Are we on the right track with endless discussions about how to help industry recover?

Business people and trade organizations are focussing on the cost of labour. But that in itself isn’t a solution. Is it better to buy a BMW in China than a Renault because of Germany’s more beneficial labour costs compared to France’s? It’s true that the cost of labour is too high here in Belgium, but if we think that this is the sole root of problem, we are simply being dishonest with ourselves.

Politicians shout loudly calling for more innovation. And Belgium does indeed score badly when it comes to investing in R&D, but there isn’t always a direct link between levels of investment and quality of innovation. I’ve been in contact with technology companies at home and abroad for over 20 years, and it’s clear that Belgian engineers score very highly in their specialist domains when it comes to productivity and creativity.

Furthermore, too much focus on product innovation results in a rat race in which having the lead is now less important with insufficient financial gains. No single company can keep on winning this race. Option NV couldn’t maintain its lead over Chinese companies. And Barco had the same problem over multiple technology cycles, which current CEO, Eric Van Zele, recognized as soon as he took up his role.

Companies can only profit from the raising of R&D stakes by avoiding the battle as much as possible and packaging technology in solutions that the market wants. Because the more product maturity grows, the more the market demands a better package. Most clients aren’t looking for the latest products; they buy the product that creates the most value for them.

This means that skills other than just innovation from R&D departments are required. Understanding customers and the environment is crucial for delivering value. A value-driven approach gives products longer lifecycles so they can remain competitive with large volumes. This improves the financial leverage of investments, increases profits, and enables a company to finance its further expansion. Not ‘time to market’ but ‘on time to market’ is the motto.

You are ready to work on this sustainable growth when your product innovations reinforce the added value that your client perceives (because otherwise you are only innovating in order to beat your competitors in the technology rat race). Clients are then prepared to pay more for your strengths. This is possible when your R&D personnel have enough contact with clients to really understand how and why your products are used. When your sales and marketing activities no longer focus just on the product, but also on creating added value. And when you organize your entire company in such a way that everyone is focussing on clients and the market.

It used to be the case that your quote was too expensive, and prospective buyers would almost always question it. If you asked why they thought it was too expensive, they would tell you it cost much more than your competition. This meant that good negotiators who could resolve issues automatically became the best sellers. Our client, Kris Verheye from Belgacom, says those times are now a thing of the past. Buyers aren’t price-buyers anymore, so you won’t get very far with sellers whose only skill is negotiating.

This new buyer, Buyer 2.0, is a very well-informed buyer. Our own experience and figures confirmed in Harvard Business Review tell us that B2B decision-makers have already made 60% of their purchasing decisions before they even meet potential suppliers. This means that the sales conversation is no longer about price, but rather about value and risk management.

At our latest Corporate Performance event, Kris Verheye said: “Buyers don’t always know how to get good value out of the things they have informed themselves about. That’s why the new buyer has to help, and make the difference as a good guide.”

So the conversation cannot be about the cloud to begin with, for example, but about the client’s challenge. What do they want to solve? What do they want to improve? Where do they want to be more competitive? The new seller doesn’t have to find an answer for the whole business strategy straight away, but they do have to understand the client’s market conditions well enough to be able to take advantage.

Once the intended aim of the purchase is clear, we shift to the financial aspects. What is the available budget? What is the expected TCO? How will we calculate the return? The new seller starts acting as CFO and, in this role, concludes the second phase of the purchasing process.

Only then is it time to discuss the solution and, for example, look at that cloud. The average buyer won’t necessarily want to know what it is exactly; they might know about that already. But they will want to know how their supplier can ensure the implementation will be as invisible as possible, and how they can minimise any risk resulting from the change. So the new seller becomes the risk manager.

Perhaps there’s no need to discuss a solution at all, because the seller also has to be able to decide if it’s best to pull out of being the potential supplier, for example if the business case isn’t clear enough, or the budget won’t satisfy the ambitions, or the client is underestimating the project management. If this is the case, the seller also needs to be a risk manager with an eye for a maximum success rate for quotes, and a high return from pre-sales costs.

Together with the price-buyer, the price-seller is also disappearing. Ironically enough, this increases the sales costs, which you can read more about in this article.