How Small Food Companies Could Benefit from Greater Diversity
Big data may offer a competitive advantage for businesses that can now adapt quickly to changing markets. But for smaller businesses without such data abundance, can diversity strategy offer a reasonable alternative?
Companies based in Western Europe are generally renowned for their speed, ability to adapt, and their innovation. But competitive advantage born from such qualities did not evolve naturally. These companies have worked hard to change and develop specific management philosophies and skills.
A prime example is the Swiss giant Nestle. The global competitiveness that Nestle has enjoyed has come, at least partially, from diversification of its leadership pipeline and outward-looking management culture.
50% of Nestle’s senior marketing leaders are now female, and 41% of its junior associates are from ethnically diverse backgrounds. 87% of its employees reported feeling more engaged as a result (Source)
An outward-looking management culture has been a natural progression for many businesses in this age of social media. It might seem obvious to some, but for a long time, firms seemed to be product-driven, creating products based on company strengths and resources rather than adapting those resources to suit the market. Newer market-driven strategies, on the other hand, breed adaptiveness as a natural consequence.
When it comes to smaller food businesses, the same principles do not seem to be applied as often, and I wonder if this might be an ego issue. The owner-managed company might have some substantial advantages, but its weaknesses can include personal pride obstructing correct decision making. Often entrepreneurs revere their knowledge like a dragon guarding its treasure. They fail to read about strategy because they feel like they already know everything there is to know. They fail to understand that in a rapidly evolving world, strategies also need to be able to change quickly.
A giant like Nestle, on the other hand, lacks the existence of any individual at the helm of decision making. Again, this can have its disadvantages, such as ethical considerations becoming only relevant when consumer-driven. But an advantage is that there is no ego to get in the way of change. A large business like Nestle has a big picture view of the industry simply because it’s capacity to store data is much more abundant; hence its information systems are more powerful. So, there is less need for human decisions. The company can adapt-almost in real-time, to the changing needs of the market.
Perhaps it is a stereotype to say that the Swiss have always been associated with high value, low demand products such as expensive chocolate and watches. But what is clear is that the Swiss economy is small. For Swiss companies to grow, they have no choice but to focus on the international market. Many Swiss companies have been very successful at this. What is their secret? The simple answer is — diversity. If a company wants global revenues, it needs to employ global leaders. Most Swiss executives are not from Switzerland.
For a long time, people that preached about diversity in business were viewed as the corporate version of hippies. The variety was seen as something that was more about ethics than a robust business strategy. But experience and data have shown us otherwise. The engagement of diversification strategies is now being exposed as one of the essential business strategies of our time.
With Tosla, I understood all of this from day one. Although Tosla is still relatively small, almost fifty percent of our decision-makers come from outside of our homeland. I purposely use the phrase’ decision-makers’ here. We are a small business, and I am the sole owner, so to talk about executives would be simply a statement of the ego. I also like to think of them as ‘executives to be’.
Even when I was establishing Tosla, I had a strong vision for diversity. I went searching for a mentor for myself and finally found him through Linked in — an international executive who I think very highly of. After reading this person’s comments and writing, I felt an instant connection with them. You might think that establishing a relationship was challenging, but it was not. These days, I think most business is done online, and the international online world is like having 8 billion people in the next office. So, it was not difficult. One email later and I was on a plane meeting this French Guy in Warsaw. From then on, it has been a process of learning and one of continually making mistakes. Of course, no venture is perfect, but this guy has helped me carve out the best from my imperfections.
When studying entrepreneurship, you read about this kind of thing a lot. Many well-known experts in the field talk about how you have to make a mistake after mistake without taking any of it to heart but continuously learning from your mistakes. Having a mentor has certainly helped with that. By myself, it might have been more comfortable to dissolve into negativity. But, when you have someone who has been through all of it, they know how to laugh it off. They understand the big picture, and they know the saying — ‘You can’t bake a cake without cracking a few eggs’. In other words, without those mistakes, your business will never become what it is meant to be. When you connect with someone outside your culture, it instantly expands your vision of the world.
Why is diversity so powerful?
Companies in the top quartile for gender diversity outperform their competitors by 15%, and those in the top quartile for ethnic diversity outperform their competitors by 35%(Forbes).
Ultimately, a grand mistake that a business can make is forgetting that its customers are made of the same thing that its employees are. A company at the primary level has human beings create something for other human beings to buy. If the team that is making or designing the product is of a single-gender or ethnicity, then it goes without saying that the product will likely appeal to those of the same gender and ethnicity. For many years, men may have believed that they knew what was happening in women’s minds. The age of information is proving that to be very wrong. Scenes from the TV show ‘Mad Men’ come to mind, or the film ‘What Women Want’ — Scenes where men are sitting around discussing ways to market to women. The results are laughable.
Many companies talk about their diversity. Many even write down some code to prove that they are ‘doing the right thing’. Unfortunately, this keeps the whole thing within the pigpen of the ‘hippy culture’; restricting it to a code of conduct that businesses should execute to avoid bad press. It misses the essential point. When companies go out of their way to understand diversity, they will realize that it is a tremendously intelligent strategy. It is not a strategy that requires a degree to understand. It is straightforward.
The diversity of your team will mirror the diversity of your customer base.
Diversifying at the design level will naturally diversify at the customer level. This works because the people making decisions about the product and business will typically include their preferences regardless of how objective they think they are being. Companies might attempt to teach objective thinking to their staff. Still, the subjective mind is far more powerful and will find ways to sneak into their communication without them even knowing.
This being the case, a smart leader should assume that their team is always thinking subjectively and thus overcome the problems of personal preference by utilizing diversification. The more diversification there is in the group, the broader the finished product will be. Other considerations, such as helping staff feel included and empowered, are also relevant, not to mention the big picture improvement of the human race. But, the point is that there are substantial material advantages for the business that engages in diversification. It is a very sophisticated way of operating.
We can easily view diversification and outward-looking management strategy as two separate things. But one negates the issues that we find with the other. There is no limit to the potential utilization of these strategies for a business like Nestle. Since they are so large, they have vast opportunities to diversify. For a small business with under a hundred employees, the possibilities are more limited. So, it is essential as a smaller business, also to adopt an outward-looking management strategy. Again, this will come back to experienced recruitment. Mostly, companies that are still product-driven are likely to be lacking in diversity since both approaches come from the same dinosaur way of looking at things.
The modern business should be looking to adapt to the changing needs of the market by being ‘outward-looking’ or ‘market-driven’. Also, they should be diversifying as much as possible within their resources. These two strategies working in tandem is often what sets businesses aside from each other in terms of growth. The statistics are proving it. Quite simply, any organization that does not include these things as part of their strategy will, sooner or later, get left behind.
My writing is based on true events and stories. It is as real as it gets. I changed parts of the stories and excluded real names, as I don’t want people to get hurt. But most of the stuff I write is authentic and includes my thoughts and feelings.