Available May 29, 2026

Episode 025:

The Collective Transformation Problem: When an Entire Industry Has to Change at Once

DURATION: 61 minutes
HOST: Kevin Novak | GUEST: Eric Hoplin

SHOW: The Human Factor Podcast

Kevin Novak (00:05)

Most of the transformation research we rely on assumes a single organization trying to change itself. One leadership team, one culture, one set of stakeholders, one immune system to navigate. And that is already extraordinarily difficult. But what happens when transformation is not an organizational problem at all? What happens when it is an industry-wide problem? When more than 30,000 companies representing $8.2 trillion in annual revenue must transform simultaneously because their value chains are interdependent. When one link in the chain modernizes and the others don’t, the system doesn’t partially improve. It creates new friction, new bottlenecks, new failure points.

That is the collective transformation problem. And it introduces human dynamics that individual organization change management was never designed to address. Because now you’re not just managing resistance inside one culture. You’re managing it across thousands of cultures, thousands of leadership teams, and thousands of workforces, all of whom are processing the same disruption through different lenses, different timelines, and different readiness levels.

I’m Kevin Novak, CEO of 2040 Digital, Professor at the University of Maryland, and author of the book The Truth About Transformation: Leading in the Age of AI, Uncertainty, and Human Complexity, along with the Ideas and Innovations weekly newsletter. Welcome to the Human Factor Podcast, the show that explores the intersection of humanity, technology, and transformation along with the psychology behind transformation success. This is Season 2, Episode 12.

And today’s guest has navigated transformation across a range of organizational contexts that is unusual by any measure. Eric Hoplin is the President and CEO of the National Association of Wholesaler-Distributors, known as NAW. It represents the wholesale distribution industry, an $8.2 trillion sector that accounts for roughly one-third of the entire American economy.

But what makes Eric’s perspective particularly valuable for this conversation is not just his current role. It’s the trajectory that brought him here. Eric’s career began in political campaigns. From there he moved into management consulting at Booz Allen Hamilton, then to the Financial Services Roundtable, where he represented CEOs of the largest financial firms in the country, and then to Wells Fargo as head of external relations during a period of significant organizational challenge. Each of those environments has its own culture, its own power dynamics, and relationships to change and resistance. And each one gave Eric a different lens on how organizational structures respond to transformation pressure.

He also holds a certificate in change management from Georgetown University’s McDonough School of Business, which means he has studied the academic frameworks for managing change and then tested them across multiple contexts where the stakes were real. When Eric arrived at NAW in 2020, the board charged him with building the next generation trade association. That isn’t an incremental mandate. That is a transformation mandate. He has more than doubled NAW’s size. He’s acquired Modern Distribution Management, which is the leading intelligence and information platform for the distribution industry. He has launched AI and analytic capabilities for the membership, and he has testified before Congress on AI deployment in the distribution sector. Eric holds a Master’s of International Affairs from Columbia, an MBA from Augsburg, and a BA from St. Olaf College. Eric, welcome to the Human Factor Podcast.

Eric Hoplin (04:33)

Great to be here. I love the Human Factor.

Kevin Novak (04:37)

I’m really happy to have you actually. I’ve been waiting. So, Eric, I want to start with the mandate itself that I described in the intro. When you came into NAW, the board gave you the mandate for significant change and transformation. And I think the language matters more than most people realize. When a board charges a new CEO of anything, the implicit message that’s embedded in that mandate is the current generation must be dismantled or fundamentally reformed. And that triggers something we explored in Season 2, Episode 5, with James Elliott: the organizational immune system. The immune system is the collection of processes, cultural norms, institutional habits, and relationship networks that evolve to protect the organization from any disruption and any change.

Those mechanisms were not designed to be obstructionist. They were designed to basically fight the antibodies. The committee structures that ensure thoughtful deliberation become bottlenecks. Cultural norms that preserve institutional identity become resistance to new ways of operating. The relationship networks that maintain trust become channels for mobilizing opposition. So you walked into NAW with that mandate and began executing. Where did the human dynamics of that surprise you the most?

Eric Hoplin (06:09)

There are human dynamics at a couple of different levels when it comes to running a trade association, because you’ve got the human dynamic of the team, the staff at NAW, and then you’ve got the human dynamic of the members, the folks you represent. And within them, they’re not one monolith all thinking and acting alike. They’ve got different views on things.

With the human dynamic on the membership side, I’d start there, Kevin. I recognized that this was an incredible trade association with a very loyal following and a very loyal, active, engaged membership. Most of the people who had been engaged have been engaged for 20, 30, 40 years. One guy told me he’d been coming to our meeting for 50 years, longer than I’d been alive. I love that loyalty and that dedication. And they loved what they were getting out of their association. But the board said they used that T word, the transformation word. They wanted me to transform it. They wanted me to create what they were calling NAW 2.0, a next generation trade association.

One of the people dynamics that I had to factor in is how do you take this group of members who’ve been loyal and active for 20, 30 years, often generationally, father to son and mother to daughter, and how do you keep them engaged and excited and interested as you transform the organization? Because if I’d blown the whole thing up and just said out with the old and in with the new, this crowd who was the core of the association might have packed up their things and said if you don’t like how we did it, we’re going to go find someplace that does.

