The 2020 Mid-Year Economic Update_long

Lack of Vision Holding Distributors Back on Digital Innovation

Explore state-of-the-art innovation practices and make them your own, recommends Mark Dancer.

Distributors are facing a “vision cliff” that is holding back progress. This is one of the most important findings for the next edition of NAW’s Facing the Forces of Change report. Our data reveal that nearly all distributors are making plans to implement established digital tools, including e-commerce platforms, advanced analytics, customer relationship management systems and social media. 

Despite progress, distributors report very frustrating returns on investment. Digging deeper, very view distributors have plans for implementing new technology forces of change, including the Internet of Things, additive manufacturing and artificial intelligence. For these emerging forces, most distributors are waiting for best practices or distributor-centric applications to emerge.

A variety of reasons contribute to the overall lack of progress and results for distributors. But the most important goes to a lack of vision and a failure to innovate. 

Many distributors view digital transformation as a form of continuous improvement. This is an entirely appropriate approach, but it is also shortsighted. Continuous improvement is about getting better at what a distributor already does. In a time of change, when customers are comfortable with new and disruptive sourcing options, something more is needed. 

Distributors must have a vision for how they can meet the future needs of customers, and how their business can offer new and substantially improved customer experiences delivered through breakthrough gains in operational excellence. This vision must also include the emerging technology forces of change; otherwise, distributors risk building digital capabilities that will be immediately obsolete.

Business Innovation

Executing a vision means that distributors must be willing and able to change their business model, not just strengthen it. Business innovation is a well-established discipline. Disruptors, platform businesses, technologists and other businesses are skilled practitioners and leverage state-of-the-art innovation practices. Our research for the Facing the Forces of Change reveals that most distributors are not using (or even aware of) business innovation practices. When distributors do innovate, it is mostly by trial and error.

Competing with disruptive forces through methods that are primarily about continuous improvement and implementing established best practices of fundamental digital transformation is like fighting with one arm tied behind your back. Distributors must explore state-of-the-art innovation practices and make them their own by defining the “distributor way” of business innovation. Distributors can learn from innovators but winning is about applying the best methods in a way that is appropriate for the unique opportunities and challenges facing distribution.

My session at the MDM Digital Distribution Summit will share innovation insights as preliminary findings from the next Facing the Forces of Change report. My work is ongoing, and I’d like to hear from you if you have feedback, questions or other ideas. I’ll be around both days of the conference, so please feel free to reach out through mark.dancer@network4channelinnovation.com.

If you want to be notified when the new Facing the Forces of Change report is ready to preorder, submit this form and you’ll be the first to know.

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