1. An Epicor®
and 4th
Generation Systems Collaborative White Paper
Unleash:WD 2012
Eight Ideas to Inspire Your
Distribution Business in the
New Year
2. Table of Contents
A Call for Change...................................................................................1
#1 - Market-Making and Disruption.................................................2
#2 - Rethink “Supply Chain”...........................................................3
#3 - Unleash an Innovative Spirit in Your Company.........................4
#4 - Acknowledge and Lean Into Fear.............................................4
#5 - Prepare Your Organization Culturally........................................5
#6 - Collaborate, Don’t Command..................................................5
#7 - Recommit to the Human Aspect of the Business......................6
#8 - Recommit to the Voice of the Customer..................................7
Conclusion..............................................................................................8
About Epicor.............................................................................................
About Unleash..........................................................................................
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
3. 1
A Call for Change
What will your company do differently in 2013? In recent discussions with
innovators in the wholesale distribution industry, several forward-looking themes
emerged. Taking a cue from PepsiCo®
CEO Indra Nooyi, participating distributors
sought to “lift and shift” ideas from other industries in order to change their
business model (i.e., the story of how an organization creates, delivers and captures
value) and potentially reinvent their companies.
In taking this approach, it’s important to make a distinction between true
transformation versus incremental change.
You may ask, why is it so important that you reinvent
your business now? In myriad ways, this era screams for
transformation: from the influence of technology, to global
economic forces, to changing demographics. We are living
in an “Age of Disruption.”
For example, by 2020, the Millennials (those born between the early 1980s and
early 2000s) will dominate the workforce—meaning that the majority of your
employee base (and that of your customers) will have grown up using the Internet,
social media, mobile devices, etc. as a primary means of experiencing the world.
How could this not impact your marketing, sales and customer service?
Reimagining your business involves looking at it as if you’ve never seen it before,
and thinking about how to deliver value to your customers in a completely different
way—creating a market that you can be the leader of!
On the following pages, we have identified eight ideas based on excerpts from
the November 2012 Unleash:WD Innovation Summit, produced by 4th Generation
Systems and co-sponsored by Epicor Software Corporation. The summit brought
innovators from outside the distribution industry to the TED Conference-inspired
stage to help distributors rethink their business and catalyze a new wave of
innovation and business model transformation throughout wholesale distribution.
You’ll find following each of the eight ideas, a series of “lift and shift” questions
developed by Unleash:WD founder Dirk Beveridge. These probing questions are
intended to help you elevate the innovation discourse within your distributorship.
“In most organizations,
change comes in only
two flavors: trivial and
traumatic.”
—Gary Hamel, Wall Street Journal
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
4. 2
#1 - Market-Making and Disruption
Going forward, successful innovation in wholesale distribution will call for market-
making, rather than simply gaining market share. Creating new markets is critical
for business survival. A simple way to think about it is that you’re not just “building
a better mousetrap,” but coming up with
a new paradigm for controlling mice!1
Apple®
is famous for this in their product
development: led by Steve Jobs, the
company would solve problems customers
didn’t know they had, with products they
didn’t even realize they wanted. Market-
making starts with identifying unmet needs.
However, far too many companies find
themselves shackled to an existing business
model. In the Apple example, Sony®
Music had all of the necessary pieces (talent,
technology, marketing channels, etc.), but Apple “beat them to the punch” in
reinventing the music industry (via iTunes®
and the iPod®
), because Sony was stuck
in their own business model. Don’t let what you know limit what you can imagine.
It goes without saying that a focus on taking share has its place for all
distributors. That said, to what degree is your business committed to
identifying unmet (and quite probably unarticulated) market needs and
then innovating new solutions?
Is there an opportunity for you to partner with your strategic suppliers to
bring this level of thinking to your alliance?
Look at the sources of the ideas in your distributorship. Are the ideas almost
exclusively derived from tenured employees, industry gurus and research? Is
it possible that this ingrained knowledge is limiting what you can imagine?
