Tl;dr - Partnerships are a rapidly growing aspect of technology companies' go-to-market strategies. There are important learnings that thoughtful industrial companies can take from the software world and use to grow capital equipment sales.
Industrials Should be Learning From Tech & SaaS Sales
I straddle the industrial manufacturing and technology worlds. I've worked in capital equipment and industrial consumables since 1992; in sales, management, channel, and marketing. And I've worked in technology since 2012; also in sales, management, channel, and marketing.
I've learned from those parallel experiences that many of the sales, marketing, strategy, and management challenges are common. Yet the SaaS world is far more energetic and proactive in innovating its top line functions.
Certainly, it's inherently easier to scale software licenses than build complex machinery. But every industrial company I know would happily drop low-margin, high-maintenance customers if they had enough good ones to backfill their capacity.
The difference is mindset. The mindset is driven by stakeholders. Investors in the software space are impatient and intolerant. They demand seemingly impossible growth, and companies deliver....through innovations in sales and marketing.
Some industrials are gradually catching on. While they tend to trail by several years, examples of innovations from software and tech sales that can be applied to industrials include:
- sales structure (BDR, SDR, inside sales)
- integrated sales and marketing
- accountability, data and reporting
- customer journeys and experience
- marketing automation, CRM and salesforce automation
- pipeline management
- sales talent management
But there's another that is just starting to get a lot of attention in the tech space and which will offer opportunities for machinery builders. That's the Partnership Ecosystem. Sound fluffy? Maybe a bit, but let's dig into the practicalities.
What Is a Partnership Ecosystem?
It's really a way of describing the fact that B2B operations optimally involve far more than a vendor and a transaction.
More precisely, a B2B industrial partnership ecosystem is the entire aggregation of organizations whose products and expertise can collectively help customers achieve better outcomes.
A partnership ecosystem (collection of companies with overlapping business interests) compliments a community (collection of individuals with overlapping passions and professional interests.) The combination ideally creates knowledge and insights that boost efficiency for the benefit of all, especially buyers / end users.
In one sense this is a very traditional concept in the industrial world. Trade associations have long offered various categories of supplier and associate memberships, and fostered dialogs between suppliers and end users.
These tended to be superficial, however, and focused on the vendor's requirements.
Some have taken things further with collaborations with university departments with complementary research.
But let's look at what SaaS companies have achieved to set a benchmark from which we can work backward to understand what might be possible for machinery builders.
Examples of Software Communities and Partnership Ecosystems
95% of Microsoft's commercial revenue flows through its partners.1
"IDC reports that the Salesforce partner ecosystem will create $1.6 trillion in new business revenues and 9.3 million jobs worldwide by 2026."2 Their "Dreamforce" user conference is advertised as the largest software conference in the world and attracts "tens of thousands of like-minded trailblazers from around the world."
These are obviously important outliers in size and impact, but consider for a moment the possibility that their partner emphasis is causation rather than simple correlation.
Other more typical examples include companies like Drift (chatbots) which has created formal software and business integrations with related software companies, communities of enthusiastic users who share tips, best practices and even friendships with other users, and implementation partners who help customers optimize Drift products. Their knowledge base is enormous and covers a variety of specific technical and tactical questions. Their content is prolific and covers a variety of business growth, strategy, marketing and B2B sales topics. The impact of their fast-growing team reverberates around the software, martech and salestech industries as employees leave to join or launch companies creating related products. And employees who move from one company using Drift, to another that isn't, bring enthusiasm and aggregated engagement, and best practices to new companies. More than just a successful product with reasonable ROI, they bring a body of resources that collectively drive business impact.
What's interesting is how Drift's approach contrasts with Salesforce.com's. The latter generally uses its heft to acquire and control related products/services. That contrasts with Drift's approach of collaboration. (Drift was even a signatory to a full two-page spread ad in the WSJ on January 16th, 2022 that took exception to Salesforce.com's approach and exhorted users to "liberate your data."3)
How This Could Apply to Capital Equipment Sales
Understanding the Natural Ecosystem
Many of my clients build capital equipment that is used directly in or adjacent to food manufacturing. So let's use that as an example.
Food manufacturing as an industry involves a huge number of stakeholders. For example:
- Medical & nutritional researchers and caregivers
- Cookware and kitchen design
- Packaging designers and engineers
- Food science (flavor, texture, appearance, nutrition, shelf life, preparation)
- Institutions and restaurants
- Ingredient (core commodities, additives from flavor and aroma to nutrition and perishability)
- Storage, process, cooking, and packaging machinery
- Industrial suppliers (e.g. gasses for gas flush and refrigeration, systems for dust control, compressors fork trucks, warehouse racks, etc.)
