Are You Making the Necessary Capability Investments?-Distributors in the Digital Era #27

Are You Making the Necessary Capability Investments?

Across all of our research about getting results from digital investments, one essential requirement for success stands out: Successful use of digital tools requires proactive development of people and process capabilities. Digital tools change the way that work is done, and if a company’s people do not have the necessary knowledge and skills, guided by new methods for accomplishing critical tasks, results are not achieved. Worse, confusion and frustration can lead to lowered performance, productivity and efficiency. Distributors that address this requirement can achieve game-changing results. Digital executions that do not work to proactively develop people and process capabilities falter and fail.


New Results Require New Behaviors

The reasoning behind the importance of developing capabilities is straightforward. Digital investments, like all investments, are made to achieve new, incremental results. Results may be defined as improved productivity or efficiency leading to increased profits, or as upgraded sales and marketing effectiveness leading to revenue and share growth. Your formula for digital success may be similar or not, but the requirements for success are the same: To improve profits and sales, your people need to take new actions and work differently—enabled by digital tools.

Three examples help tell the tale:

  • Migrating customers to new e-commerce platforms. It is possible that your customers may have a pent-up demand for buying online from your business, rushing to shift orders from other methods as soon as your new online store opens. Most distributors, however, tell us that work is required to migrate customers to online buying, and that work involves selling the value through the effort of sales and customer service people. The most effective transitions define this work as a value-selling capability, with well-planned skill definition, training, metrics and coaching.
  • Accelerated new account acquisition. For some distributors, the most important impact of digital tools is about acquiring new accounts in numbers far greater than traditionally achieved. Digital tools that contribute to success can include websites and microsites, tablets, configurators and so on. Success, however, does not follow investments unless new digital skills around digital marketing, social media, and often, person-to-person value selling are created.
  • Account optimization. Many CEOs tell us that the path to success in the face of disruption by Amazon and others lies in focusing on their company’s most profitable and loyal accounts. When working with these accounts, share and profits continue to grow as joint collaboration efforts yield improved service levels, new products sales and, ultimately, new and expanded services. A wide range of digital tools can contribute, but success ultimately depends on processes that focus efforts on these accounts (while avoiding distractions from others) and a strengthened people culture of innovation and customer service.

Not Enough Progress Is Being Made

In our latest research, we asked distributor CEOs to rate their progress toward developing people and process capabilities. Our findings are not encouraging. In the following exhibit, our findings indicate that progress toward developing overall people and process capabilities, as well as the specific capabilities for executing multichannel initiatives, average between neutral (a rating of 4) and strong (a rating of 5). Looking into the data, we found only a very small number of companies with very strong or game-changing progress. Through follow-up conversations, we found the progress of most companies was actually weak or very weak and that ratings of neutral were instead given out of a sense of denial or embarrassment. The results are not encouraging and may actually be lower than the numbers indicate.

Are Your Making the Necessary Capability Investments

Lack of progress toward proactively developing people and process capabilities is a huge problem for distributors. Results will not be achieved without new behaviors. Moreover, it is the responsibility of leaders and managers to define the new behaviors. At the same time, some new ways of doing work will flow from the initiative of self-starting employees. However, without new knowledge about digital methods and possibilities, people-driven innovation will be much slower than otherwise possible. The result will be not only lower-than-expected returns on digital investments for distributors, but also a failure to offer new and improved customer experiences and strengthened partnerships with key suppliers.

Moving Forward

In our new research report coming out soon, we will provide additional insights about the root cause of lagging capability developments and will offer suggestions for moving forward.

If you’d like to get started now, please refer to “Chapter Five: Digital Tools Must Create Value” in Getting Results From Your Digital Investments for competency model and business process mapping tools you can use to get started. Or, take a look at “Chapter 4: Implementing CRM and Change” in Getting the Most Out of CRM for an approach to driving organizational and cultural change. Also check out this blog post, How Competency Models Give You a Competitive Advantage on developing people competencies.

As always, if you would like to have a conversation, please reach out to me at mark.dancer@channelvation.com. I welcome your insights and questions and will be happy to share what I’m learning.

 

About the author:

Mark DancerMark Dancer, President of Channelvation, Inc., is a channel strategist and leading authority on digital transformation. He is also an NAW Institute for Distribution Excellence Fellow. You may reach Mark at mark.dancer@channelvation.com.

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