....Companies that will be around and successful ten years from now are those that decide now to rank happiness higher than earnings per share...

A successful food & beverage company of the future, say in 2025, will have dealt with a core set of challenges in a much better way than its competitors. This will include relentlessly nurturing a growing number of happy consumers, providing a higher perceived relevance and purpose to its entire business eco-system (employees, suppliers, consumers, communities, …), generating not only more profits but “sustainable” profits, contributing to better lives of staff and consumers alike, taking radical steps to adapt their organisational structures, and constantly adapting their business models and relationships with consumers (touch points, proximity, real-time and continuously-open conversation channels).

And just when you thought this was enough of a challenge in itself, shareholders also have to be educated and convinced that sustainable value creation does not come from quarterly earnings reporting but from deeply-embedded ways of working and higher happiness levels of their total workforce.

Innovation versus sustainability?

Should you make your company sustainably innovative or innovatively sustainable? Don’t choose. Embrace both and run with it. What really matters is enabling your organisation to anticipate changing consumer “need states”. Not just of those consumers that already buy from you, but of those consumers that buy from your competitors. Herein lays untapped business potential: shifting more resources to understand why consumers don’t buy your brand.

Changing food supply chains models

The food value chain will come under pressure due to the demographic burst (9 to 10 billion humans will inhabit our planet around 2050, and 15 billion by 2080 if nothing changes). But it must! Anticipating the scarcity of water, (probably the key ingredient of all food and beverage ingredients) means re-evaluating not only your current factory footprint, but the entire supply chain model as well.

Will you be able to grow or source the ingredients you currently do 15 years from now? Will there be enough water in that region? Can you drastically reduce your factory’s water consumption by then?

Water is not the only problem

Sourcing all your food or beverage ingredients from sustainable sources is rapidly becoming enforced by shifting requirements from global retailers. Good for the planet, good for the consumer, but it’s less sure how good it is for profits unless companies decide to act now. The question is how to keep raw materials costs down under scarcity, at least until growers have integrated new sustainability requirements into their business model and become better able to keep prices at current levels.

The new normal for the food industry

Nothing will be ever normal in the food industry. Stable sourcing, world-class manufacturing, state-of-the-art supply chains, innovation excellence and talent management are moving targets. Once you think you have the best factory output in the world, a new technology comes along, meaning new machines, new processes, and new learning curves.

Once you think your organisational structure is fit-for-purpose and you have the best person in each position, people switch jobs, move laterally, get frustrated, and ultimately disrupt your carefully-built “winners mentality”. Or your competitor is just smarter or more agile and redesigns the entire category of products resulting in innovative success .
At best, the “New Normal” state for the food industry may be reached in the short term when consumer attitudes towards meat and fish have shifted radically and simultaneously. And when technological advances are of such a nature and magnitude that the new food pyramid, (and thus food consumption patterns), will force food growers and manufacturers to exclusively market products with minimal environmental impact.

In pursuit of innovation excellence and operational excellence

The recipe for success is to achieve both simultaneously. Why does this matter? People are at the centre of the equation in both states of excellence. Even the smartest computers on earth, (and they get smarter every day), do not innovate. People are innovators, not machines. For operational excellence, it’s the same thing. You may disagree. The common belief is that operational improvement comes from focusing on seamless end-to-end processes which is true but misses one crucial point: people make the difference, also in achieving best-in-class operational performance.

How it comes together

Simply put in equation format:

1) Boost your Innovation performance + Embed Improvement loops leads to Profitable change

2) Come up with New stuff + Execute it Better leads to Sustainable Competitive edge.

So does excellence mean profitability?

The good news is that the answer may be quite simple after all. By producing new stuff that is better than your competitors, you have a double competitive edge. All it really takes is driving your innovation efforts and continuous improvement efforts more aggressively and in full sync with each other so that it brings you closer to a recurrent profitable change management loop. Simply put, all you need to master is the Innovation Repeat Loop ©, which means maximising innovation efficiency, accelerating innovation performance to generate lasting and recurrent innovation breakthroughs or so-called “game changers”..

But what about true happiness?

Companies that will be around and successful ten years from now are those that decide now to rank happiness higher than earnings per share. To reach this state of nirvana, a new generation of CEOs are required. CEOs genuinely obsessed by making the correlation between happiness and profits. They will break the rules, educate their boards, and eat happiness for breakfast.
Many Asian companies have already understood this, and are acting upon it right now. European food industry leaders need to adopt a much stronger stance towards this profitability lever, as it does make people smile instead of generating real conversations on how to achieve it. 
If you haven’t started the process in your business, or don’t see the point, let’s have a conversation.

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Erwin De Spiegeleire leads the Consumer Goods & Retail Practice at Papilium Consulting, is the founder and CEO of Stratadvice Consulting and is a regular speaker and contributor to industry events.
Contact details: e.despiegeleire@skynet.be