Pasha, thank you so much for sharing this post. I think it is interesting that you have approached this post from the consideration of the restaurateurs. I couldn’t agree more with your conclusion that those restaurants that don’t move with the digital shift in their business will get left behind. Of course, there will always be those restaurants that sell such a good product that there will be demand even if they take the route of having no booking system and having a first come first served operation.
It is interesting also to consider this shift from the consumer perspective. At first, it seems that there are only positives. I can learn quickly which restaurants perform best based on user-generated recommendations, and I can book in advance and with ease to save a space at one of those restaurants. However, it is not all positive for the consumers. If ratings providers are offering to ‘make bad reviews go away’ if restaurants advertise through them, I, as a consumer, may be misled to attend a poorer performing restaurant that was willing to spend more on advertisements. Similarly, as a consumer, I face an increasing choice problem, where I must select between multiple restaurants. As we know, consumers find choice stressful. This may lead to attendance of those restaurants with higher website positioning through advertising, or selection of those restaurants that are ‘pushed’ to me through a booking system. There is no guarantee that these restaurants will more closely meet my preferences than without the digital shift.
Thank you for the interesting post. As we try to understand whether Zillow will break the realtor monopoly, there are a two significant variables that we should elaborate on:
1. Competition: Zillow’s business model is dependent on scale. If another competitor can establish and develop the same scale, Zillow’s existence may or may not be called into question. In addition, as has happened in the UK, realtors may group together to establish a competing site, thereby perpetuating their role in the monopoly, digital or not.
2. Willingness of users to buy and sell homes through Zillow: Buying a home is a very personal, and high risk transaction. Individuals are not experts and yet Zillow will create incentives for individuals to conduct the transactions themselves. Zillow should work at all levels to reduce the ‘risk’ of the transaction for individuals. This could include software that supports pricing estimates which can be modified based on select variables (e.g. house age, furnishing, leasehold or freehold). Additionally Zillow must offer a service where a Zillow estate agent will visit a users house, to recommend a price, but where the fee is far lower.
By being cognisant of these factors, Zillow will greatly support their chances of breaking the realtor monopoly.
Intriguing article – thank you for sharing. I am particularly fascinated to see the negative public response to this investment, as reading through the objectives, it seemed like a ‘no-brainer’. From the article, it appears that this system has huge potential benefits for i) citizen care, and; ii) the government in the long-term, with limited downsides:
i) Citizens receive improved care through a case management service, as well as a reduced citizen administrative burden
ii) The government could it seems benefit from enormous future cost savings. Digitalising services drastically reduces time to serve as well as the government’s administrative burden
Unless there was a significant failure in delivery of these services, it seems extremely difficult to believe that the investment shouldn’t have happened. However, perhaps what could have been different is to set the expectations differently. As many will have seen, it is rare for a shift to digital to go perfectly smoothly. This potentially could have been better communicated to the public in advance, and is a lesson for all public and private organisations to be aware of before embarking on a digital transformation.
Thank you for the fascinating article. I have always been interested in the cyber security threat and in particular the ability of firms to protect themselves. There are two additional challenges I find particularly unique in terms of the threat that companies face:
• Cyber attacks are not always profit motivated: High capability groups such as Anonymous often engage in hacking for issues of principles, rather than profit. As such, firms must not just ensure that they have high security measures, but they must also ensure that they are consistent and authentic in their messaging, as there is a high risk that they could be exposed otherwise
• The market for talent is skewed against firms: The best talent requires a high price tag in this industry, and in addition some of the best talent may have been engaged in illegal cyber activity in the past. This presents a substantial challenge. How many employees should Citi hire when the investment is purely preventative? Should Citi consider employees who have previously conducted illegal activity, especially if some are they are some of the most talented or does this raise ethical objections for their hiring practises?
