Putting ideas into action—boldly and broadly
Working together, can we advance our collective conversation about the future of supply chain?
This edition shares a third web event in an ongoing, year-long conversation about owning the future of distribution, hosted by the Heating, Refrigeration, and Air Conditioning Institute of Canada (HRAI.) In conversations with two members—a distributor and a manufacturer—we explore the use of North Stars, which are guiding principles for achieving and reinforcing innovations, especially in pursuing system-changing innovations that open the door to dramatic gains in profits, sales, and share. Just as Daniel Burnham, architect and city planner, said, “Make no little plans, they have not magic in them to stir men’s blood,” we wonder whether distributors can think beyond small shifts to imagine unprecedented value delivered through products and services. We live in epic times, opening the possibility of epic opportunities if only we can imagine new ideas and work to make them happen. Below, I offer my takeaways. I invite you to watch our conversation, develop your point of view, and join our work.
Moving our collective conversation forward
During regular business times, “owning the future” means optimizing influence, control, and success over time. But we live in epic times marked by digital transformation, artificial intelligence (AI), shifting work preferences, and a generational transformation like no other. The status quo is under fire, and while organizations’ established cultures may weather the coming storm, mitigating risk demands that leaders consider divergent ideas, imagine alternative markets, and invest in people with the courage and discipline to embrace change and drive progress. With this in mind, our conversation explored the future with two experienced, thoughtful, and creative minds: Shawn Hulshof, Vice-President at Wolseley Canada, and Chad Brezynskie, Co-Founder and Vice-President of GeoSmart Energy.
Listening to our recorded conversation, I found three actionable takeaways. These are my ideas, inspired by Hulshof and Brezynskie’s insights, but not intended as exact accumulations of their comments. I take a few leaps, and they are my own. I offer my thoughts for validation, refinement, or debate to push our collective conversation ahead.
Exploring ‘North Stars’
Asked to name their company’s North Stars for driving innovation, Brezynskie offered “changing the rules,” and Hulshof offered two guiding principles: “making customer projects a priority” and “being the best partner to our brands.” Reflecting on their explanations and examples, their insights point to new principles for operating as an intermediary in modern markets. I asked OpenAI’s ChatGPT to define three guiding principles for inventing a new distributor business model. After a few iterations using the AI as a copilot for business model design, I settled on these:
Customer centricity. Replace sales with project execution as a core function, focus on customer pain points, and enable progress with value-added services, including consultation, technical assistance, and post-project assessments.
Value creating vs. disruptive models. In every project, help customers consider options that range from incremental or adjacent value creation to radically redefining how business is done. Consider lessons and chart a forward-looking course that is right for the customer over time.
Brand experiences. Go beyond supporting supplier brand strategies to executing customer processes that reveal the brand promise, deliver measurable results, identify missed opportunities, and make the brand more and more relevant over time.
My use of ChatGPT to help design new business models is inspired by this McKinsey & Company article, and especially this paragraph:
Generative AI is also pushing technology into a realm thought to be unique to the human mind: creativity. The technology leverages its inputs (the data it has ingested and a user prompt) and experiences (interactions with users that help it “learn” new information and what’s correct/incorrect) to generate entirely new content. While dinner table debates will rage on whether this truly equates to creativity, most would likely agree that these tools stand to unleash more creativity into the world by prompting humans with starter ideas.
Distributors and manufacturers face many barriers in imagining the future of distribution, and in working together to make it happen. If ChatGPT can help lessen our load, adding creativity and speed, we should find ways to use it as a co-pilot—not to take the lead, but to assist us on our journey.
Are ChatGPT’s guiding principles for a new business model correct? Who knows. Are they a good start? I say, “hell yes.”
Determining the importance of data
Data is revolutionary. Asked to rate the importance of data for innovating the future of distribution from one to 10, Hulshof and Brezynskie responded with a quick and confident “10!” Digging in, our discussion affirmed that HVAC equipment creates data allowing remote performance monitoring, automated adjustments for changing conditions, predictive maintenance and reduced warranty claims, and annuity revenue streams for data-based customer services. Brezynskie offered a real-world story as inspiration for going further with data, slightly edited and summarized here:
Tesla is one of the most significant companies to use the flow of data in everything they do. Data controls everything in the Tesla experience, from the temperature in the cab to the speed you are driving and how hard you accelerate. Sensors collect data as it flows back and forth, and Tesla uses that data to improve its products, generate alerts about upcoming service requirements, and more. One of my sales reps received an alert as he was heading out in the morning that his Tesla might not make it to his planned destination. He had charged it the night before, so the battery had a problem. The rep drove to a nearby Tesla location, and a car awaited him. Two weeks later, his car was returned with a new battery. Thinking about how we can leverage data flows to better serve customers and provide support is our future.
Stanford University’s Human-Centered Artificial Intelligence (HAI) aims to advance AI research, education, and policy to improve the human condition. HAI published an annual AI Index that “tracks, collates, distills, and visualizes data related to artificial intelligence” to provide “unbiased, rigorously vetted, and globally sourced data for policymakers, researchers, executives, journalists, and the general public.” HAI is doing much of the hard foundational work for organizations like HRAI and its members.
