Sounds + Food 'n' Retail

Take a look at this quote, which I posted a few days ago:

"There should be a rule: before helping the environment in one market, we should be required to think through the impacts on other markets." (source: Freakonomics blog).

Or, to put it differently, every action has a (sometimes equal) reaction (I think the traditional phrasing ignores the human element). The idea that everything is interconnected is both fun to right-brained generalists like me (not a compliment), and scary at the same time. The global economy is very complex and, I would say, impossible to regulate.

There's a couple of things going on the world, which I'm sure everyone is aware of. There's a number of wars, there's the weakened dollar, there's some kind of housing-related recession going on, there's a shortage of oil, our planet is perceived as suffering and currently being saved (I hope), there's India and China, the rise of the Anglo-Saxon system, etc. etc.

And some of the biggest problems facing the food-industry (depending where you are in the chain), are rising food-prices, which relates to that oil-shortage (both in terms of pricing, but also because of alternative fuels using farm-products), the rise of India and China, and some other factors; and the costs of keeping green, which has largely been inspired by companies like Wal-Mart, but also by the (exaggerated) need for global diversity by customers (which the food-industry is also partially to blame for).

The solutions vary, and are, so far, very defensive in their nature. For the cost of going green, most pollution comes from transport and the solution is to either use the most eco-friendly way to go: on land, by train, across water, by ship; or to go local—which companies like Marqt seem to focus on, but which also comes with the pitfall of seasonal shortage.

For rising food-prices, again one solution is to go local, to save on transport and have some control over how farmers work, and be able to charge higher prices to the rising local-conscious consumer. But a bigger solution is for more food-production to happen (much of it currently goes to India & China, or to biofuels), and possibly from smaller farmers. The problem here is that it will take time (some estimate decades) for smaller farmers to get ready.

Both are definitely big picture-problems, and will take time to solve. One thing, I'm personally looking at, are micro-lending sites like Kiva.org, which put you into contact with local farmers, allowing you to help them out in your own way. From a Venture Voice interview with one of the founders, I understand that some of these investments happen within the context of a community, where each member keeps watch over the other's use and repayment of the funds, in order to ensure a good outcome, and so loans will continue to come in. But, while I think it's well worth the effort, this is still a small-picture solution to a much larger problem.

The way it looks right now, the solutions have to be planned in the long-term and on a large scale. There is definitely space in the farming-segment for more production to happen. In the mean time, food-prices will continue rise, as will the price of educating consumers to make more responsible choices. I like Tesco's approach in labelling the origins of their food and allowing people to make more carbon-friendly (locally focussed) decisions. But that doesn't solve the problem for farmers in remote areas of course.

Sigh, if you just got a headache, I sympathise, as I just got one too.

Further reading:

• NYTimes: Environmental Cost of Shipping Groceries Around the World
• Economist: The new face of hunger
• Buzzfeed: Food Hoarding

The picture is courtesy of ABC News.

Let's face it, even with nature knocking on our door, some accountant will still ask what this whole thing is going to cost. Science, facts, morality… it's not enough. I compare it to smoking; even though everyone knows smoking kills, it took pressure—social, governmental, commercial—for people to quit. And the same applies to businesses going green.

Without further ado, here's five pressures that make the business-case for companies to change.

1. Governmental pressure - let's ignore for a fact that government is the one keeping its finger on the pulse of scientific research, social, business, and technological trends. But what is hard to ignore is that the government is actively pushing businesses to change, either by punishing the wrong-doers, by subsidising clean practices and technologies, or by providing new infrastructures around these new rules, allowing for businesses to dispose of their waste in better ways and use alternative, cleaner energy-sources.

2. Consumer pressure - like with smoking, not all consumers have been following the new green "religion" quite as passionately. That said, there are the early adopters, the geeks, the pressure-groups, that are insisting on businesses changing their ways. And those businesses are themselves customers to their suppliers and are doing the same thing to them.

3. Business climate pressure - apart from the above, two things will strongly pressure businesses to change: costs and competition. The rising cost of fuel, electricity, and water, etc., as well as the cost of disposing their waste, is a good incentive to implement technologies that help conserve energy and produce less waste. Similarly, as competition will do the same, businesses are forced to respond.

4. Knowledge-carriers - with the amount of scientific research being produced everyday, it was only a matter of time before methodologies would be developed to help businesses become greener. Since this is still a specialised activity, both commercial parties (consultants) and governmental institutions are there to advise companies on how to change.

5. New technologies - new inventions are constantly being brought to the market, that help businesses conserve energy or get it from alternative sources. Think: technology to monitor and regulate energy-use, water-conserving toilets, more efficient lights, green roofs, etc.

