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

Distributor Case Study

ABC Supply is a $300MM+, multi-location, distribution chain. It has never had a formal “innovation department”. ABC does budget funds for upgrading capabilities: new trucks, warehouse automation, etc. Education costs are expensed as needed. Otherwise, everyone is expected to reactively adapt to the daily challenges that arise.     

But then, ABC subscribed to Waypoint Analytics’ cloud service for: “Customer and SKU Net-Profitability”. The big analytical insights begged for new solutions to yield big gains. But, no one readily understood the new math or had the courage to pursue the novel strategies.    

The solution? Create an experimental “Innovative Analytics Department” (IAD) and budget. The steps: 

  1. Hire a part-time, Waypoint-savvy consultant.
  2. Assign a full-time, intrapreneurial employee to assist and be trained by the consultant (the “Innovating Duo”).
  3. Make admin support available as needed with costs being billed to the IAD.  
  4. The IAD cost-center is allocated (as part of corporate overhead) to all profit centers.   
  5. IAD reports to the CEO.[i]  
  6. The IAD’s first year goal: achieve 5X the department’s costs in increased profits.
  7. The Duo’s incentives are based on profit improvements.    

Promoting Quick Wins

Big results from big change must anticipate big resistance. So, the Duo is targeting easiest, biggest-opportunity wins to get a company-wide, bandwagon effect going.   

As the Duo works initially with the most collaborative managers and reps, all wins will be trumpeted to all employees. Because initial collaborators will be getting both glory and more income from these wins, others will hopefully volunteer to work with the “free-service” Duo. (But, already paid for via corporate allocation.)   

Next-Level Digital Innovations To Follow

ABC’S early wins are growing service-value, sales, profits, free cashflow, and the courage to innovate further. “Innovation 2.0” is already discussing “digital transformation” experiments.  

Be in touch for a Waypoint virtual session! bruce@merrifield.com


[i] See recent blog #145 – “Innovate at 32 Degrees” – http://merrifieldact2.com/waypointanalytics/145-innovate-at-32-degrees/

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