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Narrowing the Innovation Gap in Distribution

By Bridget McCrea

You may think your distributorship is innovative, but is it really making the “bold” moves necessary to thrive and grow in today’s market?

Business as usual has become a common theme in many industrial markets where “just enough” sales during any one year can seem like enough to ask for. After all, any company that survived the Great Recession can surely weather some of the more recent ebbs and flows of the electrical distribution business, right?

Not necessarily. While companies may not be scrambling to fill their customer pipelines, that doesn’t mean those distributors are living up to—and exceeding—their potential. To do that, they need to be innovating on a regular, intentional basis in both good times and bad. And we’re not just talking about taking on a new product line or opening a new location—this is about bold innovation: the breakthrough services, solutions, and products that keep customers coming back for more and that develop distributorships’ future growth paths.

“The essence of making revolutionary changes is taking risks,” writes Global TradeSource’s Laurel Delaney in The Art of Bold Innovation.“Bold risks produce bold innovation; they launch new products, services, and companies; they improve workplace conditions for employees; and they may even end up changing the world.”

Keep Pushing That Button
With customers asking for more from the organizations that serve them, innovation has become a necessary part of doing business. But to be truly innovative, a new idea or initiative must satisfy a particular need, be replicable (and at an economical cost), and has to provide a new level of value for customers. It should also be useful, meet customers’ expectations, and do more than just “dust off” an existing service or solution and try to make it better.

Faisal Hoque, a serial entrepreneur, founder of SHADOKA, and author of Everything Connects: How to Transform and Lead in the Age of Creativity, Innovation, and Sustainability, sees solid potential for electrical distributors that put the time and effort into bold innovation. “For the most part, distributors focus on selling services to others, so there’s real opportunity for them on the business innovation side,” says Hoque. “That could mean improving the way a specific product or service is delivered, how the company interacts with its customers, and/or how it internally manages its own resources. There’s a lot of potential for improvement in those and other areas.”

The good news, says Hoque, is that bold innovation doesn’t have to break the bank, nor does it have to take years to implement. Once you decide on a specific area where bold innovation is both necessary and feasible, you can begin making incremental improvements that result in “serious bottom and top line impacts,” he explains. For example, knowing that the distribution model typically revolves around customer interaction, customer service, and order delivery, he says companies can dig down into this “customer care cycle” and come up with ways to improve and innovate the related activities.

“Ask yourself how well you’re evaluating and understanding your customers’ needs,” Hoque suggests, “and then come up with process improvements (i.e., a more user-friendly e-commerce offering, a mobile app for ordering on the fly, etc.) that help you better serve those customers.” Look at it from the customer’s point of view, he adds, and be sure to include both pre- and post-sale activities as part of that process (as in, it’s not just about making the sale and delivering the product).

Hoque cautions distributors not to over-complicate the innovation process—something that small to midsized firms are prone to do. “Don’t overthink it,” he says, “but don’t be loose and unorganized about the process either. The goal is to strike a good balance and focus on delivering a consistent level of service and attaining efficiencies that help your top- and bottom-line performance. “If you’re not being efficient, you’ll wind up spending too much money on this,” says Hoque. “The goal is to just keep pushing that button to make your operations better and better. That’s what sustained innovation is all about.”

Expand Your Thinking
When he looks around at the electrical distribution environment, Dirk Beveridge sees an industry that continues to do its job, add value, work hard, and manage its piece of the channel. But something is missing. “Distributors tell me that they have relationships up and down the channel,” says Beveridge, founder of Chicago-based UnleashWD and author of INNOVATE! How Successful Distributors Lead Change in Disruptive Times, “yet something just doesn’t feel right.”

For many, the “missing piece” is bold innovation, or the ability to stay out in front of customer demands and business change in an extremely disruptive environment. “Change is happening at a very quick pace, and we all sense it,” says Beveridge. “For the distributor, that ‘sense’ that something just doesn’t feel right is actually a call for change. That’s your calling for innovation and why companies need to start thinking differently.”