So I had to find a way to transform but transform with that segment of members and get them to be part of the process. To figure out, what is the core of what we do? What are the most important things that we do? What do we have to make sure that no matter what happens in the future, we are still doing well? How can we improve on those core things? How can we make them even better? And then outside of those core things, are there new things we should do? And then the last bucket is, is there anything we should stop doing?

Putting people at the center of that conversation was what was critical to the success. Because if I had just come in and said, out with the old, in with the new, follow me, I think the core members might have said thanks but no thanks. Instead, they were part of the process. They were part of the journey. They were giving me the ideas of how we should transform and were very clear about the things that they didn’t want to change. And those are foundational, important, and are still a core of NAW. So I think the people side was really important from the membership perspective.

Eric Hoplin (09:29)

When you come into an organization, what I have found is that the employees gather into three groups, a third, a third, and a third, who have roughly different views of things. Roughly a third of employees take one look at you and say, I’ve been here much longer than you have. I’ve seen change attempts come and go. I’m going to be here well after you leave. I’m not changing a thing. So I’m just going to keep my head down, I’m just going to do what I’ve always done. I don’t care what you say, do, or try. I’m not going to be part of it. Usually about a third of the group fits into that no-change-thanks mentality.

The next third is one degree to the right where they’re like, yeah, we could probably use some change. Wouldn’t mind it. It’s kind of hard. I’m really busy with my day job. So I’m just going to put my head down. I’m going to keep doing my day job. No objection if you want to change some things, but I’m not going to do a lot to help. Let me know if you need anything. That is about a third of the staff.

And then the other third sort of say, my gosh, where have you been? We’ve been waiting for someone like you to show up who can empower us. We have lots of ideas. We’ve been sharing ideas for years, ideas that have never come to fruition. No one’s given them the time of day. But let me tell you, I’ve got so many things I can do.

When you have a staff roughly divided into thirds, you’ve got to deal with all three of those groups. And all three of those groups need you to deal with them in different ways. When I came into NAW, we were at the height of the pandemic. This was pre-vaccine. It was October. The first thing I did was I tried to figure out where people were going to fit into these three groups. I asked them to come meet with me. I made it voluntary. It’s a pandemic, but I’ve got my balcony. So I said we’ll meet outside, I know it’s October, we’ll bundle up, we’re going to sit six feet apart. And I had a set of ten questions and I asked every member of the staff the same ten questions.

As I went through those, it became pretty evident who’s going into which bucket just by their answers. Now sometimes you have to confirm that. First impressions can be wrong and I found that to be the case in the past, but more often than not, first impressions tell you where they’re headed. From there you think about how do I engage with them, how do I manage them, how do I include them in the process? Really recognizing you’ve got three different audiences at least with the team when you’re coming in and you’re charged with the transformation. If you don’t get those people dynamics right, you’re going to have a revolt on your hands and you’re not going to be able to make the change.

Kevin Novak (12:54)

Eric, did you find, related to the immune system, you talked about the membership component as well as the staff, was the immune system reaction generating those antibodies stronger in one over the other, or were there antibodies being developed with both?

Eric Hoplin (13:17)

I think the thrust of the people on the team said they wanted change and they agreed with change and it was time for a transformation and they agreed with the board. That was what they emotionally felt, and that’s what they intellectually thought. But those antibodies, as you’re saying, and those structural forces and the culture and the history, were so powerful they took most of the people who might have been in my first camp of wanting to embrace change and put them in the second camp. So they were saying the right things. They thought they were doing the right things, but they weren’t my change agents.

You really have to understand those cultural elements and the structure that might hold you back. Sometimes it’s just how people communicate. Sometimes it’s that we haven’t changed anything in decades. So their concept of change is a small step, whereas I’m thinking of a huge transformation. We’re both using the word transformation, we’re both using the word change, but in their mind it’s going to be very little and very gradual, and in my mind it’s going to be very fast and dramatic. You have to start speaking the same language and then start understanding their cultural perspective, where they’re approaching things from.

So that way when you’re presenting the vision and trying to communicate where you’re headed, you’ve got to recognize those cultural norms. And beside the cultural norms, organizations have different processes, different technologies and skills and capabilities. You also have to really take a look at all of that. When I came into NAW, for example, we couldn’t hold a Zoom meeting when people eventually came back to the office because our network crashed. It was just too many people on Zoom using this new video technology all at once. That affects your ability to communicate with people and engage with people. We had to start from the basics. We had to build a technology stack that’s going to support this transformation and this change and connecting with the team and connecting with the members.

You might have the right communication pattern, you might have the right strategy, the right concept of change. But if you’re forcing yourself against culture and against history and against process and workflow and technology, it’s not going to work. You have to also be focused on those elements and factor them into the decisions you’re making and the way you’re communicating.

Kevin Novak (15:59)

Eric, you hold a certificate in change management from Georgetown’s McDonough School of Business. That means you’ve studied the frameworks, the models, the academic literature. And then you’ve spent so much of your career in environments where you’ve had to test those frameworks against reality. Where did the academic frameworks hold up when you applied them at NAW, and where did reality diverge from what the models predicted?

