Here is an interesting article from The New York Times that talks about the difficulties being faced by the organic milk market and shortcomings of the business model. A lack of demand due to economic downturn has made it tough for farmers to recover the cost of converting from traditional to organic, which can run into hundreds of thousands of dollars. Farmers are overstocked as people begin cutting down on organic milk consumption, more a luxury perhaps than a need. The article points out to the need for connecting the small farmers – who may be remotely located - well to the markets.
http://www.nytimes.com/2009/05/29/us/29dairy.html?_r=1&th&emc=th
Saturday, May 30, 2009
Friday, May 29, 2009
microfinance vs. payday lending
If you're interested in a story about the birth of what I would call an anti-ethical brand, check out this story in Harpers about the beginnings of payday lending: http://www.harpers.org/archive/2009/04/0082451
Essentially, the article details the story of one of the innovators of this business, and explains how it has grown to the point where many of its customers are trapped in an endless cycle of debt - never able to repay. It is a reinvention of a sharecropping system.
I talked to Gagan about this issue briefly after their presentation and she said that MFIC is offering an ethical alternative to payday loans, at rates much lower than the rest of the competition. Will they or other ethical lenders be able to scale up and compete with the payday loan sharks, or should the government step in and regulate?
Essentially, the article details the story of one of the innovators of this business, and explains how it has grown to the point where many of its customers are trapped in an endless cycle of debt - never able to repay. It is a reinvention of a sharecropping system.
I talked to Gagan about this issue briefly after their presentation and she said that MFIC is offering an ethical alternative to payday loans, at rates much lower than the rest of the competition. Will they or other ethical lenders be able to scale up and compete with the payday loan sharks, or should the government step in and regulate?
Wednesday, May 27, 2009
Wonderful Remarks
Class, I thought that you might enjoy this inspiring commencement address given by author and entrepreneur Paul Hawken at the University of Portland earlier this month. Its a manifesto for activism and engagement that applies to those of you who are preparing to graduate as well as those of you continuing with your studies after this semester. I found it really moving and hope you will enjoy it. Click here to read the text.
Wednesday, May 20, 2009
THREADLESS likeness...
For those of you interested in other sites producing products similar to the model Threadless has on their site - I turn you to the following that was recently sent to me in an email from a friend:
RYZ - This hearkens back to the days of slip-ons, but with a much cooler design in mind. RYZ is consumer designed for your feet.
EXUVE - Takes Treadless to a new level calling for designers to design an entire garment.
INFECTOUS - Ads screenprinting to skins for your favorite hardware accessories, like your ipod, laptop, or cell.
RYZ - This hearkens back to the days of slip-ons, but with a much cooler design in mind. RYZ is consumer designed for your feet.
EXUVE - Takes Treadless to a new level calling for designers to design an entire garment.
INFECTOUS - Ads screenprinting to skins for your favorite hardware accessories, like your ipod, laptop, or cell.
Tuesday, May 19, 2009
Oh to be Innocent...
I took a great CSR class while I studied abroad last fall, and we read a case about a cool smoothie company in the UK called Innocent. Just last month, Coca-Cola made a minority investment in the company. Innocent wants to grow, but some of its customers are concerned. I thought I would post the Innocent website and some articles about the deal with Coke as it seems relevant to what we've been discussing lately (i.e. Rhoda's post, Starbucks, Threadless, Burt's Bees, etc.). Enjoy!
http://online.wsj.com/article/SB123913675734598167.html
http://news.bbc.co.uk/2/hi/business/7986901.stm
http://www.innocentdrinks.co.uk/
Sunday, May 17, 2009
Stoneyfield Farms - Smart Supply Chain
I am doing research on Stoneyfield Farms as a brand with a "higher ideal" for an academic internship. During my research, I found that Stoneyfield exhibits the traits of a sustainable supply chain (as discussed in our lecture a couple of weeks ago), with strong emphasis on offsetting its carbon footprint, minimizing solid waste and using responsible packaging. The company's organization and production practices can also be identified as strategic CSR, having a significant impact on the environment and society, while proving to be best practices for smart business. Read more about Stoneyfield's "Earth Actions" and the educational platform it has created for its consumers and community at http://www.stonyfield.com.
