Delivering for Best-in-Class Wholesaler-Distributors
December 20, 2017  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow
Involve Your Staff in Creating a Culture of Innovation

Digital success requires leadership to recognize that the acquisition of technology is not a magic bullet. Achieving significant growth of sales and profits requires an inspired strategy enabled by technology. But more is needed. New results require new behaviors. One test of an effective strategy is the clear articulation of new behaviors that will lead to higher productivity, a new and improved customer experience, greater share of a customer spend, or more targeted and effective support from your suppliers. These are the basic tenets of a capability-driven strategy. That is, making balanced and intelligent investments in people, processes and tools with the goal of becoming a modern, competitive distributor—a preferred supplier and effective channel in the digital age.

Companies of all types and sizes in every industry are adopting and using digital tools, but distributors face a unique challenge. They are thinly funded businesses with low net margins and little room for error in managing expenses and cash flow. This is a critical issue and requires careful planning by distributor leaders, because the successful adoption and use of digital tools can’t be driven top down or by forcing them on an organization. Leaders can create and drive a digital vision, but ideas and execution must come from the people who do business the way it is done today.

In my last two posts, Success Requires New Digitally Enabled Behaviors and Going Beyond the Basics of Digital Innovation, I explored two of three essential rules for leaders to consider as they adopt a competitive mindset for the digital age and drive their vision for harnessing the power of digital tools. In this post, I will examine a third rule, one that goes to unlocking the potential of your people as active participants in innovating your business model, customer experience, and supplier partnerships. For your convenience, here are the three rules:

  1. Technology is not your strategy. Your strategy should guide your digital investments and use of digital tools. As distributor leaders work hard to gain a personal understanding of digital technology, it is easy to lose sight of the fact that without their strategic vision, the use of digital tools will falter.
  2. New results require new behaviors. Digital tools enable new results for your business, and it is the responsibility of leaders to identify what new behaviors are required by your employees, customers and suppliers for successful execution of your strategy.
  3. Innovate to automate. New capabilities and often people are required to take advantage of digital tools, and distributor economics require careful management of staffing levels to remain profitable. One solution is to use digital tools to automate jobs and allow space for new roles and positions.

If your people are too tightly staffed and micromanaged, they will have little time to identify opportunities for the successful use of digital tools or contribute to their successful adoption. In our most recent research with CEOs in CEO Insights on Innovating the Distributor for the Digital Age, some leaders told us that this reality can sometimes be addressed by acquiring distributors that have somehow managed digital progress. However, the greater opportunity is in finding ways to free up people in an ongoing way that harnesses their creativity, experience and most of all, time. The starting point for achieving organic innovation is to rethink the size and timing of technology projects, followed by asking for creative ideas for improving your customer relationships and supplier partnerships. Viewed in this way, leaders seek to foster organic innovation by planting seeds and nurturing growth.

Short Races Are Better Than Marathons

Technology initiatives like upgrading ERP platforms or implementing a CRM take time and may play over many months or even years, especially if planning spans understanding options, selecting a vendor, implementing the technology and driving new business results. But envisioning these critical initiatives as a single initiative comes at costs, measured as people engagement. For most of us, it is very difficult to get excited about a too-distant goal. Skepticism sets in, relevance is diminished, and management skills are questioned. Keeping one’s eye on the ball is difficult when the ball is over the horizon. A better approach is to define and manage technology initiatives in smaller chunks. Frequent attainment of smaller goals builds success, momentum and more active engagement of your people.

Automate Low-hanging Fruit

A leader’s long-term strategic vision is essential for pointing a company in the right direction, but actual progress requires that a company’s people carry the heavy load of doing business differently. And, the first step in doing work differently is to stop doing business as it is done today. In the context of adopting digital technologies, small-step investments that target outdated and inefficient labor have two advantages that combine to turbocharge progress. First, by automating manual processes, people time is freed up to contribute to digital innovation. Second, each small success sells the critical contribution that digital tools can make, building momentum toward the larger vision. Solving low-hanging fruit issues builds leadership credibility, and over time, helps engage your workforce as a force for change.

Manage Time Like Cash on the Front line of Change

Planning digital evolution as a series of short races against achievable goals and automating to free up time and build innovation momentum are important priorities for leaders, because they free up your people’s time and involve them in creating a culture of innovation. But, distributors remain thinly funded businesses that require practical and careful stewardship of assets and investments. Many distributor leaders have discovered the critical importance of first-line managers across all the functions in their organization. In the jargon of organizational change, these are the managers who mange the effort of individual contributors—your salespeople, marketers, warehouse workers, analysts and others who do the heavy lifting.

First-line managers are critical for digital success, because they are the point where strategy becomes execution. I will devote more time to their critical role in future blog posts, but in the context of this discussion, it is important that leadership provide first-line managers with the tools and training required to harness and direct the freed-up time and creative ideas of their people. In a very real sense, successful digital transformation is achieved through time management, not just cash management associated with investments and expenses. It’s a battle and one that can be lost on the first line of management in any company.

Please Share Your Ideas and Experiences

Several of the ideas shared in this post are inspired by conversations with Linda Taddonio of IQ Acceleration. You can find more of Linda’s unique ideas and deep experiences in a new white paper authored for the NAW Institute for Distribution Excellence called Digital Transformation: The New Proving Ground for Distributors.

I would like to hear your ideas and experiences on any aspect of digital technology and business innovation. Your insight will help me continually direct and manage the contributions I can deliver as a Fellow for the NAW Institute for Distribution Excellence. Please feel free to reach out at any time to share your experiences, ask questions or offer ideas. If you’ve ordered CEO Insights on Innovating the Distributor for the Digital Age, I would enjoy a conversation about how it fits within your business and where you are going. To get a conversation started, reach out to me at mark.dancer@channelvation.com.

 

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Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer founded the Network for Channel Innovation to drive awareness, advocacy and excellence for channel innovation, and to enable an exchange of ideas between channel leaders on business transformation, technology adoption, social impact and community engagement. For more than 30 years, Mark has worked with leading companies to achieve channel excellence across a wide range of industries in developed and emerging markets.
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