How Leadership Makes or Breaks B2B E-Commerce: Part 2 of 8

I am partnering with fabric this Fall season to revisit concepts in my book Billion Dollar B2B E-Commerce and reflect on how organizations approached these concepts during the height of COVID-19 that pushed more business online. This is part two of an eight-part series.

When business leaders and C-level executives discuss what it takes to execute the creation and launch of a successful B2B e-commerce operation with me, our conversations inevitably turn to the importance of leadership and how the drive to embrace digital transformation must start at the very top.

A recent MIT Sloan Management Review illustrates this point. After surveying almost 4,300 managers and executives and interviewing several C-suite leaders, including Starbucks CEO Kevin Johnson, Anheuser-Busch InBev (AB InBev) CEO Carlos Brito, Delta Air Lines CEO Ed Bastian, former Best Buy chairman, and CEO Hubert Joly, and Purdue University president Mitch Daniels, the study found that:

“Successful digital transformation demands that leaders measurably transform themselves. Efforts to lead digital transformation are unlikely to be effective without a leader’s own digital transformation—one that makes purpose, engagement, and fairness as important to workplace success as data-driven agility and productivity.”

And yet, the urgent need to reshape their organizations has caught many manufacturers, brands, and distributors by surprise. Due to the impact of COVID-19, business leaders now consider accelerating the shift to digital business the most critical priority in 2021.

However, most B2B businesses remain ten years or more behind where they should be in terms of digital transformation and e-commerce capabilities. This means that most B2B leaders are woefully unprepared for the changes sweeping the e-commerce sector.

The result is inaction driven by a combination of fear and not knowing where to start. The “brutal reality” is that ignoring digital transformation is not sustainable, and customers are forcing change. Companies that are listening, however, are massively rewarded. Why shouldn’t your company be one of them?

Confronting the Brutal Reality of Your Organization

In the B2B world, many manufacturers, brands, and distributors are struck with organizational inertia. Whether they realize it or not, companies are tied down and limited by their processes and traditional ways of doing business. In some ways, they are victims of their own historical success.

Traditional selling channels—the direct sales force (outside and inside), distribution and resale partners, telesales, catalog, and other methods—have driven many companies to tremendous revenue and profit levels in their categories. These legacy selling channels will continue to be an important part of the buyer-seller relationship in B2B industries. However, the world has changed.

While these companies are living in collective inertia, customers’ expectations have dramatically shifted. Today’s B2B customers expect to have a buyer-focused experience, informed by the retail purchases they make in their personal lives as consumers. Furthermore, the purchasing experience has either shifted directly to or is heavily influenced by digital platforms. As younger professionals come into the workforce, “digital native” is no longer a name for a category of buyers; it’s every single individual that B2B organizations interact with.

– Billion Dollar B2B E-Commerce, Chapter 2, Page 20-21, First Edition

The Foundational Elements of Organizational Evolution

Four key foundational elements of organizational evolution are necessary to prepare for and execute a successful digital transformation. They are:

• Redefining leadership, starting from the very top.
• Getting the right people on the bus (and the wrong people off it).
• Establishing cross-functional alignment and accountability frameworks.
• Hiring real e-commerce experience and giving that leader actual executive authority.

Redefining leadership, starting from the very top

Digital transformation simply won’t occur without this single ingredient: senior leadership driving change. This needs to come from the very pinnacle of the organization. The CEO, and even above him or her (e.g., the Board of Directors), must not only buy into the goal of becoming a digital-first organization but also embrace this change and find ways to incentivize and empower the entire organization to evolve.

A great example is Pella Corporation. Pella designs and manufactures windows and doors for residential homes and commercial applications. In 2015, former CEO Pat Meyer stepped down after the Board of Directors decided on new leadership.

Tim Yaggi replaced him as appointed President and CEO and was elected to the Pella Board of Directors in May 2016. Under Tim’s leadership, Pella completed multiple acquisitions, shook up the executive team, and improved innovation.

