A Call for Change
What will your company do differently this year? In recent discussions with innovators in the wholesale distribution industry, several forward-looking themes emerged. It’s important to make a distinction between true transformations versus incremental change.
You may ask, why is it so important that you reinvent your business now?
We are living in an “Age of Disruption.”
For example, by 2020, the Millennials will dominate the workforce—meaning that the majority of your employee base (and that of your customers) will have grown up using the Internet, social media, mobile devices, etc. as a primary means of experiencing the world. How could this not impact your marketing, sales and customer service?
Reimagining your business involves looking at it as if you’ve never seen it before, and thinking about how to deliver value to your customers in a completely different way—creating a market that you can be the leader of!
Here are eight ideas based on excerpts from the inaugural UnleashWD Innovation Summit. The summit brought innovators from outside the distribution industry to the TED Conference-inspired stage to help distributors rethink their business and catalyze a new wave of innovation and business model transformation throughout wholesale distribution.
#1 - Market-Making and Disruption
Going forward, successful innovation in wholesale distribution will call for market-making, rather than simply gaining market share. Creating new markets is critical for business survival. Apple® is famous for this in their product development: led by Steve Jobs, the company would solve problems customers didn’t know they had, with products they didn’t even realize they wanted.
Market-making starts with identifying unmet needs. Far too many companies find themselves shackled to an existing business model. It goes without saying that a focus on taking share has its place for all distributors. That said, to what degree is your business committed to identifying unmet market needs and then innovating new solutions? Is it possible that this ingrained knowledge is limiting what you can imagine?
#2 - Rethink “Supply Chain”
In the 21st century, we are all part of a networked world, where capabilities cross-connect inside and outside your enterprise, and are not just linear. You need to play in the right part of the value chain, as cutting-edge companies like Google® are doing.
Currently, Google is developing augmented-reality eyewear (a.k.a. “Project Glass”) that interconnects to all facets of what Google does—displaying real-time information about live events as they unfold before your eyes. Beyond developing the technology itself, Google has thought through the accompanying business model. Because a ubiquitous, non-stop Wi-Fi connection will be required, Google is already positioning itself in the middle of the network. Google recognizes that putting the pieces together will be essential to keeping other competitors out.
How might looking at your role as a distributor as part of a “networked chain” or “value chain,” rather than your role in the “supply chain,” unleash new thinking? Where are the opportunities to earn a position of strategic control?
If you’re like most distributors, you may classify the replacement of a legacy Enterprise Resource Planning (ERP) system as “traumatic,” and so may have put it off. But in rapidly changing times, there are also risks in standing still.
#3 - Unleash an Innovative Spirit in Your Company
Most airlines have been operating in the red over their entire lifespan; yet Southwest Airlines® has enjoyed consistent success for over 40 years. Southwest achieved that level of performance because they rethought and reimagined what it could mean to be an airline. Everything they do is in service to that disruptive mission.
As Alan Kay said, the best way to predict the future is to invent it. You need to avoid “analysis paralysis,” or retreating to the safety of what is known. Do your guiding ideas—your mission, vision, values, and purpose—elicit a spirit of pioneering, or one of security and risk avoidance? And how about your established leadership?
#4 - Acknowledge and Lean Into Fear
Our history and success create a strong bond with the status quo. When you innovate—when you bring your company to the edge—there is no crystal ball that will show you how the change will play out. Fear of the unknown is one of several common fears in business. Others include:
- Fear of failure
- Fear of losing control
- Fear of success.
The latter may seem counterintuitive, but in some cases, you may be reluctant to implement change due to fear of cannibalizing your current business model. Apple made the creation of value for customers its priority. When you do this, the fear of cannibalization disappears. In fact, when your mission is based on creating customer value, cannibalization and disruption aren’t “bad” things to be avoided. They are goals you actually strive for—because they help you improve the outcome for your customer.
To what degree is fear limiting a rigorous discussion of your business model, and the relevancy of how you currently create, deliver and capture value? Is the need for short-term results limiting your leadership’s openness to innovating and creating something new?
#5 - Prepare Your Organization Culturally
How do you get past the fear factor? You can begin by fostering a culture of change. Empower your teams to innovate: create environments for experimentation, where people can take risks and “play with the pieces” in safety, leaving room for failure. You need to be able to “fail cheap and fast” to learn.
Disruptive change can start with seemingly innocuous offerings, but it’s not enough to just improve the way things are today; you also have to envision, prototype and test new business models that will pave the way to the future.
Does the culture of your distributorship foster, recognize, and reward experimentation? What does this say about the inventiveness of your distribution business?
#6 - Collaborate, Don’t Command
Your organizational leaders can be catalysts for this ongoing process. They need to collaborate instead of command. You should recognize that your team is stronger together than all of you apart; take advantage of that shared brainpower; and engage the collective expertise within your own organization, as well as your external network.
IBM® coined the term “humbition” to describe its leadership mindset—a combination of fierce ambition (power of the individual) and intellectual humility (power of the group, as leaders seek ideas from a wide variety of sources and unexpected places in the organization). These innovators know they don’t have all of the answers, and keep themselves open to outside influences and committed to continually learning as fast as the world is changing.
To what degree has your leadership consciously moved away from the industrial era’s top-down, command-and-control style of management? How can you open the flow of ideas to collaborate with others, including those outside your four walls?
#7 - Recommit to the Human Aspect of the Business
While it may seem fundamental, too many organizations fail to incorporate a sense of humanity into their overall mission—engaging their employees and customers at a basic human level. For example, in ERP implementations, the solution itself may be seen as very powerful, but the challenge can be in the execution. You can’t just “throw technology in there on top of everything” and expect instantaneous improvement. To encourage employee buy-in and achieve maximum benefits, there should be a change of management process in place. “Super users” who are up to speed and passionate about the technology can help guide others. By bringing more of who you are into what you do, and nurturing those human connections, you have a shot at becoming what is called a “Passion Brand.” This is what will separate you from everyone else in the market!
To what degree is your leadership focused on the processes and systems required to run your distribution business, at the expense of ignoring the human emotions that drive your employees, suppliers and customers?
#8 - Recommit to the Voice of the Customer
Innovative companies seek out the Voice of the Customer (VOC), to see the business relationship through their eyes and truly understand their needs. If you are going to design your business around the customer experience just as Southwest, Apple and others have done, you need to talk to customers, ask them, and perhaps more importantly, observe what they want and visibly react to their hidden agenda.
In today’s hypercompetitive environment, you must create value outside of product. This means connecting to the customer’s hidden agenda and ambitions—their emotional intelligence. The underlying question that the average customer is asking is, “Why should I do business with you versus one of your competitors?” All too often, front-line people have no good answer! If your own employees can’t explain clearly, simply, consistently and convincingly what your differentiators are—that’s a problem!
Opening Your Business to Inspiration and Provocation
The only sustainable form of market leadership is thought leadership, and that involves identifying the “big ideas” that define how you do business, and the impact you want to have. While it may seem an overwhelming task, you can be a change agent.
Understanding how to stage your change management programs, and introduce new business models inside your established distribution company, requires some vision of what the business could look like in the future and how you will compete.
This article has been abbreviated for this website. Please view the full article here.
In 2012, Epicor Software Corporation co-sponsored the first-ever 4th Generation Systems-produced UnleashWD Summit for wholesale distribution. Over two days, 17 provocative storytellers from outside the industry challenged and inspired distributors to think differently about their businesses and to create a new wave of innovation and business model transformation. To view the videos of each of the 17 storytellers, visit: http://unleashwd.com/leaders-of-innovation-2012/