Thanks for a really thoughtful article Caroline. To your point about consumers having time to actually understand this information- I would argue that this will simply become a norm in the future. We are already seeing a trend toward transparency in sourcing, through companies like Whole Foods, who provide visible sourcing info on signage within stores. Currently, one could argue that decision making based on this information is simply a luxury for people who have both the time and money to choose their food based on where it was sourced (vs. how much it costs). However, increasing transparency of supply chains in the future could actually level the playing field and improve the quality of food for all people- not just those of us who are able to afford organic salmon at a high end store like Whole Foods. The ability for people to be knowledgeable about their food, regardless of their income, poses positive benefits for health outcomes in communities everywhere. While I completely agree with the risks of “garbage in garbage out” mentioned above, I see the overall benefits of this system as outweighing those risks. And as technology becomes ever stronger, checks will likely be put in place to verify supplier info going forward. Great read!
Anton- such a fascinating article- thank you! There is clearly immense room for innovation in the fairly untapped furniture market in terms of digital capabilities. Building off of Emily’s point above- I think the idea of giving customers too much freedom is quite relevant here. In particular, if IKEA demonstrates to customers the simplicity of not only ordering online, but designing and 3D printing their orders, the company risks making itself obsolete. Instead, IKEA needs to find a way to give customers just enough autonomy, without assisting customers in actually subverting IKEA’s role in the supply chain. I believe the company can do this through both strong partnerships with suppliers as well as innovative design. If IKEA can continue to maintain relationships with suppliers that drive materials costs down (as compared to what these costs would be for a consumer 3D printing on his/her own), it holds on to its position of power in the market. Similarly, if the company can demonstrate to the consumer a design prowess that the average person could not attain on his/her own, it allays the risk of individual designers taking market share. Still, I would urge the company to build responses to these long-term threats into its business plan as it works to maintain relevance and expand its footprint in an increasingly digital world.
Thanks for a really thoughtful article. In response to question 2- are nations becoming obsolete- I think in the case of a company like Ford, this is far from the case. Ford is truly iconic in its role as a company that embodies American hard work and productivity. For a company like Ford, which has become symbolic of weakened American exceptionalism and specifically, the growing threat of international companies to the American heartland, the concept of nationhood is more important than ever. As a result, a key challenge for Ford will be convincing its employee base and the midwestern community in which it began of the long-term positive effects of global expansion. This is much easier said than done, as the short-term visibility of job loss will almost always trump the argument for future market growth in the eyes of employees. However, a company that has become an embodiment of the American economy cannot easily be disentangled from the public perception of its impact on that economy, and thus on that nation. For Ford, I would argue that nationhood will not be obsolete until the local economy sees the benefits of globalization directly.
Thanks for a very thoughtful article. Your point on the impact of Brexit on human capital in this supply chain is particularly interesting to me. Brexit has already seen a major shift in skilled labor in the EU, with skilled employees from a variety of industries leaving the UK for seemingly “greener” pastures . Given the current state of affairs, it is likely very tempting for McLaren to focus on the short term implications of Brexit through the increased costs to source and manufacture cars. However, I would caution McLaren to also focus on the longer-term cost implications, particularly in both hiring skilled labor in the UK and in customer demand. With skilled laborers leaving, cost of labor is only going to increase for these jobs. Additionally, as McLaren (as I understand it) is a manufacturer of luxury jobs, high-earners leaving the region has the potential to significantly disrupt demand. 
1. Rovnick, N. Cocco, F. Brexit prompts skilled European workers to leave the UK. Financial Times. https://www.ft.com/content/a37c2aee-565f-11e7-80b6-9bfa4c1f83d2
2. Helm, T. The Guardian. The Guardian. Aug. 26, 2017. https://www.ft.com/content/a37c2aee-565f-11e7-80b6-9bfa4c1f83d2
Really interesting write-up of a complicated issue. The family and legacy dynamic poses an additional complication to the concept of sustainability. In response to your question regarding safeguarding this familial brand vs. addressing new challenges — I would argue that in order to protect the brand, Tabasco will need to adapt rather than clinging to old processes. If the brand is to stay relevant, it will need to find new and creative ways to continue producing excellent quality products in the midst of potentially declining crop yields and arable land. Demonstrating loyalty to its community, shareholders, and lifelong employees does not mean sourcing and producing in the same way it has been; it means adapting to changing conditions to ensure the business can stay viable. While I agree with the above comments that diversification is a good starting point, I don’t think it goes far enough. Instead, I believe the company needs to adopt one of your more drastic suggestions, such as improving crop drought resistance through experimentation, in order to ensure relevance.
This article also causes me to wonder how consumer preferences may change as a result of changing crops. If peppers were to get so scarce, could we reach a world where Tabasco 100x in price in the next 50 years? Interesting to think about how demand for today’s “basic” products may look very different in the future.
Thanks for your interesting insights. Your question, “Will shareholders tolerate lower returns for an environmentally-friendly investment?” has major implications for the investing world at large. A number of impact investing models have sprung up over the past few decades, with the Pay For Success model (which I know you are very familiar with given your time at Social Finance) coming to mind as one of the most unique. As younger generations call for stronger accountability for environmental protection and awareness (and other facets of the Environmental/Social/Governance model), investing models will need to continually adapt. Walmart, a major corporation, may find itself included in “socially conscious” asset classes and benefit from additional investment as a result. However, we see a strong counterargument continuing to drive decision-making as well, as many will continue to argue that a commitment to environmental protection over profitability is reason in and of itself to divest from a firm. So, what comes first-
As a result, I am curious to see where Walmart will fall in the ongoing debate between returns and resource protection. Walmart is already on the path to demonstrating that corporations that operate with ESG motives in mind are not necessarily acting irrationally . I am hopeful that this mindset continues to spread across additional players with the ability to set and influence environmental corporate standards.
1. “Virtue is its Own Reward: Or, One Man’s Ceiling is Another Man’s Floor” AQR. May 18, 2017. https://www.aqr.com/cliffs-perspective/virtue-is-its-own-reward-or-one-mans-ceiling-is-another-mans-floor