Anything I missed?

In a way, you can't blame businesses for resisting. There have been lot's of change-initiatives these last decades—from ERP to joint ventures—which have produced questionable, if not disastrous results. For change to happen, it must be driven by strategy first, because doing business is like doing war. There is a high price for failure and no one will be congratulating the loser.

But what is certain, is that eventually there will be no more choice. Those that are slow to react will do so at the cost of an unsympathetic government, of the competition racing ahead, and of customers dropping their support.

This article is mirror-posted on tech IT easy, where there's also an interesting discussion going on. Why do people end up going green?

I'm currently working on a wrap-up of what I wrote about in months 3-6. It's usually a monthly tradition (see months 1 & 2), but this one is extra long and taking me some time. Apologies for the silence this has been causing this week.

One of the things, I'm working on is a work in progress, a map of the food-industry. Step 1 is to identify the individual segments, which, I should note, are probably transferable to a great number of industries. Future iterations will include identifying specific companies in each segment, as well as sub-segments, and specific segment-pains also.

• Segment 1 - the production of raw materials: This can involve anything from growing coffee-beans, to potatoes, to rubber and trees (later used for packaging). Some vertical integration with segment 2 and perhaps 3.


• Segment 2 - the production of consumer-goods: The activities here involve sourcing raw materials and producing them into goods, ready for retail. From my understanding, there are a number of super-producers (Unilever, P&G, etc.) and more specialised ones. Some vertical integration with other segments, plenty of horizontal integration also.


• Segment 3 - retail: A diversified segment, consisting of super-markets, specialised stores, and hybrids (which combine retail with other services like music, etc.). Some vertical integration occurring, with e.g. private labels, and large franchises like McDonalds & Starbucks that communicate directly with segment 1.


• Segment 4 - consumers: too diversified for me to summarise at this stage. What I do note is that the reach of customers is increasing up the value chain: organics, enviromentalism, etc. are all signs of this.


• Sub-segments - marketing & logistics: It has been my observation that the degree that these are externalised depends on the resources available within and the complexities of the tasks. What I also noticed is that it's the supplier, not the buyer, that takes care of these things. And finally, that it's segment 2 that is usually responsible for marketing their products to segment 4, the consumers. I expect that something similar is or will be occurring from segment 1 to segment 4, to address concerns consumers may be having about production-methods.


• Meta-segment A - regulation: It has been my observation from my thesis that the government is a factor at pretty much every stage of the process of bringing a product to the market. It is a tool both for consumers, for larger interest-groups, and for businesses to stimulate change within industries, with all the consequences that has. Again, regulations pertaining to organic & green production-methods, as well as human rights and memberships of trade-unions are just a few of many factors to consider here.


• Meta-segment B - optimisation: This is where I would place consultancies, which are super-specialists aimed at improving processes in and between organisations, but also aiming at customers who are having more and more information at their disposal, more cash, and more complex needs.

That's all for now. Please let me know if I missed anything or if you disagree with something. I am here to learn!

I'm hoping to finish up my wrap-up by this weekend and that it will be business as usual next week.

While I'm stuck on writing some other posts—the idea is there, the execution some way off—it is time for another collection of links.

• Using Human Sigma for measuring customer engagement - Mitch Owen reviews a new book on the market, that suggests that evaluating our efforts at customer satisfaction happen on four levels: Confidence, Integrity, Pride, Passion.


• How to coast to a writing career - Valleywag writes an insightful post (for once) about what matters when blogging. I like "AVOID: Blogger ego. If you do blog, just write and forget about it. Don't reply to your comments with more than "Good point, h8rboi, thanks. Don't troll other bloggers for links, or try to get onto Techmeme by posting about whatever's already there. ... People in the real media don't care what your Technorati rank is, they'll just Google you to see what you write." That said, I have no intent to engage on a writing career.


• Mind hacks: an interview with Jonah Lehrer on neuroscience - What I like: "Artists are constantly being forced to reverse-engineer the brain. By reverse-engineering the art - by trying to understand why, exactly, it resonates with us - we can learn about the mind."


• Thirteen examples of successful brand experiences - could be filed under architecture. The British design council points us to 13 different "experience-castles" (my own term), where customers can be enchanted.


• Calculating the carbon footprint of wine - What can I say? It's the new world! Some key-points: organic is not as efficient as we think; distance matters; packaging matters.


• Bonus Link: Why does a salad cost more than a big mac. - A picture says more than a 1000 words. This is just as applicable to Europe btw. Thank Wolsey for inventing the subsidy!

Enjoy! More of this: check out the S+FnR bookmarks—updated 24/7 !