For business-to-business (B2B) suppliers, the traditional competitive advantages, based on superior products and relationships, are under pressure. Purchasing organizations are getting more sophisticated, low-cost competitors from China and India are becoming increasingly prevalent, and innovations are being imitated more rapidly.¹ On the other hand, a company's go-to-market model¡ªincluding sales, sales support, and service¡ªis a powerful factor in the purchasing decisions of many customers (Exhibit 1). Although many B2B suppliers have neglected this model, it holds the potential for significant competitive differentiation.

Developing a winning go-to-market model isn't easy for incumbent suppliers, because few are well positioned to provide what demanding customers want: simple, low-cost support for some needs and deep knowledge and collaboration for others.² The basic transaction costs of suppliers are too high for them to compete with the no-frills specialists¡ªfor instance, Chi Mei in chemicals and High Tech Computer (HTC) in technology. And they don't have enough industry-specific "solutions" expertise to compete with businesses (such as GE Plastics and IBM Global Services) that are setting new standards for value-added sales and service.

This "stuck-in-the-middle" scenario is playing out across a wide range of industries, from advanced materials and chemicals to information technology and telecommunications. It...