Eric Hoplin (16:39)

That’s an excellent question. I might use an example different from NAW if it’s okay. One of the things they teach in change management, I think this is one of Kotter’s theories, is the importance of having a burning platform. If there’s a burning platform, then everybody is going to be compelled to make the change. On its face, I think that sounds good. You want to have a reason to compel people to change.

But there was an instance where I was recruited to join Wells Fargo. You may recall Wells Fargo had gotten itself into some trouble. I was one of many people they were bringing in to help right the ship. My focus was on reputation, political stakeholders, and the like, as we were in some deep water politically as well. I came in with the mindset of, well, we’ve got a burning platform because the company’s in big trouble. The CEO was just fired and we’ve got a new CEO in place and they’re being dragged before Congress. People are walking out of the branches and closing their accounts and the stock price is being hammered and the Fed just put a cap on Wells Fargo so they couldn’t grow beyond I think it was a trillion dollars at the time. So now we’ve got to start shedding businesses in case we grew too much.

So this is a company in crisis. In my mind, Kevin, there’s the burning platform. There’s Kotter 101. I’m going to walk into this place and everyone is going to say, yep, we’ve got a burning platform, so now we’ve got to change. The difference between the framework in this instance and the reality is when I got into Wells Fargo, it was a very complicated situation that had led the bank into trouble. Nobody, or there wasn’t universal agreement on what the burning platform was. There were lots of burning platforms. Some were more important than others. But we can’t change everything. We can’t fix everything. We can’t transform everything. So my platform is the most important. And then an external event would happen. And it turns out this burning platform is the more important one. And we’d sort of forget the three months of work we’d been working on and now we’d go do another.

Where the framework diverged, I think, Kevin, is that it took a while. Maybe it’s because the framework was ultimately right, but we had to get everybody mentally on the same page that the company was in trouble. One of the challenges we had is a company with tens of thousands of people, 99.9 percent of those people are good actors. They’re good human beings. They would never, ever have cheated their customers. In their mind, as they’re moving forward, they’re like, well, it was the bad 0.1 percent and they’re gone. So now America should forgive us and our customers should forgive us and Washington should forgive us.

It was six months ago, then it was eight months ago, then it was a year ago, and they couldn’t mentally understand why we had a burning platform. They didn’t understand that the rest of America hated the bank. If you were in the bank and you were helping people get into their first home through a mortgage, if you were helping the small business man or woman start their business, you’re doing what you’ve always done. You’re doing good. Mentally you think, well, we don’t need a big change. We just need everyone else to recognize that those were just a couple of bad people.

One of the challenges and one of the important things was to communicate and get people within the bank to believe, we do have a burning platform. It wasn’t just bad apples. There was a cultural element, there was a managerial element, there was an expectations element. It’s a complex problem. The complex problem is not just going to go away because we’re doing more lending now. We’ve got to fundamentally change who we are. We’ve got to fundamentally change our culture. We’ve got to fundamentally change how the customers are at the center of everything we do. The longer we keep saying it was just a couple of bad people, we’re not going to recognize what that burning platform is. And that burning platform ultimately was that we had lost the trust of our customers, of the government, and of the American people.

So the burning platform was that we had to gain that trust back. Then it was all the changes that we made under that would wrap up into that one fundamental thing: we had to rebuild the trust. This is a company that had been around for 150 years. Think about the stagecoach in the old West. Wells Fargo was protecting the lockbox of the currency that would be used to pay someone’s payroll out on the ranch, out on the farm. It’s a company that has a long storied history. It had always been considered one of the good guys, one of the white hat companies, until that moment. I think that’s where the framework got blurry a little bit, but ultimately I think proved right once we could agree on what the burning platform really is.

Kevin Novak (21:57)

I want to shift to what I think is one of the most distinctive dimensions of your current challenge, the collective nature of it. Some research for you. Mancur Olson published The Logic of Collective Action in 1965. The research fundamentally changed how we understand why groups fail to achieve shared goals even when every member of the group would benefit from the outcome. Olson demonstrated that rational individuals will often not act to achieve their common interests because each individual can benefit from the group’s efforts without contributing. There’s a free rider problem, and it operates at every level of collective action, from neighborhood associations to international treaties.

Layer on to that Everett Rogers’ research on the diffusion of innovations, which established that new practices spread through social systems in predictable patterns. Rogers identified five categories of adopters, from innovators to laggards, and demonstrated that the rate of adoption is influenced not just by the quality of innovation but by the social system’s communication channels, its opinion leaders, and its tolerance for uncertainty.

When you apply both of those frameworks to an industry of more than 30,000 companies that must transform together because their supply chains, logistics networks, and customer relationships are interdependent, you get a transformation challenge that most change management literature simply doesn’t address. What patterns do you see across the distribution industry in how companies respond to the need for transformation? Are there distinct groupings: companies that are moving aggressively, companies that are waiting to see what happens, and companies that are actively resistant?

Eric Hoplin (24:10)

There’s a lot of transformation happening across the distribution industry. As you mentioned, there are 30,000 companies, about $8.7 trillion in economic activity, which is roughly a third of America’s GDP. There are more than 8 million employees working in distribution. It’s a big group. That’s a lot of people, a lot of companies, and a lot of economic activity.