As such, firms must be extremely aware of the need to invest in and support other firms cyber-security prevention measures. In particular, given the costs involved, the role for large firms to support smaller firms and for cyber-security service firms to grow is substantial given how difficult it will be for smaller firms to justify the cost of hiring in-house talent.
Thank you for the fascinating article. This case is particularly interesting to me as digital is both an opportunity to support the resolution of the human trafficking problem, as well as a cause of the problem itself. As noted, a causal factor in driving human trafficking is the market for sexual exploitation, which one can assume is in part driven by the increasing access to the internet and pornography across the global population. The article describes how digital is being used to target an outcome of this: human trafficking. However, I would argue that a digital response must also be designed to address the cause: the availability of and demand of online adult material.
Thank you for this fascinating post. It intrigued me to see the extent to which consumers have an effect on Levi’s environmental footprint along the value chain. In fact, one could argue that this share is even higher than that represented. Fabric production is driven by consumer demand for new jeans and as such consumers have some degree of responsibility over the environmental impact from fabric production, whilst of course Levi’s does as well. One response to this would be to reduce consumer demand for jeans through taking a more circular approach to Levi’s value chain. This could for instance be supported by an upcycling/trade-in program similar to that of Patagonia’s which consumers could participate in.
Levi could learn from Patagonia in the marketing of their upcylcing program. This is perhaps most symbolised by Patagonia’s high profile ‘Don’t Buy This Jacket’ advert, thereby encouraging re-use and repair of older jackets. Similarly, one could argue that their ‘Worn Wear’ brand labels sewed on to re-crafted garments are attractive to the millenial, environment conscious consumer, and potentially increase the value of the items. Through initiatives such as these, Levi’s would be able to build increased brand loyalty amongst their consumers in addition to a reputation for long-lasting quality.
Thank you so much for the post. I suspect every chocolate lover will be reading this one!
What intrigues me most about this article is the moves by Lindt & Sprüngli and other chocolate manufacturers towards sustainable practices despite that they of themselves will likely only have a marginal impact on global warming. This includes the supplier Code of Conduct explicitly stating that suppliers ‘strive to minimize their greenhouse gas emmissions’, and Lindt & Sprüngli increasing their share of renewable energy as an input. It is inspiring to see this role-modelling by the manufacturers.
Naturally, Lindt & Sprüngli will also have to plan for the scenario in which global warming continues apace. It is almost certain that these efforts will have to revolve around the supply chain. I was inspired by the ITC eChoupal case where, with a highly fragmented supply chain, through innovative use of technology to educate farmers and improve their ability to invest in farming and crop technology, ITC has been able to greatly increase soya bean output. With a similarly fragmented supply chain, perhaps Lindt & Sprüngli and the other chocolate manufacturers could learn from this case, and look at ways to invest in their farmers through technology, to educate them and encourage further investment by the farmers, thereby increasing their yields. Longer term, as mentioned in some of the previous blog posts, it may also be critical to develop more resistant strains of the cocoa bean, for instance learning from the work that Indigo Agriculture is currently conducting. It will be fascinating to see whether the manufacturers are able to work together in achieving this.
Thank you for this post DF. It is fascinating to see the initiatives that Volkswagen is taking in order to address its environmental footprint. I particularly appreciated the reference you made to the trade-offs around using aluminium, for instance, in car manufacturing. It is critical that manufacturers, and firms more broadly consider all of the potential effects of their ‘sustainability’ initiatives, rather than just presenting initiatives that may sound good to the consumer in a headline but might with full information have neutral or damaging environment consequences.
In the context of Volkswagen and the LEAD cases that we have been addressing recently around leader as architect of an organisation, I believe that there may be one aspect of a successful sustainability strategy that many of us are not addressing. Volkswagen has revealed through the emissions scandal that the architecture and culture of an organisation is critical to whether or not a sustainability strategy will be embraced with integrity as a priority, or whether as in Volkswagen’s case, it will be followed for the purposes of public perception, not necessarily leading to good decisions. Volkswagen has identified that causes of the emissions negligence include insufficient governance of their modular toolkit strategy team in addition to a “mindset within the company that tolerated rule breaking”. As we see in many instances, family owned businesses such as LEGO and IKEA are leading the charge towards sustainability and doing so as they have cultures that are able to think in the long-term. However, a lesson for us as leaders from this case is that in driving any organisation towards sustainability, we must also be thoughtful about designing the firm, its culture and governance to embrace these initiatives, and ensure that we do so with integrity.
