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On November 28, 2017, TOM2017 commented on CEDIAM: a fruit processor sees its future in banking :

Thank you Abdoulaye for this very thoughtful and detailed article on Mali’s mango sector. I find it particularly though-provoking to see another “chicken-egg problem” in which financing represents a potentially critical yet scarce enabler for domestic agricultural development.

You very nicely outline the fundamentally positive market growth dynamic with Mango export growth of 21% annually from 2008 to 2015 likely to be constrained going forward by an anticipated supply shortage largely driven by lower production yields as a result of water scarcity – While I clearly understand the very compelling logic to engage a customer such as CEDIAM in the financing of efficient drip irrigation for farmers, I am wondering why the world’s largest drip irrigation providers Jain and Netafim could not play a financing role as well, given they are suppliers of the irrigation equipment?

Ideally, a financing arrangement with a “mini-syndication” between CEDIAM and Jain/Netafim could allow the two companies to share the risk (and preserve funds) of financing farming activities while at the same time reducing the risk of the financing given CEDIAM’s role as a core customer providing demand stability. A similar model is executed in various forms by numerous industrial and consumer product companies in which the equipment manufacturer offers financing to customers. The recent acquisition of Netafim by the Mexican chemicals group Mexichem could also potentially lead to further yield improvements in Mali’s mango sector through the supply of agricultural chemicals in form of product bundles, allowing drip irrigation players to tap into a to-date hard to access market.[1]

[1] Reed, J., “Mexichem to buy Israeli irrigation specialist Netafim” Financial Times (Aug 7, 2017)

On November 28, 2017, TOM2017 commented on Unilever: The Problem of Water :

Thank you Isabelle for this very insightful article on one of the most pressing (and often most insufficiently covered) global issues. The fact that, according to the Water Resources Group, the global demand for freshwater will exceed supply by 40% already in 2030 (!), should be a major alarm signal for humanity and all multinationals to engage and reduce the end-to-end water consumption of their supply chains.

While Unilever has clearly initiated strong efforts this respect, as outlined by you, I think a case study analysis of Nestle, one of the other leading companies worldwide with respect to water footprint, can also be very helpful for Unilever’s continuous optimization. For example, Nestle engages actively in reducing water usage at their suppliers’ farms in developing countries by i) teaching improved water usage practices and ii) connecting farmers with advanced seeds manufacturers (e.g. Syngenta) reducing the required water usage of growing plants. In addition, Nestle also has built “Zero water factories (e.g. in Brazil) allowing the company to extract and use water from milk through a process of evaporation”[1] which is then subsequently re-used in factories for cleaning and cooling processes. As outlined by you, water reduction is a slow process as it requires many different adjustments across an entire supply chain. However, the urgency on this topic leaves no other option than to engage immediately and decisively.

[1] Nestle, Creating Shared Value and meeting our commitments 2016 (Feb 2017)

On November 28, 2017, TOM2017 commented on Transforming Ford: Supplying Mobility in a Digital World :

Thanks a lot Trevor for this very insightful read on Ford’s digital transformation efforts. From my perspective, the key difficulty almost all large automotive OEMs are currently facing can be summarized along the lines of “re-inventing the car while driving it”. Not only do technological advancements such a continuous powertrain hybridisation and electrification require OEMs to make significant R&D investments funded through cash flows from “old” combustion engine powered vehicles, but also the entire business model is shifting from a manufacturer of cars to a provider of mobility. While this clearly implies that automotive manufacturers still need to maintain their historical cash generative core, unfortunately automotive OEMs are now focused to engage in a broad set of entirely new technologies, such as AI (e.g. acquisition of Argo) or lidar sensing (e.g. acquisition of Princeton Lightwave), and business models (e.g. car sharing) at once. As it takes significant time to develop new technologies and business models, companies need to engage “all-in” now. From an organizational perspective, it definitely makes sense to separate new business model development initiatives into separate entities (e.g. start-up business units) to ensure out-of-the-box thinking detached from the influence of the historical hierarchical organization. For example, Daimler, the German luxury OEM, recently announced a revamp of its entire corporate structure to align the organization to “a new reality of shared, electric and self-driving vehicles”.