An industry of that size and scope is never going to move together, in lockstep. I think that’s probably impossible. But the question is, can we have a shared narrative and a shared goal? We want to get to transformation, and companies are going to go about it in different ways. They’re going to prioritize different things, they’re going to work on it differently, but ultimately we’re going to move in that same direction. That’s my theory of the case, Kevin. That’s what we’re working on and working toward.

If I zoomed in specifically on artificial intelligence, as we were surveying our members, a couple of years ago when we asked who’s focused on AI, about 10 percent were focused on AI and 90 percent weren’t. Then as ChatGPT came online and everyone started using it, we asked again and it probably went from 10 to 20 percent of distributors using AI and still 80 percent were looking at it. By year three when we did the survey, it was dramatic how many companies were using AI. Then we started to ask a separate question: how many use cases of AI do you have? Then we started to see the data break again.

Some leading companies, a small amount, were using it for 50 or more things. Then there was a slightly bigger group using it for 20 or more things, and a slightly bigger group of 10 or more things. But then half of the industry was using it for one thing. What that told me is you’ve got a group of leaders and innovators that were diving in. Then the rest of the industry started to follow. Then they realized some success and started branching out. Okay, let’s use this tool for lots of different reasons. And by the time they’re using it for a lot of different reasons, some companies are just entering and they’re testing it or piloting it with just one. The rate of acceleration of adoption is so fast. I think almost every company in distribution is using AI in some way now. Those at the front tail are using it in much more sophisticated ways.

Kevin Novak (27:11)

Are there, knowing the tiers in the industry with the large, medium, and then the small and independent companies, is there any free rider dynamic at work where companies are going to sit back, benefit from the industry-wide modernization without investing? Are they waiting to see, or are they waiting to take advantage?

Eric Hoplin (27:50)

The short answer is yes. That’s always been a dynamic and always been a phenomenon. Of the 30,000 companies, there’s a subsection that are direct members of NAW. We represent the entire industry through a variety of different membership categories, but those companies that are direct members of NAW tend to be the most dynamic companies in distribution. They’re large and small, they’re on the cutting edge. Those are the companies that are really driving innovation and change in this period of AI and automation. It’s a lot of the non-members, I’d have to say, that are probably a bit of the free riders, sitting back and watching to see what this dynamic group is doing. Which mistakes are they making that they’re going to avoid? Which investments did they make that have really paid off? And they’ll lean into it.

But I don’t think it’s unique to the AI moment. If you look back, there have been lots of transformation periods in the distribution industry. I think that’s sort of how it plays out. There’s a group that pioneers and makes mistakes, but they come together in a community like NAW where they’re figuring it out and they’re talking about different vendors, different solution providers. Who’s got a cool technology? Have you tried this? It was terrible, or this was amazing. We applied it here, it didn’t really work, but then we tried applying it over here in our business and it went gangbusters.

When the community is giving that feedback, the learning is faster and the adoption and acceleration of the transformation picks up steam. I think for the people that are in the community, we’re getting advanced when it comes to this. We still have a long way to go. So the question is, how long are some of those other companies that are outside of the community going to wait? Either to get involved in the community or to be fast followers. Eventually, given the pace of change that we’re seeing in the industry, every distribution company is going to have to adopt AI in some form or fashion.

Kevin Novak (29:52)

Because you’ve been in a variety of different industries, even to your management consulting days, are there elements that are non-specific to industry that you’ve experienced related to those who are waiting and seeing, or those who are early aggressive adopters?

Eric Hoplin (30:16)

There are a couple of elements. Smaller companies that have less capital in some cases are holding back. Companies that are well capitalized, they’re experimenting a lot. They’re recognizing that not everything is going to hit. They can afford to do that. If you’ve got a couple of failures, they want to fail fast and go on to the next thing. So there’s a dynamic like that playing out.

But it’s not a universal dynamic because there are a lot of small companies that are investing in artificial intelligence. And I think what they’re finding is it’s an equalizer. They have some of the sophisticated tools to engage with their customers that the big companies have always had. For those that are on the small side that are making the investments, I think they’re finding it’s making their capabilities much stronger relative to some of their bigger peer competitors. I suspect that’s going to lead to more innovation and more investment in artificial intelligence. It may start with the bigs leading, but I think the smaller companies are going to follow fast, especially those that are dynamic and want to grow.

Kevin Novak (31:23)

I want to pick up on something that you mentioned related to information. NAW’s acquisition of Modern Distribution Management really changed how information flows across the entire industry. MDM has been that leading intelligence platform for wholesale distribution for decades. And now it sits within the trade association that represents the industry. It’s not a typical strategic move, but it’s an incredibly smart strategic move. It’s a redesign in many ways of the industry’s information architecture. What was the strategic thinking behind that move? And what have you learned about the relationship between information infrastructure and the industry’s capacity to transform collectively?