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
Ways to disrupt an
industry:
• Totally eliminate customer
pain points
• Reinvent customer service
• Make “dumb” (static)
touchpoints “smart”
(interactive, creating a
relationship)
• Teach your company to
talk (e.g., Siri®
for Apple
iPhones®
)
• Teach your organization to
see and learn in new ways
(e.g., municipalities using
in-ground parking sensors to
control traffic flow)
• Be utterly transparent (telling
it like it is)
• Act like a startup (asking,
“What would we do
differently if we were just
entering the market?”)2
______________________________________
1
Saul Kaplan, Chief Catalyst, Business Innovation Factory, “Business Model Innovation - How to Stay Relevant When the World Is
Changing.”
2
Michael Hinshaw, President, TouchPoint Metrics, “Smart Customers, Stupid Companies: Why Only Intelligent Companies Will
Thrive, and How to Be One of Them.”
5. 3
#2 - Rethink “Supply Chain”
For wholesale distributors, “supply chain” may be what you know, but that is 20th
century language—an established business model that limits your thinking and
leaves you vulnerable to disruption, just like Sony. In the 21st century, we are all
part of a networked world, where capabilities cross-connect inside and outside your
enterprise, and are not just linear.3
You need to play in the right part of the value
chain, as cutting-edge companies like Google®
are doing.
Currently, Google is developing augmented-reality eyewear (a.k.a. “Project
Glass”) that interconnects to all facets of what Google does—displaying real-time
information about live events as they unfold before your eyes. Beyond developing
the technology itself, Google has thought through the accompanying business
model. Because a ubiquitous, non-stop Wi-Fi connection will be required, Google is
already positioning itself in the middle of the network. In contrast to Sony, Google
recognizes that putting the pieces
together—either as a supplier to or
an owner of a strategic control point
in the value chain—will be essential
to keeping other competitors out (at
least initially, while market leadership
is being established).4
Words matter. Context matters. How might looking at your role as a
distributor as part of a “networked chain” or “value chain,” rather than your
role in the “supply chain,” unleash new thinking?
Where are the opportunities to earn a position of strategic control?
If you’re like most
distributors, you may
classify the replacement
of a legacy Enterprise
Resource Planning (ERP)
system as “traumatic,”
and so may have put
it off. But in rapidly
changing times,
there are also risks in
standing still. Enterprise
Resource Planning can
drive change within an
organization and track
transactions across
the network. In the
future, ERP vendors
will be judged by their
ecosystem: that is,
how they interact with
customers, partners/
developers, etc.
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
______________________________________
3
Saul Kaplan presentation.
4
Dr. William Putsis, Professor of Marketing, Economics and Business Strategy, University of North Carolina at Chapel Hill, “Creative
Destruction - The Imperative to Make Your Product Service Offering Obsolete.”
6. 4
#3 - Unleash an Innovative Spirit in Your Company
Technology mavericks like Google and Apple do not have a monopoly on
innovation. For example, most airlines have been operating in the red over their
entire lifespan; yet Southwest Airlines®
has enjoyed consistent success for over
40 years. Southwest achieved that level of performance because they rethought
and reimagined what it could mean to be an airline. They determined their value
proposition to be: “We’re in the freedom business—to ‘democratize the skies’
and make air travel affordable and accessible for rank-and-file Americans. Our
competition is other forms of transportation, not other airlines.” Everything they do
is in service to that disruptive mission, which allowed them to target an unmet need.
Or, consider the transformation in delivering home entertainment, from Blockbuster®
to Netflix®
to online streaming of movies and TV shows. Each successive business
model has upended the whole market. (When is the last time you visited a
Blockbuster store?)
The lesson from these examples is to not let past experience get in the way of
innovation. As Alan Kay said, the best way to predict the future is to invent it. You
need to avoid “analysis paralysis,” or retreating to the safety of what is known.
Do your guiding ideas—your mission, vision, values, and purpose—elicit a
spirit of pioneering, or one of security and risk avoidance? And how about
your established leadership?
Look across all functions of your distribution business—does the culture
require analysis that demonstrates a guarantee of success? How might
this cause a retreat towards safety and what is known, rather than
advancement towards new possibilities?
#4 - Acknowledge and Lean Into Fear
Our history and success create a strong bond with the
status quo. Anything but “that’s the way we do it here”
produces an intense surge of fear that can freeze an
organization out of any significant level of innovation.