The company also responded to the COVID-19 pandemic by launching digital initiatives, including virtual appointments, a new e-book, a new webinar series, and a new e-commerce site. This made them become the first national window and door manufacturer to offer the ability to customize products, see prices, and purchase windows and patio doors completely online.

Tim Yaggi was named a Glassdoor Top CEO in 2019, and Pella received a Glassdoor Employees’ Choice Award, recognizing it as one of the Best Places to Work in 2020.

Getting the right people on the bus (and the wrong people off it)

Leaders cannot be successful without the right team around them. This is not a new concept but must be rethought in many B2B organizations. The “right team” must go beyond loyalty to the organization (which does have value) and should include a healthy dose of new digital expertise and willingness to embrace change, not just accept it.

Another key concept is the importance of getting the right team in place. Leaders want to “get the right people on the bus,” and make sure positive contributors are along for the ride and will help to drive. Digital transformation at large, legacy organizations is impossible without a concerted team effort, and eliminating rogue agents and negative thinkers working against digital initiatives is imperative to success. The job of the leader is to get the right people in place, and—equally important— the wrong people out of the organization. This could mean making some difficult decisions about long-term employees who may be resisting change.

Establishing cross-functional alignment and accountability frameworks

B2B organizations of all sizes contain departments that are impacted by digital transformation, including but not limited to sales, marketing, finance, IT, customer service, and fulfillment. There is virtually no aspect of the organization that is untouched by e-commerce.

As a result, cross-functional involvement and communication related to digital efforts are critical. This is not an easy task. Structures such as steering committees, shared vision and objectives, key performance indicators (KPIs), and service level agreements (SLAs) are important to establish early in the process to avoid internal conflicts and ensure effective execution.

For example, Axonify is an all-in-one SaaS platform that enables organizations to modernize corporate learning to achieve business outcomes. The company boasts a cross-functional, revenue-focused business operations team that brings together marketing, sales, and customer success and includes additional functions like product, support, professional services, finance, and HR.

Consolidating these operations provides a centralized way to coordinate the entire organization and ensure things are changing to facilitate growth. In addition, the business ops team at Axonify can work across the entire business at macro and micro levels to ensure everything is aligned.

Hiring real e-commerce experience

To enable digital transformation, B2B organizations can choose to “promote from within.” However, they’ll likely need to hire additional people with relevant e-commerce experience who can lead and drive change. In addition, these team members will also need to have the full support of the CEO and the board when making important business decisions.

There are far too many B2B companies that get stuck in business case building, consensus alignment, and groupthink, wanting to make sure everyone is 100% comfortable before taking any action. This consensus-driven approach paralyzes companies and creates a lack of true ownership within the organization. When individuals don’t have the responsibility to drive initiatives forward, growth can stall.

Just look at the stark differences between eBay’s consensus-driven approach and Amazon’s data-driven execution approach. At eBay, decision-makers work together to find mutually acceptable solutions. If the entire group isn’t on board with a decision, it won’t move forward. On the other hand, Amazon makes decisions quickly based on the data that is presented. The key is that they have the conviction to execute with 80% of the information rather than 100% (which is often impossible to obtain).

One way to introduce this mindset into an organization is to bring in someone from a B2C e-commerce leadership role to fill a similar role in the B2B enterprise. For example, many retailers and consumer brands have Chief Digital Officers, Vice Presidents of e-commerce, and similar titles. B2B firms can find success in recruiting from these ranks. And this approach can be used at all levels of the organization while building an e-commerce function.

Take Ingram Micro, a California-based distributor of information technology products and services. The company recently hired Stephanie Pike for the role of Global E-Commerce and Marketing Executive. Not only does she bring a wealth of B2B e-commerce experience from her time at Thermo Fisher Scientific, American Achievement Corporation, and Ricoh, but she also brings valuable B2C experience from her time at Office Depot and Circuit City.

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