Defining or Being Defined by Your Supply Chain

Stephen DeAngelis

March 24, 2016

Lora Cecere (@lcecere), founder of Supply Chain Insights, asserts, “The supply chain IS Business, not a department within a business.”[1] If Cecere is correct — and I believe she is — then how a company defines its supply chain could define the company itself. Where would The Walt Disney Company be if Walt and his brother only saw their company as one that produced cartoons? Daniel W. Rasmus notes, “Disney used to have a very clear mission statement: ‘Make People Happy’.”[2] It was that broad vision that helped make The Walt Disney Company what it is today. Where would Amazon be today had it narrowly defined itself as an online bookstore rather than global logistics firm? Would Apple be anything more than a fading niche player in the IT world had it narrowly defined itself as the provider of elegant personal computers? Would Google be the powerhouse it is today had it simply defined itself as a search engine provider? Daniel Isenberg (@danisen), a Professor of Entrepreneurship Practice at Babson Executive Education, and Timothy Coates (@timcoates), a Program Manager at IBM Corporate Citizenship, provide additional anecdotal evidence supporting the hypothesis that a company can be defined by its supply chain.[3] They write:

“Until a few years ago Steve Cronce’s Raphael Industries did $1 million dollars a year of specialized industrial painting for customers within driving distance of their plant in Milwaukee, Wisconsin. One of them happened to be GE Healthcare, which sent Raphael ‘dead’ X-Ray tube parts for re-coating and re-commissioning. Challenged by other entrepreneurs in Scale Up Milwaukee’s Scalerator program to come up with a plan for rapidly ramping up his business, Cronce wondered: ‘What if I redefined Raphael as a strategic link in the global medical imaging supply chain, rather than as a paint shop?’ This supply chain epiphany is taking Raphael toward $10 million of work a year by burrowing into GE’s global network as well as serving its competitors. He is poised to become the leader in this segment of a multi-billion dollar market. ‘By serving as GE’s and other equipment makers’ supply partner, the whole world is now my scope. I am no longer limited by geography.'”

Back in 2009, Michael Shawn Malone published a book entitled The Future Arrived Yesterday: The Rise of the Protean Corporation and What It Means for You. Malone indicates he wrote the book after looking at his résumé and realizing that many of the companies he worked for no longer exist. He began wondering what a company had to do to survive in an era increasingly defined by rapid change. From the title of his book, we know that Malone was writing about change. “Protean” means readily taking on varied shapes, forms, or meanings. Malone believes only companies that can change with the times will survive. This notion is nothing new. The Greek philosopher Heraclitus (540 BC-480 BC) wrote, “Nothing endures but change.” The point is, a company that defines itself too narrowly is likely headed for history’s dustbin. Martin Christopher, an Emeritus Professor of Marketing and Logistics at the UK’s Cranfield University, writes, “Companies operating in every industrial sector and in every market around the world are facing significant challenges, ranging from economic recession to demographic shifts and geo-political upheavals, to name but a few. … When confronting these changes, it will be crucial for companies to develop agile supply chains.”[4] So how can a company broaden its vision to help it grow and thrive as the world around it changes? Rasmus offered this advice:

“The bottom line on vision … is to recognize the complexities of the business and create visions for areas that are meaningful to internal and external constituencies, and make sure these visions are consistent with the mission. Grapple with the future. If the vision is 10 years out, you don’t have to understand how to achieve it today, but you do need to start prioritizing investments, including learning investments, that dip toes into the future so you really understand what the organization will need to achieve the vision. And the state that eventually arrives in a decade may be very different than what was documented 10 years prior, but by then, the vision should be another 10 years ahead. A vision should help inform direction and help set priorities. It should not be unchanging. As organizations learn, they need to adjust and adapt, and reflect that learning in the vision. That is why scenarios are so important: They help you practice different futures in which the vision might unfold — each scenario requiring different tactics and strategies. Any vision that stays the same for a decade fails as a vision.”

Grappling with the future can be highly entertaining and informative; but, you also have to splash a little reality on your vision or your company will find itself wandering in the wilderness hopelessly lost. The editorial staff at Entrepreneur writes, “No business — particularly a small one — can be all things to all people. The more narrowly you can define your target market, the better. This process is known as creating a niche and is key to success for even the biggest companies. Walmart and Tiffany are both retailers, but they have very different niches: Walmart caters to bargain-minded shoppers, while Tiffany appeals to upscale jewelry consumers.”[5] My only caution is that defining your target market too narrowly could end up hurting your company in the long run. What does your company do best? How can that product or service be provided to the largest possible “niche” market? I agree your company can’t be all things to all people; but, it can be something special to a lot of people if you define your company’s business correctly. In the case study noted above, Raphael Industries scaled up its niche rather than narrowing it.

Christopher asserts that in order to redefine your company in a way that allows it to thrive during disruptive changes corporate silos must be eliminated. “For centuries, organizations have followed an organizational logic based upon a division of labour where activities take place within functions or departments,” he writes. “While this functionally-based organizational concept may ensure the efficient use of resources, it creates a silo-type mentality. As a result, companies are slow to respond to changes in the market or business environment.” He continues:

“Companies that respond rapidly to changing customer requirements tend to focus more on managing processes. Processes are the horizontal, market-facing sequences of activities that create value for customers. They are cross-functional by definition and are usually best managed through inter-disciplinary teams.”

And these cross-functional teams need to be working from one version of the truth (i.e., a single source of integrated data). Cognitive computing systems are ideal platforms for helping companies to breakdown down silos, integrate data, foster alignment, and manage processes. Because cognitive computing systems employ natural language processing, cross-functional teams need not rely entirely on data scientists to help them make the most the data at hand. Cross-functional teams are well-positioned to help a company craft a definition of the business that creates rather than closes off opportunities.

Footnotes
[1] Lora Cecere, “Sage advice? Only for turkeys.” eft, 1 February 2013.
[2] Daniel W. Rasmus, “Defining Your Company’s Vision,” Fast Company, 28 February 2012.
[3] Daniel Isenberg and Timothy Coates, “Using Supply Chains to Grow Your Business,” Harvard Business Review, 20 November 2015.
[4] Martin Christopher, “Want to Thrive in Disruptive Times? Start With an Agile Supply Chain.Longitudes, 28 February 2016.
[5] Staff, “Defining Your Market in 7 Steps,Entrepreneur, 13 February 2013.