Eric Hoplin (32:22)

As we were looking at NAW’s transformation, one area that I thought was important is we needed to get better at business intelligence. We needed to get better at benchmarking and providing data that our members could use to run their business. Historically we had provided information, we had published books and some white papers. Oftentimes those books had a three-year cycle where we would research them, we’d write them, and then we’d market them. After we sold enough books, then we’d start the cycle again. In today’s economy, that’s just not nearly fast enough.

We needed to get into that game. We had a huge advantage. One of our huge advantages is we have connections to the most dynamic companies in distribution. They’ve got great data. If they can anonymously and safely and securely share some of that data with us, we can analyze it and package it in a way that’s going to help and benefit the whole community. We knew we had that advantage, but what we didn’t have, Kevin, is the piece in between. We didn’t have the analysts. We didn’t have the people who would know this is the data they’re going to care about. We didn’t have the technology platform that could receive the data.

I had a strategic moment where I had to decide: am I going to invest the dollars needed to build out that capability so we can become a business intelligence provider to the industry in a credible way? Or is there somebody else out there doing that, and if we build it, we’re going to compete against them? We were looking squarely at Modern Distribution Management. They had developed sophisticated analytics tools, research, benchmarking, and other reports.

For me, the question was build versus buy. I decided to pursue the strategy of buy. If they hadn’t been for sale, I would have pursued the strategy of build. But the strategy of build would have probably cost more and would have probably taken longer. And then once I got it built, I would have had a big strong competitor over there. The strategy of buy was better because I got it faster, I got it better, and at the end of the day I didn’t have a big competitor at the end. That’s why we pursued the acquisition.

Kevin Novak (34:43)

I want to turn back to AI and automation because in the distribution industry, they’re not abstract concepts. The technology has the opportunity to reshape warehouses, logistics networks, supply chains, and workforce development right now. Behind every automation decision, workers are processing what that technology means for their identity, their job security, and the psychological contract they believe they had with their employer.

We explored the identity crisis of expertise in Season 2, where we examined what happens when the things that made someone valuable, the knowledge and skills they spent years developing, are suddenly augmented or replaced by a system that can perform aspects of their work. And in Episode 7, we examined the psychological contract, the unwritten set of mutual expectations between an employer and a workforce that goes beyond any formal employment agreement. When AI enters a warehouse or a distribution center, the workers in that facility are not just evaluating a new tool. They’re evaluating whether the implicit promises their employer made about the value of their experience and the security of their contribution are still being honored.

You testified before Congress on AI deployment in the distribution industry. One of your key themes was the importance of keeping human judgment in the loop. How is the distribution industry navigating the human side of AI adoption? Not the technology implementation, but the people side: the anxiety, the identity questions, and the trust dynamics being exposed.

Eric Hoplin (37:07)

The industry isn’t a monolith, so there are probably different elements and aspects depending on who you talk to. But I talk to distribution leaders every day. I travel to distribution centers. I’m in a different distribution center every single week. I’m talking to people from the CEO all the way down to the entry-level employee who just started and they’re driving a forklift or loading the truck.

I talk to them about this and I ask them a lot about this. Here’s my anecdotal impression of what’s happening across the industry as it relates to workers: by and large, up to now, I think workers have largely embraced this. They’ve embraced it in lots of ways and for lots of reasons. Many times employers are putting it on the employees to help figure out how can we use AI to make your job a little easier? How can we use AI to help us be a little more effective and a little more efficient? The companies that are doing that, it’s employee-led. It’s not one day announced on high and now we’re all going to use this technology and you’re going to like it.

For example, I was talking to a lawyer at one of our member companies recently, and he was telling me that they’re historically short-staffed in the legal department. They have thousands of customers and they need contracts for all the items that they’re distributing across a sophisticated supply chain. He said suddenly they started using some AI technology and it’s like he had five junior lawyers behind him reviewing the stuff. He still needed to have his hands on things and make critical decisions, but the grunt work, AI was handling. So it was making his job easier, more efficient. It wasn’t a choice of the company hiring five new lawyers to help him. It was, you can do the same work you’ve always done, but do you want to use this tool that might make it a little easier for you?

I testified before Congress about artificial intelligence and the focus of the testimony was on warehouse safety. Warehouse safety has been an important part of the culture of distribution companies for as long as we can remember because warehouses can be dangerous when you’re moving huge volumes of items and sometimes those items are big and very heavy. Accidents can happen. We’ve long focused on how do you reduce the number of accidents, how do you design processes, how do you train people, how do you design your warehouses to maximize worker safety. But in the age of AI, AI is proliferating new tools that help us make warehouses and distribution centers even more safe. We’re working with our people, we’re working with the teams, and they’re helping us figure out where are the dangers, these are the sorts of technologies that might help us. They’re thanking their employers for making the investments.

What we’ve seen so far in the distribution industry is I think employers and employees have been doing this together. Folks have embraced it. And I think we’ve seen wide-scale adoption as a result. There is a however. The technology and the capability of AI is accelerating at such a pace that it’s becoming so much more capable than it was when we deployed that technology a year ago, a year and a half ago, or frankly even six months ago. The question is going to become, when the technology becomes so capable that not only does it provide that one attorney with five attorneys behind them, but can do the job of that attorney, then I suspect the workforce element is going to be different. I don’t think we’re there yet. We haven’t seen a lot of use cases of where AI is directly replacing humans. But if the technology continues to advance at the pace that it is, that may be something in the future that we’re going to have to confront as an industry.

