Channel 2.0: “Collaborative Ecosystem Management”

We are in the midst of a dramatic shift in the way business is done.  In most industries, a much more open and collaborative network model is replacing the traditional closed and controlled firm-centric view of the world.   This shift has been well documented by my colleague Don Tapscott in his bestselling book Wikinomics.  Don is the head of nGenera Insights (a Customer Innovations partner).

As this shift takes place, companies must reconsider many of the foundational assumptions about their role in the complex ecosystem of customers, competitors, intermediaries, and other influencers.   While many basic relationship management capabilities are still important, there are two major problems with the traditional approach to  “Channel Management”:

  1. The first problem is the “channel” part. In a network view of the world, a channel is an outdated, linear way of viewing the market.  In many ways, it reinforces the notion that you move your products and services forward through the channel to reach end-consumers.  This doesn’t work in the presence of media-savvy and networked consumers.  These next-generation consumers can easily find better deals with more agile providers and, in the process, are more likely to either by-pass intermediaries all together or deal with newer intermediaries (e.g. Amazon, etc…) that consolidate products and services in a way that makes it easier for them to get what they want.
  2. The second problem is the “management” part. In a more agile, networked view of the world, channel participants are more difficult to manage or control.  They tend to either have or believe they have more alternatives.  In most cases, they have the all-important relationship with the ulimate consumers who are paying the money.  In addition, they have to deal with a rapidly changing set of consumer demands that change what it takes for them to be successful.  If I’m an insurance agent, retailer, distributor, etc… struggling to keep up with changing consumer demands, preferences, and alternatives, I’ll challenge anything that product providers do that gets in the way of my responding to and serving my customers.

As we move beyond the linear, Channel 1.0 view of the world, companies must begin to more effectively position themselves as part of a collaborative ecosystem.  We call this Channel 2.o model, Collaborative Ecosystem Management.

Channel 1.0:  Traditional Channel Management

Channel 2.0:  Collaborative Ecosystem Management

Linear, feed-forward value delivery system

Complex, shifting network of participants

Static and known list of channel relationships

Evolving and emerging channel participants

Product and service fulfillment model

Demand creators and accelerators

Inflexible channel structures and systems

Adaptive collaboration processes and technology

The new channel model builds on many of the Channel 1.0 capabilities (covered in:  Channel 1.0: Foundational Capabilities for Optimizing B-to-B-to-C Performance) but must express these capabilities in a world that includes a complex, shifting network of participants, an evolving and emerging set of channel partners, and, as a result, must leverage more adaptive collaboration processes and technology.

Customer Network

Example:  The SAP Developer Network (SDN) is an online community for SAP developers. It is a resource and collaboration channel for SAP developers, architects, consultants and integrators. The SDN hosts forums, expert blogs, a technical library, downloads, a code gallery, e-learning catalog, a Wiki and more.  All these support open communication between active members of the community, which includes more than 1,455,000 members.  The SDN has fundamentally transformed the scale and effectiveness of integrated and supporting SAP’s products in a way that continued to fuel the growth of the company.  This allows SAP to maintain a primary focus on evolving their product while managing an enabling network of other participants that can apply the product and fuel their growth.

In general, we’ve learned that moving to a Channel 2.0 model must integrate three dimensions.  This builds on and extends the basic Channel 1.0 Capabilities, as well as, the Consumer-Back Approach that were introduced in Channel 1.0: Foundational Capabilities for Optimizing B-to-B-to-C Performance.  The three dimensions that must be integrated are:

  1. Consumer-Back Experience Design. Creating a platform for integrating complementary providers and partners in order to provide a seamless end-to-end consumer experience around goals that are important to consumers.
  2. Provider-Forward Experience Design. Creating an “experience chain” that helps makes traditional intermediaries, as well as, the wide range of other ecosystem participants successful in serving their downstream customers, whoever those customers are.
  3. Collaborative Ecosystem Platforms. Providing an open communication environment for connecting consumers, channel customers, complementary product/service partners, and other influencers.  This collaboration platform often creates the opportunity for channel customers and complementary product/service providers to collaborate with each other in ways that are currently impossible.

These are not three alternatives.  Effective Channel 2.0 strategies must integrate all three.

Dimension 1:  Consumer-Back Experience Design. A more ecosystem-oriented environment makes it possible to integrate capabilities across complementary service providers in ways that were previously impossible.  Often that integration was left to the customer.  For example, if your goal was to relocate your family from New York to San Francisco, the experience you would have as a customer would involve integrating the capabilities of real estate agents, mortgage companies, movers, banks, schools, doctors, utilities, home furnishing retailers, cleaning services, hotels, airlines, the post office, etc…    A significant step beyond the Consumer-Back approach described earlier would be to do what we call Consumer-Back Experience Design. This is what “The Right Move Group” did when they created an integrated platform of services address all of the elements listed above for families moving to the San Francisco area.

