Cautionary Tales of Avoiding ‘New Guys’

By Bill Wade
Wade&Partners

“Men Wanted” The undersigned wishes to hire ten or a dozen men, familiar with the management of horses, as riders on the Overland Express Route via Salt Lake City. Wages $50 per month. – Pony Express ad in Sacramento Union, March 19, 1860.

Most of the successful applicants were small, wiry men who weighed between 100 and 125 lbs. — roughly the same size as a modern jockey. Their average age was around 20, but it wasn’t unusual for teenagers as young as 14 to be hired. (One man named “Bronco” Charlie Miller was only 11 years old when he first joined the Pony Express.)

Talk About a Driver Shortage and Hours of Service Hassle!

William Russell, Alexander Majors, and William Waddell founded the Pony Express in the late 1850’s. They were already in the freighting and drayage business. At their peak the operations employed 6,000 men and owned 75,000 oxen, thousands of wagons and warehouses plus a  meatpacking plant (oxtails anyone), a bank and an insurance company. A nice sized fleet!

At that time, California-bound mail had either to be taken overland by a 25-day stagecoach or spend months inside a ship during a long sea voyage. The Pony Express, meanwhile, had the dream of an average delivery time of just 10 days.

Talk about ‘express’ mail…more than 1,800 miles in 10 days! From St. Joseph, MO to Sacramento, the Pony Express would deliver a letter faster than ever before. Russell, Majors, and Waddell organized and put together the Pony Express in two months in the winter of 1860. The undertaking assembled 120 riders, 184 stations, 400 horses, and several hundred personnel during January and February 1861.

During its 19 months of operation (officially the Leavenworth and Pike’s Peak Express) it did reduce the time for messages to travel between the Atlantic and Pacific coasts to about 10 days. From April 1860 to October 1861, it became the most direct means of east–west communication.

The speed of the Pony Express didn’t come cheap. In its early days the service cost $5 for every half-ounce of mail — the equivalent of some $130 today. Prices were later reduced to just $1, but they still remained too high for everyday mail. Instead, the service was mainly used to deliver newspaper reports, government dispatches and business documents, most of which were printed on tissue-thin paper to keep costs (and weight) down.

This Horse Is Looking for Work

This first ever ‘FedEx’ was rendered obsolete on Oct. 24, 1861, when Western Union linked the eastern and western telegraph networks at Salt Lake City, completing a transcontinental line.

The Pony Express ceased service just two days later. Despite operating for only 19 months, its riders had successfully delivered some 35,000 pieces of mail and traveled more than half a million miles across the American frontier.

The new technology had bankrupted the ‘best of the existing solutions’ in just 48 hours! It would happen again and again…Bell Telephone, Marconi, TV and satellite Internet…the ghosts of annihilated distance. Solutions continue to raise expectations…and spur innovation.

The Last 3 Trends

Morphing market channels has never been an isolated phenomenon. These take place inside a complex ecosystem comprised of OEMs, dealers and independent aftermarket suppliers, distributors, rebuilders, service techs and operators.

Billions and billions of dollars are being spent to consolidate supply in just little slivers of the traditional consumer retail market. That number doesn’t even include consolidation in B-to-B distribution among suppliers, dealers and distributors in literally hundreds of channels. All this effort seems aimed at overcoming these last three trends which require structural changes.

The Death Star…

Amazon’s digital channel has eclipsed much of the information value and cost efficiencies once enjoyed by traditional distributors. When a disruptor eats into your space, I suggest a dual response strategy:

  • Downsize to your core profit customers (niches) and renew the relationships, and
  • Use your incumbent capabilities to create a new business model to join the disruption growth party.

Back in the day, Kodak had a massive camera film franchise. They also invented the first digital camera. But they let the technology languish. As others began to chomp into their film sales, Kodak put film veterans in charge of a catch-up digital-camera strategy. The strategy was to stimulate film sales by getting digital photographers to print out their best photos.

Mighty Kodak collapsed….The Kodak veterans didn’t want to hurt traditional film sales, profits, dividends and stock appreciation rights. But, when disruptors start stealing your business, declining numbers are unavoidable. This is when it’s time to change or downsize and redirect your best talent into reinventing value for your most profitable core customers.

To win a share of digital channel growth against Amazon, you will need fresh intrapreneurial talent, not veterans! The next-gen digital buyers need digital sellers, not veteran field reps. You have knowledge and capabilities within your channel that Amazon Business does not yet have. So, let your digital intrapreneurs repurpose legacy strengths to sell both new customers, as well as old customers that want to buy in the new way.

Reduce Long-Tail Spending Costs.

According to an Amazon Business-funded study, procurement pros increasingly want to reduce long-tail spending costs. The big-spend items have been automated and integrated, but the pesky bottom 35% of items eat 1% of the spend dollars, take over 50% of Purchasing’s time, and are a pain for everyone.

Corporate citizens want Amazon’s B-to-C shopping experience in their B-to-B world… but Purchasing wants controls. Amazon continues to invent cloud tools for Purchasing control and analytics and continues to win sales.

Wake Up and Challenge the Powerful Newbies!

Amazon has neither people nor robots visiting customer sites…at least, not yet. Nor do they have the targeted historical, statistical, SKU-based spend data that you should have for your best fleet or shop customers. Why not combine feet, targeted analytics and onsite creativity to both reduce long-tail activity costs and increase the uptime productivity of the end users?

Amazon is endlessly innovating and experimenting. Do Not Wait. You can beat virtually all comers… as well as all virtual comers… by using the right analytics, street smarts and some imaginative systems re-tunings.

