Friedman's Rule #5 — In his New York Times best-selling nonfiction book The World is Flat, Thomas L. Friedman devotes a chapter to “How Companies Cope.”
Rule #5 reads: “In a flat world, the best companies stay healthy by getting regular chest X-rays and then selling the results to their clients.” What Friedman suggests by chest X-ray is a self-analysis to identify your best abilities as well as where you are not so good — and letting go of those things you can outsource.
HARDI has a basic in-house tool for member firms that may be of assistance in conducting an “X-ray” of an HVACR wholesale-distributor. We based it on an earlier work of the association staff in support of consultant Stephen C. Zaremba for a conference presentation.
Why Conduct a Self-Evaluation of Your Company?
Competition is everywhere today in the HVACR industry — traditional and some nontraditional rivals. Customers are in control more than ever. Yet each customer's buying needs and habits are different.
One of the precepts of Market Center Distribution is to understand what each customer wants. This exercise will help you uncover your company strengths, and you can use this information to:
- Distinguish yourself from your competition.
- Inform key customers why they should buy from you and segment your customers more effectively.
- React more effectively to changes in your market.
- Improve supplier relations.
- Uncover important training needs.
If you're satisfying 95 percent of your customers, you're losing a lot of business. And poor service sends more customers away than price or quality. This exercise can help you identify and improve your value-added services.
HARDI's Conducting a Company X-Ray
The tool developed by HARDI to assist a company in performing their own X-ray is a small, 23-page document packed with hands-on procedures designed to assist the HVACR distributor take a sometimes painful but always valuable look at their company from the inside out.
The conventional view of wholesaling — and thus of wholesaling companies — focuses on those activities — usually called “services” — through which the wholesaler seeks to “add value” to the products he distributes. Though there are variations between firms, those services typically are identified as including access to inventory, granting of credit, some form of delivery, appropriate business hours, accurate billing and assistance toward product/installation knowledge.
Consider two probabilities about the conventional focus:
- Delivery of the various “services” actually occurs through the completion of a series of tasks within each organization. That means that success in adding value depends absolutely upon the degree to which member employees excel in performing both joint and individual tasks.
- That a company will provide these “services” in some appropriate way is simply what customers expect; they are “givens.”
Therefore, customers will cease to buy if you fail to provide, in some appropriate way, the value-added “givens.” But the mere fact that you do provide them cannot be in itself the reason why customers come to you rather than to your competitors (who also provide all the “givens”).
If you wish to discover why, in the view of your customers, your company merits their business, you need to look beneath the “givens” and from a different perspective. A company will need to look at objectives — not tasks alone. They will need to look across the company — not just at departments or at jobs.
To help in this refocusing, the X-ray tool has regrouped the activities of wholesaling into objectives. It deliberately used slightly unfamiliar wording to help distributors bring a freshness and added creativity to their self-evaluation.
These identified four objectives of wholesaling are:
- Product Availability — Meeting this objective entails all the things a company must do to ensure its customers have access to appropriate and properly located products in a timely fashion.
- Cost-Effectiveness — Far deeper, more profound than price, meeting this objective involves a distributor as the willing partner in the total activity of their customer as they acquire and use their products.
- Administrative Certainty — Customers acknowledge a company is meeting this objective when they recognize the company as “knowing what they're doing.” Distributors acknowledge the importance of the objective as they strive to keep customers dealing with them hassle-free, accurately, in a pleasant manner and efficiently.
- Technological Currency — Far broader than product knowledge or new models, currency here connotes the distributors' efforts to keep their customers in a state- of-the-art mode — not only in what they buy from the distributor, but in best uses of those products and/or alternative products.
The four discussions guided by this exercise can help an HVACR distributor discover the specific best practice (people-oriented, to be sure) that their company brings to the process of serving their customers — and to emphasize and capitalize on those strengths.
While the design of this process makes it a positive drill, a company will undoubtedly uncover some weaknesses as well as strengths. After identifying these drawbacks, a distributor should use the results to develop appropriate training for their employees to change serious weaknesses into important new strengths for their cause.
Once a distributor understands what they are, they'll understand that what they want to be is much more easily attainable. Once they understand their real strengths, they are better prepared to understand their customer and better prepared to take care of customer needs.
HARDI members can download and print a copy of this useful tool for free through the “Members Only” section of HARDI's website — www.hardinet.org. Nonmembers can purchase a printed copy for $39 by contacting the HARDI office at 888/253-2128.