The Spin On Unacceptable Performance

spin free2

Food and CPG leaders are putting a spin on failure with reports that company profits surged while revenues fell–blaming industry conditions for the latter.

This is unacceptable…

…proving just how far removed they are from new value elements in their customer base and market environment.

The carnage of one-sided performance is staggering. On what platforms will these companies rebuild?

Boards have not set the right expectations. They pronounce slashing costs as acceptable without first re-examining business models or conducting a thorough review of factors essential to value creation and growth…including failures in the integration phases of their acquisition strategies.

Control is irresponsibly handed over to big-name consulting firms paid to make outrageous, value-destroying recommendations.

The greater tragedy is that reported results socialize failures into the industry as justification for others to perform similarly.

Growth has people at its core. Profits surge and revenues increase when CEO’s mobilize their people to do innovative and valuable things for customers.

Subsequent market traction is what drives momentum, thrust.

When revenue growth unravels, so does momentum. When that happens, amassing profits alone means little.

Food and CPG chiefs must realize that today more than ever, their organizations are just one innovation, just one lost customer away from getting whacked by a competitor—eliminating further need for them in the marketplace.

They are subject to the same lessons learned by those in more enlightened industries: The capability of Doing Better with Less must be assimilated into organizations and performance expectations.

Unfortunately, top food and CPG companies are Not Doing Better With Less.

They are Doing Less With Less.

There’s nothing acceptable about that. Nothing to applaud. Nothing to feel good about.

No matter the spin.

Food Industry 3.0

businessman looking out the window freeIn the digital age, they that own the data own the customer.

And the innovation.

And the growth.

And the first-mover advantage.

Unlucky manufacturers are still inserting millions of dollars and resources into the vast value-trapping black hole between themselves and buyers. Data about shifting user preferences is not readily available or if so, shared late and at significant additional cost.

Little about this data is predictive. Brand access to consumers and users is tightly controlled by intermediaries. Supplier innovation remains a shot in the dark.

But recently, we read headlines such as Kroger and Whole Foods’ possible interest in acquiring Blue Apron.

ConAgra’s and Campbell’s alliance with Peapod.

Tyson’s alliance with Amazon.

Obvious growth opportunities with recurring revenue in new channels, yes.

But the bigger advantage is overlooked, and it’s this:

Granular data derived from these big data alliances can transform manufacturers business models and restore their ownership of the customer.

Consider: It was Google that confirmed the rise in consumer interest in functional foods—not one of the industry’s common research companies. Google queried food category search data from January 2014 to February 2016 and spotted early risers and fast decliners signaling shifts in consumer wants and behaviors.

Amazon, Blue Apron, Peapod and a growing number of others like them are not just online product sellers. They are big data companies.

Tyson’s new home meal kit alliance with Amazon provides insights into purchasing patterns by consumer type and early trends to innovate upon.

Wait. There’s more.

Tyson can also use granular data to zero in on new investment opportunities, to extend insights to other channels, employ better inventory controls, implement manufacturing 4.0 processes and create personalized experiences with their brands that everyone talks about but few know how to deliver.

If Kroger or Whole Foods acquires Blue Apron, the benefits of analyzing consumer behavior from that source include brick & mortar tailoring offerings in a local, more personalized way.

Whether these companies have caught on to the real advantages of their new alliances is unknown.

Looking ahead, we see manufacturers developing and rolling out new products that are customized to local tastes and preferences—even neighborhood hot-spots. No more sweeping the US market to gain as many points of distribution as possible. Redesigned business and operating models become almost no-brainers.


The practice of inserting millions in trade spending and sheltered income into a system that offers no value to users and consumers and no reciprocating benefits to manufacturers becomes obsolete.

Trends such as those published by industry research companies will prove generic and incomplete.

The usual business performance metrics get tossed out.

Predictive modeling of demand prevails.

Food Industry 3.0 arrives.

In the digital age, they that own the data, own the customer.

They own the world.

Culture Fix

Books-and-Glasses bing freeFrom Jim Collins to The Oz Principle, best-selling books attract leaders with their resonating philosophy. Folding their methodology into the organization puts a checkmark in the “repaired” box on the CEO’s culture to-do list.

We’d like to take aim at starry-eyed devotion to plug-and-play solutions to business problems.

