Evel Knievel was an international legend, and his daredevil stunts fascinated several generations of fans. He was continuously driven by the desire to keep his audience awestruck, devising bigger and more spectacular stunts throughout his career. In search of more impressive acts to perform, he kept innovating, expanding his current show by adding more vehicles to jump higher or further than before. He was also looking for breakthrough ideas inspired by popular trends and technological innovations. For example, the hype around the movie “Jaws” led him to develop the shark jump.
Entertainers know they need to keep evolving. They take calculated risks and try out new things to keep their fans excited and hold their attention. The same is true for companies, and those in consumer-facing industries have this line of thinking ingrained in the fabric of their business. On the other hand, industries like wholesale distribution (that traditionally do not have consumer exposure) find it harder to evolve, try out new processes or business models, or see what new technologies could do for them.
In the last decades, it was acceptable to retain a business model that was very much built on personal relationships with customers and suppliers. Back-office functions were enabled by an ERP system that had very limited exposure or impact on management of the customer lifecycle. Since then, the technology innovation cycle has considerably shortened. This change created the effect that existing business models are being disrupted or completely snuffed out over the course of a few months. Companies often find it challenging to leave the beaten path, afraid to impose change on their organization or risk alienating customers. This positions them (in the best case) as a change laggard, or (the worst case) as a takeover candidate. Fortunately, many traditional wholesale distributors have recognized the need to evolve. The question for them is not necessarily the “why” or “what” but rather “how” to approach this.
Even though innovation means breaking away from the known and creating something different, there is an established methodology called design thinking followed by experienced practitioners. As part of it, teams come together to ideate new approaches based on an agreed-upon problem statement. This could be “How can we add value at a customer location without being physically present?” Ideas from the team may range from ways to offer inventory outside the regular delivery cycle, installing self-service terminals, or even deploying full-time employees onsite with key customers. As you can see from these examples, some ideas might not even require new technology to be deployed. A central guiding principle to keep in mind is when going through an innovation cycle, technology is never the driver, but merely the enabler, for business-driven use cases.
After you pick your innovation idea and have a basic understanding of potential underlying technology requirements, you must validate its desirability for end users, the business value created, and the technical feasibility. This is initially done best in quick validation cycles, lasting mere hours or only a few days. These serve as a mechanism to sort out the ideas that are bad or not yet ready. Concepts that receive an initial thumbs-up should go through a lean prototyping cycle. This means you validate ideas with internal or external business partners on a theoretical basis, or even decide to set up a system or piece of equipment to see if ideas are really doable under real-life conditions. For example, an idea on testing a variety of potential pricing models in the internet catalog (e.g., discounts priced-in vs. special rebate programs vs. customer-specific pricing) could be tried over a set time period using different brands and by targeting a small subset of potential customers without affecting the whole market.
At this point, you should limit investments to those that mitigate potential risks associated with resistance from your customers or that address technical limitations that were overlooked before. To keep funding and business risk under control and make sure good ideas make it to the finish line, try fast and fail fast. Investments to equip a complete fleet of trucks with heat-sensitive sensors might be premature given issues that could be identified during testing, or the installed technology might even be outdated before a successful prototype could justify deployment across a whole logistics department.
After the prototyping phase, with a couple of successes under the belt, the entire organization will be looking forward to adopting the idea. It should be expanded slowly, taking organizational change-management needs and technical scalability into consideration. By following this approach, you will be able to see what new technology, business process, or new business model sticks, and you will significantly increase the probability of success.
Don’t be afraid to try, fail, and ultimately succeed so you can become as revolutionary in your industry as Evel Knievel was in his.
Whatever your innovation project, SAP is your innovation partner of choice. With the SAP Cloud Platform you will find a solution set that is perfectly suited to quick-start your innovation prototypes and tie them flexibly into your back-office processes at a speed suitable to your organization. In addition, SAP offers support with trained design thinking resources that provide structure for your in-house innovation cycles, helping your team take the first steps into the future.