- Farming and agriculture
- Grocers and retailers
- Technology (such as track and trace)
- Food safety researchers and government inspectors
- Legal experts
- Alternative protein investors (even the new bug fixation)
- 3D printers
- Veterinarians (as human and pet food converge!)
- Industry organizations
- Professional organizations
- Water industry
And certainly many others that I'm missing.
Competition and Conflicts
Of course, across this enormous ecosystem, there are conflicting opinions, priorities, egos, competitive commercial interests, philosophies, and preferences. Corn syrup manufacturers and the railroads that transport it have a very different view of the world than the company that makes pallets on which finished goods with syrup ingredients are shipped.
So it's seductive to say that companies must just focus on their own tiny little piece of this world to avoid creating any consternation that might damage their commercial interests. But that's absurd.
Hiding Behind "Expertise"
I also find many machinery manufacturers who immediately default to "expertise." For instance "We make machines for delivering the right amount of yeast and flour to the mixer, we're not experts on mixing or baking." Or "We make software to log dust collection bag house performance, so we're not experts on dust control media or sugar fugitive dust explosion mitigation."
And therefore they relieve themselves of any need to help curate expertise in those related areas.
If that's what they think, they're right.
And they're wrong.
That's a copout.
Their software customers are food companies that touch all of these above. They may have well-developed internal functions to address some or most of these, but there are certainly gaps. In most cases, they would welcome integrated expertise and curated insights. And in many others, functions don't exist where they might.
The Potential Energy of Partnership and Community Ecosystems
That's the potential of partnerships - to pull many of these threads together in a cohesive way that augments the power of individual offerings and perspectives into a meaningfully robust ecosystem.
Put differently, there's potential energy in the masses of unstructured data in a natural ecosystem that can be converted into figurative kinetic energy with efforts to create structure.
Yet each of the parties above tends to obsess over their own small part. Trade associations exist primarily as commercial entities and evolve away from their original raison d'etre founded on collective value. Large meat processors may loathe administrative overhead for silly (of course many are vital) health regulations and discount regenerative agriculture.
The solution is simple, albeit not easy.
Focus on the end user rather than selfish interests.
How can Manufacturers Create Structure?
Here's where the rubber meats the road (a food pun, get it?)
Companies can approach this in a number of ways - from casual to ambitious.
On the ambitious end of the spectrum could be a large, industry knowledge graph - a sort of Wiki for an industry. This is surely a potentially enormous undertaking (think of the list above - where would you circumscribe the extent of the "food industry?") However, it's one that can be undertaken incrementally.
Start Small With Public Information Collaboration
In fact, that's the solution to a more casual start. It's easy to create collaborative content with guests. These can be articles, events, podcasts, videos, etc.
The baghouse software company could interview sugar suppliers on the topic of additives to reduce caking and minimize dust. The ingredient processing company could collaborate with an oven manufacturer and mixer designer on discussions around improving the efficiency of food manufacturing.
And there's no reason any of them couldn't organize a one-day event with diverse stakeholders on how to overcome barriers to implementing the requirements laid out in FSMA (Food Safety Modernization Act.)
An additional step (which can happen in parallel - need not be serial) can be some commercial partnerships. For instance, a company that makes food packaging equipment can create partnerships with innovative sustainable materials suppliers.
If there's concern about alienating other traditional material suppliers, then start differently. Create partnerships with vendors of blockchain technology that documents ingredient provenance, supports track and trace requirements, and delivers marketing and merchandising benefits.
Not only does this create enormous potential value for the end users (food manufacturers, their retailer customers, and the retailers' consumer customers) but it offers great commercial opportunity too. It creates opportunities for entry sales (opportunities to sell lower barrier offerings into target accounts - more here), new revenue streams, and practical experience with new business models (e.g. recurring revenue and PaaS or product as a service.)
This is a huge mindset shift. Many companies won't be able to make it.
But the payoff is potentially huge.
Not only can capital equipment companies increase revenue, build brand, and breach accounts with strong incumbent competitors, but it's also an enormous opportunity for competitive differentiation.
While many will continue to focus myopically on the technical details of their product, a few will undertake to build community and partnership ecosystems that will power their business growth.
It's one more example of what industrial companies can learn from those in SaaS.
More Resources Regarding Partnership Ecosystems
Be prepared for very tech and software-centric commentary, but if you can dissociate the product and company names you should be able to develop an understanding of how partner ecosystems are evolving, and how you might apply those lessons to your capital equipment sales world.