Kevin Novak (41:38)

You hit on this, and it’s been thematic on the past couple episodes. Guests have talked about AI in terms of adding, adding skills, adding capability to people. Last episode and actually even hearing from readers of the newsletter, I brought up companies like Block. You have Oracle and others who are publicly saying they’re decreasing their workforce because of AI. Whereas on the ground, what I continue to hear is there’s more of an augmentation, that there’s not an intent to reduce headcount, that there actually is opportunity to help staff do their work better, faster, or to increase it. But there’s no conversation about reducing headcount. What are you seeing in the distribution industry? Is that a theme?

Eric Hoplin (42:50)

Kevin, what I would say is the ethos of just about every distribution company that I’ve ever spent time with is they love their people. Their employees are the core. People have worked there for generations. I was in one distribution headquarters earlier this week and the woman who was walking me to my meeting, I asked her how long she’d been working there. She said, well, I’ve been here for four years, but my mom’s been here for 30 years. My brother just started and we love it. You hear that sort of example all the time where you’ve got lots of members of the family or multiple generations working there.

When that’s part of your ethos, Kevin, when we’re grafting on these systems, when we’re working with AI to help make us more efficient, nobody’s starting with yeah, we want to do this so that way we can eliminate those people from our payroll. We want to do this so we can help them do their job better. They can be more efficient. It’s about empowering the workforce. That is the theme that I think most distribution companies are rallying around.

It could change in the future, but I haven’t heard a single executive say, boy, this is going to be great, we’re going to be able to slash the workforce by 20 percent. Nobody’s thinking in those terms. And by the way, we’ve got some data to back that up. We did a large survey recently of our members and we asked them, given the investments you’ve made in AI, have you seen a step-change difference in your efficiency? Something like 90 or 95 percent reported that they hadn’t seen a step change in efficiency. If anything, it’s improved by one or two percent. If your efficiency is improved by one or two percent, you don’t have the capability to move anybody out.

The other side of that survey was just about everyone said, because the technology is evolving at such a fast clip, we’re going to continue investing, we’re going to continue on the path we have, and we hope that we’re going to see a step change in efficiency. But nobody’s seen it yet. Nobody’s seen it to the level that I think would warrant serious consideration of layoffs.

Kevin Novak (45:11)

Knowing that, and based on this show and talking with a variety of different people, there is considerable hype in the marketplace, as there usually is with any new technology. We can go back to when the internet was born and Pets.com and all those companies that died in the dot-com boom because of the hype. Are you hearing in the variety of leaders that you deal with at NAW, the nebulousness or the confusion as they’re trying to grab onto something and actually use that for strategic decision-making?

Eric Hoplin (46:04)

I would cite an example. We held an event last week in Denver. It’s called our Shift Conference. It’s focused on technology, people, processes, change management, things of that nature. Our board chair, Kathy Mazzarella, who’s the CEO, President and CEO of Graybar, was one of our keynote speakers. I did a fireside chat with her and I asked her a similar question.

Kathy had an elegant phrase where she talked about people augmented AI. She puts people at the center of this and at the center of the decision-making. She’s instructed all of her leaders up and down the company to do the same thing. As a result, the workforce I think has responded well and has embraced the tools and the technology. Time will tell where it goes. But she’s an example of many of the leaders that talk about, as they’re making the decision to roll out these technologies, they’re using the frame of how is it going to impact our people, because our people are at the core of our business and we’ve always thought they were the key to our success. How do we do it in a way that’s not going to disrupt that relationship? How do we do it in a way that could enhance that relationship? I think by putting them at the center of the decision, using that as your framework, is a powerful way to go about it.

Kevin Novak (47:41)

I’m so glad you brought up Shift because that was actually my next question. With how you guys are programming that event, what conversations are you trying to create with your membership about the future of the industry? Where does the industry need to go that most leaders haven’t yet fully absorbed?

Eric Hoplin (48:04)

There are a couple of things. I’ll go back to the study that I talked about recently. When all your technology people have been telling you, your CEO, all your technology people have been telling you, we’ve got to make these huge investments in artificial intelligence, it’s going to be a game changer, the efficiencies it’s going to create are going to be amazing and you’re going to see that go to your bottom line. They’ve made these investments over one, two, three years and they’re finding that things have improved one or two percent. The CEOs are wondering, well, what else could I have deployed that capital to do that would have gotten me two, three, four, five percent increase?

One of the themes we’re talking about is stay the course. Keep making the investments, keep refining how you’re using AI as the technology continues to evolve. We continue to expect that we are going to see some of those dramatic improvements in efficiency. It’s a bit like a group therapy session. There was one big sigh of relief. You could just sense in the room when everyone realized there’s no one in here who’s figured it out, who’s growing 10x because they adopted this AI. We’re all in this path where we’re doing one or two percent at best. We’re on a journey. We just started the journey.

That’s one of the themes and one of the messages: we’re all in this together. We know what the goal is, we know where we’re headed, but we just have to stay focused and put one foot in front of the other and continue to make the investments.

