VOL. 133 | NO. 32 | Tuesday, February 13, 2018
When Suppliers Innovate
One of the greatest thrills of a career is when you see a nice client thrive and prosper. Recently, I was flown to the West Coast with a client to co-present the findings of a few innovation projects. We had an esteemed audience, including senior vice presidents of marketing, procurement and sales, and a few vice presidents, too.
At the end of the meeting, one of the SVPs turned to my client and said, “Congratulations, you now have the highest possible score on the Vendor Scorecard for Innovation.”
Their savvy client knows how to manage strategic relationships and how to inspire new thinking on their behalf.
My client was a supplier to a multibillion-dollar company. By taking a market-based view of the market they share – and doing detailed business-to-business design thinking projects in various segments along with in-depth ethnographic insights generation to figure out the real needs of end users – they are adding brain and muscle to the relationship, making them a more valued partner for marketing and product development.
What’s even more exciting is when you realize you are in the middle of a healthy trend – and that is what was typified by the meeting detailed above.
In a variety of industries – office supplies, packaging, consumer goods, OTC, durable goods and manufacturing – we are seeing suppliers becoming more valuable strategic partners to their customers by handling more front-end innovation projects and bringing to the relationship the insights learned and new product, services and business model concepts.
Let me be careful to make two points.
The first one is that the supplier remains the subject matter expert on making helpful things (such as packaging, containers, equipment parts, etc.) and that technical research and development doesn’t stop because of this trend. In fact, it may speed up and be even more prolific.
The second point is that now these suppliers are not only serving in the role as the subject matter expert on the technical and cost side of what they do. Now they also are providing insights from the field, growth concepts and new thinking about the market segment itself – all based on the jobs to be done and unmet needs in each segment. This kind of thinking is of premium value to the brands they serve.
Instead of dealing with just the technologists (chemists or engineers) about the thing itself and procurement about the costs at scale, they now interact deeply with those in insights, marketing, sales and product pipeline.
Essentially, by taking both an asset-based and market-based perspective, suppliers become stronger strategic partners to their clients, breaking the bonds of the vendor-customer paradigm where price is the main criterion.
In many cases, the suppliers are empowering many of the innovations for the brands they serve. This is a triple win: for the supplier, their client and the end users who benefit from the innovation.
Michael Graber, managing partner of the Southern Growth Studio, can be reached at southerngrowthstudio.com.