Jessica Kimiabakhsh
Jessica Kimiabakhsh
Txts to Empower the Developing World
Here's an interesting form of crowd sourcing that pays mobile phone users in developing countries to accomplish simple tasks for large corporations through text messaging. TxtEagle, is currently deployed in Kenya and will soon be deployed in Riwanda and is providing additional income to those in rural and low income populations as long as they have cell phone access and service.
http://www.txteagle.com/
http://www.txteagle.com/
Saturday, May 16, 2009
Burt's Bees in the Sunday LA Times
Almost as if it had been timed for our class, this Sunday's LA Times (and released earlier today online) has a short piece on Burt's Bees continued success even in face of the latest recession.
http://www.latimes.com/news/nationworld/nation/la-na-bees17-2009may17,0,6395043.story
CEO Replogle is quoted as saying "No matter how bad the economy gets, 'it's the small luxuries, the small indulgences, that people are reluctant to trade off'." The article also attributes the firm's success with the increasing emphasis of consumers to find things that are good for themselves (natural products) and good for the environment.
I'm a bit skeptical on the former as I imagine the luxuries are the first things to go. However, I do see how (as mentioned in the case) the strong loyalty of its customers can help Burt's Bees weather this economic storm. As for the latter, it seems like they were also in the right place at the right time with its increased focus on distribution in mainstream retailers (CVS, Walgreens, Target, Walmart, etc).
In either case, the bigger question (not tackled in the short article) seems to be -- Is their continued success (they're even hiring!) in this recession an indication that they have proven out a way to separate themselves out from their peers in the marketplace? And I'm also curious, for those of you that are customers, do you think they have they done so while maintaining enough authenticity to preserve the "quirky" nature of the brand, or despite losing some of this authenticity as they go mainstream?
http://www.latimes.com/news/nationworld/nation/la-na-bees17-2009may17,0,6395043.story
CEO Replogle is quoted as saying "No matter how bad the economy gets, 'it's the small luxuries, the small indulgences, that people are reluctant to trade off'." The article also attributes the firm's success with the increasing emphasis of consumers to find things that are good for themselves (natural products) and good for the environment.
I'm a bit skeptical on the former as I imagine the luxuries are the first things to go. However, I do see how (as mentioned in the case) the strong loyalty of its customers can help Burt's Bees weather this economic storm. As for the latter, it seems like they were also in the right place at the right time with its increased focus on distribution in mainstream retailers (CVS, Walgreens, Target, Walmart, etc).
In either case, the bigger question (not tackled in the short article) seems to be -- Is their continued success (they're even hiring!) in this recession an indication that they have proven out a way to separate themselves out from their peers in the marketplace? And I'm also curious, for those of you that are customers, do you think they have they done so while maintaining enough authenticity to preserve the "quirky" nature of the brand, or despite losing some of this authenticity as they go mainstream?
Thursday, May 14, 2009
Event on Campus, Monday
The Bottom of the Pyramid to
the Rescue of the Global Economy:
Why Increased Corporate Social Responsibility and Development of New Models
for Microfinance are More Critical than Ever
featuring
Ricardo B. Salinas Pliego
Chairman, Grupo Salinas
Monday, May 18
11:45 – 12:45 P.M.
Korn Hall – Anderson Complex
Lunch will be provided
Wednesday, May 13, 2009
Damned If They Do/Don't?
After the discussion with Tyson Dusch from Starbucks, I started thinking about the increased pressure consumers and advocates are placing on corporations (particularly the larger more public corporations) to be socially/environmentally responsible. When organizations do respond to the pressure, it seems that everyone is quick to criticize their reasoning and methods - - Is this particular organization purely focusing on social impact in order to improve their own brand image in the marketplace? By responding to the social needs of the consumer, could this particular organization have instead increased their environmental impact, another source of frustration for consumers/advocates? It seems no matter how corporations act, in the end, they are damned if they do and damned if they don't.
