Preparing for the Next Generation in Hardwood
The hardwood industry cares about the future. Specifically, it cares about future generations. Businesses want the next generation to be successful, so they make long-term investments in good machinery and good people.
But there’s one investment almost every hardwood company avoids: business technology. It’s considered too big, too expensive, too disruptive. Leave it for the next generation to deal with.
Which is why multimillion-dollar businesses still invoice with QuickBooks, track inventory in Excel, and save everything on 15-year old servers.
Here’s the thing. Technology isn’t just a pesky issue for individual businesses. It’s an irresistible market force, one the next generation will grapple with in several ways.
Currently, most hardwood businesses have similar processes and challenges: stacks of invoices waiting to be entered, inaccurate records, misplaced inventory, etc. This is going to change. Updated technology resolves these challenges, giving businesses competitive advantages.
Here’s an example. One benefit of new technology is information accuracy. Sales reps know what’s actually in stock. Accounting’s numbers match Purchasing’s numbers. Products are where they’re supposed to be. All of this means employees are more productive, errors are reduced, and order-fulfillment improves.
While the change may start with a few businesses, it the entire industry will feel the effects.
Before, all businesses had to work around the same set of limitations. But suddenly, businesses with updated technology will be able to complete more orders in less time with fewer mistakes and a leaner workforce. Once this happens, competing businesses will have to modernize in order to keep pace. As more businesses adopt new technology, it will increase the pressure on the rest of the industry to do the same.
This is an extremely service-oriented industry. Service quality is a point of pride (and competitive strategy) for many hardwood businesses. Customer priorities, however, are changing. And “good service” is starting to look a little different.
Almost every industry now uses technology to enhance customer service: airlines send text alerts when a flight is delayed; banks let customers issue checks from web portals; local governments offer online driver’s license renewal. Whether ordering a pizza or paying utility bills, customers expect real-time information and self-service. It’s the new standard.
Right now, most lumber customers are happy with phones and faxes. But that’s changing, especially as younger generations enter the industry. This new wave of customers, vendors, and employees prefers email to phone calls. Many have never seen a fax machine. They will expect online bill-pay and live delivery-tracking, because that’s the normal experience for them. And they will prefer lumber businesses that provide the services they’re used to.
Hundreds of hardwood businesses will face some kind of technology crisis in the next few years. It’s the natural result of aging resources.
Old machines eventually break, and that includes computers. (And when the 15-year old server finally goes, it may take 15 years of records with it.) When old software programs are pushed to their limit, they run slowly, routinely freeze…and slowly edge towards a total crash. Old technology is also a juicy target for hackers. Software companies often stop issuing security updates for older products, leaving them more vulnerable to cyber-attacks. (In May 2017, the WannaCry virus infected 300,000 computers through a weakness in old versions of Microsoft Windows. Computers on the current version of Windows were unaffected.)
Technology failure poses several risks. In the short term, it means the loss of business as orders are delayed by days or weeks. The long-term harm comes from rushing to replace the broken system. Choosing new business software normally requires months of research and planning. An emergency crash means the business needs to pick something (anything) immediately. It forces the company to make a complicated decision, and a huge capital investment, under crisis circumstances.
The hardwood industry can’t afford to ignore the market effects of technology. This is especially true for businesses concerned about the long-term future of their companies. The next generation won’t be able to compete if they must first spend several years simply catching up to the rest of the field.
Here’s the good news. Current leadership doesn’t have to personally tackle this issue. They can still let the next generation work out the details. However, current leaders DO have to initiate the process. They need to stop shutting down the topic and allow discussions to happen. Task a trusted deputy to explore the issue and be willing to listen to what they report.
Actual change doesn’t have to happen this year or the next year or even the next five years. But the ground needs to be prepared now, so when the next generation is ready, they can take the baton and run.