July 27, 2012
FDBuyer: Wanted – Candor & Trust
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
Consumer insights, logistics efficiencies and pricing are all critical trade relation issues. But what both retailers and manufacturers seem to thirst for the most is candor and trust. This isn’t new.
Candor is the simplest of these two to understand and the hardest to implement. It has risks. Tell an unpleasant truth to a trading partner and you stand to lose the business or get fired. You’ll need, simultaneously, an understanding boss and a forgiving partner. So it’s easy to see why little lies permeate all business so thoroughly, generally without much consequence. But lack of candor can also scuttle a good business relationship forever. Who among us can say we’ve never stretched the truth?
Trust involves more than just candor; it includes shared, useful expertise. Sharing business knowledge that proves consistently reliable and useful to your partner is of great value. But the other complaint I hear from retailers time and time again over the years is that vendors continue to make pitches based on decks of data they’ve barely even read themselves.
The number of left-handed single women over 40 in Peoria who buy frozen pizza on Tuesdays is of no use. The average promotional lift of specific items at specific discounts on endcaps? Well, that’s something that might be worth knowing.
Yes, the big manufacturers with the deepest pockets have an advantage here. They can afford more data as well as the analysts who can parse it. But as one retailer told me, many vendors don’t share information throughout their sales forces very well. A key consumer insight or a new merchandising idea that is selling lots of product is often kept — deliberately or not — under wraps. A formalized communication program, perhaps with checklists, wouldn’t hurt.
You don’t necessarily have to be the one with the deepest pockets, however. I’ve had the good fortune over the years to close a bar or two while listening to veteran retailers, brokers and reps hold forth on why some merchandising ideas work well and others fail. These were the guys in the trenches who’d been doing pretty much the same thing for decades. They knew their stuff cold, like combat-hardened old sergeants. If you were ever going into battle — in business or in war — those were the people you knew could be trusted.
But as I’ve also found over the years, these same people are the least consulted by the young business school graduates in the corner offices. The misuse (or non-use) of this incredible resource is responsible for more business failures than I can count.
BrainTrust
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Discussion Questions
Discussion Questions: How can trading partners build a culture where candor and trust can thrive? Since it’s such a long-standing and common problem, why isn’t it formally addressed more often?
Poll
I think it comes down to the fact that retailers and manufacturers are increasingly competitors. “Frenemies.” Retailers have private label, and I have heard some horror stories where manufacturers were open and collaborative about new product introductions well in advance of distribution in order to ensure a successful product launch, only to find their ideas ripped off in private label — and at the shelf before their own new products. I’ve also heard horror stories of manufacturers insisting on price levels in the store that “protect our brand image” only to turn around and offer their own — exclusive — discounts on the manufacturer’s online site. These situations do not create an atmosphere that is conducive to collaboration.
I agree that trust begins with candor and openness. But it’s hard to be open when your best strategies get used against you by your own “partners.” It happens on both sides. And I don’t think it changes until executives work hard to build a culture of collaboration — down to the measures that determine a field sales team’s or category buyer’s bonus. My impression is that Wegmans has managed this. But not many others.
Candor and trust will prevail if society ever values them more than money and power. Those values are plants of slow growth in an aged bosom: today is the season of credulity and gullibility, i.e., green backs, power and “got-ya.”
And that, like our Congress not passing a budget for four years, is why candor and trust it is not formally addressed more often. As Pogo has stated, … “it is us.”
One of the larger challenges that is driving a greater divide between trading partners lies in the fact that all parties are being swamped with an unprecedented volume of data. Much of that data is very valuable and useful. However, each party is shouting over each other to say that their data is most insightful.
What the stronger trading partners are doing is agreeing on the data points from diverse information sources that are most useful, and then systematically organizing them along common grounds. That enables better decision making.
That better decision making offers both trading partners what they want and need — solutions to their challenges and opportunities.
As usual Warren’s insights are well worth pause. And to say that “candor and trust” have always been an issue is a huge understatement…it’s been thus since the beginning of time.