How do we balance what we think is important for society, and for the environment, while encouraging organizations to continue to develop programs that move beyond improving the bottom line? While Starbucks has put in place several programs to respond to concerns around their supply chains, local growers, the need for fair trade coffee, etc., we as consumers are quick to poke holes in their story. Perhaps it's the level of confusion around fair trades, organics, etc. that has caused us to be so skeptical of the larger firms. So, is it really worth it to be a pioneer in the field of corporate social responsiblity or is it more important to wait until consumers are educated enough to truly understand the impact the corporation is making?
How do we balance what we think is important for society, and for the environment, while encouraging organizations to continue to develop programs that move beyond improving the bottom line? While Starbucks has put in place several programs to respond to concerns around their supply chains, local growers, the need for fair trade coffee, etc., we as consumers are quick to poke holes in their story. Perhaps it's the level of confusion around fair trades, organics, etc. that has caused us to be so skeptical of the larger firms. So, is it really worth it to be a pioneer in the field of corporate social responsiblity or is it more important to wait until consumers are educated enough to truly understand the impact the corporation is making?
Indian Threadless
I was discussing about Threadless with a friend and he mentioned that one of his class mates from college has started an Indian version - http://www.inkfruit.com
I just had a fleeting look at the website - a very similar concept but seems like they have just started - only give you points to shop on their website for selected designs or submitting photos (instead of cash award), doesnt seem to have the referral policy and the blog doesnt seem to be as comprehensive.
Yet, a proof of low barriers to entry but it would be interesting to see what they do differently to adapt to Indian context as well as things different from Threadless - so far they just seem to copy them!
I just had a fleeting look at the website - a very similar concept but seems like they have just started - only give you points to shop on their website for selected designs or submitting photos (instead of cash award), doesnt seem to have the referral policy and the blog doesnt seem to be as comprehensive.
Yet, a proof of low barriers to entry but it would be interesting to see what they do differently to adapt to Indian context as well as things different from Threadless - so far they just seem to copy them!
Monday, May 11, 2009
cause-related marketing
I have two separate thoughts.
1. We did not talk much about one Threadless stakeholder group: the Street Team. While it is common for companies to offer discounts, rebates, and other credits to consumers, Threadless has built a community of customers who actively market the Threadless t-shirts. I think what Threadless has done goes well beyond the radio stations that get people to put bumper stickers on their cars. Street Team members are not just snapping photos and uploading them, they are making short movies of themselves and the Threadless t-shirts to promote their products. If Threadless had sold to the large retailer, this free advertising content might have been at risk.
2. On the way home, I heard this radio ad: "Fletcher Jones Mercedes wants to help our schools. But we need your help. With every Mercedes you buy, Fletcher Jones will donate $XX (I forgot) to the school of your choice. We sell XX cars per month. If everyone participates, that would mean almost one million dollars (a year, I think) for Southern California's schools."
Target, Office Depot, and the Galleria Mall have similar programs. The problem I have always had with these marketing efforts is that they send more money to the schools that already have more money. Since people with more money spend more money, and send their kids to wealthier schools, those schools get most of the benefits while the poorest schools get much less. In total, all these programs might not add up to that much, but if they do end up having an appreciable impact, that might even be worse. People might think, if private donations are going to fund my local school, why should I vote for higher taxes to support other schools?
1. We did not talk much about one Threadless stakeholder group: the Street Team. While it is common for companies to offer discounts, rebates, and other credits to consumers, Threadless has built a community of customers who actively market the Threadless t-shirts. I think what Threadless has done goes well beyond the radio stations that get people to put bumper stickers on their cars. Street Team members are not just snapping photos and uploading them, they are making short movies of themselves and the Threadless t-shirts to promote their products. If Threadless had sold to the large retailer, this free advertising content might have been at risk.
