Disruption. Innovation. Disruptive innovation. Innovative disruption. Take your pick.
They are all bouncing around this industry like a bunch of meme pinballs, but it’s increasingly hard to tell how many points are being scored. Call me old school, but too often it seems as though companies get distracted when they dwell too much on the big-bang impacts of disruption, and not how to leverage marketplace shifts to build a stronger culture and company, and in the process stronger customer relationships.
I’m not suggesting that distribution leaders ignore the incredible rate of change and disruption that is truly reshaping customer behavior and expectations. But I think there’s a tendency to look at it from a fairly narrow lens – millennials are taking over, or Amazon will destroy distribution as we know it. Distribution channels are in large part highly fragmented, which makes them both vulnerable to disruption and difficult to displace.
When I feel the need for a bit of business grounding and perspective, I usually look first to Peter Drucker, who said that “the purpose of a business is to create and keep a customer.” Distributors are struggling with both elements in increasingly digital and, yes, disruptive marketplaces.
Drucker went on to say, “Because the purpose of a business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Drucker’s definition of marketing is about a deep and complete understanding of the customer. He understood the true meaning of innovation decades ago.
The two featured reports in this issue of MDM address what I think are at the heart of what successful innovation looks like in the distribution company of the future. The first is a summary of a just-released research report on talent acquisition and development. The second feature is a recap of a panel discussion held at MDM’s Digital Distributor Summit on how both traditional and emerging (and disruptive) distribution companies are creating value for their customers in a digital age.
While innovation is currently trendy, it has long been at the heart of how distributors have created value for their customers through a unique mix of product and service delivery. Core to this mission has been how the talent within the four walls of the company has translated into creating and keeping customers. That talent has always been the real source of differentiation and innovation for distributors.
Let’s kill the buzzwords. Virtually every distribution business is in the process of reinventing itself. It’s hard work to focus and develop the right strategy for how to evolve the innovation that created value for your customers in the past to what they need today and next year. True innovation takes the distraction out of disruption, and is a core capability that distributors – with the right talent and culture – have to develop to create and keep customers.
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