This is a persistent soapbox for me I know, but these are not mechanistic issues; they are spiritual issues. ‘Candor’ does not belong to the mega-company that can buy the most data. And ‘trust’ can never be written into a policy manual. It’s like publishing “Honesty” as one of your corporate values. All that does is make one wonder how long it took the Values Committee to make that decision.
Candor is learning to speak the truth in love. Truth, as ancient wisdom has long told us, is a two-edged sword. Use it to hurt and destroy and it will come back to destroy you. Use the truth to build, encourage, grow and strengthen and you reap rewards beyond measure.
Trust is irrelevant unless in the context of risk. We are so adverse to risk in this country that we’ve come to the bragging point that “I don’t trust anyone.” We somehow think that’s the mantra of leadership. Nothing could be sadder and further from the truth. Whatever you send out comes back to you. Send out distrust and you will not be trusted. And probably for good reason.
Warren prompts us to reflect on who holds the truth in our organizations. In academic circles this is labeled “Knowledge management.” Do all the fancy research you want…the person who has what you most need is having a coffee break in your lunch room.
“Lies, damned lies and statistics” Benjamin Disraeli
Or as Pop Flynn used to say “Boy, figures don’t lie — but liars figure.”
Ironically enough, Ray Jones was reminiscing yesterday about his early career as a market researcher in corporate. The tale was about how often different constituencies would approach him, in preparation for some big upcoming meeting, seeking statistics that would support their predetermined point of view on the issue at hand. We both got a good chuckle out of the specter of them all showing up at the meeting armed with the same research study — spinning the same numbers to suit their cause.
In the early days of fact based selling and later category management, DHC was often called upon to present the “new selling approach” to sales teams. I would often start the presentation by saying “there are only two people your buyer will trust — and neither of them is you!”
What I was referring to of course, is that they would trust information based on either consumer research or sound intelligence about what was working for their competitors. But then we learned to “spin” — and the CPG world discovered Disraeli. The rest is just so many PowerPoint decks.
I recently completed a three year research project with IFDA and IFMA on the foodservice side of the business. During year one, in depth interviews with various channel members, not surprisingly, indicated a lack of trust. Upon further analysis, it appears the lack of trust emanates from a lack of understanding of the other channel member’s needs and challenges. In order to enhance understanding and in turn increase trust it is important to generate real engagement and transparency.
Year two was dedicated to developing a collaboration pilot with foodservice manufacturers and distributors. The model was based on three mutual goals: Sales and Profitability Growth, Supply Chain Efficiency, and Customer Centric Strategic Business Management.
The pilot project concluded in December and the results of year three were released last week at the IFDA Smart Conference in San Francisco. Suffice it to say that the title of the report is COLLABORATION WORKS!
Quantitative measures demonstrated significant improvement on each goal. In addition, qualitative feedback from the collaboration pilot teams indicated enhanced relationships between collaborators and resulted in increased channel effectiveness and efficiency.
Allowing individuals to speak openly often results in a meaningless intangible communication well seasoned with frustration. These same communications can dull the mood of those in attendance and strengthen any feelings of indifference they might have. The effort to prioritize or even allow candid communication in the open must be overseen by highly skilled managers that are at all times unimpeachable in their governance of a committee or a company meeting, to allow constructive opposing comment(s) solely for the purpose of supporting a predetermined goal. Once an open minded and focused group of individuals are communicating effectively, trust is always present and building team confidence in the system and the company’s goals. It is my experience that wayward input from a group or individual(s) at a meeting or in a report/communication is present due to shortfalls in the understanding of the timing or objectives needed to be in place or the failure of management to see or recognize this group’s or individual’s experiencing unanticipated resistance in the path of the company’s goal. In short, there must be a focused and fully capable executive team at the top to place and maintain this sort of open policy. And as many of us now know that at the present time there is a lot of opportunity for many companies to attain this level of communication skill. So the answer as to how can this be done is simply, put the right people in charge.
It’s another 800-lb gorilla in the room. Where trading partners are currently sharing and truly collaborating, there are great benefits to be gained by all parties concerned.