When you innovate—when you bring your company to
the edge—there is no crystal ball that will show you how
the change will play out. Fear of the unknown is one of
several common fears in business. Others include:
• Fear of failure
• Fear of losing control
• Fear of success.
The latter may seem counterintuitive, but in some cases, you may be reluctant to
implement change due to fear of cannibalizing your current business model. The
antidote is preparation to face the fear head on; i.e., asking the question, “Can we
be ready to eventually move away from our core business?”5
Apple made the creation of value for customers its priority. When you do this, the
fear of cannibalization disappears. In fact, when your mission is based on creating
customer value, cannibalization and disruption aren’t “bad” things to be avoided.
They are goals you actually strive for—because they help you improve the outcome
for your customer.
In his book The Innovator’s
Dilemma, Clayton
Christensen of Harvard
Business School suggests
that large companies
have certain barriers to
innovation. Being industry
veterans means that they
adhere to set ways in
approaching new and
potentially disruptive
technologies.
Most businesses also have
an established customer
base to which they are
accountable. Customers
are a substantial barrier to
innovation; as Henry Ford
has been quoted as saying,
“If I’d asked customers
what they wanted, they
would have told me, ‘A
faster horse.’”
Last but not least,
companies make decisions
according to their place in
the value network—or, to
put it simply, according to
where they already are in
the market.
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
______________________________________
5
Lara Lee, Former Chief Innovation Operating Officer, Continuum, “Leaning into Fear - The Courage to Push Beyond.”
7. 5
To what degree is fear limiting a rigorous discussion of your business model,
and the relevancy of how you currently create, deliver and capture value?
Are there stories within your organization of individuals who questioned
the status quo despite the risks inherent in doing so? How do these stories
end?
Is the need for short-term results limiting your leadership’s openness to
innovating and creating something new?
#5 - Prepare Your Organization Culturally
How do you realistically get past the
fear factor? You can begin by fostering
a culture of change. Empower
your teams to innovate: create
environments (a.k.a. “sandboxes”) for
experimentation, where people can
take risks and “play with the pieces”
(and each other) in safety, leaving
room for failure. You need to be able
to “fail cheap and fast” to learn.6
Of course, most distributors are not set up to think this way. They are very
uncomfortable with “just trying” and experimenting iteratively (outside of product
RD). Yet, a series of ongoing, informal experiments can lead to lots of little changes
in strategy and culture that add up to transformation over time.7
Disruptive change
can start with seemingly innocuous offerings, but it’s not enough to just improve the
way things are today; you also have to envision, prototype and test new business
models that will pave the way to the future.
Does the culture of your distributorship foster, recognize, and reward
experimentation?
How many “sandbox” experiments are currently underway within your
business? What does this say about the inventiveness of your distribution
business?
What can you do today to help your organization identify potential new
ways of creating value and then “step into the sandbox” to play with the
ideas, allowing for “fast and cheap failure” on the innovation journey?
#6 - Collaborate, Don’t Command
Your organizational leaders can be catalysts for this
ongoing process. They need to collaborate instead of
command, emphasizing the importance of working
together as a group. You should recognize that your
team is stronger together than all of you apart; take
advantage of that shared brainpower; and engage
the collective expertise within your own organization,
as well as your external network. Creating an
“Architecture of Participation” allows you to tap
into fresh ideas (by colleagues, customers, vendors/partners, etc.) that may have
previously remained hidden.8
The Power of “Yes,
and…”
At The Second City
Comedy Improv,
responding “Yes,
but…” to a group
member’s suggestion
is considered to
be “like ‘no’ in a
tuxedo.” On the
other hand, “Yes,
and…” is the basis
of improvisation; it
connotes acceptance
and building of ideas.
It’s about possibility,
not perfection, and
turning off your
internal “checks,” to
really be present and
listening.9
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
______________________________________
6
Lara Lee presentation.
7
Bill Taylor, Founding Editor, Fast Company Magazine, “Practically Radical - Not-So-Crazy Ways to Transform Your Company, Shake up
Your Industry, and Challenge Yourself.”
