157. “Only The Paranoid Survive” 2.0

Andy Grove’s Book and Quote

Grove was a founder of Intel, and its CEO from ’87 to ’98. He wrote an acclaimed book on what he had learned: “Only the Paranoid Survive”, published in ’99.  His summary quote:

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155. Your Lake-Woebegone Service Value

“SERVICE IS VITAL; OURS IS GOOD!”

Most distributors know/believe this phrase. But, are you living in Lake Woebegone where everyone is above average? We all practice some degree of the “self-enhancement bias”. It’s good for our species’ happiness, sanity and survival.

But, if competitors have “good service” too, what’s the tie-breaker? Isn’t it meeting a “price”? Then, won’t you get commodity returns, and struggle to attract and keep new young talent?

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154. Forecast What You Can Control with Best Odds

Forecast the Global-Everything Bubble?

The global economy is slowing down. Do be more cautious with debt and big, long-term investments. Otherwise, focus on the net-profit gains that you can best forecast and control. Take your 5-10 biggest net-profit-upside-potential accounts to the “next-level”.  

Assumptions About Customers:

  • Top 20% customers may yield 80%-plus of your gross profit dollars (Pareto). But, one in five is typically unprofitable. They are big losers due to huge, small-dollar picks, orders, and/or returns.
  • For net-profit rankings: your top 2% will yield 70-90% of operating profit. (All net-profitable accounts – about 20-40% – will yield 120-150% of your financial profits. They pay for both the losing accounts and residual operating profit.)
  • A team effort will always find new, upside possibilities within best 2% accounts.  
  • Another 4% subset of customers are high-growth “gazelles”. They are run by ambitious, innovative leaders and have a tightly focused strategy at which they excel. Gazelle buying needs (and sales) grow 2-4X faster than their peers. As innovators, they are apt to be open to your ideas for replenishment-process improvements. Partner them, and they will grow you for years.
  • Your competitors are not thinking this way. Their reps do what they can. And, those reps won’t be able to (on their own) counter your total-team solutions.   

Action Steps:  

  1. Rank all customers by year-over-year increases-to-decreases in gross profit dollars. (Better by net-profit gains, if you have a cost-to-serve model). The most up and down accounts will shock you.   
  2. Focus first on most-up accounts. Why? Nobody wants to take credit for fumbled, down accounts. And, big-up accounts may be still expanding with unsolved replenishment process needs.
  3. Some accounts will be way up. Are they gazelles? Do more research to create a top-5, gazelle, target list.  
  4. Selling and installing next-level replenishment systems requires honcho-led team selling with three stages. Find new system needs to fill. Co-create and resource them. Then, do ongoing, proactive maintenance. For much more on – “Enterprise Account, Team Selling” – follow the link at the bottom to an appendix of past documents and how-to blogs.   

Will This Work for You?

Certainly! As you and colleagues skim through the appendix material, reasons for why you can’t change will arise. Work through them.  As Henry Ford said: “if you think you can or can’t, you are right.”

CLICK HERE to view the appendix

153. Analytics for Silos to Supply Chains

Invent Your Own Analytical Insights

Analytics software is big news.  But, your richest analytical insights are hiding under foot. To uncover these insights, get curious. Make specific observations about the good and bad activity that you know intuitively exists within your business.  Are these observations symptoms of what underlying root-causes? Write down the questions and theories that arise. Do some customer field research and quick statistical analysis to test and refine your questions and theories. Then, do small, fast, learning-forward experiments to find the golden insights.

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152. Don’t Misapply: “Keep It Simple Stupid” (KISS)

“Bruce, KISS It!”

For years on the distribution speaking circuit, Polished Pleasers have advised me to: “Make your message simple, appealing, dumbed-down – with memorable sound-bites or key distributor folks won’t listen. Your advice on service-value innovation for net-profitable customers and customer niches is too complicated.  Tell them what they want to hear. (Be an edutainer!)”

Some distributors (along with my own turnarounds) have pursued what I preach for great results. Wins keep you going! But, many distributors are still not suffering enough (yet) to want to upgrade their simplistic, operating, financial beliefs.

The intent behind KISS was not to adopt simplistic notions for success. Simplistic always yields weak, commodity, follow-the-herd returns! What was KISS’s intent? How did it get distorted? What should you do about it? Read on!    

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