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In one form or another, every distributor is rethinking the right model for 2010 and beyond – one that's leaner, more productive, but built on the strengths, values and relationships that built a successful company in the first place. The best description that's helped me think about the disruption and the reaction by companies to it is to consider a hybrid model.
Nearly every company has been stretched to reduce cost and react defensively. No one I've talked with expects to "enjoy the float" in the same manner as past recoveries. If you try to rebuild the same model that was successful for many years, don't expect the same results. Customers and markets have changed too much to enjoy the same level of sales and profitability that model efficiently produced for so long. The alternative is to build a hybrid distribution company – one that is lighter (leaner, lower cost), gets more mileage (productivity, profitability), and is more focused to serve and grow defined customer segments. Of course, what that hybrid looks like will be different for each company. But there are a few common denominators.
Strategic plan, great execution. Some distributors are facing credit and cash crunches right now. Others are working from a plan to leverage the opportunities opening up in terms of product and customers as relationships shift. Those who have planned through different scenarios can react more quickly.
Top talent. This will be an increasingly important differentiator. There is arguably a greater generational talent shift taking place at both large and small distributors than in many years. Workers need to be more adaptive and flexible to manage this fluctuating economy effectively.
Innovative leadership. In spite of periodic waves of consolidation, nearly all product sectors in distribution remain highly fragmented. There have always been leaders who have had a vision for how to build value out of industry disruption. The same is happening now.
These qualifiers for success today aren't new. There has always been a minority of distributors that has quietly built adaptable, high-performance companies on these foundations. I'm optimistic about the opportunities emerging in 2010 for those who invest in building their new hybrid.
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