Your question is about whether or not LEGO will create value for their consumers with their reduced CO2 emissions, but I question whether or not value is created for the consumer in this case. I see the data about how consumers respond to Corporate Social Responsibility initiatives and I agree that value is created there, but I think a lot of companies have assumed that their own consumers find value in sustainability programs without properly segmenting their customers segments. Particularly in this case, LEGO needs to do a better job of segmenting these consumers and understanding if their own consumer cares about CSR or not. For example, a high-income technology employee in California may care a lot about social responsibility, so he or she buys a Tesla. Does the typical buyer of cheap plastic children’s toys care as much about sustainability? Possibly, I can’t be sure that it’s not true, but I think companies need to better understand whether this is a marketing advantage or not. I recognize that companies can implement these initiatives for their own altruism, that they want to help the planet, but there’s a different question in understanding the ROI and sales increases from their efforts. In order for LEGO to understand whether or not consumer value is created, I believe they need to understand the buyer, and then make the decision based on whether the efforts are worth it on their own if indeed the consumers do not find value there.
Great article, and questions. I think the second question you pose is actually a bit more contentious as it actually questions the same philosophy that drives our need for a Navy to begin with. Many Americans question the massive U.S. military spending around the world to begin with. If the government agrees that we should be spending our own money to combat military problems abroad (granted that we may be legitimately doing that out of concerns that issues abroad could threaten us domestically), how is our spending to address climate change-driven threats any different? Does it purely come down to the fact that some people don’t believe in climate change, and the current administration may want to ignore it? The same argument could be made about the existing Navy spend on military threats. I think the more likely reason that this spend is so contentious is the time horizon. You cite that the floods are projected in 2100. Terrorism or war could happen any day, and I think that’s what truly differentiates what current spend will go towards.
A key assumption that this article relies upon and needs to call into question is whether or not global business growth will be driven by U.S. companies expanding overseas or new domestic entities forming in their own countries. If a large portion of international business and job growth were to come from U.S. corporations, such as big brands and professional service organizations growing new locations and offices in other countries, then the U.S. business schools could possibly be more protected. For a long time, international markets have been flooded by U.S. firms expanding, which drew talented international business students to come to the U.S. to get the education that would send them back to these firms’ international offices in their home countries. For example, a Japanese student may choose to come to Harvard Business School to recruit for the McKinsey Tokyo office. But as international students see more opportunity for businesses at home, they might be more likely to stay in their country for their education. The trend seems to be that international businesses are developing to compete with the U.S. corporations, and that may be a major reason that international applicants are down, aside from any visa or immigration issues.
While isolationism and investigations into cross-border trade may be a big threat for Energizer, I think these should just serve as a wake-up call for the much broader problems they face with globalization and technology advancement. Sourcing materials and labor from foreign countries are unlikely to be restricted by government since it is so vital to the U.S economy, but Energizer needs to understand how to face the same business risks regardless. As wages rise in foreign countries, and the countries with natural resources (graphite) want to use them domestically, how will Energizer’s margins remain? Ultimately they need to plan for these changes regardless of international trade policy, and likely invest more in delivering products that are not so dependent on limited natural resource supply and the availability of cheaper manufacturing labor.
This article raised two points in my mind. The first one you address, which is, once everything is connected to the internet, what are the cyber risks on the business? With such complex logistics and a promise to customers of the right delivery to the right place at the right time, DHL’s mistakes can have reverberating effects through the supply chain. That fact makes their IOT infrastructure a tempting target for hackers. I’d recommend they think design and practice their threat identification and response plan before implementation. The other question this article brings to mind is, with the ability to create efficiencies and reduce costs, how does the new value get distributed? In other words, should IOT improvements mostly benefit DHL’s bottom line, or should they pass on the cost reduction to their customers? How do they make this decision? I would think that pricing stays the same and DHL gains the benefits from its technology improvements, but with new technology developments they need to prevent new competitors from entering the market as well.