Kevin Novak (49:39)

I want to hit on your awesome career in different segments and industries. You’ve navigated political campaigns where messaging discipline and strategic communication are the culture. You’ve navigated management consulting at Booz Allen Hamilton, where analytical frameworks and client relationships are the currency. You’ve navigated financial services regulation at the Financial Services Roundtable. You’ve navigated one of the most scrutinized organizational environments in recent American business at Wells Fargo. And now you lead a trade association representing an entire industry. Without asking you to speak to any more specifics on Wells Fargo, what did navigating that environment teach you about the relationship between organizational culture and an organization’s capacity to transform? What do you understand about institutional dynamics now that you could not have understood before that experience?

Eric Hoplin (50:48)

If you look at the first part of my career, I was working in smaller organizations, teams of 20 to 40 people. Then when I was at Booz Allen, I was consulting largely with government clients. You’re consulting for the CIA, which is kind of a big entity, or the Department of Defense. One of the things I started to realize is it’s a lot harder to move the Department of Defense than it is 30 people at a nonprofit organization. But the principles are the same. It’s just going to take a little longer, it’s going to take a lot more communication, and you still have cultural barriers and other things you’re going to have to deal with.

By the time I got to Wells Fargo, I had to apply that principle on steroids because this is a huge multinational company. It has offices all over the world. More importantly, to the dynamic of Wells Fargo, it started as a bank in Minnesota called Norwest, which then acquired the West Coast bank of Wells Fargo, which then acquired Washington Mutual and acquired Wachovia and acquired First Union. What this really was, was a mix of five or six huge banks together. They all had, depending on where you were, different cultures, different systems, different processes, different ways of management and leadership.

When you’re at a big monolith like that, you can’t look at it as one big thing, one big company, one big culture. You’ve got to understand the subcultures and you’ve got to understand the issues going on below the surface. You just have to take more time. It takes a lot more time to turn and transform a big organization. So you’ve got to start with the small wins. What are the things we can all agree on? Get people moving together, get people to join the transformation journey. You get one win, it’s not going to change everything. But you get the team to accomplish one win and then you go on to the next hurdle, which is just a little bigger. Then you go to the next hurdle, which is just a little bit bigger. After two, three years of work, you look back and say, wow, we’ve transformed a lot. We’ve come a long way. Taking it in chunks, especially in a larger organization, is probably a pretty good idea.

Kevin Novak (53:21)

What do you see about associations and trade organizations that insiders miss because they have never worked outside of that model? And conversely, what did you have to learn about association culture that none of your previous experience prepared you for?

Eric Hoplin (53:37)

Those are great questions. An association is very different from a company and very different from a government body. I’ve had the privilege of working in all three. One of the things I love about associations is associations can be nimble. You can change things tomorrow. You can move really quick and swiftly in an association. You can’t do that in a big multinational corporation. You can’t do that in the government. That’s one thing I love about working with associations.

One thing that I learned coming to the association world from Booz Allen, at first when I was trying to help transform the Financial Services Roundtable, my previous trade association role, I treated it like one big entity. When I realized that this is a grouping of 30 people and we can move swiftly and quickly, that was an important learning. I took that when I came to NAW.

The flip side I would say is coming in, it was really important to understand the component of the membership. I’d always been used to dealing with the employees and the leadership and the board and the governance structure. We’ll make decisions on transformation and put together a change management plan and make these things happen. But I’d never had to deal with this whole external community. And by the way, the whole point of the association is to serve the external community. Understanding them, knowing them, understanding their challenges, what they’re looking for in an association, is a big part of the equation. I learned that quickly at the Financial Services Roundtable and brought that mindset by the time I got to NAW.

Kevin Novak (55:24)

We’re coming to the part of the conversation that often produces the most honest moments on the show from guests. After navigating transformation across political campaigns, management consulting, financial services, and now industry-level association leadership, you’ve seen how different organizational structures, different cultures, different leadership models respond to the pressures of change. That breadth produces pattern recognition that single-context leaders simply can’t access because they’re drawing their conclusions from a sample size of one, while you’ve navigated fundamentally different organizational types. What do leaders consistently underestimate about the human side of organizational change? What have you learned across all of these contexts that keeps showing up regardless of the industry, the organization type, or the scale of the transformation?

Eric Hoplin (56:27)

I’m going to give you a very simple answer. And before the audience yawns and says, wait, it can’t be that simple, I’ll give you a little more depth to the answer. But the short answer, Kevin, it’s all about the people. If you get the people part right, then you’re going to succeed in the transformation.

Here’s the level below that. One of the tools that I’ve used, whether I’m consulting for the Department of Defense or working at Wells Fargo or in a trade association or smaller organizations, is when it comes to people, I talked about the third and third and third. You’ve got to find that crew that’s in that first bucket, that they are ripe and ready for change. Those are your change agents. You’ve got to identify your agents for change and you’ve got to hear them out. They’re going to have a hundred ideas and you only have time and resources for ten of them. So you’ve got to focus them. Let’s focus on these ten things. Those other 90 things are probably pretty good, but we just don’t have the capacity yet.