8
Ibid.
9
Tom Yorton, Chief Executive Officer, The Second City Communications, “The Power of Improv - Business without a Script.”
8. 6
IBM®
coined the term “humbition” to describe its leadership mindset—a
combination of fierce ambition (power of the individual) and intellectual humility
(power of the group, as leaders seek ideas from a wide variety of sources and
unexpected places in the organization). These innovators know they don’t have all
of the answers, and keep themselves open to outside influences and committed to
continually learning as fast as the world is changing.
Contributions from employees, customers and partners must be easy to try out,
adopt and maintain. Playing off of each other, group members can heighten ideas,
add layers, and combine and recombine to reinvent the organization.
To what degree has your leadership consciously moved away from the
industrial era’s top-down, command-and-control style of management?
Is the word “silo” still often used to describe the lack of communication
within your business?
How can you open the flow of ideas to collaborate with others, including
those outside your four walls?
Are you happy with the collaborative nature of the conversations with your
strategic suppliers? Your strategic customers? If not, what can you do to
lead a more collaborative exchange?
How far down the path are you relative to understanding the needs of
Millennials—the group of individuals who will dominate your workforce in
the very near future?
#7 - Recommit to the Human Aspect of the Business
While it may seem like a fundamental, far too many organizations fail to incorporate
a sense of humanity into their overall mission—engaging their employees and
customers at a basic human level. For example, in ERP implementations, the solution
itself may be seen as very powerful, but the challenge can be in the execution.
You can’t just “throw technology in there on top of everything” and expect
instantaneous improvement. To encourage employee buy-in (the human element)
and achieve maximum benefits from the technology, there should be a change
management process in place to concurrently adjust the system and educate the
employees in iterative steps.10
“Super users” who are up to speed and passionate
about the technology can help guide others.
By bringing more of who you are into what you do, and nurturing those human
connections, you have a shot at becoming what is called a “Passion Brand,”
because from this internal “fire in the belly” comes
a broader organizational perspective: “How do
we make everything we do more significant and
memorable to the outside world?” This is what will
separate you from everyone else in the market!12
At Umpqua Bank, based in Portland, Oregon, they
asked, “Can we create an entirely new banking
experience—one that is attuned to all five senses
and the complexities of the human spirit?”
Tapping into
passion—or what the
Greeks called “agape”
(deep, compelling
love, motivation or
belief)—is especially
important to
Millennials.11
As a
generational group,
they are concerned
in the short term
with “What gets me
up in the morning?”
and in the long term
with “What will be
my legacy; will my
work have a lasting
impact?”
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
______________________________________
10
Dr. Ron Ashkenas, Senior Partner, Shaeffer Consulting, “Simply Effective: How to Cut Through Complexity in Your Organization to
Get Things Done.”
11
Hunter Hodge, Co-Founder, Cirion Group, “Talent Wars - Why Young Talent Flocks to the Innovative Relevant Businesses of Today.”
12
Bill Taylor presentation.
9. 7
Although this question may sound “New Age” in theory, Umpqua’s answer came
via tactics such as incorporating pop-up stores, local indie music soundtracks, coffee
service and free chocolate into the bank’s branches, and keeping them open after-
hours as community centers. In essence, Umpqua is changing the conversation with
customers about the role a bank can play in their lives—reshaping the sense of
what’s possible by becoming part of the infrastructure in the community.
To what degree is your leadership focused on the processes and systems
required to run your distribution business, at the expense of ignoring the
human emotions that drive your employees, suppliers and customers?
What emotional responses surface when your employees, suppliers and
customers interact? Are these negative, neutral, fairly positive, or do they
suggest they love to interact with your business?
What would you need to do to turn your distribution business into a
“Passion Brand” like Harley-Davidson®
, Apple, Disney®
, and others?
#8 - Recommit to the Voice of the Customer
Innovative companies like Umpqua seek out the Voice of the Customer (VOC), to
see the business relationship through their eyes and truly understand their needs.
If you are going to design your business around the customer experience just as
Umpqua, Southwest, Apple and others have done, you need to talk to customers,
ask them, and perhaps more importantly, observe what they want and visibly react
to their hidden agenda.