Great pun at the end with “digest.” I think you’re right to question two things. The first is, will consumers suddenly trust the sources of their food because some technology called “blockchain” now certifies where it came from? Brands can already use terms like organic, cage-free, no pesticides, etc., but ultimately consumers don’t know. It comes down to them trusting the brand and the retailer. I’m not sure telling them a software program tracked their food will make things more believable. Secondly, the implementation of this throughout the supply chain seems at risk for implementation errors if the employees in the supply chain don’t believe in the importance. Right now Wal-Mart could likely find out what trucks and handlers touched the food, but why don’t they? Why not simply demand a written record of everywhere the food went prior to its delivery? We saw Toyota keep the information sheets along with each car being produced, but why didn’t Walmart and its suppliers ever go through the process of tracking who handled the food? Creating a blockchain solution may make this tracking more feasible, but it might be a technology solution for a problem that people don’t think they have.
You touch on some interesting elements of culture and transparency to help improve their cybersecurity measures. There are two learnings from TOM this year that seem to apply here. The first is this understanding that mistakes (and cyber attacks) will happen. An organization is stronger when it is prepared for the failure to occur, not just focused on preventing it. With the rapidly advancing pace of cyber attacks, these organizations need to “think around the corner” and assume that an attack will happen at some point. Secondly, you mention at the end that “unreported attacks are missed learning opportunities,” which mirrors the no-blame culture we saw at Toyota. If people cover their mistakes, others don’t learn how to prevent those going forward and the organization is not strengthened. This, as you point out, can come down to culture. If the culture of the organization can somehow encourage people to share their failures and learning mistakes, similar to how Toyota managed this in their production processes, the USCG could be stronger. However, changing to a no-fault culture can take years in an org where there is low management turnover.
It sounds like Starbucks is doing a good job of tapping into the front-line of data in their stores and utilizing it in their supply chain decisions. It also seems like they have efforts going forward to collect more data for demand prediction. As for piloting blockchain technology and Bext360, do you think Starbucks is better off owning this technology, making it unavailable for competitors? Or should they simply be a customer, avoiding the investment and allowing their coffee beans to be scored up against their competitors’ beans? If Starbucks truly feels their brand is becoming ubiquitous and losing its reputation as “high quality,” then having the entire coffee industry measure up with Bext360 should help their brand image. However, if other lower-quality competitors choose not to participate, then this doesn’t really change things for Starbucks.
ALDI seems to have great prospects for the short and medium-term, but the question is when will they make the big investments for the long-term. My guess is not soon. In a market position as the low-cost provider, you’re looking to keep R&D as low as possible to beat the competitors on margin in an industry where margins are 1%-2%. I also wonder if digitizing the supply chain is really up to ALDI or if it comes down to their partners and suppliers. If ALDI needs to know where inventory is located, they can likely just utilize a system that receives and analyzes the information, while shippers and distributors actually implement internet-of-things technology. ALDI seems to be at the risk of investing in technology without fully deciding where their strategic place is in the supply chain. Do they want to control the inventory and build a system that allows for direct warehouse-to-consumer delivery? Or are they better off simply being the best solution for their primary customer base that wants the lowest costs possibly in a physical store experience? Will the technology choices they make aim to only lower costs, or will they develop into an omni-channel business where the competition looks much more threatening.
This article leaves me with two questions. First, do you think something like Brandless can only succeed as direct-to-consumer, and that the company will ruin it’s entire supply chain advantage by eventually selling in retail stores (like we’ve seen other DTC companies do)?
Is “Brandless” just really a new brand that is opening up a margins race to the bottom? The company is trying to be a low-cost provider by eliminating internal overhead and retail mark-up, but there are plenty of low-cost incumbents in their space (mainly store-brand generics). Brandless will ultimately need to beat these companies on quality (associated to their ‘brand’) since they are unlikely to match their production and distribution scale while getting started. In an industry like food and beauty products, Brandless will need to rely on the quality of it’s products, and must win on simply lower cost distribution to a price-sensitive consumer.