Quick Take: Finding the freedom to innovate

Can we deconstruct traditional distribution and use technology to radically reinvent it?

Decentralizing distribution

At TWIN IMPACT 2022, several conversations centered on the idea that technology can radically reinvent industries, including space travel, healthcare, music, and finance. In the latter, decentralized finance (DeFi) was a hot topic. Often, DeFi is mostly about cryptocurrencies disrupting and replacing traditional methods for creating, growing, and transferring wealth. But as I think about B2B innovation, DeFi inspired ideas about how distribution might be reimagined in a future where technology makes the impossible possible.

The most compelling future of distribution will not be achieved by applying technology for distributors to better do what they already do. Ideas come first, but if technology is to allow the freedom to innovate, it’s helpful to have a working list of essential technologies in mind:

• Artificial intelligence (AI) explores data to find patterns and learn faster than humans to automate activities and achieve better outcomes with previously unattainable effectiveness and efficiency.

• Blockchain is a technology that enables a record of transactions from origin to finish, across all parties and intermediaries, with data added as helpful for any purpose and offering radical accountability and transparency.

• Web 3.0 is an uncertain work in progress, building on previous versions, but may empower individuals to read all knowledge, publish all content, and own all creations. AI is “in the system” and will act as a digital game warden to render aid, steward resources, and enforce norms.

After TWIN, I dug into decentralized finance, reading and listening in many places, and found a beneficial discussion of ideas on the HBR Presents/Azeem Azhar’s Exponential View podcast here. For reimagining the future of distribution as decentralized, three radical possibilities stand out:

• Banking without banks. The most radical ideas point to fundamental reinventions of the status quo. If finance can happen without established financing institutions, is it possible to imagine a future where the immutable need for distribution is achieved without distributors?

• Brands vs. contracts. Traditional financial institutions put their brand, reputation, assets, and facilities forward to create confidence in their ability to deliver on promises. In a blockchain, smart contracts bind suppliers and customers, offering radical visibility to customer satisfaction and supplier performance. Opaqueness is out, replaced by proof.

• Put data “on-chain.” On-chain can mean transactions put on blockchain but might also be extended to refer to any information added there, or on Web 3.0 platforms, or on a technology that has not yet emerged. This might mean operating instructions, performance data, training videos, and repair instructions for physical products, but much more is possible. The possibilities might be endless, leading to genuinely seismic value offerings.

So, what is decentralized distribution (DeDi)? More than the opposite of centralized distribution, meaning a distributor with a warehouse. Armed with the exponential power of digital technologies and cloudless foresight enabled by radical possibilities, I can leap ahead to distribution that is not centered, physically or mentally, around the existence of a warehouse full of stocked products. I offer three potential versions of DeDi, in no particular order:

• Mission-critical “plus up” data. Acting as an intermediary, distributors gather the essential information customers need to run their business, innovate their products, and dominate their markets—and package that data using technology to offer an integrated product/service/data offering, with AI and data wranglers to “plus up” customer outcomes. Mission-critical data might include financial measures, application design, equipment performance, operational excellence, market share, competitive advantage, commodity prices, safety measures, government regulations, and much more. 

• Masters for solopreneurs. I have reported a developing trend toward individuals, driven by purpose and passion, carving out a one-person business model enabled by a customized tech stack. These solopreneurs are hyper-focused on a local or business community, offering a personalized and impossible-to-match service. In this version, a new form of “DeDi master” distributor would enable them with not just products but also services inspired by modern methods from the future of work and learning. Examples include virtual platforms for work and education, digital certifications and medallions, community coordination, and government relations.

• “Owning” groups and venturing. Today, traditional buying groups exist primarily to aggregate member purchases and negotiate for favorable supplier pricing, terms, and support. Leading groups help members develop competitive capabilities. In a DeDi future, the buying group might own inventory wherever it exists, using AI and platform-enabled customer experiences to get products to the right customer at the right time with maximum efficacy. Thinking beyond developing member skills, a DeDi owning group might act as an innovation intermediary and implement venturing processes to find or incubate startups for member advantage. The result could be a massive shift in competitive power and profits.

Your take?

I am not an expert in decentralized finance, artificial intelligence, blockchain, or web 3.0. But I have spent 25 years helping B2B companies imagine the best possible outcomes, only to be told implementation is impossible. Can you believe that digital technologies might give you the freedom to innovate? Can you imagine reinventing the fundamentals of doing business for your customers and in your markets? What are the DeDi versions you can conceive beyond those I suggest above? Please share your comments below or reach me at mark.dancer@n4bi.com.