By Len Monheit
A compelling value proposition for new and existing clients is required in order to build and sustain a business. If you do not continue to offer this, clients will go elsewhere, or perhaps more significantly, the entire value chain will move around you. And when the value chain does move, it’s in bold steps: new technologies are adopted, ingredients or product lines are discontinued or banned, new niche markets are developed, the roles of distributors, brokers and agents are changed, functions get outsourced, or outsourced functions get brought in-house. A dramatic change in regulatory environment could make an entire business obsolete.
At Nutracon a few weeks ago, one of the investment groups spoke about the types of business they were seeking to work with. High among the list of desirables, ranking with a compelling product and science to back it, was the idea of management strength. We’ve heard that before, ‘it’s about the people as much as the business plan’, but the difference this time, was that in order to be perceived as an asset, the management had to be ‘agile’.
So in this business environment, what does that really mean?
We’ve all observed the ‘flip-flop management style’ where direction and strategy changes as frequently as the weather. Hardly a healthy business environment, it delivers stress and wastes precious resources, as the management group plots path after path successively while the business burns around them. And on the other side, we’ve got the ‘business as usual crowd’, where the mantra of ‘because we always have’ is the response to queries about new initiatives. While stability in an organization is valuable, failure to adopt to changing conditions and more importantly, customer needs and expectations, will lead to disaster.
Somewhere in the middle is the agile management group, focused on operational issues, with the ability to plan and reassess strategy frequently. This doesn’t mean rehashing issues with the same arguments, otherwise the business goes nowhere. It does mean incorporating new information into the decision making process in an organized manner, encouraging input from any who may be able to provide it. It means effective use of intelligence, networks and market research, frequent cost-benefit analysis, perhaps even a higher risk tolerance.
At any part of the industry value chain, these principles apply.
Consider a retailer or health food operator. With new seals and certifications to be aware of, concerns about both product safety and efficacy, and a driving desire on the part of consumers to at least self-diagnose if not actually treat, both opportunity and responsibility have magnified. On the one hand, the opportunity to provide guidance in changing times could help enhance customer relationships and build a solid community base. On the other, the need to be educated and to provide educational resources to clients (either directly or by identifying such resources) also needs to be part of the business process. Operators need to monitor mainstream media, understanding their customers concerns and drivers, need to know where to get additional information and have to responsibly seize new sustainable business opportunities.
The position of an ingredient distributor is different in many respects, but the same when it comes to business principles. The new Food Safety legislation will mean new responsibilities for importers, but also an opportunity to add value in the services they provide for their clients in managing and presenting records and materials and ensuring uninterrupted availability of goods.
From the viewpoint of manufacturers, we’ve seen several indicate they are in compliance with the newly proposed supplement GMP’s, taking advantage of the opportunity the introduction of the legislation provides. We’ve observed NBTY and others exit the ephedra products category and Cytodyne attempt to reposition with an ephedra-free product as a response to the current storm, and new business opportunities are emerging at the same time, including a renewed focus on the GRAS process (Generally Recognized as Safe), changing distribution models and brand strategy, and the ability to easily put product and educational materials in the hands of channel partners.
If we step back to examine the characteristics and behaviors likely to lead to success in today’s business climate, whatever a company’s position along the value chain, we find they should be:
- Quick to assess external information and adjust appropriately
- Lateral thinking
- Networked, involved in true relationships with suppliers and customers
- Connected to trade associations and other industry resources
- Able to think both operationally and strategically
- Organization structure specifically designed to support collaboration and information exchange rather than islands of information or an autocratic environment. (The entrepreneurial system which gave rise to much of the industry success must evolve into a more mature business structure)
- The organization must be oriented to seize sustainable opportunities
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