Digital Logistics: Ignore at Your Peril

In the digital world we study Tech Crunch and worship Lean Startup (often getting no further than the title which we misinterpret). Analog competitors are called dinosaurs, and we smugly believe history holds no lessons. The tech community believes it is pure innovation from top to bottom. We invent words for things analog business has been doing for years and reject the foundations on which our business is built. How many people even realize that the term “shipping code” is appropriated from the analog world? This willful ignorances is silly, wrong and brings with it peril.

Sun Tsu said “The line between disorder and order lies in logistics.” General Robert Barron, former Commandant of the Marine Corps famously said “Amateurs talk about tactics, professionals study logistics.” These aphorisms are as true in the digital age is in the analog world. Our tools and outputs are different but the way ideas are nurtured and turned into products- where they come from, who works on them and how, what happen after something is launched- is a logistical challenge.

Winning is all about logistics but when was the last time you heard a Unicorn founder say they were in the logistics business? In failing to recognize this many digital businesses- and non-digital businesses that need to compete digitally- fail to organize themselves to compete.

Generations of business school students studied logistics and its’ cousin, operations, using the quasi-novel The Goal about a troubled factory trying to overcome constraints to achieve amazing productivity and growth. As far as b-school textbooks go, this one is a page-turner. The Goal highlights the need to align the people of a business and the things they do to avoid bottlenecks, errors and market shifts. Smart logistics turn organize your people from a mob into a hive that hums with happy workers and customers.

Think of it this way:

  1. Tech companies run on ideas. Ideas come from somewhere- our imagination, consultants, team activities, customers, competitors… there is a never-ending pool of ideas. Without ideas we would have nothing to build. The best organizations start with a clear process to acquire and prioritize ideas. Do your workers have motivation and opportunity to learn and try new things? Do you have sufficient knowledge sharing? Do employees at all levels go to conferences or just your CXO? Sourcing the best raw ideas is no different than sourcing any raw material and is the essential first step in building a powerful digital factory.
  1. Ideas by themselves are worthless. Each factory has a receiving department responsible for taking in, sorting and distributing raw goods to where they do the most good. Great digital companies must have a parallel system for distributing ideas. Try rewarding every idea shared publicly; and reward everyone involved in turning an idea into a product no matter how small the contribution. Your organization will soon develop the neural pathways required to turn the best ideas into products.
  1. When a raw good (or idea) is sourced, factories have people who take actions to build the product you sell. In tech we call this area product development instead of operations because, well, just because. Digital businesses often make the mistake of starting here and thinking too literally. Developing a product involves more than writing code. You need architects to design systems, lawyers to do contracts, security, QA, PMs, engineering team leaders to guide staff developers and more. Each part of a product flows through these players like raw materials through a factory floor. Team members need to clearly know their role and how it fits into the context of a project, product and company. This clarity empowers everyone to recognize when things get off track, help each other when needed and feel connected and engaged. Define each role and make each employee the CEO of that job.
  1. Coca-Cola, Sysco Foodservice, Cintas Uniforms and other old world businesses have trucks and drivers that are in front of customers every day. Every time one of these drivers walks into a store they see how much product sold, which competitor has shelf space. They look the store manager in the eye. Digital businesses have hundreds of tools to gather customer insight but virtually everything we do is at arm’s reach. You need to think about how to get in front (literally in front) of customers. Do you have engineers embedded in your client teams? Is customer service given a real voice in all decisions? Does the community manager know how to turn a customer exchange into insight that informs the direction of the product? Do you have a mechanism for getting market insight back into the product loop? If you are not collecting and feeding customer insight back to sourcing, product development and distributions, your logistics are not creating the virtual cycle your digital business needs.

The common thread through all this is organizing people to succeed. When empowered, focused, and motivated for team success you win. Successful businesses, digital or otherwise, are collections of processes that turn ideas into products that delight customers, in ways that excite employees and reward shareholders. If your logistics stink, your Growth Hacker will be peddling buggy vaporware built by disinterested employees to a market visible only from a share space office.

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