Defining innovation as “leading customers to a better future for which they’re willing and capable of paying for,” Beveridge says innovative electrical distributors understand how adopting new ways of doing business, securing new markets, and finding new revenue streams ultimately lead them to a better future. That future includes benefits like improved profitability, partnerships, relationships, growth, sustainability, and relevance.

For electrical distributors looking to infuse bold innovation into their operations in 2016, Beveridge says a good starting point is to simply start bringing “new thinking and ideas” into your business. And while this may sound like a monumental task, one way to kick off the process is by forming a book club for your leadership team. Pick one new business/management book per month for the team to read and discuss. For suggested titles, check out Forbes15 Best Business Books Of 2015, which features books like We Are Market Basket: The Story of the Unlikely Grassroots Movement That Saved a Beloved Business; Everybody Matters: The Extraordinary Power of Caring for Your People Like Family; and The Compass and The Nail: How the Patagonia Model of Loyalty Can Save Your Business, and Might Just Save the Planet.

“This simple step doesn’t take much time and it will help inject new thinking into your company,” says Beveridge, who sees inertia, over-thinking, and stagnation as three major obstacles for companies that aren’t innovating as boldly as they should be. Reading about other industries and their success stories and failures helps firms overcome these and other issues. “When you open yourself up to new ideas from outside of electrical distribution,” says Beveridge, “you wind up expanding your thinking relative to what’s possible.”



8 Habits of Innovative Leaders

It’s one thing to wish for long-term change, says Faisal Hoque, but practicing sustained innovation throughout an organization is a completely different story. “Leaders need to create the culture and the process to realize sustainable value,” he says. That requires the ability to:

1. Listen:  Listen broadly for ideas through external networks. Listen to the customer. Listen to the front lines in your organization.

2. Understand:  Understand who your actual and potential customers are, what they want and need, what they will need, and why those needs have not yet been met.

3. Organize:  Organize the innovation team to include those with a stake in the innovation, organize the innovation program, and organize the resources and investments needed to address the problem.

4. Create:  Create an environment and capability for innovation by giving the team the ability to fail. Create many alternative solutions by leveraging the cascaded innovation lifecycle.

5. Experiment:  Experiment and learn from failure. Conduct many experiments in parallel. Use prototyping and other iterative, feedback-driven techniques.

6. Listen again:  Listen again to the customer to help them imagine. Use prototypes to elicit feedback. Listen to customer acceptance and buying criteria. Listen to what could go wrong, but don’t let the devil’s advocate take control.

7. Design:  Design the concepts to address customer-centric values like cost, intuitive use, ease of change, and sense of enhancement.

8. Implement:  Implement the final go/no-go decision. Consolidate or eliminate competing alternatives to a manageable number. Send concepts back for reinvention, retesting, or redesign. Implement the second stage of the innovation lifecycle: manifestation.


The Five Phases of Bold Innovation

In Bold Innovation in Mature Markets: The Five Vectors, Robert G. Cooper, developer of the Stage-Gate® Idea-to-Launch process, describes the five vectors he says must be in place to undertake “bolder and imaginative projects that create breakaway new products, services, and business models.” They are:

  • A bold innovation strategy that focuses your business on the right strategic arenas that promise real growth. Most businesses focus their efforts in the wrong areas—on flat markets, mature technologies, and tired product categories, arenas that are quite sterile. 
  • A climate and culture that promotes bolder innovation. Leadership is vital to success. If senior management does not have the investment appetite for these big concepts, then all bold initiatives and systems will fail.
  • Big ideas to feed your innovation funnel. Find big problems and look for big solutions; or exploit disruptive trends in the marketplace.  
  • The right I2L (idea-to-launch) process to drive these ‘big concepts’ to market. Creating big ideas is half the battle; you also need to drive these ideas to market with the right system—a rapid, flexible, adaptive, and agile gating system.  
  • The right investment decisions—picking the winners. Making the right investment decisions—evaluating ‘big concepts’ for development when little information is available—is a challenge.

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.


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