Distributor Innovation Takes Culture, Not Just Books

Everyone knows distributors have to innovate to survive. But how does a distributor put innovation lessons into action? The answer is culture.

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Innovation. It's a magical word. It conjures up images of patentable products that customers clamor for that results in untold revenue growth; by services that enthrall customers and engenders undying loyalty to your company; to operational efficiencies that generate untold millions in productivity improvements and profitability. In other words, nirvana.

Much has been written and discussed regarding innovation for distribution channels and that "distributors need to innovate to survive."

In fact, did you know that, according to Amazon, there are 73,933 business books related to “innovation?” Unfortunately it is not a new subject.

And with so many books you would think just reading could provide company executives with the answer to their innovation challenges.

Distributors are Innovators

The reality is that many distributors are innovators and continue to innovate…for their customers, suppliers and themselves. In many cases, the original innovator within a distributor, manufacturer or manufacturer rep was the founder. They found a need (perhaps an unserved market), took a risk and invested into a business.

Companies have a continual need to innovate. Sometimes it is incrementally, sometimes a major new product/service, sometimes to support a customer’s needs (or a market niche).

And then there are the “ah ha” moments where someone has an epiphany, new products or services are developed and new revenue streams are developed.

Which is more frequent?

Culture Drives Innovation

Before highlighting potential approaches to becoming more innovative or to addressing organizational challenges, it is important to emphasize a key tenet of innovation — the culture of your company and the personality of the people within your company are the determinants of how innovative your company either is or can be.

Innovation cannot be mandated. Nor can it be structured as a process. It needs to be inherent in your organization and cultivated in an open, safe environment where idea generation and communication is encouraged and where change is desired, expected and acted upon. The organization must be decisive, seek to serve customers (internal and external, upstream and downstream) by soliciting feedback, be willing to resource new initiatives, analyze performance and measure activities to determine if defined "success" is achieved. Once achieved, the success should be communicated, recognized and ideally celebrated.

And there is one other foundational criteria...a willingness to take risks. Sometimes it is "bet the farm" types of decisions, other times it is "let's take a chance."

If you have this type of culture, honestly, then you are ahead of 98 percent of companies.

If not, it could be a senior management issue, a reluctance of middle management to buy-in to initiatives or it could be your hiring process.

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It all starts with people, and it takes communication

Innovation takes intellectual curiosity. People need to want to explore change; to find a "better/different" approach to addressing an opportunity or issue.

People within your company need attributes relating to

  • Risk Taking
  • Initiative
  • Creativity
  • Resourcefulness
  • Attitude

Moe Glenner, president of Entredex, integrates these into exercises to calculate an Innovator’s Predictive Index that helps assess company management and key new hires. Moe is the author of “Selfish Altruism: Managing and Executing Successful Change Initiatives” and “Plus Change: Genesis of Innovation.

Once people are identified as being "intellectually curious,” they then need to expand their frame of reference to be exposed to ideas and tools from others within the industry, from complementary industries and from non-complementary industries where they can ask "how could that work for me."

Throughout my career I've had exposure to over 60 different industries.  One thing I've learned is that many companies have similar issues, albeit expressed slightly differently, they use different terminology and have industry specific tools that can be expanded, or adapted, to your industry.

Once you view an issue as industry agnostic, different ideas can be explored and developed.  And to get through the naysayers within your organization, use the 5 Why's iterative approach to reach the root case, and perhaps you will get to the "true" reason.

Expanding your frame of reference

The issue of expanding your frame of reference is critical to innovating. While it has been said that “there is little new in the world as the Greeks and Romans already invented it” (okay, maybe the kernel of it), no one has a monopoly on ideas. “Borrowing” is not considered bad. A key to success is observation and adaptation.

