By Len Monheit
I'm struck by some of the patterns in the decision making that executives and managers are called upon to make on a frequent basis. In reality, it is not much different from other business environments, with the tug of war between operational crises and strategic priorities, yet in this sector, there are continually a set of decisions to be addressed, depending on a company's value chain position. In many cases, over time, the actual decision options don't change, but the company behaviors do. I suggest that we can watch the industry evolve by observing the choices and selections to key decisions.
There are a number of obvious decisions that companies and managers must make and a few that are less obvious but nevertheless significant. In no particular order, here are a few :
Which trade association(s) to join?
Whether or not to certify product, facility or operation and if so, what program?
Whether or not to obtain GRAS status? Which mechanism to use?
Whether or not to conduct a clinical study?
whether to sell direct or through distribution?
Which event(s) to attend?
Whether or not to have a booth?
Whether or not to build a product brand (ingredient or finished product)?
Whether or not to introduce your own label (retailer or distributor)?
I label all of the above questions as rather obvious, with the outcomes of the decision making process apparent to the industry. There is also another type of decision and in some cases, while the outcome might be apparent, the fact that an actual decision has been made is less so, often even inside the company itself:
Whether or not to lead with science?
Implicit in this issue is a determination of the level of science that the audience can bear and understand. Also implicit in this discussion is the inevitable dialogue (or tug of war) between research/product development and marketing. Important to this issue is which group and which process drives new product development - Is it a marketing idea that initiates the process? Does the product development group get an idea at a conference or through literature? Or, is it an ongoing collaborative process? Or, (and given the entrepreneurial spirit of the industry, this last is frequently the case), does the boss wake up one morning and decide to.....?
Whatever the case, despite an apparent commitment that many have made to education, we continually hear the message to keep it simple and make it taste good. Well, science is seldom simple, hence we hear retail and consumer experts say, "Leave the science out, give us a simple, catchy marketing message."
It's easy to see the conflict.
Whether or not to defend minor attacks or even potential sideswipes with a proactive approach?
Trade associations and companies both wrestle with this decision and the most common argument is that for 'minor' issues, a formal response blows the issue out of proportion. And as far as pre-empting a potential negative issue, if the issue is never raised, then, by pre-empting it, you've in fact made it an issue. There's no real answer for this second case, other than an assessment based on experience, judgment, environment and context. For the first situation, however, responding to a minor issue, there are other factors involved. Yes, you can potentially make the issue bigger than it deserves, but consider that a whole lot of minor issues end up making a big issue. And if a minor issue is not challenged, and goes on record as not challenged,than that very fact becomes more ammunition for media, detractors etc. It almost becomes an accepted precedent, a commonly accepted truth, ie. "supplements are not regulated". On both the company and association level, history and implications must be carefully examined, especially in these times with the volume of communication which can occur. It doesn't take much for a minor story to get picked up on mainstream media, the more negative or controversial, the more likely.
Whether or not to defend the product or defend the category?
As attacks on supplements efficacy and safety arise (and increase in frequency), industry is continually placed on the defensive, trying to justify, put in context, counter-attack or simply stop the bleeding. The trade associations most likely will be active in category defense, pointing out bodies of literature, redefining regulations, procedures and safety nets. Companies are faced with a very different situation, especially given the competitive nature of specific products and entire relationships. On the company level, many might not be used to acting in concert or concept with another organization and so are only in a position to see their small piece of the pie rather than the pie itself.
When the safety of a category of products is challenged, ie. a specific herb, mineral or specialty ingredient, companies must decide to fight for their brand or for the product category. If the brand investment is high, there's a strong argument that the defense presents another opportunity to promote brand. How many times have we seen a headline reading "such and such products found to be ineffective, unsafe, poor quality, etc" with a typical company response, solely on a company level, being, " X brand has this......" and so the broad blanket statement goes unchallenged. From time to time though, with an example this past week in fact as Nutrition 21. Nutrition 21 responded to a University of Sydney Study which questioned the safety of trivalent chromium , we see a company response that says and supports that "this category is safe (or effective) and yes, our product is part of this category." Whatever the response, it's often a difficult decision for a company to make.
Should I push the envelope until I get caught?
In an environment with frequently erratic enforcement and potentially high margin windfalls, companies are frequently faced with decisions on whether they should 'push the envelope' until they get caught. Obviously in basic terms a risk/benefit analysis, there are frequently broader implications for both the company and the industry. It is conceivable that while this behavior might be economically justified short, medium and long term for a company, it might be bad long term for an industry which ultimately will lead to negative long, long term implications for the company. That is, it might be counterproductive to a successful industry with a collective bigger pie. If your projected term is only 2,3,5 or even ten year, you might not even consider the 20 year implications, have retired after your positive risk benefit equation, leaving your successors with an untenable future. While this situation is apparent in many sectors, including government in an industry with a high risk/benefit ration (as currently exists in many parts and channels of the supplements industry) it is a real issue for us.
These unobvious decisions define company culture and at a certain point contribute by default to a definition and culture of the industry as a whole.