JUNE 22, 2005: Distribution Channel Commentary (DCC) # 78

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 periodic (formerly weekly) commentary service that is now being posted at www.merrifield.com. (Past DCC’s are all posted there along with a summary index of over 300 DCC topics!).

  • 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 don’t 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. We’re flexible; the answer is "yes", what’s the question?

TOPICS:

  1. THEMATIC QUOTES.
  2. WANTED: "BLUE OCEAN STRATEGY" (VALUE INNOVATION).
  3. MOM AND POPS ARE OUTSOURCING FROM ASIA; YOU TOO?
  4. INCREASE YOUR BREAKTHROUGH THINKING RESULTS – A NEW EXHIBIT.
  5. WHY YOU CAN’T AFFORD NOT TO TAKE A FREE LOOK AT A VIDEO/DVD?
  1. THEMATIC QUOTES:
  2. "In fourteen hundred ninety-two

    Columbus sailed the ocean blue….

    But India the land was not,

    It was the Bahamas, and it was hot….

    Columbus sailed on to find some gold

    To bring back home, as he'd been told…"

    Excerpts from the poem "In 1492"; author unknown

    Comments: Because Columbus did something radically new by sailing west to get east, he was able to accidentally discover the New World and gold. This triggered an entirely new agenda for nation states of Europe. The authors of the book, "Blue Ocean Strategy" have thus used the blue ocean metaphor to describe strategic directions that create new value propositions that allow a company to grow sales and profits easily compared to trying to out compete entrenched competitors with best practices to provide more of the same incrementally improved value propositions.

    "Our thinking and our behavior are always in anticipation of a response. It is therefore fear-based."
    Deepak Chopra

    Comment: Most managers don’t want to do blue ocean thinking because it raises three sets of fears: 1) our historical, unspoken assumptions will be questioned and exposed for being simplistic, dated and/or emotional and irrational. 2) Blue Ocean conclusions require going where no one else has specifically gone, which means management doesn’t have all of the how-to answers and won’t seem to be in control. And, 3) everyone will be required to fail forward to the vision and most people are afraid to make even small, progress-necessary, learning mistakes.

    "Markets are mechanisms that make use of the vastly different and overlapping knowledge of all participants, and each "expert" in a different array of circumstances of time and place, even when the vast majority knows nothing at all about them. Specialization coordinated by markets is, in fact, the primary source of advancing civilization."
    F.A. Hayek

    "1. Out of clutter' find simplicity. 2. From discord, find harmony. 3. In the middle of difficulty lies opportunity."
    Albert Einstein

    "The range of what we think and do is limited by what we fail to notice. And because we fail to notice that we fail to notice, there is little we can do to change; until we notice how failing to notice shapes our thoughts and deeds." R. D. Laing

    "Conversation is a meeting of minds with different memories and habits. When minds meet, they don't just exchange facts: they transform them, reshape them, draw different implications from them, engage in new trains of thought. Conversation doesn't reshuffle the cards: it creates new cards." Theodore Zeldin

    Comment: This Zeldin quote is a repeat from an earlier DCC. But, I think if you put the three preceding quotes together – Hayek, Einstein, Laing – you realize how important it is to have deep conversations with people outside your business who can better see the edges of your business and your business’ ecosystem. If the participants in "blue ocean dialogue" also have the skills to: uncover and question historical assumptions; see the bigger picture and how it is shifting, then "minds will change" and new "Aha’s" can be hatched. Taking the blue ocean idea to commercial success then involves a different set of entrepreneurial capacities. All "7" of the capacities needed for blue ocean implementation are in Exhibit 39 at http://www.merrifield.com/exhibits/Ex39.pdf.

    "All learning integrates thinking and doing. In reactive learning, thinking is governed by established mental models and doing is governed by established habits of actions. Deeper levels of learning create increasing awareness of the larger whole - both as it is and as it is evolving - that leads to actions that increasingly serve the emerging whole."

    From the book entitled Presence by Peter Senge, et.al.

    Comment: See topic 4 below and exhibit 39 at our site for more about this book.

  3. WANTED: "BLUE OCEAN STRATEGY" (VALUE INNOVATION).
  4. Many mature industry companies have seen profit margins erode in spite of huge industry consolidation and ever better, best practice implementation. A big part of the problem is that everyone in an industry is more locked into industry-think and company group-think than they might realize. Too many competitors are offering the same competitive value proposition to the same type of customers. How to target some customer niches and offer them a breakthrough value innovation is the challenge.