With the current flood of big data, there can be defined positive outcomes for each party with every collaboration, information sharing effort. We have to move the ball forward, and let past adversarial relationships be left in the past.
In the current and evolving world of transparency brought on by technology, trust becomes the only sustainable currency. This is a subject not confined to the grocery industry, but rather a universal one which must be explored by anyone serious about driving a sustainable business going forward.
It is time to earn trust through your actions not your words, to actively trust your business partners, and to have a zero-tolerance policy for anyone not willing to board this trust train.
The greatest challenge for candor between retailers and manufacturers is the dependence of retailers on manufacturer funds in order to make their profit margins. You see, the challenge is that the two sides are actually in two different businesses — manufacturers are focused on growing share and sometimes categories, and retailers are focused on driving revenue and striving to get as much in manufacturer funds as possible.
Until both sides can get together and develop a series of customer-focused joint goals, the gap is challenging to say the least.
Trading partners and retailers both have to look at the overall integrity of the retail space and simply commit to maintaining their own. There is data, there are situations where they compete, but the core solution is to maintain credible, honest (no matter how much it hurts) relationships.
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I think it comes down to the fact that retailers and manufacturers are increasingly competitors. “Frenemies.” Retailers have private label, and I have heard some horror stories where manufacturers were open and collaborative about new product introductions well in advance of distribution in order to ensure a successful product launch, only to find their ideas ripped off in private label — and at the shelf before their own new products. I’ve also heard horror stories of manufacturers insisting on price levels in the store that “protect our brand image” only to turn around and offer their own — exclusive — discounts on the manufacturer’s online site. These situations do not create an atmosphere that is conducive to collaboration.
I agree that trust begins with candor and openness. But it’s hard to be open when your best strategies get used against you by your own “partners.” It happens on both sides. And I don’t think it changes until executives work hard to build a culture of collaboration — down to the measures that determine a field sales team’s or category buyer’s bonus. My impression is that Wegmans has managed this. But not many others.
Candor and trust will prevail if society ever values them more than money and power. Those values are plants of slow growth in an aged bosom: today is the season of credulity and gullibility, i.e., green backs, power and “got-ya.”
And that, like our Congress not passing a budget for four years, is why candor and trust it is not formally addressed more often. As Pogo has stated, … “it is us.”
One of the larger challenges that is driving a greater divide between trading partners lies in the fact that all parties are being swamped with an unprecedented volume of data. Much of that data is very valuable and useful. However, each party is shouting over each other to say that their data is most insightful.
What the stronger trading partners are doing is agreeing on the data points from diverse information sources that are most useful, and then systematically organizing them along common grounds. That enables better decision making.
That better decision making offers both trading partners what they want and need — solutions to their challenges and opportunities.
As usual Warren’s insights are well worth pause. And to say that “candor and trust” have always been an issue is a huge understatement…it’s been thus since the beginning of time.
This is a persistent soapbox for me I know, but these are not mechanistic issues; they are spiritual issues. ‘Candor’ does not belong to the mega-company that can buy the most data. And ‘trust’ can never be written into a policy manual. It’s like publishing “Honesty” as one of your corporate values. All that does is make one wonder how long it took the Values Committee to make that decision.
Candor is learning to speak the truth in love. Truth, as ancient wisdom has long told us, is a two-edged sword. Use it to hurt and destroy and it will come back to destroy you. Use the truth to build, encourage, grow and strengthen and you reap rewards beyond measure.
Trust is irrelevant unless in the context of risk. We are so adverse to risk in this country that we’ve come to the bragging point that “I don’t trust anyone.” We somehow think that’s the mantra of leadership. Nothing could be sadder and further from the truth. Whatever you send out comes back to you. Send out distrust and you will not be trusted. And probably for good reason.
Warren prompts us to reflect on who holds the truth in our organizations. In academic circles this is labeled “Knowledge management.” Do all the fancy research you want…the person who has what you most need is having a coffee break in your lunch room.
“Lies, damned lies and statistics” Benjamin Disraeli
Or as Pop Flynn used to say “Boy, figures don’t lie — but liars figure.”
