December 10, 2003: Distribution Channel Commentary (DCC) # 50

Greetings:

If you know what these commentaries are about, go to "TOPICS" below; otherwise, read on.

  • A FREE SERVICE

The Merrifield Consulting Group, Inc. (www.merrifield.com) is offering this opt-in weekly commentary service that is now being posted at www.merrifield.com. (Past DCCís are all posted there along with a summary index of over 200 DCC topics!). We do have a growing list of e-mail addresses to which we e-mail the commentaries on Wednesdays in a Word document to allow for easy reading, re-purposing and forwarding.

  • SHARE THE KNOWLEDGE: ADD OTHERS (OR, DELETE ME!)

To make this free service continue to happen, we must reach more individuals who care about making independent distribution companies/channels more effective. If you know of others who might like to receive this service, please: forward this commentary on to them; encourage them to email karen@merrifield.com to have her add their email address to our list; or, send them to our web site. If you donít like this type of mail, ask to be deleted, and we actually will.

  • RE-PUBLISHING/RE-PURPOSING ANY COMMENTARY CONTENT? YES YOU MAY!

Just let us know by email what you want to do, give us some credit and point them to our web site. We are delighted to have a number of: trade associations; channel publications both printed and on-line; software firm publications; buying groups; and university programs that have all found re-purposing applications. Some just post the entire commentary on their site, others will post excerpts with their preface remarks. Weíre flexible, the answer is "yes", whatís the question?

THIS WEEKíS TOPICS

  1. NEW YEARíS RESOLUTION #1 Ė STOP RIDING ALL DEAD HORSES
  2. NEW YEARíS RESOLUTION #2 Ė IMPLEMENT WHAT WE KNOW, BETTER
  3. TWO KINETIC CHAINS: WARREN SPAHNíS (BEST LEFTY EVER, RIP); AND YOURíS
  4. FOR "LEADERSHIP", BE LIKE JOHN GAGLIARDI (?) WIN WITH "NOíS"
  5. FOR "STRATEGY" BE LIKE WEGMANS, DOMINATE ONE NICHE OF CUSTOMER AT A TIME WITH OPERATIONAL (SYSTEM) EXCELLENCE
  6. PRICE YOUR COUNTER SALES ITEMS LIKE GROCERY STORE TUNA SPECIALS
  7. JANUARY FINANCIAL MANAGEMENT COURSE; MY TWO DAYS OR ALL 5 DAYS
  1. NEW YEARíS RESOLUTION #1 Ė STOP RIDING ALL DEAD HORSES

As the New Year approaches, our thoughts may be turning to New Yearís resolutions. One of the big reasons that the average New Yearís resolution only lasts about two weeks is that we are so busy doing dumb stuff, we donít have the time to do the smart stuff we know that we should be doing.

There is, fortunately, no shortage of edutainment business books that can make us laugh (and cry) about the dumb stuff that we keep doing. The value of business storybooks is that they sometimes can make us stop long enough to reflect differently about how we should actually solve the resource wasters and attitudes within our business. The books cannot, however, identify the flawed, outdated, unspoken assumptions that under-gird our conventional wisdom, practices and habits; we have to do that for ourselves.

So, here is a quick two-step exercise with supporting links that combine storybook edutainment to get us in an open-minded state followed by distribution-specific, how-to, rethink unspoken assumptions tools. Together I hope that these references will increase your odds of getting significant, sustainable profit power results in your business in 2004.

First, check 20 short guidelines that summarize the "tribal wisdom of the Dakota Indians" at the following interesting link. (If you type in "tribal wisdom of the Dakota Indians" at google you will get 11,000 hits! I chose one source, because: it has other "funny (clean) jokes"; the site itself is a total trip; and the intro to the guidelines points out that it came from a corporate memo that had been circulated to all kinds of managers. This "wisdom" obviously has universal appeal and effect for making people acknowledge dumb practices in a light way. http://www.hindu-religion.net/showflat/cat/jokes/22741/7/collapsed/5/o/1.

Then, read the two-page article on a how-to "strategic time management" exercise for distributors at this link and strive to generate some variation of the report in "step 7". With enough repetition, this report will cause all managers to start noticing new things, thinking new things and eventually stopping old dumb activity to start doing new, smart activity. The one page report will be a catalyst for breakthrough profit improvement. 2_20.asp.

If, in 2004, we can either convert dead horse customers into profitable ones or let a competitor feed them, we will then have the extra time, profits and confidence to do more of the smart things we know we should be doing. Here are two closing quotes that came from my number one source for cool management thinking stuff, Mr. Tenney Campbell of San Francisco.

"The limit to innovation in business is not technology but managers obsolete viewpoints." David Gurteen

"The essence of strategy is choosing what not to do." Michael Porter (i.e., donít keep riding dead horses)

    2.    NEW YEARíS RESOLUTION #2 Ė IMPLEMENT WHAT WE KNOW, BETTER

Beyond knowing how to be better than we are doing in both our personal and corporate lives, we are faced with not being as good at managing change as we could be. In 2004, we should all try to turn the art of successful change management into a corporate science. Two references follow below which will hopefully help you turn "mind into matter" and close some of your "knowing-doing gaps".

