A crisis of collaboration
Traditional partnerships won’t spur the future of distribution—breaking boundaries and creating workforce ecosystems will.
Are you frustrated by scanty and superficial collaboration among distributors? Or between manufacturers and distributors? Or with startup companies, incubators, vendors, or technology experts? I am. Very. System-changing innovations are not possible without collaboration among organizations. The power of digital technologies, the Internet, and the younger generations will only help optimize B2B innovations with thoughtful and committed collaboration. In this edition, I share a way forward. Join me, and together we can push back against protectionist mindsets, worn-out compensation structures, bad habits, and lazy leaders—and all the forces that hold back strategic collaborations and the future of distribution.
Broaden your perspective
A collaboration crisis is holding back the most dynamic and consequential innovations in distribution. The value chain operates in a linear, layered, and multistep model with rigid assignments of roles and responsibilities codified in business models and running with a protectionist mindset. Every industry shares the same barriers, and Sydney Berry, Chair of the Professional Beauty Association, put it this way:
A lack of collaboration holds back innovation. Our members include manufacturers, distributors, salons, and stylists. Every level protects its interests and power, with not enough collaboration across channels. We need a universal perspective. We are fractured and divided into fiefdoms. Progress is held back by a fear of sharing and a deficit of action even as we learn about mutual opportunities and solutions.
We must work differently, within and across organizations, if traditional value chains are to avoid disruption and create system-changing value for customers and communities. Radical change is coming, driven by the exponential gains enabled by digital technologies and the generational transfer of power to leaders and innovators that work differently, with different values. Today’s businesses can thrive as the future unfolds, but only if they get out in front of what’s coming, armed with a framework for doing work differently as leaders and innovators.
Looking for solutions, I found new research shared at MIT Technology Review’s 2022 EmTech Next event. A panel discussion on Collaboration, Communication, and Virtual Innovation: Orchestrating Workforce Ecosystems is instructive. Elizabeth Altman, Steve Hatfield, and Allison Ryder share powerful insights about the future of work, citing research conducted for an MIT Sloan Management Review Big Idea: Future of the Workforce study. Below, I share what I’ve learned and offer implications for collaboration, B2B innovation, and the future of distribution.
Develop a workforce ecosystem
Distribution delivers a product, but it’s not what you think. Distributors exist to help their customers do their work better. Products manufactured by suppliers and sold by distributors are part of what’s offered, but products are only a means to an end for customers. Customers create strategies, build capabilities to execute them, and achieve desired outcomes through work. Distributors enable that work, and as a new future of work emerges, distributors have an opportunity to do more.
Modern leaders think about their workforce as including the efforts of others who are not employees, often meaning contractors, gig workers, and freelancers collaborating with employees. But collaborations can also happen business-to-business, as companies decide to work together for mutual advantage and common outcomes. It’s called a workforce ecosystem, and Altman et al. offer a definition:
Workforce ecosystems are structures that encompass actors from within the organization and beyond, working to create value for an organization. Within the ecosystem, actors work toward individual and collective goals with interdependencies and complementarities among the participants.
In a way, workforce ecosystems are old hat in existing value chains where manufacturers and distributors rely on each other’s capabilities to create customer value. But workforce ecosystems are radically new because they considerably expand the resources available. The impact can be dramatic, enabling new strategies and innovations. Altman explains that traditionally, “organizations develop a strategy and then figure out who and what they need to accomplish that strategy.” Workforce ecosystems flip that approach because they give “access to resources that you might not have had access to before,” allowing companies to rethink their strategies. That is, the availability of additional resources creates opportunities for new and expanded innovations.
Ultimately, workforce ecosystems can enable new business models because they bring more than labor. A workforce ecosystem conceived and led by distributors can generate new ideas for customers to consider and wide-ranging expertise to solve customer problems. And by helping many customers, distributors may step up to help our society. Examples include sustainability, electrification, and addressing the skilled worker shortage.
Armed with workforce ecosystems, distributors may evolve their business models to act as innovation intermediaries, as previously introduced in an earlier edition:
Distributors can transform by waking up to fill a role that already exists. Innovators outside distribution have noticed that progress happens when organizations lean in to help others, sometimes as a public/private project, but often because a commercial relationship already exists. For distributors, it’s about understanding customer innovation needs, reaching out to the distributor’s suppliers, vendors, and experts, and bringing knowledge and resources to bear. The role is known as an “innovation intermediary.” It is defined as “any organization that acts as an agent or broker in any aspect of the innovation process between two or more parties.”
Innovation ecosystems are already in place and well understood in several industries, including the technology sector. Altman et al. have this to say about Cisco’s ecosystem:
Cisco has more than 50,000 contingent workers—a substantial part of its entire workforce ecosystem. The company is in the midst of establishing new practices to manage contingent workers across both functional silos and its many disparate business units. It’s the beginning of a broader, more coordinated approach to integrating the management of people and work processes across its workforce ecosystem.
Push for change
In distribution, change often happens organically through incremental steps—sometimes without notice, driven by the actions of suppliers or customers, or initiated by distributors in pursuit of productivity and profit. In the panel discussion, Hatfield introduced a “maturity model” and observed that some companies are “intentional orchestrators,” but others are not. Companies that are most intentionally orchestrating a workforce ecosystem have five common characteristics:
Closely coordinate cross-functional management of internal and external workers.
Hire and engage the internal and external talent they need.
Support managers seeking to hire external workers.
Have leadership that understands how to allocate work for internal and external contributors.
Align their workforce approach with their business strategy.
For distribution, these characteristics are a destination to aim for on their innovation journey. To get started, distributors must work with customers to understand their needs—new strategies ready for implementation, new products ready for launch, planned upgrades to operations or facilities—and explore the work needed to make progress. Then, distributors can identify resource gaps and sources to fill them. Acting as an innovation intermediary, distributors can arrange partners in its fledgling workforce ecosystem to contribute their labor, capabilities, knowledge, and expertise, working with a distributor’s employees to help the customer move forward. Distributors may need new mindsets and people to make this happen, and they should look to employees of younger generations, especially Generation Z.
Foresight and footsteps
Collaboration is the future of work, and for distributors, collaboration is imperative. As an industry, distributors often must catch up to other sectors in developing and adopting innovations. But distributors are uniquely positioned to embrace workforce ecosystems because distribution is designed to help customers do their work better—by working side-by-side with customers where they live and work.
Distributors can help usher in the future of work by building workforce ecosystems and raising collaboration standards for achieving B2B innovations. I offer six questions for distribution’s leaders and innovators to explore as they consider how to best win the future by embracing workforce ecosystems:
What are your customers’ top unmet needs by type of customer—skilled worker, owner-operator, and scaled corporation?
Are these needs best fulfilled by missing labor, capabilities, knowledge, or expertise?
Where can you find resources for your workforce ecosystem, perhaps considering suppliers, educators, gig platforms for freelance workers, service companies, or contractors in your trade-line industries?
Is your HR organization skilled at fostering a culture of collaboration among inside employees?
Is your procurement organization engaged in the effort to find and collaborate with outside resources?
As you design a workforce ecosystem to help a few customers, can you imagine scaling up your efforts to help the local communities your branches serve?
As always, I’m looking for help. If you have ecosystem experience, I would love to hear from you. Please share your experiences or answers to the questions above by leaving comments below or at mark.dancer@n4bi.com.