The 2023 edition is worth a read by every curious and thoughtful innovator, but for this newsletter and our ongoing conversation, two key takeaways seem particularly relevant:
The demand for AI-related professional skills is increasing across virtually every American industrial sector, and
While the proportion of companies adopting AI has plateaued, the companies that have adopted AI continue to pull ahead.
If the importance of data is a “10” for defining the future of distribution, are distributors doing enough to build AI-related professional skills in their organization? Has our adoption of AI tools started, yet alone “plateaued?” Can we imagine how AI can help HVAC distributors “pull ahead” in Canadian markets, leading customers and suppliers to the future?
Building tomorrow’s supply chain
In the previous HRAI event, our continuous conversation about the future of distribution included perspectives from two supply chain and data experts, Richard Sharpe, Competitive Insights and Tim Brown, Georgia Tech Supply Chain and Logistics Institute. Together, they shared insights on the application of data for building a modern supply chain and the importance of “data confidence” in moving forward. Data confidence is not just defined as having cleaned-up and well-organized data that is trusted for making decisions. It is also about organizations making data-informed decisions collaboratively—in and across every function, including sales, marketing, operations, finance, and senior leadership teams. Innovation is seldom achieved by lone wolves armed with a vision and undeterred by barriers. Collaboration yields better results faster in ways that are sustained over time.
Brezynskie and Hulshof see the need for collaboration within their companies, suppliers, and customers, but there is a long way to go. Telling the story of a failed CRM implementation, Brezynskie explained: “We're still trying to figure out … how to collaborate internally as much as possible [to] streamline efficiencies.” Asked to rate collaboration on a scale from one to 10, Hulshof offered:
We're hovering between a three and a four. We're in our infancy of understanding how to collaborate because … it's really about breaking down those barriers [around] information as intellectual property. That’s the secret recipe. We will have to figure out how we get … more comfortable moving our collective industry forward. [Doing so] will help insulate us from outside disruption.
I think Hulshof and Brezynskie are on to something. Collaboration is perhaps the most crucial organizational competency for achieving innovations. Without collaboration, system-changing innovations are not possible. Distributors and manufacturers must find ways to foster high-impact collaborations within their organizations. They must pursue radical collaborations across organizations, working together in new ways to create new customer experiences and outcomes.
Inspired by our conversation, I googled “what is radical collaboration in an innovation context?” I received millions of results, so I asked ChatGPT the same question, seeking a definition of radical collaboration, and requested three supply chain examples to illustrate it:
In an innovation context, radical collaboration refers to collaboration that goes beyond traditional boundaries and involves diverse stakeholders working together to drive significant breakthroughs and create transformative solutions. It involves fostering an open and inclusive environment that encourages sharing ideas, resources, and expertise to address complex challenges and achieve mutually beneficial outcomes.
Examples of relevant supply chain innovations that exemplify radical collaboration include blockchain-enabled supply chain transparency, collaborative forecasting and planning, and co-created innovation platforms.
ChatGPT provided definitions for each example, but supply chain professionals, distributors, and distribution-minded manufacturers should be able to run with the example as a concept and flesh out what it might mean for the HVAC value chain and market in Canada. If we can’t, we have work to do about setting standards for what it means to be a supply chain professional in the digital age. But I think we can. Or, we can develop our own ideas for a definition of radical collaboration, projects to pursue, and people to make change happen. If the future of distribution depends on radical collaboration, collaborating around an industry project is an excellent place to start.
Leaning in
HRAI’s year-long conversation about the future of distribution can be the start of an industry-wide collaboration for exploring ideas and finding ways to make them happen. My just-published Supply Chain Quarterly article, provides a foundation for what may lie ahead. There, I propose a radical collaboration between distributors and supply chain professionals, including manufacturers and customers, to build a supply chain that is not just resilient but responsive to needs and aspirations and regenerative for workers and communities. I explore proximity and flourishing as North Stars (also introduced in our video) and offer a third—the ongoing transfer of innovation and business leadership to the coming generations.
But most importantly, I close with a critical insight from a Hoover Institution paper offering guidance for advancing prosperity for the betterment of society and the economy: “The quality of a nation’s institutions is more important than natural resource endowments.” By this, the paper’s authors point to the essential contribution of public and private institutions—like HRAI—to building a world we all want to live in.
Acting on Hoover’s insights, I believe the next step following our fourth and final conversation about the future of distribution is to lean in and radically collaborate, exploring divergent ideas and working to make them happen. Doing so will create opportunities for system-changing innovations, with the possibility of achieving unprecedented profits, sales, and share. Individual companies will act in their interest according to their unique strategies and capabilities. Still, a collaborative effort has the potential to create a rising tide for all companies, lifting the Canadian HVAC industry for the betterment of society and the economy.
If you have comments on this edition, please leave them below or contact me at mark.dancer@n4bi.com. And please watch for announcements about our final conversation on the future of distribution in your inbox and at Hrai.ca/events.
Let’s make the future happen together.