First, check out (if you havenít already) the annotated slide show at our site entitled: "Closing the Knowing-Doing Gap" and most specifically slide #7 entitled "3 phases to change", which is a depiction of the very heart of change. Hereís the link: Knowing_Doing_Gap_slides.pdf.

A second reference you might want to check out is a recent article from the on-line magazine "Optimize" entitled: "Turning Mind Into Matter". This piece is a bit heavy, but worth the read, especially if you are wrestling with IT "solution" implementation problems. To avoid getting bogged down, you might skim the first page + until you get to the "idea identification" step. Hereís the link: http://www.optimizemagazine.com/issue/025/innovation.htm.

As you think about your corporate change management capabilities, you might try applying ideas from the two references above to past programs that your company attempted with less than full success. Perhaps the exercise will help you to pinpoint specific change management opportunities and might even encourage you to revive some faltering efforts successfully.

    3.    TWO KINETIC CHAINS: WARREN SPAHNíS (BEST LEFTY EVER, RIP); AND YOURíS

Many of you may not have noticed or reflected as deeply as I did upon the death of the greatest left-hand pitcher in baseball history, Warren Spahn, on November 24th.My interest and sadness came from two sources. The first was from my Dad, who today at 82 (same age as Spahn) still has a great "kinetic chain" going with his tennis serve. Dad is a second-generation, collegiate baseball player who turned me on to Spahn and his "kinetic chain" when I was 8. (My definition of a kinetic chain is a series of interconnected arc-like motions that ripple up through the body to give a crack-the-whip final output effect.)

In 1958 we had recently moved to New Vernon, NJ, a rural village from which a number of Dads commuted to NYC. My new friends had turned me on to baseball, much to the joy of my Dad, and they infected me with Yankee fan fervor. When I asked my Dad who he thought would win the í58 World Series between the Milwaukee Braves and the Yankees, he pointed out the unknown-to-me historical facts that the Milwaukee Braves had beaten the Yanks in the í57 series. Also, with their great pitching staff led by Warren Spahn, they could upset the Yankees again.

I picked up on my Dadís enthusiasm for Spahnís "kinetic chain" which, according to Dad, was the source of Spahnís good velocity, great control and superior consistency. Soon after, we were in the back yard where I was experimenting with my first, kinetic-chain process. I went on to deploy my new found kinetic chain wisdom to: little league throwing and hitting; discus heaving in high school track meets; tennis serving; and eventually to orchestrating business turnarounds.

As a tribute to the great Mr. Spahn and his kinetic chain, here are three links to his story. The first two show pictures of his wind up and then delivery. And the third, is an obituary with his life and baseball story.http://www.gasolinealleyantiques.com/sports/images/baseball/mg-spahn.jpg (the wind-up) http://www.mbtn.net/spahn.jpg (the delivery)
http://www.cqservices.com/MyCQ/News/Default.asp?V=5882 (a news obit.)

Then, if you are totally confused about how I might apply the "kinetic chain" to business, here is a link to a new exhibit at our site that explains the "kinetic chain for sustainable profit power in business". ./exhibits/Kinetic_Chain_Ex_16.pdf.

If you understand the kinetic chain model/tool, you will then understand why "technology solutions" and "incentive plans", the last two steps of the kinetic chain, are insignificant contributors to 90%+ of businesses while they put about 3%+ of the firms into hyper-performance. Most golfers, tennis players and pitchers understand the importance of a strong, well-timed wrist snap as the last step of the their kinetic chain. But, what good is any wrist snap, if the first, biggest and most powerful steps of the kinetic chain, from the ground up, are missing or mis-aligned? The same conclusion applies for both incentive plans and IT tools.

Can you guess what happen to my first kinetic chain pitch? I remember very slowly turning sideways, coiling my shoulders back and doing a very slow, big front-leg lift trying not to fall over. Then, I let it fly with breakthrough, new personal best velocity well over my Dadís head. He just laughed and reassured me that his first effort when he was eight went over the head of his father. Where did my Grandfather learn his pitching process wisdom? He was a star pitcher and captain of the undefeated University of Chicago team in 1887 that was coached by a 35 year old chap named Amos Alonzo Stagg. I have no clue where Mr. Stagg may have gotten his coaching insights. Iím just grateful for the living chain, trying to improve the torch and pass it on. I hope you will benefit and pass it on also.

    4.    FOR "LEADERSHIP", BE LIKE JOHN GAGLIARDI (?) WIN WITH "NOíS"

In topic three, I touched on "leadership/management" being the first step of the kinetic chain that leads to sustainable success. Because I believe great coaching/leadership techniques can apply to all human endeavors, Iím always looking for role model lessons in the sporting world.

Would you consider being the winningest coach in football history a marker of "sustainable success" (profit power in business)? I do. This fall, John Gagliardi achieved just that by passing Eddie Robinsonís record of 408 career wins. "John" now has 412 and looks like heís good for a few more winning seasons.