We are starting to see an increasing number of Consumer-Back Experience Design examples in other areas.  For example, the range of integrated platforms for launching small businesses (a.k.a. Business in a Box platforms).  This includes platforms like:  Smart Online and Microsoft’s Start Up Zone.    Other examples include travel integration services like TripIt, wedding experience integration service like Wedding Channel, and personal concierge services like Fini.

We believe that building an effective Channel 2.0 strategy starts by thinking Consumer-Back.  However, success is dependent on also considering the other two perspectives.

Dimension 2:  Provider Forward Experience Design. Forward Experience Design builds on and significantly extends the capabilities described in the Channel 1.0 Capability Model.  A more technology-enabled, ecosystem-oriented model makes it possible for providers to collaborate with their channel customers in fundamentally more effective ways.

Examples of technology that can enable Provider Forward Experience Design include:

Dimension 3:  Collaborative Ecosystem Platforms.  As we move towards more of a Channel 2.0 world, both of the previous two perspectives will increasingly be enabled by an Collaborative Ecosystem Platform.  A Collaborative Ecosystem Platform creates an environment within which participants from multiple organizations can work together to create an integrated experience that improves the performance of participants and, in the end, creates more value for customers.  This can run the range from:

  • Relatively unstructured sites for sharing information, like Microsoft’s Technical Community Platform
  • Process specific platforms for collaborative service like Get Satisfaction (enables product companies, intermediaries, and end-consumers to all collaborate on generating answers to technical and service issues.
  • Domain specific platforms like Sermo which provides an environment for physicians to discuss courses of treatment, the application and effectiveness of pharmaceutical and medical device products, etc…
  • Social networking platforms like Facebook which is providing additional ways for companies to reach end-consumer and participate in the dialogues that consumers have about the experiences that are important to them.

The migration to a Channel 2.0 strategy is very much an emerging capability for most companies.  It creates the ability to mobilize a much larger and more diverse set of participants in a way that can accelerate growth.  At this point, most of the companies we’ve seen and worked with are putting their toe in the water.   In our experience, it’s still very important to address any gaps in the foundational capabilities that are left over from Channel 1.0.  Very often addressing those gaps can have a substantial and immediate impact on business performance.  In most situations, we are recommending  a parallel set of activities aimed at:  1) addressing Channel 1.0 capability and performance gaps and 2) developing a Channel 2.0 strategy and roadmap that includes identifying the business experiments required to start to learn about and get traction in a Channel 2.0 world.

8 Responses

  1. Excellent article Frank thanks. I started thinking about what Channel 2.0 could be as I’m pushing in that direction with a service my business runs called iQuote. I’ve got a Blog ready to go about “how would you feel if you had to buy airline tickets from the IT Channel?”. I’ll certainly bookmark you. Seems you coined the phrase Channel 2.0 before me!

    • Tim… I’m looking forward to seeing the blog post you mentioned. Can you let me know when you post it? Cheers, Frank

      • Absolutely. Re: your comment on outsourcing I was thinking about how VARs may look to further outsource product supply and logistics as they adapt to your Channel 2.0 model. Not sure I have the answers yet but I’ll keep thinking! Really useful Blog thank you.

  2. Hi Frank. I’ve read your Channel 2.0 blogs in detail. All good stuff but I wonder how Supply Chain organisations (such as Distributors) fit into this model. They can’t just disappear surely – in fact is there an argument that says that they are more important as the Channel looks to outsource product touch yet further? Cheers, Tim.

    • Tim… thanks for your comments. No I don’t think supply chain organizations will disappear as long as they 1) add clearly differentiated value to customers and 2) don’t get in the way of having product companies engage with, understand, and design for the changing needs of the ultimate customers. I’m not sure about your point re: outsourcing product touch. My sense is that any company that outsources understanding the changing needs of the customers that directly or indirectly use their products will eventually be dead meat.

  3. Great article Frank. I’ve just come across your blog and there’s some great material here. With regard to technology that can enable Provider Forward Experience Design, don’t forget about RelayWare (www.relayware.com). Our solution offers the full range of PRM functionality plus a great deal more and is already operating as the platform for some of the industry’s leading programs. Why not come and take a look at us?

    • Mike… thanks for the add. I took a look at the RelayWare website… it looks great ! I’ll keep this in mind for future reference with our clients. Keep up the good work. Cheers, Frank

  4. Very good writeup. I was looking for how Channel 2.0 is being defined and your article came up in the search result.

    I have not read such a good definition of Channel 2.0 before, and as I started interacting with our customers on their channel problems and showcasing our ‘Channel Execution Management’ (www.cogivo.com) solution, I realized I could point them to your write up to show that this problem is real and vendors/resellers need a different solution to sell in this new world.

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