Harley-Davidson is another company that was
able to turn their business around by looking at
innovation through the lens of their customer
community. After a test ride, they began asking
prospective customers, “What do we need to
change about this bike to get you to buy it?” The
customers, seeing that someone talked to them,
actually listened and visibly reacted in response to
their comments, began to develop the sense of
“You get me” that engenders goodwill and buzz about a brand. (This phenomenon
is also readily visible on Facebook®
, where your post implicitly invites the world to
acknowledge your existence with a “Like.”)
In addition, Harley-Davidson learned to base their brand messaging on emotional
appeal. At a very primal level, we buy with the heart (a.k.a. “emotional
intelligence”), not the head.
In today’s hypercompetitive environment, you must create value outside of product.
This means connecting to the customer’s hidden agenda and ambitions—their
emotional intelligence. The underlying (but typically unspoken) question that the
average customer is asking is, “Why should I do business with you versus one of
your competitors?” All too often, front-line people have no good answer! If your
own employees can’t explain clearly, simply, consistently and convincingly what
your differentiators are—what is unique and compelling about how your company
is doing business relative to what’s going on in the marketplace—that’s a problem.
It’s not good enough to be pretty good at everything; you need to be the most at
something in your field!14
“Brain = pain”…so stop
making sense!
The more you try to
use rational, logical
arguments to sell (under
the assumption that data
will enable your customer
to make an “informed
decision”), the faster you
commoditize your business.
Look at the messaging
found on your competitors’
(and probably your own)
Web sites: “We offer
outstanding customer
service; reliable, value-
added, quality product;
our people make the
difference…” These are
NOT differentiators! If
everyone is saying the same
things, potential customers
will just become immune to
the message and pick the
cheapest alternative. You
need to consciously choose
not to do this (saying what
people expect you to
say, and doing what they
expect you to do).13
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
______________________________________
13
Ken Schmidt, Former Director of Communications, Harley-Davidson Motor Company, “Harley-Davidson’s Ride from Disorder to
Dynasty.”
14
Bill Taylor presentation.
10. 8
At your next board or staff meeting, could you tell a compelling story of
your commitment to understand the emotional and business needs of your
customers?
And then could you expand that story to demonstrate innovations to better
meet these needs?
Beyond the articulated needs (let’s say, getting the right product, to the
right place, at the right time, at the right price), what are the hidden
agendas of your customers that are not being fully met?
Conclusion: Opening Your Business to
Inspiration and Provocation
The only sustainable form of market leadership is thought leadership, and that
involves identifying the “big ideas” that define how you do business, and the impact
you want to have. (E.g., Google’s mission is: “to organize the world’s information
and make it universally accessible and useful.”) While it may seem an overwhelming
task, you can be a change agent; it just takes patience and persistence.15
Remember that when Steve Jobs returned to Apple in 1997, the company was
dying at the hands of Microsoft®
, IBM, Dell®
, and a host of other competitors that
were doing what Apple did, only cheaper, with faster processors. The iMac®
, iPhone,
iPad®
, iPod, iTunes and the Apple Store were still to come. Jobs’ real genius was
seizing upon existing concepts, simplifying and perfecting them, and then putting
them forward at exactly the right moment. Likewise, social media is an “overnight
sensation” that took 15 years to come to full fruition—the world just wasn’t ready
for it back then.
Understanding how to stage your change management programs, and introduce
new business models inside your established distribution company, requires some
vision of what the business could look like in the future and how you will compete.
LEARN MORE:
Epicor Software Corporation co-sponsored the first-ever 4th Generation Systems-
produced Unleash:WD Summit for wholesale distribution. Over two days, 17
provocative storytellers from outside the industry challenged and inspired distributors
to think differently about their businesses and to create a new wave of innovation
and business model transformation.
To view the videos of each of the 17 storytellers, visit:
http://unleashwd.com/2012-videos
2013 Unleash:WD Summit Details:
October 29-30
Venue SIX10
Chicago, IL
www.unleashwd.com
Unleash:WD 2012. Eight Ideas To Inspire Your Distribution Business In the New Year
______________________________________
15
Bill Taylor presentation.