2. On the way home, I heard this radio ad: "Fletcher Jones Mercedes wants to help our schools. But we need your help. With every Mercedes you buy, Fletcher Jones will donate $XX (I forgot) to the school of your choice. We sell XX cars per month. If everyone participates, that would mean almost one million dollars (a year, I think) for Southern California's schools."
Target, Office Depot, and the Galleria Mall have similar programs. The problem I have always had with these marketing efforts is that they send more money to the schools that already have more money. Since people with more money spend more money, and send their kids to wealthier schools, those schools get most of the benefits while the poorest schools get much less. In total, all these programs might not add up to that much, but if they do end up having an appreciable impact, that might even be worse. People might think, if private donations are going to fund my local school, why should I vote for higher taxes to support other schools?
Understanding the market
Since our discussion today involved performing the STP analysis and doing appropriate research before entering the market, i thought it will be apt to share some of the personal things i have been working on to get some feedback from the amazingly diverse class that we have.
I will be graduating with my PhD in Electrical Engineering this quarter and am planning to return to India with a desire to do something in the rural technology sector. I would like to engage in a work that empowers the rural communities in a sustainable and most effective way.
To this regard, with another friend, we are planning on traveling in India for 3 months, spending time with communities, rural entrepreneurs, bureaucrats, activists, among others who are already doing great work in India. The objective will be to understand, first hand, about the current conditions and trying to find something where we can contribute most effectively.
We have created a website that gives details about what we plan to do that gives details on places we plan to visit, people we plan to meet up and the data we plan to collect:
http://bharatdiscovery.wordpress.com/
I would love to hear back any feedback from all of you as well as am open for requests for collecting any specific data as we travel which can be useful to anyone else in the class as well.
I will be graduating with my PhD in Electrical Engineering this quarter and am planning to return to India with a desire to do something in the rural technology sector. I would like to engage in a work that empowers the rural communities in a sustainable and most effective way.
To this regard, with another friend, we are planning on traveling in India for 3 months, spending time with communities, rural entrepreneurs, bureaucrats, activists, among others who are already doing great work in India. The objective will be to understand, first hand, about the current conditions and trying to find something where we can contribute most effectively.
We have created a website that gives details about what we plan to do that gives details on places we plan to visit, people we plan to meet up and the data we plan to collect:
http://bharatdiscovery.
I would love to hear back any feedback from all of you as well as am open for requests for collecting any specific data as we travel which can be useful to anyone else in the class as well.
Sunday, May 10, 2009
McDonald's CSR
In light of our discussion of Starbucks, I looked up the McDonald's CSR report just to compare competitors. McDonald's doesn't go into as much detail, but one thing that did catch my attention was their coffee supply chain practices (http://www.crmcdonalds.com/publish/csr/home/report/sustainable_supply_chain/our_approach/coffee.html). They mention their dedication to Rainforest Alliance-certified farms. We've talked a number of times in class about the need for consistency in rating business' socially responsible practices, but it seems like there's a need for consistency in supply chain certifications as well. And what good do the ratings do if consumers don't know the difference?
Friday, May 8, 2009
The $100K Green House
Full article here: http://www.philly.com/philly/living/green/20090508_Changing_Skyline_.html
I was reading this article and it reminded me of the debate on whether or not Trader Joes was a catalytic innovation. This developer, Chad Ludeman, is building small (just 'big enough'), energy efficient (they claim to subsist on $1200 worth of energy per year), green row homes in Philadelphia. The homes are not beautifully designed or built of the best materials, but instead offer green living to people who otherwise could not afford it: "'The typical new house [in Philadelphia] is three stories, 2,000 square feet, and sells for $500,000.' And that's with the usual energy-guzzling features. 'We felt green design should be available to the average working stiff.'"
There are other green features that he uses, such as insulated panels instead of wood-frame construction, solar panels, and recycled materials. I guess we could say it offers green design to those of us who are not 'rich white women'.
