The Single Most Important Thought Exercise For Distributor Strategic Planning
The Strategic Planning Process
Returning from the Labor Day weekend begins the strategic planning process for many distributors. Leading the business without a strategic plan would be equal to, if our political leaders in Washington continually whiplashed from one policy to the next, wasted resources on non value added activities, or were caught in a morasses of activity with no tangible results.
Oh wait … I guess having a strategic plan is important!
At its core, strategy is simply a central concept as to how you will achieve your objectives. As you define this central concept your leadership team works to set priorities, focus energy and resources on strategic initiatives, ensure employees and leadership are working toward common goals and establish agreement around desired outcomes and results.
As you survey the business environment, the criticality of distributors committing to the strategic planning process is clear. Disruptive technology, changing workforce dynamics, changing customer buying habits and loyalty, non-traditional competition, consolidation, alternative channels, and more all require deep thinking and strategic decisions.
Deloitte recently wrote in their white paper Winning At The Wholesale Distribution Inflection Point, “A wave of disruptive forces … is poised to transform an industry unaccustomed to rapid, unpredictable changes. Indeed, the competitive moats that preserved distributor business models and value propositions for many years no longer offer the same protections. As a consequence, the strategic choices you make will likely determine whether you win at the inflection point, or are disadvantaged and disrupted.”
It is clear that leadership has the responsibility to effectively navigate this changing environment by aligning the organization around a clear path forward.
Distribution As We Know It Is Dead
I wrote in my book INNOVATE! that “one CEO of a Fortune 500 distributor says he was told point blank by both his largest supplier and his largest customer that ‘distribution as we know it is dead.’ The traditional role of pick, pack, and ship with a local sales force focused on strong product knowledge as their key value proposition is being disrupted by the likes of Amazon and others who are investing heavily in next-generation technologies. Distributors of all sizes are facing transformational market forces that have the ability to bring once strong and proud companies to their knees.”
I explored the concept of distribution as we know it being dead on my podcast Innovate For The Future, with Graybar Chairman, President, and CEO Kathy Mazzarella. Her belief is that if we fail to adapt for the long-term, our prospects aren’t favorable. She suggested that it is dangerous to rely on our past and to think that we can wait the change out.
Kathy went on to say, “I do think that it’s important that we understand that distribution as we know it and we’ve relied on the past doesn’t exist anymore. We’ve already evolved in the last several years to a new distributor model. To sit there and think that we’re going to continue to survive without continual evolution is not a wise thing.”
The Single Most Important Thought Exercise For Your Strategic Planning
For some in your organization the case for strategic planning and change might need to be made. You might have some on your leadership team who are relying too much on the past or are being pulled back by legacy thinking.
To jump start your strategic planning process use this challenging thought exercise to begin creating an urgency for planning and change.
Step One – Stipulate
Ask your team to take the statement, “Distribution as we know it is dead” at face value. Have them stipulate, just for this conversation that the statement is inherently true.
- Buy and resell of physical products
- Warehousing a wide assortment of products within a trade area
- Reliance on sales people knowledge
- Delivering parts on time to job sites
- Middle channel between manufacturer and end user
- Relationship focused
- Financier to some customers
- Providing technical expertise
Step Three – Challenge
Now for each definition of “distribution as we know it,” make a case for it being dead and/or susceptible to disruption.
Step Four – Conclusions
After your leadership team has developed these lists, step back and look at the big picture holistically. Look for patterns. Ask if there are data points or anecdotal stories that “prove” this disruptive nature. And then, factor this thinking into your strategic planning and where change and innovation is required.
It’s Time To Think Different
As you go through this thought exercise, you will begin to look at your business through a new lens and think differently. This rethinking of what it means to create long-term sustainability, relevance and profitability is at the essence of our two day UnleashWD Innovation Summit. Our event is the premier gathering for innovative distribution leaders who like Kathy, believe if they fail to adapt for the long-term, their prospects aren’t favorable. When you attend, you’ll be surrounded by others who believe distribution as we know it is dead, and who use this inspiring and content rich event to stimulate new thinking, innovation, and growth … and build it all into their strategic planning.
Founder | UnleashWD
The Premier Gathering For Innovative Distribution Leaders
Join us as we host the most driven leaders throughout distribution – from almost every imaginable line of trade – with the purpose of providing the inspiration, education, and connections needed to transform their business in this age of disruption. Your participation will leave you excited, charged, and prepared to return to your work with the vision and energy needed to lead your business to a profitable, sustainable, and relevant future.