Box Pushing Omni-Channel Foolishness…

The Amazon Death Star has been cited recently in Washington as powerful enough to be the “controlling factor in slowing inflation.” I think it is merely a huge laxative, cleaning out those clinging to obsolete thinking.

The worst, most destructive type of change is pricing pressure supercharged by globalization, when multiple new competitors use the cheapest offering to gain larger market share for already over-supplied applications.

Additionally, later entrants often operate in highly-saturated, competitive markets…skipping steps and getting as close as possible to customer-direct, while accepting lower margins (maybe MUCH lower) and as a result, destructive pricing becomes an issue.

Service as Product…The Ultimate Shield

Utilizing basic internal and external SWOT analyses, suppliers and distributors can distance themselves from any non-differentiated competition by generating local (or online) service …which takes affordability, ROI, and widespread distribution costs into account.

The entire new service development process should be an ever-evolving testing platform where errors will be made, designs will get trashed… and loss could be recorded. Be Brave…Service is the ultimate defense against enriched delivery suppliers…Amazon, Apple, Rush or FleetPride. The development steps are simple…the task is not!

  • Generating… Lean, mean and scalableare the key points to keep in mind.
  • Screening the Idea… Set specific criteria for ideas that should be continued or dropped.
  • Testing the Concept This is different from test marketing. Does the end user understand, need and want the service…and how well does it fit with your reputation?
  • Business Analytics… Build a system of metrics to monitor progress. Even if an idea doesn’t turn into a viable service, it can prove to be a valuable asset for future service line extensions and a basis for learning and growth.
  • Marketability Tests… Arranging private tests groups and then forming test panels after the various service ideas have been tested will provide you with valuable information allowing last minute improvements and tweaks.
  • TechnicalitiesThe new service department will make plans to provide the service… the sales/marketing department will make plans to introduce the new service. Do Not Skimp on Staff Training!
  • Commercialize Forward… Keeping the distribution pipelines loaded with new service additions is an integral part of this process…don’t give physical (or perpetual) share of mind to competition.

Having your entire team working in tight synchronicity will ensure the successful launch of new lines or services…even if occasionally reinventing your own wheel. Productivity during service program development can be achieved if goals are clearly defined along the way and each process has responsibilities and contingencies clearly outlined.

6) Who…Exactly…Can Do This?

US economist tours China in the early 80’s. Seeing a canal being dug by an army of workers with shovels, he inquires: “Why not use a bulldozer?”

The Manager snaps back: “Do you want to put these poor workers out of a job?”

The Economist muses: “Then, give them spoons.”

While the spoons idea is from a different long-ago economy, the real problem is that the Manager can’t envision what the Unseen, Next, Higher-Level Opportunities are for redeploying slack workers after getting a bulldozer. Better start thinking!

What are your next-level, value and profit improving opportunities that you are dying to pursue? Whether truck drivers, techs or sales and management…we are out of people! Look at the US today:

Unemployment rate :4.1% (of those actively looking)

Labor participation (LFPR): 63% (a recent high rate- 70% is full employment

Job openings; 6.3 million (teaching laid-off coalminers to code takes time).

Take this seriously The LFPR has fallen and it can’t get up! Even the most conservative estimate says that the recession forced nearly a third of workers out of the labor force. Many of those workers never returned even once jobs become more available, because:

  • Half of the decline is due to the aging of America. They don’t need a job.
  • 24 percent of the unemployed have been without a job for six months or more. They don’t have updated skills and employers aren’t willing to take a chance with them.
  • Millions who left the labor force were between the ages of 25 and 54… prime earning years. Despite improving job opportunities, some older workers were unable to return to the labor force. That’s structural unemployment… the skills of would-be workers no longer match what employers need.
  • The increased use of opioid medication.Almost half of prime age men not in the labor force take pain medication daily to treat chronic health conditions. Two thirds are on prescription meds… from 1999 to 2015, 20 percent of the LFPR decline for these men was caused by opioid dependency. 90% of 911 calls in New Hampshire are drug related.
  • Increasing number of people too sick or disabled to work. For example, 13.2 percent of those aged 56 – 60 cite that reason for not being in the labor force. The two biggest illnesses were diabetes and high blood pressure.

What to do? I think we will have to grow our own…, remembering that each position is changing as we teach it. (see the section on VR and AR Training in Part II). Candidates? Look no further than those terribly under-represented in our business. Blacks, Hispanics, Vets, Women and Handicapped. Even old farts like the author can be great solutions…they’ve seen a lot.

Career opportunities have a half-life. Switchboard operators, elevator operators, pinsetters and milkmen were probably shortages in the Fifties… what about truck drivers today?

Conclusion

There are a lot of hard-to-anticipate pivot points coming, yielding an almost limitless list of possible directions for local and NAFTA-wide development. After studying the situation for a number of years, I have come to these inarguable conclusions:

  • Size alone is not a strategy, nor is a footprint…the guts of this business remain local;
  • Fee follows function… discounts become discriminate and weaponized;
  • Information is the ultimate Pop Code ‘A’… diagnose & repair becomes remove & replace;
  • VIN tyranny splinters… blockchain personalizes vehicle maintenance;
  • War declared by European (and Domestic) OEMs… they built it – do they still own it?
  • Tuángòu (group purchasing) self-organizes and explodes…virtual size – real discounts;
  • Net conquers gross… and CASH conquers all!

Innovation…product or service…is the only net creator of new wealth. Whether something newly-tried or new combinations, create a portfolio of options to achieve substantial, profitable and sustainable growth. Any other activity is caretaking, improvement at the margins or just rearranging the deck chairs.

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