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If Products Could Mar 8 2010


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If Products Could Mar 8 2010

  1. 1. IF PRODUCTS COULD TELL THEIR STORIES <ul><li>TOWARDS A MODEL OF SUSTAINABLE DESIGN </li></ul><ul><li>JEN VAN DER MEER </li></ul><ul><li>NYU ITP </li></ul><ul><li>WEEK 5: MARCH 8, 2010 </li></ul>
  2. 2. RECALLED 3_2_2010
  3. 3. RECALLED 3_5_2010
  4. 4. RECALLED 2_19_2009
  5. 5. RECALL: BEST FOODS HYDROLYZED VEGETABLE PROTEIN <ul><li>Bouillon Products </li></ul><ul><li>Herbox </li></ul><ul><li>Dip and Dip Mix Products </li></ul><ul><li>Concord Foods </li></ul><ul><li>De la Casa </li></ul><ul><li>Delicioso </li></ul><ul><li>Follow Your Heart </li></ul><ul><li>Fresh Food Concepts </li></ul><ul><li>Great Value </li></ul><ul><li>Johnny's Fine Foods </li></ul><ul><li>McCormick </li></ul><ul><li>Oak Lake Farms </li></ul><ul><li>Reser's </li></ul><ul><li>Rojo's </li></ul><ul><li>T. Marzetti </li></ul><ul><li>Dressing and Dressing Mix Products </li></ul><ul><li>Follow Your Heart </li></ul><ul><li>Reser's </li></ul><ul><li>Trader Joe's </li></ul><ul><li>Gravy Mix Products </li></ul><ul><li>McCormick </li></ul>Pre-Packaged Meal Products Follow Your Heart Prepared Salad Products Reser's Snack and Snack Mix Products CVS HK Anderson Hawaiian National Pretzel Company President's Choice Safeway Sunflower Markets Soup Mix Products Castella Homemade Gourmet Stuffing Products McCormick
  6. 6. TODAY’S FOCUS: THE CONTRAINTS AND OPPORTUNITIES OF CAPITALISM _2 means to seek competitive advantage _Limits to growth _Alternatives
  7. 7. <ul><li>2 BASIC BUSINESS MODELS: </li></ul><ul><li>There are 2 basic ways a company can gain competitive advantage </li></ul><ul><li>Differentiation to earn higher margin than competitor </li></ul><ul><li>Drive to be most cost efficient/high performance company in an industry </li></ul><ul><li>Note: neither position is stable over time. </li></ul>
  8. 8. <ul><li>“ MAKING THE CASE” FOR GREEN BUSINESS </li></ul><ul><li>Differentiation to earn higher margin than competitor: </li></ul><ul><li>Whole Foods. </li></ul><ul><li>Method Home. </li></ul><ul><li>Green Car NYC. </li></ul><ul><li>What other products/services are on your radar? </li></ul>
  9. 9. <ul><li>“ MAKING THE CASE” FOR GREEN BUSINESS </li></ul><ul><li>Differentiation to earn higher margin than competitor: </li></ul><ul><li>How the case is made: </li></ul><ul><li>Consumer research: pre concept development to understand motivations and drivers and identify unmet, untapped needs. </li></ul><ul><li>Post concept development to ensure there is market and an appetite for premium (i.e. more expensive) positioning. </li></ul><ul><li>Pricing model research to prove the premium positioning. </li></ul>
  10. 12. Build or Buy? These once small companies were bought by the large food processors - Because of their higher growth rates.
  11. 13. “ MAKING THE CASE” FOR GREEN BUSINESS 2. Drive to be the most cost efficient supplier. “ Green” has not always mean more cost effective, undercutting the market on price. Clorox Greenworks. 42% market share in 1 year.
  12. 14. <ul><li>“ MAKING THE CASE” FOR GREEN BUSINESS </li></ul><ul><li>2. Drive to be the most cost efficient supplier. </li></ul><ul><ul><li>How the case is made: cost scenario development and efficiency </li></ul></ul><ul><ul><li>reporting to prove that costs can be maintained and even further </li></ul></ul><ul><ul><li>reduced. </li></ul></ul><ul><ul><li>If consumer testing involved, it is to demonstrate that the </li></ul></ul><ul><ul><li>functional performance is equal or better to competitors. </li></ul></ul>
  13. 16. “ MAKING THE CASE” FOR GREEN BUSINESS: In tech, the premium exists in the beginning, with diminishing margins as the product moves along the adoption curve.
