Monthly Archives: May 2019

149. What Distributor Roll-Ups Will Become Zombies?

Private Equity (PE) Distributor Roll-Ups: The Good, Bad, and Ugly

PE Good News:

In ’08: The Central Banks rescued PE firms from their over-paid, over-leveraged ’07 deals. By lowering interest rates to near-zero for 10 years good things happened:

Continue reading 149. What Distributor Roll-Ups Will Become Zombies?

148. A Distributor’s New “Innovation Department 1.0”

Questions About “Innovation”

True or False:

  • Innovation is key to faster growth and greater profitability
  • Amazon has changed the buying expectations of your next-gen, millennial, B2B buyers
  • If you don’t digitally oblige next-gen buyers, you will lose business to faster-moving, traditional competitors and/or to Amazon Business
  • Companies like Amazon and Google allocate huge funds to R&D to invent new (disruptive) solutions for unmet needs
  • You currently have an effective R&D department
Continue reading 148. A Distributor’s New “Innovation Department 1.0”

147. Does “Fail Forward” Happen Enough at Your Firm?

Get the Tattoo? The Logic Has Gone Household!

The original – “Fail: fast, often, forward” – quote was penned by Samuel Beckett. It’s tattooed on tennis player Stan Wawrinka’s forearm.  Variations abound, like: “I never lose, I win or learn”.

Attendance in Entrepreneurship classes is booming at colleges. Every student parrots these startup steps:

  1. Find an unmet need.
  2. Invent a solution (by rapid prototyping; failing forward) of value that supports a price higher than the cost to insure a profit.  
  3. Once you nail such a solution, then scale it.   

Why Don’t Distributors Re-invent Service-Value?                                   

I’ve written a big document (free upon request) entitled: “CORE RENEWAL ROADMAP TO EVERYONE-WINS (How Distributors Can Act on Customer Profitability Ranking Realities)”. The feedback? Too often it is: “I get it, but we can’t execute.” Why? Common reasons:

  • “We don’t believe in sharing general financial numbers with all employees.” Open-book management (OBM) is, however, a pre-requisite for engaging everyone to help reinvent service-value. Service improvement, in turn, boosts sales wins, productivity, profits and pay. All stakeholder groups win. Why the NO-OBM belief? Keep asking “why” until there are no more underlying reasons. You will have arrived at the true root-cause(s) for surface resistance. Then, solve them or fade.
  • Customer net-profitability analytics revelations conflict with “our (data-free) financial mantras”. Does the C-suite really want a better future for all? If yes, write down old-beliefs to test and revise in light of new analytics discoveries.
  • “OK. We roughly believe the new analytical results, but they are embarrassing. Who wants to take historic credit for the profit-draining activity and customers?” Offer blanket forgiveness to all and move forward!  
  • “But, the roadmap changes are overwhelming.” Learning and doing new things is tough. Start any big journey with small, discrete, baby-steps. Quick, small wins build confidence and momentum.  
  • “The top 30% of the payroll (including all reps) don’t want to change or risk pay cuts.” Guarantee their pay along with new upside incentives. Have change champs do the lifting and give everyone credit for wins. Most will eventually jump on the great-results bandwagon.  
  • “No one else in my market is doing this.” Great! You win by being an innovator not following the herd.

Failing-Forward Catalyst?

For new-vision stimulation, request my roadmap and a C-Suite, virtual session on customer/SKU net-profitability analytics. bruce@merrifield.com

146. Analytics’ Credibility Within Your Firm?

Science Deniers Past and Present

The “scientific method” has enabled all the fruits of modern civilization.

The Scientific Method’s steps are (modified for distributor results):

  1. Observations.
  2. Questioning.
  3. Theories/Hypotheses.
  4. (then) Gather new data.
  5. Do iterative experiments ever smarter.
  6. Uncover Strategic Insights.
  7. Sometimes nail something new and profitable. 
  8. And, Scale it.

Until 1660, when the Royal Society of England was founded, scientists who published discoveries that conflicted with the beliefs of the church or dictators could be burned at the stake. Even today – politicians, churches, economists, CEOs, etc – will undermine any (scientific) facts that get in the way of their agendas (comp plans) or belief-identities. Want to get ahead? Tell these bosses what they want to hear! 

Science-denying leaders have good audiences for their data-free opinions. Besides obedient underlings, surveys reveal that citizens are OK on everyday-science facts.  But, they often struggle with the scientific method process and statistics.

Belief Types: Finance, Sales Relationships and Family-Company Values

Every company is dominated by the voice of finance. Be financially pragmatic. Pay timely taxes. Service debt and meet lender’s ratios. Meet the payroll. Please the auditors. But, what are the blind spots of financial operating assumptions like “buy-low, sell-high, and sell-more”?    

What “observations, questioning, theories, and new analytics” should challenge financial management? Do financial numbers measure the improving effectiveness of leaders, strategy, and the culture and systems that support the strategy? How measurably great and guaranteed your “service value” is for best, most net-profitable, target customers?  

Switching to the sanctity of “relationships that reps have with their customers”. Where are the metrics by which to manage and improve the quality and win-win economic benefits of these relationships?

Family businesses also have beliefs/values. But, to paraphrase Tolstoy, “Happy family businesses are all alike; every unhappy family business is unhappy in its own way.” Have any unhappy, family beliefs to question?

Concluding Questions:

In your company, if scientific method analytics clash with data-free beliefs, what happens? Is the C-Suite open to experiments? Or, do they want “new” data that supports the status quo beliefs and compensation schemes? Big profitable gains come (unfortunately) from big changes to old ways. What will happen to your company, in fast-changing times if scientific method analytics can’t challenge dysfunctional, profit-drain beliefs? For more on scientific, big-change analytics for distributors, be in touch:  bruce@merrifield.com