The advent of platforms, the digital economy, exponential technologies (AI, blockchain, IoT, 3D printing …), geopolitical transformations, sustainability, globalization and the consequent emergence of new business models have established a transformation of the context reference, VUCA, making the classic business and leadership models of organizations increasingly obsolete. In this context, it is now increasingly difficult to achieve a sustainable competitive advantage over time.
In addition to the elements mentioned, in recent months, we are witnessing a black swan, the Coronavirus, which is crumbling not only organizations but also the social system and major world Institutions.
The impact of Covid-19 on businesses is generating 2 types of effects:
- Paralysis on a production, commercial, cognitive and purpose level
- Reactive by promptly picking up on the weaker signals of changing needs in consumers, community and in the country
The solutions proposed by the most resilient companies are those of “Creating Shared Value” to generate economic value by identifying and addressing social problems that intersect with their core business.
I point out the ability of a company to maintain economic growth – sustainability overtime – at a certain level, in the long run does not only come from mere profit, but also the respect and well-being that it can guarantee to employees, from paying suppliers, or rather partners, fairly and in compliance with the deadlines, to return part of the profits to the community in which it operates and to think globally about the problems of the planet.
The objective of this article is to sensitize you on how to bring our business models back into the discussion, by carrying out a “Paradigm Shift“: The main purpose is to get out of paralysis and start thinking creatively, creating new possibilities for our organization, sharing the goal and motivating people to do. The paradigm shift allows to change our current value proposition with a new one, taking into account the impacts it generates on internal and external stakeholders.
An interesting starting point in this sense is a news report of these days, which has particularly struck me, or the production conversion of Bonollo Distillery. The Venetian company known worldwide as a producer of excellent grappa and derivatives has decided to start with a production of denatured alcohol for sanitary uses.
Below is a summary of the newspaper Mattino di Padova
Distillerie Bonollo Umberto against the Coronavirus emergency. The company has decided to donate 100 thousand bottles of denatured alcohol of 0.7 liters to the Regional Civil Protection, which will distribute them according to local needs. Alcohol, in this period, is particularly important both in direct sanitizing use and as a component in the preparation of products intended for sanitation. For this reason, “the company has been distilling the marc for several weeks now, no longer to obtain grappa but to produce alcohol for non-food use. It also requested and obtained from the Customs Agency an authorization to produce denatured alcohol whose first batch was subjected to a special denaturation precisely to create a sanitizing solution at 80% vol. “
This example can be the opportunity to put into practice a method, applicable to any type of organization, to find innovative solutions and generate shared value.
I state that some information that I will report below in the two canvases (they are worksheets that allow more people to work together on a goal and make a shared decision) may be inaccurate since taken from newspapers and TV broadcasters, which of course not go into the detail of the story.
The method uses 2 steps in sequence: first, a paradigm shift is defined and the impacts it determines will be assessed (both internal and external to the company).
Step 1_define the Paradigm Shift implemented by Bonollo using the relative Canvas, which consists of 3 areas:
- The current Value Proposition encompasses all the aspects that make your product / service unique and that makes customers choose your product instead of that of your competitors
For more than 100 years, the Bonollo company has been producing and marketing mainly top quality Grappas made from amarone grapes, brandy and grape brandy for the national and international market. The main customers are bars, wine bars, large specialized distribution.
- The New Value Proposition, explains how to change or add value to the current one to create new value for customers or to target a new customer
Reconverting the production of grappa to produce 95% denatured alcohol for strictly sanitary use, exploiting the assets and potential present in the company.
The target, in this case, are the companies that need alcohol to guarantee the healthiness of the workplace.
- Customer Eyes, explains what are the advantages, the engagement and the reduction or elimination of difficulties of the new proposal seen through the customer’s eyes
New customer (company): being able to reopen safely and this engagement could generate a potential purchase of Grappa products. A difficulty reducer is having a wider availability in finding health facilities.
Current customer: engagement with the consequent increase in brand awareness and potentially also in additional sales
Very interesting things emerge in the new Value Proposition of the Bonollo Distillery:
- Reuse assets to convert production
- Addressing a new target: companies that need alcohol to guarantee healthcare facilities within offices / production
- An Element of Sustainability: feeling part of the community (donating part of the production to the Civil Protection)
- Increase in brand awareness
In general, the questions to ask to give a new meaning to the present value proposition could be:
- How might we convert production by helping part of the health supply chain, exploiting the assets and potential present in the company?
- How might we add value to the customer if needs have changed?
- How might we reach new targets?
- How to partner with other players in the value chain to retain customers?
- Etc …
Step 2_ define the Impact using the relative Canvas, which consists of 2 parts:
- Internal Impact: Assess the impact (with a value of 0-100) of the new Value Proposal it has on the various stakeholders / functions / internal index (which vary according to the objective) in the short, medium or long term.
- External Impact: Assess the impact (with value 0-100) of the new Value Proposal it has on the various external stakeholders (which vary according to the objective) in the short, medium or long term
The impact generated by the Bonollo New Value Proposition in the short, medium or long term.
- The impacts generated are minimal on R&D, Processes, Organizational Structure, Investments, Production and are all short-term effects (12-24 months, i.e. it is assumed that the Covid-19 effect will end)
- The effects generated on the offer are medium-high as it addresses new customers, but surely the turnover and above all the margins will be lower than the production of grappa and everything is concentrated in the short term
- This operation has a very important effect on the Brand, reinforced also by the fact that Bonollo has donated part of the production and made it useful for other production companies. The results will have an echo not only in the short term but also in the medium term
- The impacts generated are minimal at the level of Partnership, Presence in the territory and Supply Chain and all in the short term (12-24 months, i.e. it is assumed that the Covid-19 effect will end)
- The effects generated on the Customer XP (Experience) on the current target are medium-high since engagement of the current customer is generated on issues related to the sustainability of the company and the results will be visible not only in the short term but also in the medium term
- The effects on the new target customers are medium and it is not excluded that they also become consumer customers (consumers of grappa) and the results will be visible in the short term
- Sustainability will have an average impact on the company and the results will be visible in the short term. Since sustainability is a differentiating value, it can be strengthened over time if the company pursues other guidelines.
The Bonollo Distillery has adopted what I call the Virtuous Cycle of Sustainability, a cyclical process that feeds itself and is strengthened by finding inspiration from internal and external stakeholders and making a change in the meaning of the current Value Proposition in a sustainable perspective. This leads to continuous improvement both on the economic magnitude on which sustainability affects and on those connected to it.
The ability of an organization to thrive is measured by the involvement of internal resources and external stakeholders (customers, suppliers, partners …), by its adaptation over time (antifragility) and by the value it manages to create for as many actors as possible.
Your feedback will be welcome