In our upcoming research report on digital progress and strategic solutions, we gathered insights from more than 100 distributor CEOs. We found that most could talk about their vision for the adoption and use of digital tools by their company, but there was also a dichotomy. Distributor leaders are confident in their digital vision, but only for now. They are concerned that a digital vision alone may not be enough for success in the digital age. Many are looking to innovate their business model, driving for unprecedented levels of productivity, while others are steering their business in a new direction by adding businesses with value not related to distribution and financials that strengthen the overall business.
Listening to the distributors that are making the most progress, we learned that a new leadership mindset is required for success. Distributors are still distributors, but the threat of disruption and disintermediation is encouraging many to think differently about their opportunities. By combining CEO feedback with insights from innovation experts, we offer these seven new aspects for a distributor leader’s mindset to conquer the digital age:
- Foresight is a learned and practiced skill. Foresight is about having a well-developed point of view on the future of your markets, customers and suppliers, given all of the changes that are happening today. Foresight is essential for countering disruptive threats, driving innovation and executing a leader’s own digital vision.
- The business I have is not the business I need. Many distributors were established two to three generations ago, and their business model has remained largely unchanged over the years. As digital tools change the way value chains work, leaders are challenging what it means to be a distributor today.
- I can’t wait for customers or suppliers. Leaders must lead their companies forward. Some distributor leaders would wait for customers to make their digital buying preferences known. Others believe that suppliers must recast the partnership. Both of these approaches are risky, because they abdicate responsibility for change. Today’s distributor leaders must take the reins and rekindle their inner entrepreneur.
- E-commerce is essential, but not everything. Many distributors consider the need for a modern e-commerce platform to be a core requirement. They only fret over timing, seeking to build it neither too early nor too late for their customers’ changing preferences. This viewpoint is only about the transaction, however, and runs counter to overall requirements to offer sustainable value add, enabled by a wide range of digital tools.
- New results require new behaviors. Business is, and always be, about people—customers, suppliers and distributors. Technology is an enabler of people, creating the opportunity for better decisions, new sources and proof of value. The most innovative distributor leaders are focusing on the new behaviors they seek from their own people, their best customers and their most loyal suppliers. It is through those behaviors that they create the new results that will make their company competitive.
- We can’t do it alone. Disruptors like Amazon control their value chain, setting all requirements, managing competition and owning customers. Distributors, on the other hand, operate in a value chain that is shared with other distributors and many suppliers. New partnerships are emerging with suppliers for the digital age, and distributor trade associations must step up to represent their members. Effective leaders are working through their trade associations and taking initiative with suppliers, in parallel.
- I can decide my company’s fate (for now). Our data shows that in the not-to-distant future, customers and/or disruptors will make decisions that determine the future role of distributors. Until then, distributors can make consequential decisions. For many, that means building the strategic capabilities required for success in the digital age, starting with leadership that has foresight and the right mindset.
We recognize that our suggested mindset for a distributor CEO may not be complete or completely accurate. But, we think we are in the ballpark given all of our conversations with distributor leaders and innovation experts. We would offer this test for all distributor leaders:
- Has your competitive environment changed, or is it likely to change, given the actions of customers, suppliers or disruptors like Amazon?
- Has your mindset, which you bring to creating strategy and driving results in your business, changed?
If you answered YES to both questions, you can count yourself among the distributor leaders who are taking charge of your business future and seeking to control your destiny in the digital age. If you answer YES to the first question and NO to the second, we would suggest that you have work to do if you are to remain a responsible steward of your business. If you answered NO to both questions, then you are in the clear minority of leaders who shared insights with us. In our new research report, we will share our findings for all distributor leaders in the form of new business models to consider, data on digital progress for benchmarking progress and suggestions for building strategic digital capabilities.
And by the way, if you answered NO to the first question and NO to the second, we’d like to hear from you. Perhaps you are on the leading-edge of change and moving in another direction, driven by your own vision! Please reach out to us.
If you’d like NAW to send you information about our upcoming research report when information is available in a few weeks, send an email to firstname.lastname@example.org.
About the author:
Mark 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 email@example.com.
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