MH: There is a traditional way in which suppliers approach channels, isn’t there?  In most big suppliers, channels are run by people who are rewarded on quarterly sales figures and who usually have job roles that are defined by the channel they manage – distribution manager or retail manager, for instance.  So what is wrong with that model?  And how should people do it differently?

DF: A number of things.  It is built on the distribution mindset.  In other words, the managers are rewarded for shifting product rather than for helping customers solve their problems.  There is no focus on the customer and little or no feedback to head office on what customers’ problems really are and how they are changing.

It is important to remember that these problems are complex and are unlikely to be solved just by buying a single physical product.  Channel people are concerned primarily with meeting their employer’s own internal needs.  And that usually means moving product.  And, once a channel pattern is fixed, they tend to set about making it more efficient, rather than making it right. 

MH: So that destroys the customer experience?

DF: Hmm, I would say that these people are unaware of the customer.  They have no clear idea of how their products are really put into solutions that meet the needs of end-customers.  They are very good at doing things in the right way – stripping out costs – and not very good at doing the right thing. The right thing is to understand what customers want and how the supplier fits into that delivery process.  Very often, the more we try to be efficient and cut costs, the less able we are to do the right thing.

MH: And you think we should start with that customer perspective?

DF: Yes, and when you start seeing things from a customer’s perspective you see a whole host of different ways of obtaining a solution from within a large network.  For example, if you have a data-handling problem, you could solve this with hardware, with software, or by getting someone else to process it for you on a temporary or permanent basis.  The customer just doesn’t see your channel – they aren’t interested in your channel, they are interested only in a solution, and this can come from lots of different places and take many forms and involve input from lots of companies. 
 

“Channel people are concerned primarily with meeting their employer’s own internal needs.”

MH: Why?

DF: Well, most channels people see themselves as suppliers and see a series of pipes or channels going from manufacturers to passive end-users, where the product is delivered. In fact, I would argue that the whole idea of a manufacturer is suspect.  Take Nike.  Is it a manufacturer?  It doesn’t make anything itself!  Equally, many distributors specify products and develop solutions.  And customers, particularly business customers, are far from passive – they actively seek out solutions and often have a strong input into the development and they have to work on what they buy to turn it into a solution.  Also, most suppliers are unaware of the real technology and the processes that go on at intermediary level.  A network view also makes us see how a company’s offering is transformed through the network in order to be a useful solution.