"It's conceivable that someday our suppliers could try to go direct to consumers and cut us out partially or entirely from our most profitable customer base." Dudley Fleck, Fleck Sales, Cedar Rapids, IA
Dudley made this comment as we discussed the Death of the Middleman as part of our trimester planning meeting Tuesday morning.
We’d just finished putting in place some difficult and important changes for Fleck Sales to implement for their third trimester. (We’ll discuss this change and how to respond to it in our next two blogs.)
Before our meeting I’d shared a portion of one of the trends which could influence Fleck Sales from Outthink the Competition: How a New Generation of Strategists Sees Options Others Ignore by Kaihan Krippendorff which I’d outlined in OUTTHINKERS - Nine Trends Transforming the World.
The book was written in 2011. It doesn’t take a genius to see how many of these trends, particularly The Death of the Middleman, are playing out over the past six years.
On Line Shopping
In The Death of the Middleman this business.com article byline is An underlying principle of e-commerce is to skip the costs and logistics of using a retail middleman to sell directly.
Recently I purchased a pair of glasses from Warby Parker for myself and my son Noah. If you’re like me, you dislike shopping for just about anything, especially when you get poor service and still pay a premium for the items you purchase. Warby Parker as described in David and Goliath: Underdogs, Misfits, and the Art of Battling Giants by Malcolm Gladwell seemed to be a wonderful option. In David vs. Goliath: Out Think the Competition we shared how many of Gladwell’s ideas are seeing expression in the ideas formulated by Krippendorff in Outthink the Competition.
The Middlemen are Disappearing
In Tim Finnigan’s blog The Middlemen are Disappearing, he begins his article with a quote from James Altucher, an American hedge fund manager, entrepreneur, bestselling author, venture capitalist and podcaster. He has founded or cofounded more than 20 companies.
“The world is changing. Markets have crashed. Jobs have disappeared. Industries have been disrupted and are being remade before our eyes…It’s all crumbling down. In every part of society, the middlemen are being pushed out of the picture”
We’ve all seen the impact of Uber, Lyft, Amazon. What do you feel 3D printing will do to the printing business?
How has the Internet affected manufacturing. In Outthink the Competition, Krippendorf points out, “Previously, a company that wanted to create a new product would have to invest millions to build or retool the factory. Today that company can go to Alibaba.com and find a manufacturer ready to provide the product with minimal incremental cost. In other words, with a few mouse clicks and e-mails, an entrepreneur today can achieve the economies of scale that used to require months of planning and millions of dollars.”
Furthermore, The way to wealth was once to build a factory so big that no one could match your investment; to standardize parts and platforms so that no one could touch your volume; to establish a brand so widely recognized that no one could afford to pull customers away. For more than a century, industrial conglomerates have depended on such economies of scale to keep their competition at bay. Today that advantage is eroding. Even in production-heavy industries, of which there are fewer, factories grow smaller, more specialized, and they are easily turned on and off. Products grow more customized, turning standardization into liability. Niche brands pop up and, at very little cost, pick off small segments of the market from incumbents who invested decades in building mass loyalty. A new form of competition that draws strength from sources other than scale is emerging.
You only need to look at the success of Airbnb to see how this trend is eroding normal patterns of vacations and travel.
Perhaps you prefer to stay in a hotel when you travel. Countless travelers are discovering there’s an alternative and in many cases finding the alternative better to the traditional modes of lodging.
CHANGE IS HEREMy point to this blog is change isn’t coming. It’s here. If you’re a middle man, the possibility of your business changing, if it’s not already been affected, is certain. In Fleck Sales case, the transportation of liquids and state and federal laws on distribution of alcohol will give them more time to prepare and adapt to changes.
In our Trimester Meeting Tuesday I closed with this song. I'd only just discovered it, but I believe it sums up the mindest you and your team need to have to adapt to our dynamic world.
Greatness Is Holding Fast to a Dream, Independent of the Environment
At the same time Elon Musk founder of Tesla Inc and SpaceX started those business knowing full well changes in laws and patterns of behavior would need to change in order for either of these businesses to be successful.
Great ideas are founded on the principle of, “Greatness Is Holding Fast to a Dream, Independent of the Environment.”
People like Winston Churchill, John F. Kennedy, Martin Luther King and Mahatma Ghandi, all envisioned a future others were unable or unwilling to imagine.
Is your business looking to see beyond the limited boundaries of today? Contact firstname.lastname@example.org for a 30 minute discussion on who we can help. Take our Four Decisions Needs Assessment to discover how your business measures up to achieving your growth objectives.
Next Blog – Change is GoodNavigating change is challenging. What are steps you can make to navigate change? How did one of my customers decide to change and what are steps you can take to be successful. Join us next blog