interactive product demos, to further empower and equip the sales team. 

Product-led Growth

When it comes to product-led growth, the product itself is the primary driver of the B2B company’s growth. Its ability to get the job done and user experience lead to organic adoption and customer retention. With product-led growth, the user often gets an initial experience in limited free functionality, teasing them with the promise of exponential utility through moving to incremental tiers of (paid) offerings. 

Examples of Product-led Growth

Zoom: The simplicity and reliability of Zoom’s video conferencing tool led to widespread organic adoption, especially during the remote work surge.
Trello: Trello’s intuitive board-based task management system attracts teams and individuals, promoting natural growth through its utility. 

Strengths of Product-led Growth

The product-centric growth strategy allows for organic expansion due to its inherent utility and user experience. This often reduces the cost of customer acquisition and leads to higher customer loyalty. 

Weaknesses of Product-led Growth

It’s highly reliant on the product’s quality and continuous improvement. If competitors offer a better product or if the user’s needs change, adoption rates can decrease quickly. This is especially true if the real and perceived switching costs are seen as minimal. 

Available Innovation Vectors 

For a product-centric growth strategy, a relentless focus on iterative improvements is crucial, enabling the product to adapt to usage data and shifting market dynamics. 

Furthermore, a thoughtful approach toward establishing integrations with complementary products and fostering an ecosystem can significantly enhance the core product’s utility. This makes a product even more indispensable to its users. 

Finally, an explicit intention to create affinity by increasing those perceived switching costs can minimize the rate at which customers churn to other competing alternatives. 

Partner-led Growth

Partner-led growth is a strategy that leverages partnerships and a network of value-add resellers to expand market reach. 

Examples of Partner-led Growth

Cisco: Cisco’s extensive partner network, including resellers and integrators, amplifies its reach in the networking and tech industry.
SAP: SAP’s ecosystem of partners ensures that its enterprise solutions are integrated and adopted across various industries and scales. 

Strengths of Partner-led Growth

Partner-led growth capitalizes on the strengths and market reach of partners. This allows for rapid scale and penetration into new markets without significant upfront investments. 

Weaknesses of Partner-led Growth

There’s a dependency on partners for growth, which can sometimes result in reduced control over the customer experience. Additionally, revenue splits or partner incentives can erode profit margins. 

Product Innovation Vectors 

In the realm of Partner-Led Growth, it’s essential to invest in creating scalable and user-friendly integration tools. These tools enable partners to seamlessly integrate and offer the product to their existing customer base. Additionally, B2B companies should prioritize the development of comprehensive training materials and certification programs, ensuring that partners have the expertise to represent the product accurately and effectively. A focus on collaborative marketing strategies can also be fruitful, co-developing go-to-market strategies and promotional campaigns with partners to harness their local insights and reach. 

Balancing innovation and expansion is crucial for sustained growth in B2B companies. By aligning product innovation with strategic goals, companies can drive growth while continuously meeting evolving customer needs. 

The post How B2B Companies Can Balance Innovation and Expansion appeared first on Pragmatic Institute - Resources.

That’s basically what happened this week. OpenAI just released ChatGPT Enterprise, a business-oriented upgrade of its popular AI chatbot—make no mistake, this is a big deal. 

This new edition strengthens OpenAI’s standing in the competitive AI field. Tailored for corporate applications, ChatGPT Enterprise is setting new benchmarks in AI-driven business solutions.

In this article, I will share with you exactly why I think this latest release is a game-changer for so many organizations.

A New Era for ChatGPT

ChatGPT Enterprise is not just a replica of its consumer counterpart. While it retains core functionalities like conversational AI, content generation, coding assistance, and data analysis, it introduces a suite of “enterprise-grade” features.  

These enhancements address many concerns we at Pragmatic Institute have seen when talking to and teaching product managers using generative AI tools. The enhancements encompass advanced privacy measures, data analysis capabilities, performance optimization and customization options.

OpenAI envisions this product as more than just a tool; it’s an AI assistant tailored for the workplace. As the company shared in a recent blog post, “Today marks another step towards an AI assistant for work that helps with any task, protects your company data, and is customized for your organization.” 

Empowering Businesses with Advanced Tools 

One of the standout features of ChatGPT Enterprise is its administrative console. This platform empowers businesses to oversee how their employees utilize ChatGPT, offering integrations for single sign-on, domain verification and a comprehensive dashboard that provides usage statistics. 

We’re particularly excited about the shareable conversation templates. It allows employees to craft internal workflows that leverage ChatGPT’s capabilities, fostering efficiency and innovation. For businesses seeking a more tailored experience, OpenAI offers credits enabling bespoke ChatGPT-driven solutions. 

Revolutionizing Data Analysis 

ChatGPT Enterprise’s Advanced Data Analysis feature is a testament to OpenAI’s commitment to pushing the boundaries of AI. This tool, also known as the Code Interpreter, can sift through vast amounts of data, generate charts, solve mathematical problems, and more. Its ability to derive insights from diverse datasets, be it financial records or health metrics, is truly groundbreaking

Interestingly, this feature was previously exclusive to ChatGPT Plus subscribers, the premium tier of the consumer app. However, with the launch of ChatGPT Enterprise, OpenAI aims to offer businesses an unparalleled AI experience, complementing the consumer version. 

Technical Mastery with GPT-4 

At the heart of ChatGPT Enterprise is OpenAI’s flagship AI model, GPT-4. While both the consumer and enterprise versions are powered by this model, Enterprise customers enjoy priority access. This translates to a performance that’s doubly efficient and an expanded context window, ensuring the AI retains the context of conversations, making interactions smoother and more intuitive. 

A Commitment to Privacy 

In an era where data breaches and privacy concerns are rampant and, of note, one of the most significant barriers to adoption, OpenAI has taken steps to assuage businesses’ fears. The company has emphasized that it won’t utilize business data for model training. Moreover, all interactions with ChatGPT Enterprise are encrypted, ensuring data integrity in transit and at rest. 

Challenges Remain 

However, the path forward to wholesale use of generative AI technologies within the enterprise is not without challenges or at least some inhibitors. 

Several ethical and legal concerns are still top of mind. One issue is that these AI systems are often trained on massive datasets scraped from the internet without permission, including copyrighted materials. Some websites started technically blocking scraping from AI companies in response. There are also concerns around copyright and intellectual property, as AI systems can generate content that appears to infringe on copyrights or lacks attribution.

Additionally, generative models can exhibit problems like hallucination, generating false or imaginary content, and drift, producing outputs misaligned with the original training data. More research is needed to understand and address these issues so enterprises can confidently access the benefits of advanced AI while mitigating the risks. 

Looking Ahead 

To me, it seems that OpenAI’s ambitions don’t stop here. The company has reported significant business interest, with ChatGPT being adopted by teams in a staggering 80% of Fortune 500 companies.  

It’s clear to me that the introduction of ChatGPT Enterprise marks a pivotal moment in integrating AI into the business world, not just a passing curiosity or parlor trick. As OpenAI, Microsoft, and other players continue to innovate, the future of AI in business looks promising, transformative, and undeniably exciting. 

AI for Product Professionals: A Comprehensive Workshop on ChatGPT and Prompt Engineering 

If you want to learn more about applying generative AI to your product workflows, join me in one of our upcoming AI for Product Professionals workshops. We’re on the ground learning and adapting this course so you can walk away with the latest AI knowledge and skills. We also limit the number of attendees, so you’ll have the opportunity to interact with your product peers and get a truly hands-on experience. 

Learn More

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