Anne looked at Paul, and asked, “Where are we on Lora’s request?” Paul squirmed and gave a non-answer. Jim looked me in the eye, and said, “Lora I missed that meeting, can you explain the concept again?”
I smiled. Paul, Jim, and Anne work together at a supply chain planning technology company. My client for two decades, I am proud of Anne. As the new CEO, Anne is trying to drive innovation. She is also attempting to balance product delivery with delivering client value. A tough task for any business leader in a supply chain technology role, but the task is even tougher following the pandemic.
Anne handpicked Jim for his role to lead product development. He is brilliant and gifted in both leading teams and driving innovation. When it comes to advice on market direction, Anne first turns to Jim.
Jim is good personal friends with Paul. Jim is proud that working together with Paul, they drove an increase in sales for the company last year of 35%. Paul leads sales for the Americas teams.
Looking at Jim, I drew the concept of the market-driven knowledge monitor on the whiteboard. The concept of an application to assess the plan’s quality, the organization’s execution of the plan, and the identification of opportunities appealed to Jim. He turned to Paul and said, “Didn’t we push the building of this to Q4 next year? Wasn’t this one of the product development items that we delayed to build the functionality for the Gartner Magic Quadrant and Super Cereal’s RFP?” Paul, irritated by the dialogue and picking at the skin on his cheek, shook his head, yes to confirm that Jim was correct. I could tell Paul was uncomfortable.
Anne stood up and asked, “How do we break this cycle of sales-driven versus market-driven approaches? I am tired of answering and responding to RFPs. The opportunity cost of Magic Quandrant Briefings and sales-driven activities is a drain on resources. I want to break out of our box and drive innovation.”
“Exactly, Anne. Chasing RFPs is a barrier to building market share,” I replied. “Most clients know that they need to drive change, but they need you to drive innovation to help them understand how to move forward. Most struggle to understand what is possible through new forms of analytics.” I then walked to the whiteboard and picked up a marker.
“Remember when I challenged you to build an executive dashboard to constantly analyze the effectiveness of your plans and the organizations’ capabilities to follow the plan? My thinking has evolved. Let me show you,” I replied.
The synopsis of the conversation evolved around five points:
- Visibility. The average company has over twenty visibility projects. While companies speak of control towers, they are not clear on what they are trying to control and connect market signals to outcomes. Today’s solutions are inside out. The manufacturing buyer has a new appreciation of “variability” and wants to improve visibility but struggles to bring market data like telematics, GPS, images, map data, and rating/review data into today’s architectures. There is nowhere to put it. As a result, it sits on multiple islands outside of the organization.
- Self-service. In the pandemic, we interviewed over thirty mature companies. Each wanted to drive “what-if optimization” and “discrete-event simulation models” to understand possibilities. However, they quickly found that the current planning tools were so “hard-wired” into traditional architectures that this was impossible. Changing inputs and testing flows was not possible. Today planning in most organizations is the role of the relatively junior employee with three years of experience—only 3% of back personnel use planning systems. The opportunity is redefinition to build planning differently. How do we empower the whole company to use planning technologies to drive outcomes?
- Market sensing. Companies want to align outside in. They confuse market drivers and demand-shaping levers. As a result, they shift demand losing the opportunities to shape demand to drive market growth. (Market drivers are shifts in the market like employment, GDP, illness, events, weather, and competitive activity, while demand shaping levers are pricing, promotion, new product launch, service introduction, advertising, and channel incentives.) Shaping demand increases market potential while shifting demand increases cost without growing share. All companies interviewed in the pandemic wanted to sense market potential and understand elasticity but could not because today’s solutions tether to historical order and shipment data. The signals are backward-looking increasing demand latency (time to sense true market shifts).
- Model-centric. Today’s architectures are model-centric and functional; they lack the ability to connect engines to workflow and redefine rule sets. The need is to design decision flows.
- Inside-out and Functional. The current SCOR model single-threads Plan across source, make and deliver. We have not explored the possibilities of bi-directional orchestration and market-to-market flows (channel to the supplier). Industry thinking is linear, functional, and focused on the use of historical enterprise data. The traditional planning process responds but does not sense. As a result, companies talk about “end-to-end optimization,” but most are stuck in historical paradigms.
Anne, Jim, and Paul nodded their head in agreement as I shared the work with Project Zebra in Figure 1. I invited them to a webinar discussion with business leaders on June 9th. We talked about how the market–stuck in the Now and unable to conceive the Then–needed to change. We agreed that aimless RFP cycles and responding to market reporting on traditional taxonomies, like the Gartner magic quadrant, are barriers to change. No technology company has the answer, but advances in technology offer a great opportunity.
They marked their calendars to join the guiding coalition to change. Hopefully, we can drive a different dialogue across the industry on how to use new forms of analytics to redefine decision support. See you there?