Quick Take: A new business model for a new age

‘Regenerative distribution’ combines the power of being local with innovative practices that move business forward; are you ready to join the cause?

Doing more good

Last week, I published my first “discoveries” newsletter to report on sources for inspiration, progress by innovators, and my plans for leaning in to help create change. Discovery editions will be published monthly, and as always, I welcome your comments. Click here.

In this edition, I explore another big, transformative idea for defining distribution's future—one about revisioning what it means to be a local business in the digital age. There is a move afoot to redefine sustainability as regenerative practices, indicating a change from “doing less harm” to “doing more good.” As I discussed here, this is a positive development for all B2B innovators, especially those working at distribution companies. As distributors rush to do more business online, they move away from their roots as local businesses that are integrated with communities—doing business as humans for humans in the real world, where customers live and work. Doing more good is innovating for the future, reinventing services, energizing employees, and creating unbreakable community loyalty.

Inspired by conversations at TWIN Global 2022, I wonder if distributors may invent a new business model that may come to be known as “regenerative distribution.” Building on insights found here, here, here, here, and here, I found several themes for regenerative experiences, processes, capabilities, culture, and profit enablers that may define an evolved business model:

• Regenerating communities. In distribution, humans create value by understanding customer needs, making suggestions, solving problems, and staying connected. Distributors measure the value humans create as share of wallet and earned margins. Distributors may track new metrics for community outcomes in the same way that sales and shares are tracked by segment. The shift in emphasis is powerful and may lead to new ideas and behaviors that create mutual benefits. Growing share within segments is a one-sided activity, benefiting only distributors. Measuring community results may lead to outcomes that create mutual benefit, helping communities regenerate as the distributor earns new sales and profits.

• Workforce ecosystems. As explored in this Deep Dive edition, the future of work will include teams from across organizations coming together around projects for mutual benefit. For distributors, this may consist of coordinating with distributors from other lines of trade, customers’ employees, college educators, economic development organizations, suppliers, and more. The idea is to upgrade work around construction, manufacturing, food service, and more in a way that leverages digital technologies and strives to achieve measurable community benefits of job creation, worker education, and economic growth.

• Stewardship culture. Leaders get the ball rolling toward operating as a regenerative distributor by articulating the values and behaviors most important for successfully driving customer relationships, sales, and profits. New business cultures will emerge as managers and individual contributors follow through. The new culture is one of stewardship—a personal commitment built on caring and devoted to improving outcomes over time. And importantly, the new culture is a shared culture, with values in line with community citizens, institutions, and businesses. The combined impact: mutual collaborations that create wealth for all in ways that virtual marketplaces and disruptors cannot match.

Regenerative business is not new. For distributors, regenerative business practices are founded on the tradition of serving community interests as a local business, updated with new meanings and terms for today’s generation. In a recent paper on advancing American prosperity, the Hoover Institute channels the famed economist Friedrich Hayek to make a similar point: “If old truths are to retain their hold on men’s minds, they must be restated in the language and concepts of successive generations.”

Emboldened by Hayek, I offer four advantages for doing business as a regenerative distributor for consideration by experienced and emerging leaders and innovators:

• Brand equity. Brands are best built through actions that align with shared values. Regenerative business models aim for where society is headed, creating a virtuous loop for continuous brand messaging and development.

• Multidirectional partnerships. By leading from the center of commerce, a concept I first explored here, distributors may take the lead in directing traditional alliances with suppliers, moving away from metrics designed to push inventory and drive sales to new priorities for creating financial, social, and economic wealth. 

• Accelerated innovation. As reported here, purpose-driven employees are a source of innovation ideas and an engine for thoughtful implementation. Regenerative business practices expand the universe of ideas through real-time, continuous engagement with the humans, businesses, institutions, and organizations that make up the community. Distributors move beyond innovating for survival to innovating for progress.

Your take?

In writing this edition, I discussed the potential for regenerative distribution with a few distributor leaders and was met with skepticism as well as optimism. Distributors are excited about returning to a business model defined by local engagement. But having been hectored by activists pushing “do less harm” sustainability, distributors initially see regenerative business practices as mostly shifting costs to renewable energy and products. To move forward, distributors must understand that “doing more good” is a path to sustainable profits while creating incremental wealth for employees, communities, society, and their businesses.   

Do you agree? Do you have examples? What are you doing? How can I help? Please share your comments below or reach me at mark.dancer@n4bi.com.