    The book "Blue Ocean Strategy" is the first one that I’ve seen that takes the art of "out of the box thinking" and makes it a science with thinking tools that every manager can understand. I strongly encourage readers to read the reviews for this book at Amazon, and buy it to at least initially look at the pictures that explain how different companies you will know created blue ocean profit growth.

  5. MOM AND POPS ARE OUTSOURCING FROM ASIA; YOU TOO?
  6. In the June 21st issue of the New York Times business section there was an article entitled "Outsourced all the Way" by Matt Richtel. Everyone dealing with physical goods – manufacturing, repping, distributing, etc – should read this article. Here’s the link: http://www.nytimes.com/2005/06/21/business/worldbusiness/21outsource.html?pagewanted=print.

    If the link doesn’t work, try googling the title of the article in quotes.

    Why read it? It might inspire small players to realize that they don’t have to be victims of so much manufacturing going to Asia, they can proactively make the trend their friend. And, it will underscore the fact that since the early ‘90s, manufacturing has been leaving the US for Asia at an average growth rate of 15% per year compounded annually, and it is far from over. We may not like this reality or aspects of US economic policy that enable it, but we do have a business imperative to survive and do the best for all of our stakeholders anyway we can.

    For small manufacturers and all distributors of physical products that could be sourced from Asia, there is also the opportunity of rethinking the "demand replenishment" supply chain from the end customer back to the Asian producer. This will require new types of master distribution capacity in many channels. Large distribution chains and distributor buying groups could be catalysts for bringing these new channel creatures into existence. For more, on these opportunities skim the following posted articles at merrifield.com:

    HOW CAN CHANNEL PLAYERS RE-DEPLOY MASTER WHOLESALERS (article # 2.22) at: http://www.merrifield.com/articles/2_22.asp.

    "SUPPLY CHAIN REDESIGN" NOW APPLIES TO ALL CHANNELS (article 2.23) at: http://www.merrifield.com/articles/2_23.asp.

    RESTRUCTURING WHOLESALE CHANNELS: THREE CASES (article 2.25) http://www.merrifield.com/articles/2_25.asp.

  7. INCREASE YOUR BREAKTHROUGH THINKING RESULTS – A NEW EXHIBIT.

I’ve recently thoroughly digested a book entitled: Presence: Human Purpose and the Field of the Future, which I would not recommend to 99% of the readers, because it is an expensive, heavy read that just isn’t written or edited for a business management crowd. Please skim through the reviews at Amazon for more than I can share here, but I have – for your immediate amusement and potential benefit – put together a comprehensive summary of the books key ideas in exhibit 39 posted at our site. The "7 capacities" that the four authors of this book have identified are very complementary to what you will learn from Blue Ocean Strategy. http://www.merrifield.com/exhibits/Ex39.pdf

If you skim both Blue Ocean Strategy and exhibit 39, you will significantly change the format and agenda of every management meeting that you have from now on.

  • Having each manager review their numbers and how they are going to try harder in the same old tactical ways to make those numbers will be done via email in advance of the new type of meeting.
  • The written statement of a "problem/opportunity" followed by many well thought questions for discussion will be common. (For examples of "question maps" see exhibits 30 -33 - http://www.merrifield.com/exhibits/.
  • The intent of these meetings will be to have true "dialogue" (exhibit 6). The assumptions behind traditional groupthink will be explored using something like what you will find in exhibit 34.
  • People will be assigned to create strategy maps like the ones that you will find in Blue Ocean Strategy.
  • And, the group will consciously try to move down the "U" to breakthrough "Aha’s" as you will see in exhibit 39 that summarizes the gist of the book Presence.

Of course, we could always just keep doing what we are doing to keep getting what we have been getting. But, in a fast changing world, that policy will harvest a business ever faster.

    5.    WHY YOU CAN’T AFFORD NOT TO TAKE A FREE LOOK AT A VIDEO/DVD?

How would you like to increase your company’s sales by 30 to 100% while improving your profitability six-fold and total compensation for your employees by 20%+ while their productivity from working strategically smarter grows 50 to 100%? Our latest training DVD entitled: "High Performance Distribution Ideas for All" can help you make these results happen. We have thousands of happy customers (and apologies to those of them who are diehard commentary readers for this shameless plug, but "free" always has to have ads).

For lots more information on this transformational product, check behind the links in the center of our home page at www.merrifield.com. The breadth and depth of the content are both enormous. The cost, especially through "resellers", is negligible (and it’s easy for any type of affiliation group of companies to become a reseller). And, the product is guaranteed. A prospective buyer has 30 days to review it and return it if they don’t think that they can get a huge return on their investment.

 

This will be the last commentary until the fall. So, have a happy, safe and prosperous summer!

Bruce

Bruce@merrifield.com

919-933-7474