With the right mix of technology and strategy, B2B companies can win market share in the new digital world. The chief information officer of MSC Industrial Supply Co. shows how.

How did Netflix manage to drive Blockbuster to bankruptcy? How did my company, MSC Industrial Supply Co., turn a clunky, end-of-life inventory management tool into a huge budget savings? And how did cell phone maker Nokia outlast its competitor Ericsson at a point when both companies were faced with the same major operational challenge?

All three questions have the same answer: agility and resilience. 

We often operate under the assumption that the company with the newest or most cutting-edge technology will always win. Of course technology is important. As CIO of MSC Industrial Supply, I’ve had a hand in planning and implementing the technology to transform and drive our business. But saying that any single piece of hardware or software is key to beating the competition is like saying that having the hardest punch is a boxer’s key to winning a match. It’s not about the most powerful punch: it’s about the fighter’s technique, and how and when he lands that punch.

If there’s one thing that’s a constant in all fights, it’s that the battle is constantly changing and anything can happen. Business is just the same. Organizations that recognize this and use this to their advantage will outlast their competition and win the fight.

I recently spoke at the Gartner IT Symposium about how MSC is using technology to win the digital battle against our competition. But the themes from my talk are applicable to many industries. That’s because resilience, logistics, and outlasting the competition are key drivers behind resilient enterprises.

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Here’s how to win the digital battle:

1) Fight above your weight. Don’t be afraid to take on the “big guys.” A smaller, more nimble organization can take on this competition, even if you are one-tenth its size. You have to have heart, fight your fight, and be a masterful technician. In other words, you have to have vision, to leverage your strengths and your existing partnerships, and improve your tools.

Netflix Inc. is a great example of a small company that disrupted an entire industry because they were able to do these very things. The company essentially drove the classic video rental store into extinction, and arguably has cable TV on the ropes because it had a vision and leveraged its strengths. Netflix was not even in the same weight class as its direct competition. It wasn’t a content producer or even a video rental company. It was a digital logistics company.

What gave Netflix the competitive advantage was not what they provided the end-user (movies and TV shows), but how they delivered their services – quickly, inexpensively with a focus on convenience for the end-user.  Even when it had a booming DVD-by-mail business, Netflix executives pushed themselves to try new things, jumping head-first into streaming. And while all of this was happening in the ring, they were still busy training in the gym, perfecting their next technique for the digital battle: original content production.

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The key here is knowing how to combine data, logistics and innovation.

2) In the words of the great Muhammad Ali: “Float like a butterfly, sting like a bee.” The more nimble the organization, the greater its chances are for success. Quick recovery from downturn, adoption of new technologies and an agile workforce are attributes which make all the difference in an ever-changing market.

At MSC, we once used and provided large expensive devices to help customers manage their inventory, which were supplied and managed by two separate third parties. One day, both companies decided to stop producing and supporting the devices.

So what happened?

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We used the situation to our advantage: We leveraged existing technology, cut out the middleman, and recouped a million dollars in costs from the budget. We developed mobile apps that allowed our associates and customers to do the same tasks as before, on existing smartphones with Bluetooth technology. In one fell swoop, the bulky, expensive scanning devices and reliance on proprietary networks and software were history. So, too, was much of the maintenance and upkeep. MSC no longer relies on a single network or device, or worries about things like geography or circumstance as we have implemented the right technology and software to meet customers’ needs. Where there are smartphones and Bluetooth, MSC can be there.

Beyond cost cutting, this new solution added to our resilience – enabling us to float like a butterfly and sting like a bee.

3) In the ring, cardio is king. Don’t worry about doing something first, worry about whether you can do it better. That’s how you outlast the competition and remain resilient. Just because the competition is first does not mean that their solutions are built to last.

Take mobile phone makers Ericsson and Nokia, who each faced a potential problem in 2000 when a fire broke out at a Philips chip manufacturing plant in Albuquerque, New Mexico, compromising their access to a critical stock of chips for a prolonged period of time. This marked a critical turning point for the two companies, and most authorities in the industry agree Nokia managed the situation much better than Ericsson. But why?

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Nokia had better sense-and-respond capabilities in place, better policies for collaborating with partners, and better technologies that enabled intelligent adjustment to changing conditions – all systems put in place years before. They won because they had the kind of intelligent, nimble systems that allowed the company to respond to disasters and outperform Ericsson in the long run.

Having a more agile organization that can respond to changes means having effective data flow, integrated policies and systems, and the ability to make fast decisions based on that data. If, at the same time, you can simplify processes for your company and your customers, you’ll have the power to disrupt the status quo and secure your position in the long haul.

How is this achieved?

It takes time and focused effort. The first step is to review the technology solutions that drive critical processes in your company and then ask: Are we agile enough to keep up with the ever-changing digital landscape? How can we create more efficient processes for our company and our customers? How can we make information flow seamlessly within our organization and across our partners?

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The competitive landscape is changing quickly. How you have fought in the past will not work in the future.  Prepare for the new digital battle: fight above your weight, float like a butterfly and sting like a bee, and remember that in the ring, cardio is king.

Charlie Bonomo is senior vice president and chief information officer of MSC Industrial Supply Co., a value-added distributor of industrial supplies across North America. Follow Charlie on LinkedIn at www.linkedin.com/in/charlesbonomo.

 

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