Ironically enough, Ray Jones was reminiscing yesterday about his early career as a market researcher in corporate. The tale was about how often different constituencies would approach him, in preparation for some big upcoming meeting, seeking statistics that would support their predetermined point of view on the issue at hand. We both got a good chuckle out of the specter of them all showing up at the meeting armed with the same research study — spinning the same numbers to suit their cause.
In the early days of fact based selling and later category management, DHC was often called upon to present the “new selling approach” to sales teams. I would often start the presentation by saying “there are only two people your buyer will trust — and neither of them is you!”
What I was referring to of course, is that they would trust information based on either consumer research or sound intelligence about what was working for their competitors. But then we learned to “spin” — and the CPG world discovered Disraeli. The rest is just so many PowerPoint decks.
I recently completed a three year research project with IFDA and IFMA on the foodservice side of the business. During year one, in depth interviews with various channel members, not surprisingly, indicated a lack of trust. Upon further analysis, it appears the lack of trust emanates from a lack of understanding of the other channel member’s needs and challenges. In order to enhance understanding and in turn increase trust it is important to generate real engagement and transparency.
Year two was dedicated to developing a collaboration pilot with foodservice manufacturers and distributors. The model was based on three mutual goals: Sales and Profitability Growth, Supply Chain Efficiency, and Customer Centric Strategic Business Management.
The pilot project concluded in December and the results of year three were released last week at the IFDA Smart Conference in San Francisco. Suffice it to say that the title of the report is COLLABORATION WORKS!
Quantitative measures demonstrated significant improvement on each goal. In addition, qualitative feedback from the collaboration pilot teams indicated enhanced relationships between collaborators and resulted in increased channel effectiveness and efficiency.
Allowing individuals to speak openly often results in a meaningless intangible communication well seasoned with frustration. These same communications can dull the mood of those in attendance and strengthen any feelings of indifference they might have. The effort to prioritize or even allow candid communication in the open must be overseen by highly skilled managers that are at all times unimpeachable in their governance of a committee or a company meeting, to allow constructive opposing comment(s) solely for the purpose of supporting a predetermined goal. Once an open minded and focused group of individuals are communicating effectively, trust is always present and building team confidence in the system and the company’s goals. It is my experience that wayward input from a group or individual(s) at a meeting or in a report/communication is present due to shortfalls in the understanding of the timing or objectives needed to be in place or the failure of management to see or recognize this group’s or individual’s experiencing unanticipated resistance in the path of the company’s goal. In short, there must be a focused and fully capable executive team at the top to place and maintain this sort of open policy. And as many of us now know that at the present time there is a lot of opportunity for many companies to attain this level of communication skill. So the answer as to how can this be done is simply, put the right people in charge.
It’s another 800-lb gorilla in the room. Where trading partners are currently sharing and truly collaborating, there are great benefits to be gained by all parties concerned.
With the current flood of big data, there can be defined positive outcomes for each party with every collaboration, information sharing effort. We have to move the ball forward, and let past adversarial relationships be left in the past.
In the current and evolving world of transparency brought on by technology, trust becomes the only sustainable currency. This is a subject not confined to the grocery industry, but rather a universal one which must be explored by anyone serious about driving a sustainable business going forward.
It is time to earn trust through your actions not your words, to actively trust your business partners, and to have a zero-tolerance policy for anyone not willing to board this trust train.
The greatest challenge for candor between retailers and manufacturers is the dependence of retailers on manufacturer funds in order to make their profit margins. You see, the challenge is that the two sides are actually in two different businesses — manufacturers are focused on growing share and sometimes categories, and retailers are focused on driving revenue and striving to get as much in manufacturer funds as possible.
Until both sides can get together and develop a series of customer-focused joint goals, the gap is challenging to say the least.
Trading partners and retailers both have to look at the overall integrity of the retail space and simply commit to maintaining their own. There is data, there are situations where they compete, but the core solution is to maintain credible, honest (no matter how much it hurts) relationships.