To create real change that lasts and has an impact, make sure your change management approach is more than just lip service.
Transforming organizations is difficult. It doesn’t matter if the company is small or large, old or young, or successful or struggling, creating a culture that embraces and accepts change with open arms is an ongoing struggle across all industries. Right now, it’s particularly acute in the evolving electrical distribution industry. Feeling the impact of new competitors that it never had to think about before (e.g., Amazon Business), increasingly price-conscious customers, and strained relationships with suppliers, distributors must continually remake themselves in order to stay relevant and profitable in the business environment.
“Managing change is much harder than the day-to-day running of the company. We have to change and I like change,” Barry Wilkinson of U.K.-based Park Electrical Distributors told ChronicleLive, adding that his firm’s goal is to become the “standout electrical distributor” in its region. “To do this we need to grow our products and services while embracing the changing world of technology, Internet, and environmental demands. We’ll move in whatever direction becomes necessary, hopefully before our competition.”
Wilkinson’s business goals probably aren’t much different than those of the typical North American electrical distributor that knows it has to change to keep up with the times, but isn’t quite sure what that translates into on a day-to-day basis.
To those distributors that don’t have at least one change management (i.e., the management of change and development within a business or similar organization) initiative brewing, Dirk Beveridge says now is the time to get started. Founder of Chicago-based UnleashWD and author of INNOVATE! How Successful Distributors Lead Change in Disruptive Times, Beveridge says the simple fear that a distributorship will fall behind on the growth curve and miss out on opportunities is usually enough to make its leaders want to implement change.
“A certain percentage of leaders in this industry go to bed every night frustrated and fearful about what’s to come,” he says, “they know there’s something better out there, and that it’s their responsibility to make it happen.” But actually “making it happen” takes guts. “It’s scary; there’s going to be pushback. You’re going to upset people’s security by telling them that they need to get ‘uncomfortable,’” Beveridge says. “Everyone says they want change, but the question is: How bad do they really want it?”
Generating Your Own Demand
If there’s one trend that should push distributors to start thinking about implementing and orchestrating change, it’s the way large e-tailers like Amazon Business are pushing their way into the space. And not just because customers are doing more online shopping, says Doug Dobie, CEO and founder of growth strategy consultancy Delvantage, Inc., in Long Beach, Calif., but also because manufacturers’ expectations are changing. “We’re seeing suppliers asking distributors to take on more logistics and fulfillment support roles, but unfortunately that doesn’t really present much of a revenue-generation opportunity for those distributors.”
Paint Amazon into that picture, however, and the end result is a wide logistics network that is ripe-and-ready to move goods from supplier to end user with ease (and, in a more cost-effective manner). This reality can hit hard for the electrical distributor that relies heavily on its long-term customer and supplier relationships, but that hasn’t made the internal changes needed to adapt in the current selling environment.
“The company that hasn’t taken the time to create its own demand generation, and that has fallen into a routine and gotten lazy, is just taking things for granted at this point,” Dobie says. “Suddenly Amazon comes along with its low prices and low transaction costs, and throws everyone for a loop.”
The good news is that electrical distributors don’t have to sit on the sidelines and watch this happen. Instead, Dobie says they must focus on building up their own sales and marketing capabilities, generate their own demand, and use their knowledge and expertise to target local customer segments (and sub- or micro-segments).
“There is no way a manufacturer could ever hit all of those sub-segments or do that kind of work the way a distributor can,” Dobie says, “but unfortunately, a lot of distributors operate on ‘reorders’ from long-time customers who just need some hand-holding and follow-up. These distributors are particularly vulnerable right now.”
Change is Hard
Talking about change is one thing, but implementing it and making it stick takes a strategic approach that encompasses the entire organization—not just a handful of leaders and managers. “Change is hard. Whether you’re facing a big change like reinventing a business model or something simple like the day paychecks come out, change is difficult. One study found that 70% of change efforts fail,” Mark Murphy writes in Forbes’ 3 Stages Of Successful Change Management. “Big or small, change efforts seem to run into the same brick walls over and over again.”
Beveridge says distributors can break through those brick walls by creating cultures that not only embrace the idea of change, but that also encourage and support employees in the process. In other words, simply telling staff members one day that they need to perform a task to tackle a project differently probably isn’t a sustainable approach. However, bringing everyone in on the ground floor, showing them why the change needs to happen, explaining how it will impact them, addressing their concerns, and then highlighting the expected benefits will help ensure a better outcome.
“Make change a part of your company’s mindset, and always let your people know that it’s coming; don’t just spring it on them,” Beveridge advises. “If they don’t see your confidence and the vision that everyone should be moving towards, you’re going to lose them pretty quickly, and wind up with a workforce that comes in every day to punch a clock.”
In Part II of this article series we outline the top ways that electrical distributors can get started down the path to effective change management right now.
Tagged with best practices, business