11. Innovation! But, Specifically How?

Research proves that “Innovation” accounts for 80% of the premium profits and faster growth that the brave few get over the safety-seeking many who pursue “industry best practices”. Distributor association, financial-performance surveys support this.

90% of (the same) participants have been averaging a weak 7% pre-tax Return On Total Assets (ROTA) for 15+ years. But, the top 5% (also a constant group) averaged 20%+.

The top 5% will therefore get about 4-6 times greater after-tax, Return on Investment (ROI). That’s 75-92% more.

Innovation for distributors used to mean securing exclusive, best-factory franchise territories and then selling aggressively. In mature commodity channels, the players that now excel are doing customer-centric innovation starring: next level, service-value and/or supply-chain, process-cost improvements.

Traditional product pushers –- who try to sneak up prices for the same old service — get declining results and then disappear.

Why not shoot for 20% RONA? It’s the wrong question.

Great financial numbers are happy symptoms of better, smarter strategic thinking and execution; not top-down, financial management.

Some better questions?

  • How did the 5% choose the best customers in the best niches in their specific geographies for which they were best equipped to dominate?
  • How did they research more deeply to better understand what “service value” measurably was for each target niche?
  • How did they get all employees to make next-level service consistently happen for the target accounts?
  • How did they not get seduced into servicing many small, not-growing, net-profit losing accounts that generate overwhelming busi-ness? This Busi-ness earns far less Gross Margin Dollars than the Service Activity Cost Dollars you spend on them. Busi-ness prevents proactive-ness for best profit potential accounts and niches.

Some questions to ask yourself:  How can you:

  • Get your own unique answers to these questions?
  • Discover which customers and SKUs are both most super-profitable and unprofitable?
  • Move along your own innovative trail towards dominating your most profitable customer niches and fixing your most unprofitable accounts and niches?
  • Expand the Value Pie with modest innovations to reward all stakeholder groups: employees, customers, suppliers and shareholders?

Take these easy steps:

  1. Check out www.waypointanalytics.net and request a free demo to learn about Line-Item Profit Analytics Management.
  2. Check out : http://iklarity-courses.thinkific.com/courses/CTS-Math to get fluent with Cost-To-Serve Math and principles.
  3. Put a hold on February 29th and March 1st for the Advanced Profit Innovation Conference where the top 5% meet to get even better. See www.ApicConference.com for more information on that.

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