What Is the Purpose of Distribution in the Digital Age? – Distributors in the Digital Era #52
Recently I attended The World Innovation Network’s TWIN GLOBAL 2018 conference, led by Professor Robert C. Wolcott, Professor of Innovation at Kellogg School of Management. Readers of my research for the NAW Institute for Distribution Excellence may recognize Professor Wolcott’s name. He introduced me to the Innovation Radar framework, a tool which helped advance our investigations, analysis and recommendations for distributors in Becoming a Digital Distributor and Getting Results from Your Digital Investments. More than anything, Professor Wolcott’s work helped me realize that the adoption and use of digital tools by distributors would open the door to pursuing new opportunities through business model innovation.
This year’s conference focused on pushing toward new horizons through innovation. Presenters and attendees (collectively known as Twinians) included technologists, scientists, manufacturers, financial services, healthcare, government agencies, nongovernmental organizations, political leaders and more. Discussions were both practical and passionate, and addressed innovations around digital technologies, the future of work and learning, commercialization of science and defense-initiated projects, sources of inspiration, and collaborations among Twinians. A few examples include the business and social impact of artificial intelligence, point-of-use manufacturing of pharmaceutical drugs, gaming technology for virtual training and the path for incumbent companies to fight back against disruptive forces.
As I listened on behalf of distributors, two critical ideas emerged. The first idea is about the relationship between forces and innovation. The digital age brings uncertainty, disruption, globalization, competing values and more than a little bit of chaos. It also brings huge opportunities — chances to improve the human experience, our economies, our businesses and our lives. As a community of individuals and innovators, Twinians are harnessing the forces of change, imagining new solutions and services and moving forward. And as companies and organizations, they are working to define how they will evolve as the rules that govern markets and societies change. They are collaborative and are looking for ideas, partners and help.
The second idea, combined with the first, is immensely powerful for distributors. Distributors can do more than overhaul their businesses to survive in the face of disruption. As a community, distribution can be a force for change, helping customers and suppliers succeed in the digital age. The truth of this opportunity starts with the fact that every business and organization at that conference (and in our entire economy for that matter) buys products from distributors. They are your customers. As the customers of distribution are challenged by the forces of the digital age, distributors are in a strong position to offer help — but only if they get in the game. Doing so means putting forth a vision for the future of business and earning a credible reputation as innovators working on behalf of customers and suppliers.
There is much work to be done. In side conversations, I asked for feedback on distributors and explored opportunities for distributors to lead through innovation. Mostly, I was frustrated. To get discussions started, I had to define what a distributor is and give examples. Pushing ahead, I found that at best, distributors are hidden participants in our economy at least among innovators. At worst, distributors are viewed as victims of disruption — legacy business models about to be overcome by change. Alibaba and Amazon, the acknowledged innovation leaders, are working to reshape markets and supply chains.
At an innovation conference that was focused on new horizons, distributors are not on anyone’s radar screen. Distributors suffer from low awareness and a weak reputation. Distribution does not have a seat at the table with world-class innovators. I did not find any distributors (or their industry associations) attending that conference.
To help turn things around and get started as a force for change through innovation, distributors must answer three critical questions:
- What is the purpose of distribution in the digital age?
- What is the role of individual distributors for creating value?
- How can we measure the combined impact of all distributor innovations for our economy and society?
The Purpose of Distribution in the Digital Age
The first question is the most important and must be answered by distributors collectively as a community. Distribution will remain irrelevant to innovators until its purpose in the digital age is defined and put forward. Answering this question is more than a public relations exercise. It’s about identifying a shared purpose that is a unifying force for change. Amazon and Alibaba are single companies with many innovations. Distribution comprises many businesses acting in competition with one another. This truth makes distribution an easy target for disruption and works against the reputation of distributors as innovators. A shared and unifying purpose will help the distribution community work together as a marketplace of ideas, with the best innovations making critical contributions for customers and the future of business.
The Role of Individual Distributors for Creating Value
The second question goes to business model innovations, value chain collaborations and new customer experiences, according to each distributor’s unique strategy and capabilities.
The Combined Impact of All Distributor Innovations for Our Economy and Society
The final question is about setting goals, but more importantly, it is about building a new case for distribution as a dynamic force for change and essential partner for moving forward in the digital age. Distributors must ask all three questions of themselves and answer them — as soon as possible. Otherwise, distributors will remain left behind as the future unfolds.
We are hard at work researching for the next Facing the Forces of Change® report. Our goal is to help distributors connect the dots between forces of change and innovations for customers and suppliers. Our work can help put distribution on the map with world-class innovators, but we need your help. If you have comments on this post, see relevant examples or expertise, or if you just want to talk, please reach out to me at email@example.com.
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