Delivering for Best-in-Class Wholesaler-Distributors
October 25, 2017  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow

Building strong digital capabilities is the best result that distributor CEOs can accomplish for their companies. While the future of customer buying habits, the impact of disruption in distribution-intensive value chains, and the actions of manufacturers cannot be predicted with certainty, distributor CEOs can put concrete programs in place to strengthen their digital capabilities. Combined with an effective digital vision, actions taken to strengthen capabilities will help a CEO’s leadership team and employees see that progress is achievable. Moreover, as the unfamiliar becomes more commonplace inside a company, new ideas will surface as the link between change and results becomes more tangible. The company’s culture will evolve organically, moving in the right direction in a way that reinforces the CEO’s vision, executed through the CEO’s mindset.

Make Your Capabilities a Strategic Initiative

All channels—direct, indirect, and digital—are undergoing a digital transformation as digital tools enable new customer solutions, improve channel performance, and make it possible for disruptors to make inroads. The way that channels function is changing as digital tools change the way that work is done. However, this is the middle of the transformation and future outcomes and rules of engagement are not yet defined. Business models are evolving, but it is not possible to have a perfect strategy for driving change. Rather, the most successful distributor CEOs are articulating a digital vision, sharpening their mindset, exploring future business model options, and developing digital capabilities—meaning people knowledge and skills, processes for digitally enabled business, and the adoption and use of digital tools themselves. By pushing their organizations to consistently develop digital capabilities in a sustained and disciplined manner, distributor CEOs say that they are working to achieve four strategic objectives:

1. Credibility with customers and suppliers. Showing progress with customers and suppliers, particularly those that are the best partners for your business, reserves a place at the table. As change unfolds, customers and suppliers will maintain relationships with their best distributors, if only as a way to mitigate their own risk. Further, digital capabilities open the door for collaboration with customers and suppliers about opportunities to create new value and business results.

2. Self-reinforcing change. As capabilities grow, leaders, managers, and employees become better partners for change because they better understand how business is done by distributors in the digital age. They come to see their role in executing the CEO’s digital vision and understand the urgency and determination of the CEO’s mindset. They generate new ideas, follow through on implementation, and develop new standards and metrics for measuring success. Progress builds on progress, and results strengthen.

3. Pay-as-you-go return-on–investments. Digital tools deliver returns gradually. Some distributors say that they have seen dramatic upticks in business performance after launching an e-commerce platform or CRM solutions, but most often the business gains accumulate slowly. Investment in people skills and knowledge, and in proactive review of business processes, are essential for getting results from digital investments. In fact, a lack of investment in people and process can actually prevent progress.

4. Organic culture change. Every organization has a unique business culture, one that guides behaviors and determines how success is judged. Digital business transformation happens in parallel to cultural change, but while investments in people, processes, and tools can be planned and executed, cultural change is organic. Cultural change can be highlighted in a digital vision. A mindset can set the tone, but cultural change happens over time and is driven more by new business practices, feedback loops from customers and managers, and, ultimately, the employees’ own satisfaction and frustration with their jobs.

The above post is excerpted from my new electronic research report, CEO Insights on Innovating the Distributor for the Digital Age. I hope you’ll order it today.

As mentioned in my last blog post, What Do Customers Want from a Digital Distributor?, 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 and innovative services. If anything in this post strikes a chord with you and your business, please 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, President of Channelvation, Inc., is a channel strategist and leading authority on digital transformation. He is also an NAW Institute for Distribution Excellence Fellow. You may reach Mark at mark.dancer@channelvation.com.
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