How does he do it? There is obviously a lot of art, science and tacit knowledge that is rolled up in Johnís leadership genius, as well as his football programís kinetic chain. But, one easy takeaway is his list of "winning with no" as he calls it.

As I was looking over a list of some of his "Noís", I realized that he isnít a work hard at everything kind of guy, but rather work smart at a few things that strategically really matter to really do well and also have fun. Then, the success and fun beget more success and fun in a virtuous cycle. Here are a few links on this fascinating man and his philosophy. I also infer that he isnít a hierarchical, political, power, style over substance kind of leader, but a - we are all adults trying to work together to do the right, smart, effective, fun, rewarding essence of the task - kind of a guy. Heís an inspiration to me, I hope he will be for you.

Here are some links to his story:

The official facts, bio story that includes some of the "noís" from a 100 or so comprise his "no-how" coaching: http://www.gojohnnies.com/football/jg.html.

A good reporterís perspective on the coach, and how he runs a practice: http://premium.si.cnn.com/pr/subs/siexclusive/2003/11/10/gagliardi_flashback/.

There even are some books on John and his "no-how coaching. I ordered one from Amazon entitled "The Sweet Season" by Austin Murphy. 20 reviewers have an average rating of 5 stars, the best. (I ordered a "like new" copy with one click for $1.40 (plus shipping). Amazon is amazing.)

    5.    FOR "STRATEGY" BE LIKE WEGMANS, DOMINATE ONE NICHE OF CUSTOMER AT A TIME WITH OPERATIONAL (SYSTEM) EXCELLENCE

Regular readers know that since the early Ď80s I have been an on-going student of Wal-Mart and a frequent reporter on WMTís effect on many channels of distribution. I recently came across an article on Wegmanís, one of the few grocery chains that not only is a star in the traditional grocery channel, but is holding itís own against Wal-Mart. In the article, for which a link is below, notice how much their strategy is focused on dominating certain customer niches, not just selling volume to all to win rebates and sheltered income. Notice also how their high performance service excellence culture and operational systems are vital to delivering the best total value to the customer niches that they pursue. Any distributor in American could do the same if they could unleash themselves from the culture of selling too many products to too many different kinds of customer niches with good, homogenized service that doesnít specifically do it for any one customer niche. Hereís the link: http://www.forbes.com/free_forbes/2003/1124/166.html.

    6.    PRICE YOUR COUNTER SALES ITEMS LIKE GROCERY STORE TUNA SPECIALS

A distributor client once asked me what he should do when big customers for which he had contract price agreements showed up at one of his "twig" locations and wanted to buy emergency need items at their normal contact price instead of his higher, list price. I told him to tell such customers that if they wanted the contract price, then they would have to call the main warehouse and go pick up the goods there. If they wanted remote, C-store convenience on goods that had been handled and re-stored a second time by his company, then they would have to pay for those costs that are built into the twigís pricing.

If the customer balked, my client could ask what the contractor charges per hour for last minute change orders versus what they charge per hour in the main contract for a job. Or, he could ask the customer if they have had any success on pressuring foodstuff C-store operators for the same prices on the same items that can be found at a Wal-Mart store. If the C-store attendant didnít cave, why would the contractor still go ahead and buy the item at the higher price? Best competitive, total value in the contextual moment is why.

I then went on to point out that he should also investigate charging different prices for all items at his twigs, especially the fast moving items. Each twigís prices should reflect their local competitive alternative landscape and not some "list price" from a supplier that canít possibly fit all cost realities for labor, rent, etc, across the country. He really resisted this last concept.

If you think my advice is crazy, but you who are looking for ways to get paid more for what you are competitively delivering in total value for counter sales, then you need to read the article entitled "Same Tuna, Different Price" for which the link is below. This article will even give you rationales to pass on to customers who might complain about your higher or different pricing for the same item tactics.

In fact, I think every distributor and every manufacturer that sells through distributors needs to read this article to find out what is going on at the bleeding, living edge of product pricing. Hereís the link: http://www.boston.com/business/globe/articles/2003/11/16/same_tuna_different_price/.

    7.    JANUARY FINANCIAL MANAGEMENT COURSE; MY TWO DAYS OR ALL 5 DAYS

The Texas A&M (TAMU) school of industrial distribution has an affiliate organization called the Thomas and Joan Read Center for Distribution Research and Education. This entity, in turn, offers a unique educational program for both distributors and manufacturers at large for which a participant can earn a "Certificate in Distribution Management". The total program consists of three, one-week modules, that can be taken in any order at any time that they are offered.

One of the modules is entitled "Improving Distributor Profitability" which will be offered from January 12-16, 2004 at the Read Center in the center of the TAMU campus. I have been invited to do a 1 1/2 day seminar within the week program entitled "Reinventing Distributor Profitability". If anyone is interested, they can attend the entire week or only my portion for half of the weekly tuition rate. My days will be all day Tuesday, the 13th and the first half of Wednesday the 14th. For more details you can go to: http://readcenter.tamu.edu. Or, call Peggy Jo Johnson, program assistant, at 979/845-4984.

Thatís all for this week,

Bruce Merrifield

Bruce@merrifield.com

919-933-7474

www.merrifield.com