This blog was initially posted at Tradeshift were I help develop Financial Services. It explores the limitations of acceptable and commonly built supplier-facing solutions, and introduces a new paradigm that combines platform-based collaboration and information-intensity as a framework for supplier engagement.
At some point you’ve got to start thinking about how you are thinking about things. I call this meta-thinking – thinking about thinking. The methodology you bring to your thinking is then especially interesting as your intuition matures to simply accept flat and static answers to the issues of your concerns. You then strive to get deeper than what is covered in casual blogs or product collateral that rarely go beyond proving “water runs downhill” axioms.
I have this interest and the actual task (thanks to the good people at Tradeshift) to think about financial services in the context of B2B network of enterprise buyers and suppliers. Now, everyone seems to be pointing out the same set of frictions, issues and solutions within that complex realm. It’s hard not to copy (and rightfully so!) the trending notions of working capital maximization schemes (buyer-led or supplier-led). It is easy to see the need (a real one!) to mature B2B payments into fully electronic, affordable, dynamic, transparent, smart, cross-border and cross-domain, omni-currency, data-rich and flexible to fit any origination and reporting system. But I would venture to suggest that this is all flat, static and inadequate as a full response to the opportunity at hand.
Don’t concentrate on a problem to find its solution! The true solutions to paper payments and late payments are not simply electronic payments (of all types and brands) and working capital schemes (of all promises and punishments): not in the collaboration age we are entering. Even if you do a great job at developing these solutions, say, you have a successful e-invoicing network, you’ve certainly gained incremental knowledge of your (supplier) customer. And that is where it all stops for you. As you couple an invoice with an electronic payment you acquire very little additional data concerning your supplier beyond what you already knew. You simply transport an invoice between supplier and buyer and back to the supplier. You just have trade data. And now with a wonderful cross-border, multi-currency, real-time, data-rich and dynamic payment you provisioned, you learned that the invoice has in fact been paid. Great! Where do you go from here? That is where it all stops for you in terms of opportunities and future margins.
The world is changing because of digitization and connectivity. For business, this means that the internet is transforming from mainly a “sales channel” to a collaboration framework. The boundaries of the firm–its specialization, its workforce, its production assets–are all being dismantled. The new, organically evolving paradigm reveals business models that are network-based and information-intensive. The best way to think of this is via a simple comparison between Uber and a taxi cab company we’ll call ‘XYZ’. Uber orchestrates value among service providers and service consumers. It generates true information intensity with reputation, location, vehicle, payment, habits and other data. In the meantime, ‘XYZ’ proudly offers great customer service.
Now there’s a choice. You can either introduce best-in-class payments to ‘XYZ’ company or become a real value orchestrator and build a network-based and information-intensive business with payments delightfully amalgamated inside of it.
The idea is not to focus solely on building best-in-class payments or best-in-class SCF and DD. The idea is to engage with the supplier and to engage through value orchestration that rests on network, platform capabilities and growing information assets. At the intersection of commerce and financial services strive to be the one who converts dynamic knowledge into actionable value. That will provide conditions for animated customer engagement and delight, as well as continuous new demand sourcing and margins.
Harnessing collective knowledge
Suppliers live in the dim waters of dull services. Make that a plurality of dull services. Dull EDI and e-Invoicing solutions, dull working capital schemes and cataloging. Add to that other financial, accounting and tax services domains suppliers are interacting with. Each service domain acquires only limited knowledge of a supplier to suit its own specialization. Every service provider tries to uncover “big data” within the narrow boundaries of its domain. And they fail! That’s because true, complete information about suppliers is scattered among a multitude of services they interact with. The consequence is that the level of engagement with a supplier is very shallow, yet considered normal
Everyone who has tried to onboard a supplier to a new (fantastic!) product deals with a very amorphous mass. Onboarding issues are the most telling of the true state of supplier engagement.
No solution provider has a 360-degree view of a supplier to offer contextual, dynamic and affordable services. There’s a boundary to every knowledge. We erect it. It is called a company. And that’s been the way of life for centuries. But that has to change because now we’ve entered the age of collaboration platforms. These platforms, in turn, enable collective knowledge. Value orchestration built on top of collective knowledge promises truly contextual, more dynamic and progressively more affordable services to a supplier. It certainly ignites the due dynamism in the relationship between you and your customer (supplier). We can uncover new opportunities and tie more complex nets.
At the intersection of commerce and financial services, across a plurality of complementary domains, where boundaries (of individual firms) are dismantled, we escape commoditization and dullness. We discover value. We build relationships.
Stay tuned. Stay engaged. It is about to get very interesting!