Then you’ve got to empower them. It’s not just enough to say, hey, thanks for your ideas. You now have to go lead the change. You’ve got to persuade the people in the other two buckets to come along for the ride. I’m the new guy they just hired. They don’t know me, they don’t trust me. But you guys have been working together for 20 years. They might trust you. They might come along with you. But you have to empower them.

When I got to NAW, I identified four big areas of transformation that we wanted to make. I started four task forces where I invited staff. I mandated every member of staff had to join at least one task force. But the key was selecting the leadership of the task force. I had a whole bunch of direct reports that were in camp two, and maybe one or two of them were in camp three where they were going to resist change. So I couldn’t have my direct reports lead the transformation.

I went to my change agents, those people that I sat out on the balcony with, who I knew were eager for change. One of them was an entry-level employee who had worked here for a while but had an entry-level job. When I called her and said, I want you to co-chair this task force, she said, are you sure you called the right person? My boss’s boss is going to be on that task force. I had to empower that person. I paired them with somebody who had a higher title in the organization, but still their boss was on the task force. I had to empower them, but I also had to roll up my sleeves and work with them.

Let’s set the vision of this task force. What are we trying to accomplish? What are we trying to uncover? Where are we going to drive this organization? But you sort of do that from the background. If I’m leading from the front in that task force, then it’s not those trusted individuals leading. It’s me. You get everything set up and then you step back and you watch them run and you watch them grow.

I’ll bring a full-circle moment for you, Kevin. One of those task forces that we launched, one of the ideas they generated, by the way, 113 ideas of things we should change at NAW. This wasn’t me. This was the entire staff through these task forces, being led by these change agents, who said here are 113 things we need to change or ideas we need to implement. One of them was we should buy Modern Distribution Management. Now that was six years ago. I looked at that idea and I thought, wow, that’s a really good idea. But we are nowhere near the position to be able to financially make that acquisition, let alone graft it into the body and then make it work. But we’ve got to fix ourselves first. Once we transform and we fix ourselves, then we’re going to be ripe for an idea like that.

It’s an important part of the empowerment process. You want those big ideas. And some of them are going to be wins that you’re going to implement immediately, but some of them you’re going to put in the parking lot and three, four years down the road you might dust it off and it might be an idea that once again leads to another transformation of the organization, as our acquisition of MDM did for NAW.

Kevin Novak (1:00:41)

That was simply an excellent example because one of the themes coming through with a variety of different guests is the openness to ask for help, and then to leverage empowerment and be open to that feedback and in many ways criticism, right? When the task force is identifying things to change, those things are problems. Some people may not react well to the identification, but there’s a necessity to engage people to build the trust that you’ve spoken to. My very last question, Eric. If you could go back to the beginning of your tenure at NAW, before the acquisition of MDM, before the AI capabilities, before the congressional testimony, before you had doubled the size of the organization, what is one piece of advice you would give yourself about leading a transformation at this scale?

Eric Hoplin (1:01:46)

Good question. I have to think about that one, Kevin. I might have hired you because you and Elizabeth and your company were an important part of once we had made the transformation, doing our strategy work to figure out where we go from here. I led it myself. I didn’t hire consultants, and I didn’t have that outside thought partner that I wish I did.

I started hiring people that had expertise in the industry and they came and became my thought partners. But I sort of thought, I know all about strategy development and I know how to transform organizations and I know all about change management. I don’t need to hire anybody to help me. I’m just going to lead it. And I did and we were successful. But I think the journey would have been more fruitful. I think we probably would have gotten there faster. We probably would have had better ideas if I’d hired a thought partner to help me along.

Kevin Novak (1:02:55)

Thank you for that very much. I really do appreciate that. In closing, thank you for being on the show today. You know this. I genuinely truly value your input, your insight, as well as all your sage advice. And thanks for your time as well.

Eric Hoplin (1:03:11)

My pleasure, Kevin. Thanks so much. And great to be with everyone.

Kevin Novak (1:03:14)

What Eric described today is a transformation challenge that operates at a scale most leaders never have to confront. An entire industry, 30,000 companies, $8.2 trillion in annual revenue, navigating simultaneous change because the value chain demands it. The human factor dynamics at that scale, the collective action problems, the diffusion patterns, the workforce anxiety, the institutional resistance, are simply not larger versions of what happens inside a single organization. They require different frameworks, different leadership approaches, and a fundamentally different understanding of how human beings process change when the change is not just happening to their organization, but to the entire industry.

If you found today’s episode valuable, subscribe to the Human Factor Podcast wherever you watch or listen to podcasts. Leave a rating and a comment, and share this episode with your leadership team. If you lead within an industry that is actively navigating collective transformation, the dynamics Eric described are operating in your sector right now. The question is whether you can see them and whether your industry has the leadership infrastructure to address them.

Subscribe to the Ideas and Innovations newsletter at 2040digital.com or on Substack for weekly frameworks and research on why change succeeds or fails. Also connect with me on LinkedIn, where I post regularly about the psychology of transformation. Until then, remember, transformation doesn’t fail because of technology, strategy, or market conditions. It fails because of people. And the more deeply you understand the human factor, the more likely your transformation is to succeed. I’m Kevin Novak. Thanks for watching or listening.END OF EPISODE

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