Every distributor understands the importance of innovation heading into an expected slowdown in 2020. The challenge comes in the execution, which requires unpacking the term and making sure that everyone in an organization knows how it’s defined and aligns with the value proposition.
Dr. Barry Lawrence, the director of the global supply chain laboratory at Texas A&M University, yokes innovation with progress, calling it the creation or advancement of a process or product that renders other processes or products obsolete. Blogger Drew Boyd says innovation prompts others to say, “Gee, why didn’t I think of that?” For consultant Jorge Barba, it is the future delivered.
NAW Institute for Distribution Excellence Fellow Mark Dancer concurs but adds that however distributors choose to fold the specifics into their products, services and solutions, the customer must be the emphasis if they want to build on the $6.01 trillion record high in sales posted in 2018 and ultimately become leaders in B2B innovation. Big idea, small idea — it doesn’t matter. B2B innovation is simply what Dancer describes as what businesses that support other businesses can do to help them thrive in the digital age.
“Every customer is asking the same question their distributors are asking, ‘What is the future of my business, my trade or profession in the digital age?’” says Dancer, who spent more than a year speaking with thought leaders and distributors on the topic for the book Innovate to Dominate: The 12th Edition in the Facing the Forces of Change Series . “To be a force for change, distributors have to be creative and they also have to study their customers, explore where their customers can take their business, and help them get there.By doing so, distributors will identify the best innovation they should implement in their own business.”
While distributors are inherently positioned to do so because of their role in the channel, the concern is that “the culture they have is not necessarily the culture they need,” says Dancer, meaning that everything that goes into creating a traditional distributor’s culture — the leadership’s mindset, what an organization values, the behaviors that support those values — are not always conducive to breeding innovation. What are the characteristics of a culture of innovation? According to Dancer, regardless of individual variations, it should contain the following four attributes:
Tenacious Curiosity Throughout an Organization: Every employee, from those in the warehouse to the CEO, should be engaged and exhibit some level of curiosity in their role. “You want them to think about why the warehouse operates the way it does” or what internal process improvements could lead to a profitable solution for the customer, says Dancer.
A Healthy Respect for Facts and Data: This is critical because as you generate new ideas, says Dancer, “new ideas coupled with curiosity need to be screened by facts and data.”
Willing Participants: Having an innovative mindset does not mean that employees have to “roll over and do everything that management tells them to do — but they also can’t reject it,” says Dancer. “Instead, they should focus on being a participant in the execution of innovative ideas, which means that when they think it’s wrong, they should say so; when they think it’s right, they should say so.”
Measurements to Track Success: “If you really innovate your business model, it means you’re aiming for new outcomes, so it’s not like measuring sales or profitability growth,” says Dancer. “Distributors’ metrics usually focus on improving internal performance, but the reality is that there is not that much difference between a high-performing distributor and one in the middle of the pack. It’s a game of inches. If you really want your innovations to knock the ball out of the park, focus on success measures based on how customers judge you. For example, distributor innovations might help a customer that is expanding to a series of new locations do so six months ahead of schedule. Or, distributor innovations might help a customer that can’t hire enough engineers or drivers accelerate growth despite skilled labor shortages. In both cases, the success achieved by a distributor’s innovations puts them out in front by miles, not inches.”