[1] McGee, P., “Daimler plans revamp to prepare for electric vehicles,” Financial Times (Oct 16, 2017)

On November 28, 2017, TOM2017 commented on GE Digital: One Size Fits None :

Building on Alona’s very interesting comment around the strategic necessity for historical hardware companies such as GE to pursue value-added software and digital offerings to stay relevant, I think GE clearly followed the incorrect implementation approach of a “full roll-out at once” vs. a more considerate approach of “first nail it, then scale it”. Digital offerings and software are obviously not at the historical core of a more-than-a-century-old hardware manufacturing company and respective digital capabilities need to be carefully yet quickly build up internally to capitalize on the future profit pool arising from data analysis and predictive maintenance.
Regarding the organizational set-up of digital offerings & related IT systems, I do agree with GE’s current approach of an envisioned cross-business unit IT platform such as Predix given the eventual required data analysis capability will be fairly similar across applications and main differences will be in the technological integration. Hence, I would advocate for a two-step approach: i) expand and refine Predix’ flexibility to have the potential to incorporate a variety of GE’s IT systems and ii) in the short-to-mid-term focus on the particular digital applications in a specific set of BUs to gain experience and develop a learning curve around monetization of digital offerings. This is also aligned with GE CEO Flannery’s latest announcement of a “sharpened focus of GE’s digital operations […] to prioritise what the company works on and the investment needed to achieve the best results for customers and shareholder”. [1]

[1] Crooks, E., “John Flannery sends cost-cutting signal at GE with shake-up,” Financial Times (Oct 8, 2017)

On November 28, 2017, TOM2017 commented on Guinness and Brexit: What’s it all A-stout? :

The case of Guiness in the context of the currently ongoing Brexit negotiations clearly illustrates the significant implications re-negotiated trade and border agreements can have for the operational set-up of multi-national corporations.
At the same time, the specific case of Brexit-driven operational disruptions at Guiness, associated inefficiencies and potentially resulting lay-offs/plant shutdowns provides considerable leverage for the company to demand governmental support in upcoming trade negotiations. From my perspective, this leverage represents the most effective way for a company to protect its interest under high uncertainty, as shown by Nissan UK which has successfully secured a £100m government Brexit support package. In light of a potential plant shutdown in Northern Ireland, the Irish government has a clear `quid-pro-quo´ opportunity it can utilize vs. the UK government as the main fallout of a production relocation would be in the UK. The fact that the UK government has already stepped back from its hard border rhetoric, now suggesting a “light touch” [1] border underlines the positive impact rational argumentation around the business impact of Brexit already has.

[1] Geoghegan, P., “Brexit’s Northern Ireland Problem,” The Wall Street Journal (Apr 16, 2017)

On November 27, 2017, TOM2017 commented on Siemens’ choice on Brexit Island :

While I clearly agree with Graham and Alison that Siemens is facing in Brexit not only an unknown but also unprecedented situation, I would strongly encourage the company’s top management to take a significantly more proactive approach in hedging itself against an uncertain Brexit outcome. Drawing an analogy to Nissan UK’s approach to Brexit, the most effective hedge in a situation like this includes two elements: i) a national instead of a Pan-European supplier base mitigating FX risk and supply chain disruptions and ii) governmental support guarantees to mitigate any fallout from an adversarial Brexit outcome on Siemens. These two elements are also not mutually exclusive, as the government would more than welcome and support a Siemens led build-up of the UK wind power supplier base providing needed employment and domestic investment. In negotiations with the UK government, Siemens should clearly utilize its negotiation leverage as the company is overall employing 15,000 people in Britain (a similar number to Nissan UK which was granted at £100m support fund) and take a hard stand on politicians to recognize its importance [1]. Ironically, exactly the fact that the Brexit outcome is so uncertain should encourage Siemens to do more than business-as-usual and initiate the no-regret moves (i.e. the build-up of a local supplier base) that would help the company to sustain its operations in the UK regardless of the eventual Brexit outcome.

[1] Gordon, S., “Siemens clarifies Brexit position to UK staff,” Financial Times (Apr 13, 2016)