It’s the holiday season, and many are getting ready to spend time with family. Meanwhile, some are putting the final bows on 2024 business plans and investments.
Your 2024 strategy is like the big gift you and the team are going to give to the business for the new year. You want and need it to be perfect, and this final process of putting your strategy into a box with great wrapping paper and a bow can be both fun and nerve-racking.
I was on a call this week with a partner as we were working together to put that final bow on the 2024 strategy and plan. The bow-tying process stopped when I asked a simple question:
“What do you think can hold us back in 2024 from successfully executing our strategy?”
It was moment that lead down a rabbit hole. The conversation immediately went down the road of a dozen WHAT IFs. What if this happens? What if the pricing pressure continues? What if we can’t take share with this part of the plan? And so on.
Playing the WHAT IF game can be never-ending, and I personally have never seen a perfect strategy get executed 100% on every item.
The reality is we are in distribution, where success requires end-to-end support from the manufacturer to the rep, to the distributor, and to the end customer. The channel is messy and chaotic and, as they say about the best laid plans… well, you know what can happen.
The channel is often like that game of telephone you used to play as kid. You know the one — where one person tells a story to the next person, and they tell it to another, and by the time it got to the end, the story was completely different.
So, where did we end up on the call on strategy execution?
Foremost, stick with the smart strategy we spent all that time building and expect to adjust the plan as needed.
How to use a good strategy and execute it better than the competition really boils down to a few key points, in my opinion.
1. Use your 2024 strategy as the guardrails for your business.
A good strategy keeps your fast-moving business on track as much as possible. With an aggressive strategy, you should expect to occasionally brush up against the guardrails, which keep your business from driving off the cliff.
I have seen many companies put together very safe strategies that move the business forward, but at a snail’s pace. A strategy that moves your business as aggressively as possible with proper guardrails is a winning strategy that will help you grow above the market in 2024.
2. Move fast, fail fast, move on and double down on the winners.
Don’t take me wrong. I am not advocating for failure but for ensuring you have multiple programs for each major strategy to find the right approach for your business.
Let’s use a channel pricing strategy example. Let’s say you have four test programs planned for improving margin on customer contract pricing in 2024. That’s great, but I’ll predict from experience that no matter how well you plan, one or two of these programs won’t work the way you anticipated. When those programs don’t work, fail fast, learn from it and move on. For the other one to two programs you execute that are working, move the resources you had on the failed programs and double down on the winning programs.
I’ve been in many meetings where one or two programs are planned for the year, and both fail to meet expectations later. The team was so confident about the strategy that they failed to account for adjusting if their assumptions did not go exactly as planned.
3. Make sure your strategy doesn’t put all your eggs in one basket.
If your plan is just to work harder and smarter without innovating, you are bringing more risk to your business than is prudent. The market has been carrying the channel with price increase after price increase and strong market growth driven by the economy. It was a struggle to just keep up with the channel these past three years, but now that things have slowed, the boxing gloves are back on for 2024.
By any measure and forecast, 2024 is going to entail slower growth unless you take market share. The leading channel partners are not planning to put all their eggs in one basket. They are adding new channels, new products, going after new segments, entering new markets, and more. Those leading distributors, reps and manufacturers are going to work to take the eggs from the basket of their conservative competitors.
Your Great History Doesn’t Guarantee a Great Future
The case studies on strategies that are rigid and unchanging – and lead to failure – are endless in B2B distribution. Those failures are often caused by relying on the belief inside the company that it has a great foundation built by a history of success. Many distribution companies have been working the basics of the same playbook that they were running in 1924.
It’s hard to blame those longstanding firms that either make things, or pick-pack-and-ships them to the end customer. A growing number of them have been doing it successfully for more than 100 years. While that history gives them an advantage (market share, customer acceptance, installed base) in many cases, the end customer is rapidly changing how they view channel partners.
At the end of the channel telephone game, the end customer has changed how they buy and communicate with you and how they consider the value that you deliver.
Customers don’t really care where the product comes from or who they purchase it form. They just want a fair price, speed and support. I know that is an overstatement to some extent. Relationships and history still matter, but in all honesty, the power of those relationships in the channel is in decline.
The Final Word
So, that brings us to the big question: How are you planning a strategy that drives above market growth in 2024? Is it a shampoo bottle strategy – you know, the same one you had in 1980 — lather, rinse and repeat?
Is your strategy to diversify and expand your product offering; enter new markets; go after new customers and new customer segments; or enter new channels with a strong strategic plan in 2024?
If your plan is to work harder and smarter and follow the same playbook that made you successful in 2010, the best of luck to you in 2024. You can be successful playing great defense, but it’s tough to be the champion without a great offense.
I predict those channel partners with the same conservative plan as always will be finding that aggressive competitors with fast hands and good strategic plans might be taking share from them in 2024.
Next year, it is highly likely that growth will primarily come from poaching eggs from competitors’ market basket.
More from John Gunderson
If you haven’t seen it yet, be sure to check out Gunderson’s new three-part case study on Fastenal’s “Big Pivot” that has driven its past decade of success:
- Part 1: Branch Network Reset and the Rise of Integrated Supply – published Nov. 14
- Part 2: Sales Specialization & Realignment– published Nov. 21
- Part 3: Investments, Line Expansions & Digital Growth – published Nov. 30