Take the Oz Principle and its cult-like following. Problems are bundled under “lack of accountability”. Accusatory labels are pinned on people who may be wrestling with bad top-down processes, poor communication or lack of resources. Often silent and resentful over an air of preached values that gets thinner at the top, they are told that company goals are everyone’s goals…yet are keenly aware of the power disparity in goal-setting, rewards and punishment that are doled out by a party of few. In our opinion, the Oz Principle is a goldmine of bias for leaders who are blind to their own or other failings.

It’s hard to ignore the halo around anything written by Jim Collins. But Dr. Bret Simmons points to the flawed approach in taking data that starts with Effect and works backwards to the Cause as confirmation of an argument. He says, and we agree, that failure to hypothesize a Cause first and follow it over time to examine its actual Effect is Good to Great’s defect. Editors saw dollar signs in the book’s premise and many leaders are still drinking the Kool-Aid.

We believe great gems of knowledge can be found when giving thought-leadership from these and other sources their due.

But we also believe that CEOs are in that position for a reason. The very best possess human engagement know-how that starts by getting good information from people.

Culture has been described as that which occupies the white space on a canvas after a plan has been written.

No best seller takes the place of a CEO sitting with a group of people inside the organization armed with three simple but very telling, powerful questions asked in an open-ended way:

  • Do you believe in our mission?
  • Do we have the capabilities to support it?
  • Do you like your fellow employees?

Leaders with human engagement know-how work through responses using a filter of common-sense, without going blindly forth with a method that is impossibly transferrable to the masses.

Priceless insights tell the CEO about the culture he/she has created and what must be done to shape it on the plan’s canvas.

In the end, the goal of the company is to improve earnings. The goal of employees is to participate in a community that is rewarding to them. Real solutions to balancing these needs are seldom found in scholarly writing.

Food Industry 2016

2016 graphiBlueberry Business Group issues seven business activities that from our perspective will frame the food industry environment in 2016.

As context, the stressors in 2015 were more intense than anticipated. It was a year of mega mergers, big-headline consolidation outcomes, and financially strained retailers. Included were a good number of shocks and lightning strikes. Every square inch of real estate was evaluated for better utilization. Extended payment terms put a squeeze on cash flow. Acquisitions took on a new definition: The stripping out of costs, competition, and time.

Our list below is directed towards an audience of One, the CEO. Only the CEO can create/force alignment around the organizations’ strategies and operating plans.

Your company may already be incorporating one, some or all of these activities into your 2016 plans. Your customers and competitors are doing so as well. Reactions to ripple effects are essential features of every plan.

Corporate energy in 2016 will be directed towards driving revenue growth while protecting earnings as margins shift from “here” to “there” between all members of the industry.

Organizations are re-envisioning business and eliminating unnecessary complications while spending only on what is proven to drive growth or expand margin. Zero based budgeting has grown in sophistication and now includes time discipline and selective agendas. Savings fall to the bottom line or are re-allocated to customer-facing areas of the business and new technology.

Leading the corporate governance movement claiming “bloated expenses and lackluster growth” (Bloomberg), interventions are taking hold to improve shareholder returns. With over $300 billion in available funds (Bloomberg), activist attention may turn to food companies in Europe. CEOs are confronting unwanted interventions with goals closely aligned with market realities and delivering on them swiftly.

A volatile customer consolidation environment and changing consumer behaviors are outpacing underlying growth. Acquirers are seeking more bolt-on acquisitions and “reverse synergy” targets. Rather than automatically folding growth brands into core businesses, more effective value-creating post-acquisition practices should prevail.

Turnover is accelerating in numbers while key vacancies remain open for a year or longer. Each new strategy requires an assessment of relevant skills to execute. Leaders are addressing internal dysfunction contributing to exodus or defection; companies are becoming recruitment machines.

Rightsizing principles are being applied to asset reduction, plant closures and consolidation, inventory levels, overhead and labor. Blanket manpower cuts are increasingly considered unwise in light of future workload needs and limited availability of talent pools.

Since 2010, over $570 million in venture capital funds (Forbes) have been invested primarily in early-stage food start ups, nurturing small regional players as nimble sources of innovation in new product categories. Venture capital will continue transforming the food industry. “Big Food” is quietly launching their own funding units to get a leg up on emerging brands and future category leaders.

Customers are skittish as digitally empowered consumers continue cruising new routes and channels. Channel customers are redefining supplier selection criteria, avoiding those that do not contribute appreciably to growth. Manufacturers are apportioning resources to gain occupancy in growing niches, staying alert to changing consumer appraisals of new and established brands, products and service features. Deep discount brick and mortar players loom on the horizon.

Here’s to a productive 2016 as the push for growth continues!