ClareSimonis's Profile

Brown Brother’s decision to move Pinot Noir production to Tasmania was an interesting one. Relocation is an option for some (likely, more serious and larger) wine growers, but may be more difficult for smaller wine growers who don’t have the ability to move their production. A Catalan winery – Bodegas Torres – opted to change out their grapes to combat the impact of climate change on their production. The cultural heritage of the region is deeply important to the winery, taking relocation off the table. They are now using an ancestral grape species that is more resilient to the changing climate. This isn’t withoutu challenges though – they needed to revive the species and grow a plant shoot in vitro for a year before testing the species. Which takes years. It still remains to be seen if this is a sustainable solution.

Sedacca, Matthew. “Resurrecting Ancient Wines That Can Survive Climate Change,” The Atlantic, July 17, 2017, accessed November 2017, https://www.theatlantic.com/science/archive/2017/07/at-least-there-will-be-good-wine/533886/

The own versus outsource production decision poses a lot of tradeoff considerations. While I’ll agree that vertical integration would allow H&M more control over its production, I wonder if the inflexibility of moving production from country to country (gained from an outsourcing model) would offset the benefits vertical integration. Given the onset of isolationist movements, it may be hard for H&M to predict where to put capital investment in a factory. On the other hand, strong virtual integration with supply chain partners might allow H&M to maintain supply chain flexibility while remaining competitive in the fast fashion landscape. Maybe an interesting option would be for H&M to partner with a company (like Li & Fung) that specializes in coordination among supply chain partners and allows for disseminated production, bringing products closer to consumers.

The question around displaced jobs is an interesting one. In the face of innovation, digitization, and, especially, machine learning – there are different schools of thought around how jobs will be impacted. On the one hand, some argue that as a society we’ve been faced with massive disruptions that look much like what we’re experiencing now (think the industrial revolution) and that we over time new types of jobs will be created to replace the old ones. On the other hand, some believe that we’re experience “hockey stick” growth and our ability to replace the displaced jobs will be impossible given the rate of change.

Both scenarios, however, pose questions on how we as society manage this change. In the first case where we do replace jobs – we need to ask ourselves, how do we retrain a workforce to learn new skills? In the second case where we cannot replace jobs – we need to ask ourselves, what does society look like in a world where unemployment is higher? Do we offer a universal minimum income? How will we take care of those who cannot find employment?

“China will have evolved from an “innovation sponge,” absorbing and adapting existing technology and knowledge from around the world, into a global innovation leader.” [1]

I think a key point here is that China’s value as a producer is no longer just cheaper costs, but it’s ability to bring innovation into the supply chain. China’s workforce has strengthened its knowledge capital through years of foreign investment across many industries – like automobiles – that require high-tech operations and innovation. But, can China sustain its position as an innovation hub? And will their costs stay low enough to make economical sense to move factories there vs. other emerging countries (e.g., SE Asian countries like Malaysia)?

There are question marks around China’s growth potential. In the past years it has failed to meet expectations around GDP, output, and investment growth [2].

[1] Roth, Erik, et al. “Gauging the Strength of Chinese Innovation,” McKinsey Global Institute, October 2015, accessed November 2017, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/gauging-the-strength-of-chinese-innovation.

[2] “China’s Economic Growth Dials Back,” Bloomberg Markets, August 13, 2017, accessed November 2017, https://www.bloomberg.com/news/articles/2017-08-14/china-s-economy-slips-some-as-factory-output-investment-slow.

The question of whether consumers will support lab grown meat is a really interesting question. I think it’s a question around where the price point ends up thereby who is the potential consumer.

Will the price point drop below conventional meat? In this case, lab-grown meat can be marketed to consumers who can’t afford the alternative. In this case, I think it stands a chance because it doesn’t have to stand up to the taste-test comparison to conventional meat. But, in this case, will lab meat truly steal share from the traditional meat market?

Will it be priced around the price of conventional meat? In this case, I think it’s tougher to make the case that it’ll steal share from conventional meat. Some who have tried the meat claim it is nowhere near the same taste [1]. However, I recognize there is still a lot of testing and improvements in the space.

For those consumers who are health and climate change conscious – there are other alternatives to lab meat. For example, Impossible Foods has created a plant based burger that claims to taste as good as a traditional meat burger. As these alternatives to conventional meat evolve, who knows what will be on our burger in 10 years!

[1]
Engber, Daniel, “Meat for Meat’s Sake,” Slate Media, May 27 2013, accessed November 2017, http://www.slate.com/articles/health_and_science/science/2013/08/lab_grown_meat_will_never_taste_right_it_s_a_waste_of_time.html

Organizing around digitization poses several challenges – especially for those organizations, like CemArgos, whose core product / service wasn’t birthed in the wake a digital age.

Businesses seem to manage this organization challenge in three ways:
1. Convergence: bring digitization investments to one place in the organization (i.e., under one single executive)
2. Coordination: add mechanisms to organize and coordinate digitization initiatives, but keep the same organizational structure
3. Digital stacks: this approach allows each unit (by geography, product, etc.) to mange its own digitization without coordination or convergence.

I can imagine two organizational structures that might work for CemArgos. Given the newness of digitization to CemArgos, I don’t think the digital stack approach would work , leaving convergence or coordination as best options.

Convergence would allow CemAgros to manage digitization from the top-down by funneling efforts through a digitization organization. However, this approach may meet resistance instead of the business owners embracing and owning any DSC initiatives. Coordination, on the other hand, allows the executives to own DSC initiatives. However, a more decentralized approach may realize fewer synergies across the company.

I’d advocate for a convergence strategy (roll digitization under one executive who is in charge of it). CemArgos organizes its operations into geographies – since the goal of a DSC would be to coordinate across geographies, having DSC ownership under the VP of Innovation or VP of Shared Services might allow for better coordination across the company and its supply chain.

Sources Used:
Weill, Peter and Stephanie Woerner, “Is Your Organization Ready for Total Digitization,” Harvard Business Review, July 24, 2013, accessed November 2017.