So it is 'good enough' and it is serving an under-served segment of the population. What do people think? Is this a catalytic innovation? Either way, I thought it was a cool article - enjoy!
Tuesday, May 5, 2009
Ecofaebrick: a sustainable supply chain
I believe Adam Green mentioned this brick in class as an example of a sustainable raw material. Here is a link to an article on Treehugger, a wonderful website for all you hippies:
http://www.treehugger.com/files/2009/04/ecofaebrick-name.php?dcitc=TH_rotator
http://www.treehugger.com/files/2009/04/ecofaebrick-name.php?dcitc=TH_rotator
Monday, May 4, 2009
Social Entrepreneurship Conference Link
(Last plug for this... I promise)
http://seucla.eventbrite.com/
Speakers:
Lakshmi Pratury: CEO, Ixoraa Media; TED India
Lata Krishnan: President, AIF; CFO, Shah Capital Partners
Premal Shah: President, Kiva; Founder, Silicon Valley Microfinance Network
http://seucla.eventbrite.com/
Speakers:
Lakshmi Pratury: CEO, Ixoraa Media; TED India
Lata Krishnan: President, AIF; CFO, Shah Capital Partners
Premal Shah: President, Kiva; Founder, Silicon Valley Microfinance Network
e-Chaupal: Optimizing the value chain in indian agriculture
Since we will be discussing the value chain for this week, i thought this will be an appropriate post. ITC, one of the big FMCG companies in India, launched an internet based initiative back in 2000 to improve the value chain for Indian farmers. In their own words:
ITC’s Agri Business Division, one of India’s largest exporters of agricultural commodities, has conceived e-Choupal as a more efficient supply chain aimed at delivering value to its customers around the world on a sustainable basis.
The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterised by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, among others.
For more details - http://www.itcportal.com/sets/echoupal_frameset.htmSaturday, May 2, 2009
Starbucks report
I'm not sure if anyone else is missing the Starbucks reading, but I couldn't find it in my course packet. Here's a link to what I believe is the right document: http://starbucks.com/flash/yearinreview/Starbucks_Fiscal_2007_Year_In_Review.pdf
The Fortune at the Bottom of the Pyramid
Professor Jonathan mentioned CK Prahalad, the Ross School Professor in our last class. I started reading his book The Fortune at the Bottom of the Pyramid a while ago but slowly the fast paced quarterly system took over completely and the book rests on the shelf.
Although, I didn’t finish the book but I realize how more than social entrepreneurship he is talking about pure business in the Friedman sense. At the same time he is talking about a paradigm shift in the approach of people and businesses towards the four to five billion who live on less than $2 per day. The basic premise of this book is to stop thinking of them as "poor" who need charity, and instead consider them as a huge class of consumers who present a great and profitable business opportunity. The book calls this class as the "Bottom of the pyramid" - the largest set of consumers, but mostly under-served as of today. The key aspect to realize is that the exploiting this business opportunity requires innovation in every aspect of the product cycle - from product development, cost, packaging, marketing and distribution. The consumers are value conscious yet very discerning. Merely tweaking solutions originally created for developed economies and rich consumers are almost certain to fail. New and creative approaches are needed to convert poverty into an opportunity for all the players; the book aims to bring together the NGOs, governments and communities who understand the BOP well, with the investment and business acumen of large MNCs and domestic firms. By effectively targeting the BOP, businesses can not only make huge profits but in the process also serve to improve and lives of billions of people potentially serving as a powerful tool to help alleviate poverty. He cites successful examples of companies such as:
HLL, India - http://www.hllshakti.com/sbcms/temp15.asp HLL used an innovative approach to penetrate rural areas where two-thirds of India's population lives, with a scheme named "Shakti" (meaning empowerment). Provided small-scale enterprise opportunity and improved rural living standards through health and hygiene awareness
ITC, India - http://www.itcportal.com/ one of its products is cigarettes, for which the company has won several awards for occupational health and safety, environmental managements systems as well as product excellence
Cemex, Mexico - http://www.cemex.com/su/su_lp.asp http://en.wikipedia.org/wiki/Cemex - world's largest building materials supplier and third largest cement producer yet socially and environmentally sustainable.
