Don’t Confuse “Innovation” with “Modernization”

My technology career spans many years and many industries – finance, manufacturing, publishing, service delivery, retail – I’ve seen and done a lot. So when I first walked into a commercial furniture dealership as a prospective fractional CIO in 2017, I had loads of experience but absolutely no understanding of the industry or any awareness that it even existed. I was a true outsider. Nevertheless, it was only four hours into the first day of the initial due diligence engagement before I realized that the business system they were running was positively ancient. It was completely siloed in some archaic architecture that made it impossible to integrate with any external systems. Come to find out this business system was (and still is) a standard solution across the industry!

Outside of the furniture industry, technology had for years been trending towards “API”s and open architectures that easily connect systems. Likewise, automation has been a powerful trend in IT for ages. Open access to structured data to drive decision support systems like dashboards and KPIs? That’s SOP today for many industries outside of commercial furniture.

In that first dealership, migrating to a new business system became the first priority. It opened up a lot of opportunities to modernize the business. It felt like amazing progress, and it was. But we weren’t innovating. We were just catching up. Getting ourselves “on trend.”

It’s often said that true change is a rare occurrence. When a business owner says, “we have to change” it usually means “change has already happened and we need to adapt.”

In the case of technology and the commercial furniture industry – many things changed a long time ago. Here’s a list. If you’re not already doing these things in your dealership then you have a lot of catching up to do:

  1. Integrate with your manufacturer(s)
  2. Automate repetitive tasks
  3. Use data to measure and drive performance
  4. Use a CRM to grow sales
  5. Standardize your processes with embedded workflows
  6. Centralize data and streamline information flows
  7. Adopt “easy” as an internal mantra to increase customer and employee satisfaction

How much innovation can a dealer do?

Can individual dealerships innovate anyway? I’ve spoken with at least 30 dealerships in 2021. Maybe more. It’s a remarkable phenomenon in this industry that so many dealers think they are unique or that they’ve found the secret to procuring furniture. It’s not true. I believe there is an optimal set of dealership operating processes, depending on product and service mix. If all dealerships worked the procurement problem through to the end, they would probably end up at very similar places.

I think innovation at the dealer level is about responding to local market conditions. It’s sales and marketing. What’s the best way for an individual dealer to innovate and capture their market? IMO it’s to drive up profitability then use that money to hire top talent. What’s the best way to boost profitability? See the “catch up” list above.

Where are the manufacturers and technology vendors?

Not that there aren’t opportunities for innovation in the industry. Right now, I believe there are seeds of innovation planted in process and automation, customer experience, and “future-proof” solutions. There are so many opportunities to streamline, speed up and deliver for the customer better and faster. I’ve also been hearing about AIs and automated product specification. Potentially interesting, game changing stuff. The big question is: who has the time and resources to figure it all out?

“Being first is expensive”

At that dealership I mentioned at the top of this column, we took a hard look at an up-and-coming business system with very cool technology, but that was very new at the time. It was so new that it didn’t have an integration with our manufacturer. We weren’t about the be the first. Being first is expensive. We chose a solution with a less optimal technology stack, but one that included mature manufacturer integrations.

None but the largest of dealers can bear the cost of true innovation. So how is the industry going to move forward?

Where are the manufacturers? Apart from the “majors” I believe manufacturers are holding back dealers. At a minimum any serious manufacturer should be able to:

  • Offer data services to integrate with dealer business systems
  • Streamline reporting and share data with their dealers
  • Digitize and publish catalog data
  • Roll out product configurators and other sales/specification tools

What about the technology vendors selling our business systems and specification tools? I understand they have to compete, but isolating customers isn’t the way forward. There’s no reason why a business system vendor should try to get into the product specification game, or even into CRM. At the same time, where are the web services from the specification vendors, that would open up access to embed their tools into other systems and processes?

Can we work together?

In the face of all of these competing interests, we are asking individual dealers to innovate? I don’t think so – at least not when it comes to technology. It’s going to take some focused effort to get all these disparate interests moving in the same direction. Maybe a group of dealers, manufacturers and technology vendors can get together to work on solutions collaboratively. Until something like that happens, I think the best strategy for innovation at the dealership level isn’t so much to “innovate” as it is to “catch up.” Change happened a while ago. Focus on adapting to change, adopting new norms in your operations. Doing so is almost guaranteed to improve your bottom line.

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