Very interesting! I think you have laid out well the outsourcing vs. insourcing of american jobs over the past 17 years. I am no political expert, and can not say if this is a trend that will have as much stamina after the Trump presidency. However, I do see a tension in UTX’s strategy with the Indiana facility you referenced. In order to keep costs competitive in the US with higher wages, it seems a key point here is to invest in automation. How is that bringing about US jobs? Will that anger the current administration? As technology advances for companies like UTX, the effects of “outsourcing” will still happen in this case, with American’s still being put out of business. I think there is a tension in your strategy of investing in your workforce and education, and at the same time automation. I think the company needs to clearly lay out its long term automation strategy, and invest in education for the workforce that will be around longer. A big PR campaign in this case might not be effective, and could potentially backlash on them. I think the best course of action is to continue to be in continuous conversation with the current US administration, and to let Trump and other’s know that you are actively involved in the conversation, and are looking to participate in stimulating American jobs growth as much as possible, but while still maintaining your responsibility to your shareholders of creating long term value for your company.
Great article! I think when trying to become digital and fast fashion as an organization, you need to first pivot the mindset of your company, regardless of how much adoption takes place in all your portfolio companies. Many companies like AirBnB and Pepsi have innovation labs that not only become think tanks for the company, but are responsible for changing the culture and mindset to design and user centric thinking, and becoming digital from the “ground up”.
I think all brands will need to start reducing the cycle time of their supply chain and use digital platforms as a way to access more data and understand their customer segment better. It doesn’t matter if you follow or set trends, understanding your changing customer base is essential. Even Ralph Lauren and GAP are focusing on going direct to consumer and retail and fashion companies look to vertically integrate more. The question is, once you have access to more information about your consumer, how do you understand it to translate that into a coherent strategy and action plan for your brand? The question is whether to build this analytics talent base in house or to utilize more and more companies in the area specializing in this. For example, the company “Wise Analytics Group” focuses on analytics of consumer bases for beauty products: http://wiseanalyticsgroup.com
My vote is to build this in house to keep a defensible edge, but this requires building out a new core competency.
Great essay! I do not think it is realistic for Tesla to figure out how to create products with an entire sustainable and green lifecycle. They need to balance their product innovation and roadmap with sustainability efforts like everyone else. At the end of the day, Tesla and Elon musk can not have core competencies on every aspect and subpart of their business. I think they best way they can inspire their supply chain partners is with continued product innovation. Sometimes companies need to see their is a demand for cleaner and more sustainable products and practices. The more Tesla innovates and explicitly shows how it is ahead of the world, and creates the demand for greener products and practices, the more other companies in the supply chain are going to want to innovate and grow as well to provide that service.
Great insights! I think the U.S. Department of Commerce should levy tariffs on a sliding scale. So for example, if 100% of the supply chain is outsourced, the tariff is X, if 60% of the supply chain is outsourced, than the tariff should be 60% of X. The metric it can use to calculate the percentage number is number of jobs created in the US vs out of the US.
For long term strategies, I think Bombardier in its financial analysis needs to start implementing in their models the risk of certain tariffs. This requires the build out of a strong government affairs organization, which unfortunately shareholders hold this company accountable to do. Secondly, they need to invest in lobbyists to make sure they are challenging laws and regulations that they do not agree with. This competency has needed to be built out in organizations like Uber and Facebook who undergo heavy government criticism and potential regulation.
Great essay! Compared to other retail store chains, H&M seems to be on the lower end of the spectrum with regards to price. How are they keeping costs low on clothing while investing so much on a green supply chain? I think H&M needs to do a lot better job of marketing this to their customers, I used to shop there on a regular basis and was unaware of all their sustainability efforts. On the recycling front, I think consumers expect lower prices when a product is made from 100% recycled materials. How is H&M going to implement that strategy while maintaining prices? I assume their margins are already low enough.
Overall their business model seems to have two tensions. One is trying to grow fast fashion (which is inherently not environmentally friends) and at the same time trying to implement a more sustainable footprint. The other is marketing fast fashion recycled clothing with consumers, while also trying to keep prices competitive. Could this lead to a brand tension? I see articles like the guardian who criticize their mission given the nature of the business as something that will not stop: https://www.theguardian.com/business/2012/apr/07/hennes-mauritz-h-and-m
How does H&M take into account all these risks to their brand?
Great article! A few things I would be concerned about if I was JD are the ever-changing regulations in China. These regulations can potentially limit certain travel routes for drones and unmanned vehicles once this technology hits a critical mass. Based on this WSJ article, JD is also now investing in heavy-duty aircrafts, which have caused some flight delays with drones that have not been authorized: https://www.wsj.com/articles/chinese-online-retailer-jd-com-is-developing-heavy-duty-delivery-drones-1495438200
I think JD is going to need to invest heavily in creating a regulated flight network with the airline industry to prevent further mishaps, or else face even tighter regulations.
For the analytics piece, I am curious how much inventory they are able to predict purchases outside the east region, where customers are much more scattered. Having a dense population of customers ordering multiple of the same items minimizes your risks. What about when 100 customers spread out over 30 miles order 100 different things?