Deep Dive: Innovating after the pandemic
Are you up to speed on distributor innovations during the pandemic—and are you ready to think beyond digitally transforming your business to innovating for the good of society and our economy?
The future of distribution is up for grabs, but not the part about services that customers expect. That part is known. What isn't known are the methods for meeting customer needs. New options are emerging every day, enabled by e-commerce, artificial intelligence, repurposed physical stores, data from product sensors, reinvented sales roles, digital marketing, and more. Traditional value chain players are evolving, and new startups are emerging. In this edition, I share insights from in-depth distributor interviews conducted at the heart of the pandemic. Distributors stepped up not just to survive but to help customers. As they did so, distributors innovated, gaining confidence and momentum. There are lessons to be learned and new questions to be asked by all B2B innovators. This newsletter pushes leaders to take stock of pandemic lessons and, more importantly, build foresight for what will come in the pandemic’s wake.
Distribution is essential, but not eternal
For distributors, the pandemic was an awakening. Distributors realize that change is happening and that they must evolve to remain competitive. During the worst parts of the pandemic, when many customers were struggling, distributors leaned in to help. They innovated, often on the fly, and made a difference. Armed with new confidence that they can do business differently, distributors are rethinking their business models and considering new ways to meet customer needs. By making a difference during the pandemic, distributors proved distribution is essential.
But something bigger is happening. More and more, I find the following statement useful for thinking about how markets are evolving: “In business there are products. Everything else is distribution.” Distribution is how business is done, and distribution includes every activity and capability required to do business with customers. Moreover, with newly emerging online marketplaces, fintech startups, data aggregators, and more, there are many ways to provide customers with the immutable support they need from distribution. Innovating after the pandemic is about recognizing that old ways of business are not eternal, the future is not yet written.
Listening to pandemic lessons
About a year ago, I interviewed a wide swath of distributor leaders and asked how they innovated during the pandemic. The NAW Institute for Distribution Excellence published my findings as Distribution Leans In: Stories of Resiliency and Innovation During the COVID-19 Pandemic, available here. My work includes stories of distributor innovations, along with analysis, implications, and recommendations. Below, I offer a lightly edited excerpt, one that captures the bold actions of the best innovations, especially impressive given the existential threat that distributors felt for their own survival at the start:
Day zero. The pandemic hit. Like every distributor, we were just trying to figure out what to do. It was almost like starting a business from scratch. Will we have any customers? Will we be able to get products from suppliers? Will we have revenue? Will we have employees? Will they be able to show up for work? Will we be able to conduct business? The presence or absence of business was uncertain. It was like stepping off a cliff. We were all disoriented. And then we moved forward.
Chief Executive Officer, Wholesaler-Distributor
As the COVID-19 pandemic crisis kicked into gear, distributors responded by shoring up cash flow, liquidity, supplier commitments, and customer relationships. Then, with their people safe and their business protected, leaders turned to helping their customers survive the pandemic. Distributors stepped up, as the quotation above suggests. And as they did, distributor leaders, teams, and employees came to understand something new about their business. Distribution can make a difference. More than that, distribution is essential.
In our research, we explored the idea that distribution must ultimately compete on human values and that all distributors’ core mission is to help their customers succeed. As distributors stepped up to help customers during the pandemic, new reputations have been earned. Going forward, as the pandemic ebbs, distribution may tell its story in new ways that matter for customers, the economy, and our society:
Distribution is a reservoir of resiliency. By offering flexible payment terms, distributors have long acted as a bank, providing financial resiliency for customers. Similarly, distributors can leverage their connections, capabilities, and knowledge to help customers weather storms—this pandemic or the next.
Distribution exists to solve problems. Distributors are always on the front line of serving customers and leveraging a range of products that no single supplier can match. With a new mindset and by leveraging relationships with experts, technology vendors, and service providers, distributors can double down on their commitment to solving customer problems.
Distribution is at the center of commerce. As an intermediary that stocks inventory and serves demand, distributors are constrained in the value they offer and the margins they earn. But by helping our society and economy get through the pandemic, distributors can claim a larger role. Distribution is where government, suppliers, customers, workers, communities, and more come together to get business done.
One distributor’s story provides an excellent example of acting with confidence to leverage digital capabilities and taking bold steps to help customers survive the pandemic:
Like all distributors thrust into the COVID situation, our initial reaction back in March was to raise capital, manage liquidity, and protect the business. We knew that our showrooms would be closed, but we also knew that it was time to lean in on our digital investments. We immediately launched a promotion to encourage customers to buy digitally, and we had a tremendous response and massive increase in adoption. We never stopped making job-site deliveries, but we offered many new robust self-service solutions enabled by technology for our customers at our branches. This includes kiosks for customers to place orders, ask questions, and pay for their purchases, including customers whose first language is Spanish. We also have APIs [Application Programming Interface] that enable us to connect our customer-facing app directly with customer systems to get quotes, place orders, check for Uber-like delivery times, and make changes from up on the roof at the job site. There is a benevolent loop in digital because as you lean in, you have new data about how customers vote with their interactions and purchases. Then you can use that information to dive in even deeper with more conviction about solid ideas and improvements for customers.
President and Chief Executive Officer, Wholesaler-Distributor
Will the pandemic spark a movement?
Building on pandemic innovations, every distributor (and all B2B innovators) can continue working to help customers, maintain momentum, and perhaps start a movement. Leaders may move beyond “doing the right thing” in a time of crisis, to adopting a shared purpose around strengthening our economy and society through innovation. Such a movement requires a new mindset, one that views digital transformation not just as a tool for improving a company’s internal operations and financial results, but as a platform for reinventing how business is done. Helping customers during the pandemic was a human response to a human crisis. One lesson learned is that in the digital age, as more and more business is done virtually and online, doing business as humans for humans must remain our highest priority.
Join our community by asking questions
B2B innovators do not need perfect foresight for the future of distribution, but they need to be conscious of events. This edition is an attempt to share recent research about progress made during the pandemic and start a conversation about what’s ahead. You have very likely noticed that the pandemic has prompted a discussion about the future of work. I’m asking you to consider whether the impact of the pandemic points the way towards the future of innovation.
I encourage you to consider this edition’s excerpt from Distribution Leans In, whether or not your company leaned in, and how you might recalibrate your innovation initiatives going forward. Several questions come to mind; you might add others:
Are you up to speed on changes in distribution, especially innovations made during the pandemic?
Are your end customers embracing new sourcing options and should you rethink how you define the options for delivering value through distribution?
Can you imagine new ways to work with your value chain partners to remain competitive, and should you embrace digital startups for an overall solution?
As always, please share your comments, ideas, experiences, and direction below. Don’t be a stranger. Click here to schedule a call or send me a note at mark.dancer@n4bi.com