Consider:

  1. Industry network groups are great but they only provide 100,000 feet level nuggets. If you hear something you find interesting, reach out and interview or visit. Some manufacturers, reps and distributors have network groups that regularly get together, and sometimes at different levels within an organization, to share ideas. A few years ago we facilitated this approach with a group of manufacturers.
  2. In every market there is an opportunity to network with other local businesses. This could be via breakfast clubs, functional (i.e. association such as the American Marketing Association) groups such as Vistage (www.vistage.com), YPO or other similar groups.
  3. Read, read and subscribe. More than just books. Every book takes at least a year to develop and publish. I'm not saying they are bad, on the contrary, they can be good anecdotal case studies. But read trade publications (other trades), read what your customers read, read what your professional contemporaries are reading (i.e. sales, marketing, purchasing, IT journals) and subscribe to many e-newsletters and blogs. Be an information consumer.
  4. Develop multi-disciplined task forces or work groups within your company to address issues. People can "feed" off of the experiences and energy of each other. And, depending upon the issue, perhaps bring in channel partners.

Years ago GE brought significant value to selected distributors through its Six Sigma program where they brought in process experts to help distributors, and sometimes GE personnel, to address distributor specific issues or GE/distributor issues. And the company opened its corporate training resources to its distribution channel to help train in many functional areas. Rockwell is doing this in targeted environments to improve distribution sales and management skills.

Multi-discipline task forces can also be an effective way of involving Millennials and identifying future leaders.

  1. Get feedback. Many times conducting research will help guide you to a breakthrough or an answer. Gaining voice of (customer, sales, employees, suppliers, prospects, manufacturer reps, etc) can generate a different perspective and identify their needs.

Sometimes it is survey activities, sometimes field research (observational as well as telephone), and sometimes it's asking customers/prospects (but not always the same ones you always talk to).

  1. And yes, avail yourself of consultants. It may not be for a major project but consultants are exposed to a variety of companies. They can share best practices or different ideas while protecting client confidentiality (or providing geographic exclusivity) and they can bring an unbiased third party perspective that can be politically unbiased. Buy a day a quarter, put them on your board, consult via phone…don’t become encumbered by “drinking your own juice.”

Remember, you're probably not the only company that has ever faced "this" issue or has had the "same idea."

Different types of innovation

Innovation does not have to be radical change or “throwing the baby out with the bath water.”  There are different types of innovation.

Some innovation is really incrementalism, which is needed within every organization and should be an expectation of every manager. Another word for incrementalism is continuous improvement.  In the words of Albert Einstein, "doing the same thing over and over again and expecting different results" is the definition of insanity.

The other type of innovation occurs when you either set game-changing goals (those that require rethinking the current status) or you stumble upon an idea. Remember that Post-It notes were the outcome of a failed product development initiative or that Google and Amazon.com have started many initiatives (i.e. Google for Suppliers and Amazon Supply) only to either close them down or improve upon the model. Innovation takes risk taking and a willingness, perhaps an acceptance, that you may fail but will then continue your journey.

Another key to success is being nimble.  Speed to market, internally and externally is important.  You may never get it 100 percent "right' first time out of the box but conceive, research, launch, measure, re-innovate/re-imagine. The key is having a vision of your future. Your competition will copy you but if you already have the next iteration conceived they will always be behind you.

No one has a monopoly on innovation. It's what you make of it. Do you have the temperance and the culture to innovate?

 

Need ideas or facilitation, give Channel Marketing Group a call. Need a tool to identify if your company is “innovative?”Give us a call and we can launch our Innovation Insight (I2) Assessment Tool for your company. CMG’s “innovation process” helps you assess your team for innovation attributes, accelerate cultural transformation, facilitate innovation processes, gain “voice of stakeholder” and ensure a continuous innovation process.

While strategy, marketing, business development and market research are at our core, David Gordon, President of Channel Marketing Group, has worked with companies in multiple industries over the years in areas of organizational development, culture development, internal communications, employee motivation and change management. He can be reached at  919.488.8635 or dgordon@channelmkt.com. Visit CMG's electrical industry blog, www.electricaltrends.com, which shares ideas to help any type of industrial or construction profitably grow.

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