  14. 17. Case Study: Interface FLOR carpets Long term commitment to transition the entire company towards zero environmental impact. How to make the case to investors that environmental strategy is a path to profit growth?
  15. 18. Case Study: GE ecoimagination Shift from fossil fuels to more efficient forms of energy. What was the eco-imagination brand marketing program all about?
  16. 19. Case Study: Beyond Petroleum. Which green business model is BP pursuing here?
  17. 20. WHY GREENWASHING OCCURS Aim to reap benefits of higher margins consumers attribute to green products, without understanding the actual environmental improvements of a product or service. Desire to neutralize the effect of environmental activists who have painted a negative picture of company. How do you know when a company is greenwashing?
  18. 21. LIMITS TO GROWTH &quot;Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
  19. 22. ALTERNATIVES TO FOR PROFIT, NON PROFIT: COOPs An association of people united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Roots in England (early 1800s). Well known Coops: NYC Real Estate REI Coop Credit Unions
  20. 23. ALTERNATIVES: B CORP Certified by B Lab, designates a business as socially responsible. Requires a business to rewrite its articles of incorporation to make it clear to investors that the business's managers are required to also consider the interests of societal stakeholders: such as employees, communities, and the environment. “ Because they are legally required to maximize shareholder value, profitable, high-impact businesses find it difficult to scale and create liquidity without compromising their mission.” – B Corp
  21. 24. ALTERNATIVES: CONSCIOUS CAPITALISM From: The primary goal of corporate leaders is to return value to shareholders To: the primary goal of corporate leaders is to optimize the returns to all stakeholders: customers, employees, supply chain partners, communities, the environment and shareholders But conscious capitalists have a libertarian view – entrepreneurship trumps government intervention. Skeptical that business can solve environmental problems unless given the legal framework to do so, eliminating harmful subsidies, instituting a green tax shift, and establishing land trust, so that businesses can “solve more problems.” _Freakonomics “Is There a Case for Conscious Capitalists” Famous Conscious Capitalist: John Mackey, Whole Foods
  22. 25. ALTERNATIVES: SOCIAL ENTREPRENEURSHIP (disagreement/fuzzy definitions). Non profit, for profit, citizen groups, government workers who measure their success in social impact in addition to financial impact. Also used to describe philanthrocapitalism- non profits becoming more business-savvy, more financially sustainable. Famous Social Entrepreneur – Muhammed Yunnus, Grameen Bank The Myths and Realities of Philanthrocapitalism. Critique of Social Entrepreneurship – Paul Farmer – “social entrepreneurs obsessed with scale” and “lack a commitment to the destitute.”
  23. 26. ALTERNATIVES: TRIPLE BOTTOM LINE Accounting for 3 bottom lines: financial, environmental, social Problem: financial accounting provides standards. There are no universal standards for environmental, social reporting the rival the precision of $$ and Euros and the like. Difficult to put a quantitative and qualitative value on eco/social. Getting to the Bottom of the Triple Bottom Line (Critique)
  24. 27. ALTERNATIVES: OPEN SOURCE STANDARDS CREATION The Impact Reporting and Investment Standards organization (IRIS). Launched at SOCAP09, and led by The Rockefeller Foundation, Acumen Fund, and B Lab, IRIS plans to create a common language and framework for defining, tracking and reporting the performance of impact capital. One of the group’s key initiatives is to share the Acumen Fund’s measurement Pulse software management system for non-financial data (developed in partnership with Google and Launched as a “user configurable open source toolset,” the plan is to evolve as an industry standard for funders and grant givers to transparently track impact.
  25. 28. <ul><li>NEXT CLASS: MIDPOINT REVIEW </li></ul><ul><li>2 Page Briefing with the following outline: </li></ul><ul><li>The product you’ve chosen </li></ul><ul><li>Financial drivers (how does the company that makes this thing makes money, how do they innovate) </li></ul><ul><li>Key regulatory issues (how does the government legislate this industry) </li></ul><ul><li>Activists/NGOs (what issues are advocacy groups targeting in relation to this thing) </li></ul><ul><li>Consumer drivers (how have consumer behaviors shifted with regards to this thing) </li></ul><ul><li>In class we’ll trade papers and you’ll be asked to present another classmate’s work, so keep your briefing succinct. </li></ul>