Thank you for this post Simon. I am intrigued to by the causes of emmissions scandal that rocked Volkswagen’s performance and perception in the public eye.
It interests me that whilst we typically focus on the hard, technical aspects of sustainability, the soft, cultural and design elements of a firm can be equally important in determining whether or not a company is able to become a sustainability leader, or as in Volkswagen’s case, compromise it’s integrity so as to be perceived as one. This particularly resonates in the context of the LEAD cases that we have been doing, looking at the roles of leaders as architects of their firms. In Volkswagen’s case, the design of governance for the modular toolkit strategy team appears to have been insufficient. In addition, from external reports, there appears to have been a “mindset within the company that tolerated rule breaking”. As we see in many instances, family owned businesses such as LEGO and IKEA are leading the charge towards sustainability and doing so as they have cultures that are able to think in the long-term. However, a lesson for us as leaders from this case is that in driving any organisation towards sustainability, we must also be thoughtful about designing the firm, its culture and governance to embrace these initiatives, and ensure that we do so with integrity.
Thank you so much for the article. I was fascinated to see the direct effect climate change can have on Delta, not just through regulations but the real tangible effects climate change can have on flight times.
The Delta story reminds me of the trade-offs that IKEA faces. The vast majority of their environmental footprint comes from burning jetfuel (in IKEA it was from consumption of wood), and as such their greatest opportunity to improve the sustainability of their business comes from substituting jetfuels with more sustainable alternatives such as biofuels (in IKEA this was FSC certified forestry), as shown in Exhibit 2. The question then becomes whether Delta can achieve the trajectory identified in Exhibit 2. In order to do so, as touched on in a previous comment, Delta will likely have to begin working with their suppliers. There are several options through which Delta could do so, from light touch to heavy touch: i) signal to suppliers through target biofuel input quantities that Delta will be shifting towards biofuels, thereby encouraging investment; ii) commit to purchase certain quantities of biofuels at a given price from select suppliers to guarantee investment; iii) finally, Delta could invest upstream in the biofuel supply chain, thereby taking control of production and ensuring that they meet their targets for share of biofuels as an input, in addition to hedging against future fluctuations in price as other airlines catch on. In this context, it will be interesting to see how Delta develops its business model to ensure that they achieve their targets.
Thank you for the fascinating article. It is interesting to hear about some of the actions that a leading consumer goods firm is taking in order to respond to climate change.
I’m interested that Nike is prioritising the materials innovation aspect of it’s environmental impact, particularly in the context of their value chain footprint. Nike has made sensible first steps by opening up it’s innovation funnel through the relationship that it has engaged in with MIT, representative of the need of many consumer firms to look outwards to source the capabilities to address the challenges of climate change, and in particular materials challenges that they are facing.
Nike has opportunities to show it is committed to its intention and to scale up the ambition of its plans. As touched on, Nike will reveal it is committed to its intention when it is faced with trade-off decisions. Is Nike willing to trade-off profit, or performance (e.g. colouring of their shoes) and pay higher prices for sustainable materials? These are not easy decisions, but will likely have to be made at some stage. If Nike is willing to do so, it will communicate clearly that it is committed to sustainability.
Further, I would argue that given materials innovation will take time, in the short term Nike has an opportunity to look towards the end of its value chain to minimise footprint. A large share of Nike’s footprint falls in ‘consumer use’ and ‘end of life’. Scope therefore exists for Nike to establish collection schemes and to educate the user on the disposal of their products.