Casa Bahia, Brazil - http://findarticles.com/p/articles/mi_gx5202/is_2004/ai_n19123371/ - the largest retail chain store in Brazil. It was one of the first companies to offer the highly successful credit sales schemes in Brazil mainly aimed at selling electronic and other household products to the urban poor.
I must go back to the book soon...
Although, I didn’t finish the book but I realize how more than social entrepreneurship he is talking about pure business in the Friedman sense. At the same time he is talking about a paradigm shift in the approach of people and businesses towards the four to five billion who live on less than $2 per day. The basic premise of this book is to stop thinking of them as "poor" who need charity, and instead consider them as a huge class of consumers who present a great and profitable business opportunity. The book calls this class as the "Bottom of the pyramid" - the largest set of consumers, but mostly under-served as of today. The key aspect to realize is that the exploiting this business opportunity requires innovation in every aspect of the product cycle - from product development, cost, packaging, marketing and distribution. The consumers are value conscious yet very discerning. Merely tweaking solutions originally created for developed economies and rich consumers are almost certain to fail. New and creative approaches are needed to convert poverty into an opportunity for all the players; the book aims to bring together the NGOs, governments and communities who understand the BOP well, with the investment and business acumen of large MNCs and domestic firms. By effectively targeting the BOP, businesses can not only make huge profits but in the process also serve to improve and lives of billions of people potentially serving as a powerful tool to help alleviate poverty. He cites successful examples of companies such as:
HLL, India - http://www.hllshakti.com/sbcms/temp15.asp HLL used an innovative approach to penetrate rural areas where two-thirds of India's population lives, with a scheme named "Shakti" (meaning empowerment). Provided small-scale enterprise opportunity and improved rural living standards through health and hygiene awareness
ITC, India - http://www.itcportal.com/ one of its products is cigarettes, for which the company has won several awards for occupational health and safety, environmental managements systems as well as product excellence
Cemex, Mexico - http://www.cemex.com/su/su_lp.asp http://en.wikipedia.org/wiki/Cemex - world's largest building materials supplier and third largest cement producer yet socially and environmentally sustainable.
Casa Bahia, Brazil - http://findarticles.com/p/articles/mi_gx5202/is_2004/ai_n19123371/ - the largest retail chain store in Brazil. It was one of the first companies to offer the highly successful credit sales schemes in Brazil mainly aimed at selling electronic and other household products to the urban poor.
I must go back to the book soon...
Friday, May 1, 2009
Prep for Class#5 - and upcoming speakers
Hi everyone. I sent around this information in an email, but in case you might have missed it, here is the information:
(1) There has been some confusion, so please allow me to clarify: the Threadless case will be assigned at the end of the next class. This will allow everyone to discuss the evolution of supply chains and apply those learnings to your analysis of the case. If you have not done so, I would encourage you to check out http://www.threadless.com/ to learn more about the company and experiment a bit with their model.
(2) As a reminder, we have a guest speaker attending on Mon, May 4. Tyson Dusch is a regional manager with Starbucks who will be speaking about their innovative supply chain practices. In order to prepare for Tyson's visit, please explore Starbucks' "ethical sourcing" on their website: http://www.starbucks.com/sharedplanet/ourResponsibility.aspx
(3) We also have a guest speaker attending on Mon, May 11. Chris Gebhardt is EVP of Participant Media and GM of TakePart, their very robust online social action platform. If you are not familiar with it, you might visit the site at http://www.takepart.com/blog/. Chris has deep expertise in marketing from his days at Pepsico and Ogilvy, so will be addressing marketing strategies that spawn activism and engagement.
Have a good weekend.
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