Leadership and Culture in A Digital Transition

E-commerce and digital business are a hot topic and for good reason.

Digital giants like Amazon and Grainger are shaking up the manufacturing and distribution world.  Amazon Business hit $10 billion dollars of annual revenue in 2018 after 4 years and is ranked as the 6th largest industrial distributor in the US by MDM.

While the technology can be intimidating and unfamiliar to many, the biggest barrier isn’t the technology or even the money. It’s the people.

"By 2020, companies that are digitally trustworthy will generate 20% more online profit than those that are not."[i]  In addition, "by 2025, half of low-to-medium touch B2B sales transactions will be conducted solely via self-service commerce, electronic data interchange, and intelligent bots."[ii]

While the technology can be intimidating and unfamiliar to many, the biggest barrier isn’t the technology or even the money. It’s the people. 

#1 Barrier = Insufficient skills and resources

In Figure 1, the most common answer when heavy manufacturing CIO respondents across industries were asked about significant barriers to achieving CIO objectives was “insufficient numbers of IT/business resources.”  Also, in our view, what's of interest is that the largest gap between top performers and the rest of the surveyed group is in “insufficient depth/breadth of digital skills.”[iii] 

Figure 1 – Most Significant Barriers to Achieving Digital Business[iv]

Attracting trained candidates is difficult for a variety of reasons.  Talent is in high demand. Many manufacturers and distributors are not located in municipalities known for attracting digital talent.  Because digital skill sets are in demand, it can be hard to offer competitive salaries, especially if you are looking for someone with experience working in a situation like yours.  Many digital architects like working on a team with others who can challenge them.  They want an environment where they can grow their digital skills.  This can make it hard for you to attract and retain talent. 

It is possible to succeed despite these talent challenges.  We recommend a combination of hiring new talent, training your existing team, and leveraging outside experience. Here are a few related resources to share with your IT leaders:

The Culture Barrier

Many small and mid-market manufacturing and distribution companies have a culture that is focused on stability when it comes to their sales and go-to-market approach.  That stability, however, can make it difficult to handle change. 

Contrast this with Amazon, where it is always “Day 1.”  Day 1 at Amazon is about always approaching their work as if it is their very first day of business.  There is no resting on their laurels.  Be innovative.  Try new things.  That’s how they have built their culture.

People within your organization may feel “unsafe” if they aren’t used to trying new things and taking risks.  “We are different from the rest.  We have built our business based on our sales reps,” is a refrain I have heard frequently.  Or “We’ve never needed it before.”  This type of a culture will make it hard for you to attract digital talent.

It is common for manufacturers and distributors to value continuous improvement and lean methodologies when it comes to their production line.  That mindset doesn’t automatically translate to your digital strategy.  To innovate digitally, you need to get used to moving faster than you are accustomed to and be willing to take some educated risks.

Leading the Way

For these reasons, it is important for the executive leadership to buy-in and lead the way.  While they may not make digital decisions, their role is to set the vision for the company and share that vision to drive change.

Decide what percentage of your business will come from digital in the next 3 years.  Like setting any vision, it is only partially based on what is currently true. It is drawn from what you choose to believe is possible in your future, and that choice will drive your organizational change. 

You cannot just delegate a digital transformation to IT or a single person or group.  You certainly don’t want to delegate this to the person you just hired out of college, no matter how comfortable they are with web technology.  Your willingness to change and test new go-to-market strategies must be part of your culture.

Executive leadership may not be making the digital decisions, but you set the priority and then hold people accountable to making your vision a reality.

A good digital system integrator will be able to work with your team and leadership to map out a plan for accomplishing your goals.  They will fill in your resource gaps and provide you with feedback that improves your approach based on their experience.

Change to Outlive Your Competitors

"Almost 60% of existing midsize enterprises will, by 2025, have been killed by a failure to anticipate, take part in and conform to the making of the digital ecosystems that are currently just emerging."[v]  Your choice to embrace change will put you ahead of your competitors who do not.

No matter your role, our upcoming webinar will give you some ideas, help you understand your options and build a case for your company’s digital future. 


[i] Gartner, Industry Vision: Commerce to You, Jason Daigler, Penny Gillespie, Gene Alvarez, Published 10 May 2018

[ii] Gartner, Predicts 2019: CRM Sales Technology Will Align With Digital Optimization Objectives, Tad Travis, Melissa Hilbert, Adnan Zijadic, Mark Lewis, Published 3 December 2018

[iii] Gartner, 2019 CIO Agenda: Heavy Manufacturing Industry Insights, Marc Halpern, Published 15 October 2018, Figure 5

[iv] Gartner, 2019 CIO Agenda: Heavy Manufacturing Industry Insights, Marc Halpern, Published 15 October 2018, Figure 5

[v] Gartner, Maverick* Research: Digital Business Transformation Will Kill Midsize Enterprises, Federica Troni, Annette Jump, Nadine LeBlanc, Bianca Granetto, Published 11 October 2018

Lori McDonald

President & CEO

About

Lori McDonald

Lori graduated from Purdue University with a Bachelor’s degree in Computer-Electrical Engineering and leads Brilliance Business Solutions with over 20 years of computer engineering and software development experience.  She is an Episerver EMVP, a Microsoft Certified Professional and a regular contributor on Practical eCommerce. Her status as a recognized industry expert has resulted in regular speaking engagements at business conferences.

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