Sunday, September 7, 2008

Incongruity

At the moment I’m currently reading “Innovation and Entrepreneurship” By Peter Drucker. In the chapter on incongruity I was struck by the following:

 

The reaction of the typical producer or supplier is then to complain that customers are ‘irrational’ or ‘unwilling to pay for quality.’ Whenever such a complaint is heard, there is reason to assume that the values an expectations the producer or supplier holds to be real are incongruous with the actual values and expectation of customers and clients. Then there is reason to look for an opportunity for innovation that is highly specific, and carries a good chance of success’.

 

It seems to me that so many SMB resellers are constantly bemoaning how ‘irrational’ and ‘unwilling to pay for quality’ customers these days are. Their use of the these exact phrases is what struck me about this passage in the book. It simply boils down to the fact that what SMB resellers believe the reality to be is not in fact the case.

 

As IT and computers become more and more main stream the so called ‘special knowledge’ of resellers is rapidly eroding. Given that more people entering the work force are au fait with technology and the simple fact that everyone can use Google drastically erodes any ‘special knowledge’ resellers believe they have. Resellers complaints about ‘irrational’ customers indicates an incongruity and as Drucker says an opportunity for innovation. However, that opportunity doesn’t remain forever.

 

Going forward, a SMB reseller is not going to be able to provide innovation simply by reselling equipment and programs. Larger hardware businesses like Dell, HP, IBM and the like have the resources to provide innovation on a grand scale while at the same time driving prices down. Likewise, large software businesses such as Microsoft and Google are similarly moving closer to the customer to provide more consistent and cheaper offerings. All of these moves are proving more successful everyday. Why? Simply because they are providing ‘value’ for the customer, if they weren’t they wouldn’t sell.

 

So as an SMB reseller where does the opportunity lie? Not a simple question given the ever shrinking market opportunity. As Drucker says the solution is a ‘to look for an opportunity for innovation that is highly specific’. For too long SMB resellers have been 'jack-of-all-trades’, well I believe this now no longer possible simply give the breadth of products that are now installed. A reseller has to carefully examine what a customer perceives as value. For this they will happily pay. Importantly, it’s value as perceived by THE CUSTOMER not THE RESELLER! It is in this view of the world that many resellers fall down. Why? Simple, most customers don’t care at all about technology they simply want to do their job. Most resellers have gotten into IT because they love to fiddle with technology, sadly, that is not what most customers want to do these days.

 

For an SMB reseller it is now probably time to look at adapting in way that focuses on being more specific rather than simply adding more products to the range of offerings. Perhaps, it’s time to think about getting smaller and more focused than getting bigger? Do what you do well better, don’t waste time trying to improve stuff with which you struggle. Next, start listening to what the customer wants, not what you want to sell them. Solve their pain and provide them value. The other key to success in my books? Improve your networking. Get involved with other members of the reseller community, find out what they do, read their blogs, look at their web sites, have a regular coffee with them, learn their business and become their best salesman. If you do that for them I’m pretty certain that they’ll do the same for you and more!

 

Use the power of leverage to multiple your size beyond what you ever dreamed. It is by far the greatest innovation resource available to an SMB reseller and in reality it is cheap. If you follow this, I think, as Drucker says, you’ll have ‘a good chance of success.