I’ve had some interesting follow-up conversations about my July 31 column on distribution business model transformation that triggered a bit deeper dive into how this may shape opportunities for share gain in 2024. Here goes.
Consensus forecasts continue to shape a 2023 second half that ranges between a 5% recession for the year to a low single-digit growth scenario. I am the last person to predict the future, but that range frames a few considerations for planning a successful 2024 versus the constraints most teams have been contending with since 2020.
These same forecasts map a 2024 of low single-digit growth – a return to a more normalized long-term distribution industry growth pace. I think the environment will present some opportunities for strengthening market position and real share gain beyond the recent roller-coaster rides of pricing, inflation and supply chain strategies.
Much of our team’s focus at MDM is charting the competitive landscape across distribution sectors to help our members triangulate and build stronger businesses. We try to provide guidance across several critical dimensions: highlighting what leaders are doing to build competitive advantage, benchmarking financial performance through our quarterly Baird-MDM survey, and articulating the larger trends that define a maturing industry and impact running a successful distribution business on a day-to-day basis.
MDM’S SHIFT Conference, held Sept. 18-20 in Denver, brings together distribution leaders to learn and network across topics of sales & marketing, digital transformation, data analytics and talent management. Find more info here.
Measuring & Leveraging Industry Maturity Lifecycle
I’ve been fortunate enough to study North American wholesale distribution cycles across five decades now. Technology has always been the most powerful tool and lever for improving productivity and profitability, hands down, when deployed effectively. So we’ve come from adoption of computers in the 1980s to the Internet to Amazon to the baby footsteps of AI today. (And for the record, MDM before my time championed the use of computers by distributors to improve operations – seems quaint now but was actually cutting-edge and controversial stuff at the time).
And as digital (and Amazon) became an increasing disruptor last decade, traditional dominant outside-sales models started taking bigger hits as customer behavior changed. We’ve tracked the evolution and flavors of omni-channel, rise of inside sales and alternate go-to-market models distributors of all sizes have implemented.
The digital revolution also fueled increasing sophistication and broader adoption of data analytics as well. For well over a decade, strategic pricing and profitability tools have been primary levers for private equity and every distributor to optimize pricing and strengthen profitability.
Disruption, Change & Transformation
I share the above history review to provide some context for why I think 2024 will be a year of opportunity unlike the past few. As we reported the ways distribution teams were pivoting during 2020, one of the first differentiators that emerged were in those companies that had begun the transition to digital platforms, cloud and virtual – implementing Google or Microsoft team tools, even internal communication tools like Slack.
We’ve tracked similar ways leadership teams have been able to create competitive gaps in the changes they’ve made in their sales process, use of data analytics and overall productivity. As we’ve moved through the past three years, how many times has some form of the phrase “…need to spend more time working on the business than in the business” struck you, including at 3 a.m.? Strategic planning has seemed like almost a luxury with successive challenges across COVID, supply chain and team productivity.
Every distribution team has embarked on some type of transformational work over the past three years (or before) either by necessity or strategic intent. Everyone is at a different point in the journey across the digital, analytics and sales process dimensions outlined above (and core theme of our SHIFT conference Sept. 18-20 in Denver). The fourth dimension is people, and is the key differentiator in executing successful change management work across the other three dimensions.
These four dimensions – the areas of innovation that are defining the future of distribution – have long been the framework for our content strategy and planning, and why they have been the pillars of our editorial planning as well as conference theme: “Hybrid Sales. Powered by Digital. Built on Data Analytics.”
What’s surprising to me is that, while many teams have implemented specific projects to improve sales process or advance tech stack and analytics, they have put strategic planning on the back burner due to the organizational constraints and resources. Many haven’t been able to carve the time to think about the best roadmap for 2024. Even before 2020, I know many companies found themselves pushing annual planning deeper into fourth quarter than prior years.
SWOT Analysis Is Great, But…
My intention with this column is to trigger consideration this first week of August for a 2024 planning session sooner than later. When was the last time your organization did a SWOT analysis? This valuable tool has taken a hit as the industry has had to deal with so many whack-a-mole variables. Fair enough, up to a point.
As I touched on in my column earlier this week and QuickTake conversation with Mike Marks of Indian River Consulting Group, we’re all in a transition to gen-2 business models. Competitors are exploiting the opportunities in this disruptive transition cycle; early movers and adopters win. In addition to a more traditional SWOT analysis, it’s critical to perform a deeper analysis to benchmark against competitors across the four dimensions – where are you in your journey to advance technology, sales process, data analytics and team capabilities? And where are the opportunities to out-perform and differentiate in 2024?
Additional MDM benchmarking resource: If you want go beyond an internal SWOT exercise and augment your 2024 strategic planning, consider attending MDM’s 2023 SHIFT conference in September. We’ve developed objective assessment tools to measure where your company falls in terms of capability and maturity across sales process, technology, data analytics and team/talent/culture.
We’re kicking the event off with a two-hour assessment workshop where you will be in roundtable discussion with non-competitive peers, and can take these assessment worksheets back to your teams. That’s followed by two days of sessions that profile how leaders are innovating across all of these areas. Here is the full agenda, or please contact me at email@example.com or 303-819-4615 to discuss further. We have some great team discounts for three or more.