Delivering for Best-in-Class Wholesaler-Distributors
November 1, 2017  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow

In my work with business leaders, I have found that success can be a trap. Leaders reach the top of their organizations by being successful, and they tend to equate the success of their business with their own knowledge and skills. This is undoubtedly true, but it is also a problem during periods when the factors that define a market and the business models that exist within it are undergoing major, unpredictable change. In these situations, successful leaders understand that what has made them and their business successful will not be what is needed for success in the future. They consider where their business must evolve, and then step back and decide what they must do to lead their business there.

Distributors are heavy users of infrastructure, and their business model is largely defined by the infrastructure available to deliver physical products and communicate with customers. Today’s distributor business model is largely defined by the infrastructure that existed 50 or more years ago—products manufactured in factories and identified by brands, easy access to paved highways and roads, and telephones for conversations. Since then, we’ve seen how the internet and smart phones have revolutionized the way that information is shared—factories willing to relocate globally to chase marginally lower labor costs, digitally enabled automated production being implemented, and trending toward on demand manufacture at the user’s location with 3D printing. The Internet of Things is blurring the boundaries between physical products and communication devices. Roads and highways exist, but may soon be populated with driverless trucks or bypassed by drones.

Distributor leaders know all of this, but an essential question remains unanswered, “Why would anyone think that any existing distributor business model is competitive or even justified given today’s infrastructure?”

The issue for distributor leaders is not the need to recognize that the ground has shifted beneath their feet, but to have the foresight and mindset necessary to guide their business forward. Foresight is an essential skill for distributor leaders in the digital age, because reinventing the distributor business model requires a vison for how the market will change and how your business will fit within that change.  A new mindset is required that goes beyond self-imposed constraints that come with viewing a leader’s role as a steward of a business created by founders. In the digital age, a successful mindset is one that aggressively looks for new opportunities enabled by the modern infrastructure.

In NAW’s just-released digital research report, CEO Insights on Innovating the Distributor for the Digital Age, we define foresight as “your own personal view of how changes will unfold in your industry,” and mindset is “an attitude that goes to taking control and working to find advantage.” To answer the  question raised above, we share research that identified seven characteristics of a successful leader’s mindset and four future business models to kick-start your foresight for how your business must evolve. We added 25 suggestions shared by manufacturers who are fully vested in the survival of the distributor value chain, but cautious or cynical about its ability to adapt.

All of this and more is shared with the goal of helping leaders lead their business to compete and thrive in the digital age. With this in mind, we offer three additional actions to help distributor leaders decide if they are ready to step up and drive their business forward:

  1. Make a list of the most critical knowledge and skills that have made you successful and share it with leaders that have a track record for success and innovation in the digital age. Ask them how your list aligns with theirs. Understand the differences and make a plan to leverage what works and fill in gaps where they exist.
  2. Present your vision for your company’s future business model to five customers and five suppliers, including a range of your best partners and loyal customers and those that are polar opposites. Take along an honest, independent observer and ask them to grade your presentation and the conversations that you lead. Are you viewed as a leader who your suppliers and customers will follow? Why and why not?
  3. Find an individual who can conduct an independent assessment of your knowledge and skills, and your ideas for taking your business forward. Listen to what they have to say, and share with people who know you—your peers at other companies, leaders in your community, your board, your leadership team and your employees. Use this analysis as a 360o assessment, and use it to make your own action plan for developing yourself and your company.

Are any of these actions right for you? I can’t be sure. But, I am sure that to lead successfully in the digital age, leaders must make sure they are not caught in a trap made by their own success. And, the best way to ensure they are ready to lead is to challenge their own assumptions, and the assumptions about what makes for a successful distributor. In a very real sense, the successful evolution of the distributor value chain is dependent on leadership renewal at the top.

As mentioned in my last couple of blog posts, I’m looking for ideas, stories and unanswered questions about how distributors can compete in the digital age, defend their turf against disruptors like Amazon and offer customers new, innovative services. If anything in this post strikes a chord with you and your business, please reach out. I would welcome a conversation. I can be reached at mark.dancer@channelvation.

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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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