A new way of doing business..
I would like to discuss what I believe is the future opportunity for New Zealand’s aquaculture industry. When I started my journey - as a Nuffield Scholar, traveling the world for 18 weeks as part of a global leadership program - I had one broad question… How can Aotearoa food producers gain more export value, connect with their consumers in-market, and provide solutions to the ecological and social problems we face….. all at the same time?
We need to get better at designing our value proposition. We do this by making the most of what we already have - the unrealized potential from our current production. Our now extinct farmed flat oyster industry was able to create a difference between a live Kiwa Oyster, a live Tio Point oyster and a pottled Bluff Oyster. This difference was our start point for value creation. For mussels, we do not gain anything by calling all of them Green Shell Mussels, cooking them and putting them all into a frozen half shell format in a box. This just makes them all the same.
It’s the wrong direction…
For those of you who understand wine, you’ll be familiar with the concept of Terrior. This explains the character, the set of all the environmental factors that affect the crop’s phenotype, how it turns out. Only the most unsophisticated among us now think of wine as just red or white.
Shellfish and Seaweed also have Terrior, a sense of provenance, uniqueness that inspires a story just waiting to be told. If we incorporate our farming methods and the unique environment the product is grown directly into our marketing, we can differentiate further and we can really focus on moving away from commodities and place more value on what we already produce.
Although in this case, we’ll be calling it Merrior not Terrior.
I believe the answer lies in a two fold change to how we operate export businesses in New Zealand. Firstly, a focus on nutrition and secondly (causally) a change in your business model. In studying many businesses globally who are transitioning from a commodity food to the higher value proposition of suppling ingredients or extracts to meet a specific demand, I found that fundamentally, they had all changed their business model. Initially, for most, the transition took place as a result of finding a new customer. A customer who wanted their product for its nutritional or health content and not for its traditional commoditized format which was often driven only by a visual characteristic like size or colour. Seldomly, I found that the transition had been planned and when it had, it completely upended the original business. It wasn’t a pretty process but they had managed to disrupt themselves. The results were incredibly transformational and I believe, instead of waiting for that customer, we can actively head in this direction BY DESIGN. Below is my horizontal service model. In its simplest description, this focuses on (1) understanding the problem that your consumer has and then (2) seeking to provide a differentiated solution for that customer. It acts as the pivot between production supply chain and the market.
The problems we are going to solve through this business model are non-communible health and nutrition issues that has the world’s wealthy worried. This model does not provide food, it provides for advanced, specialised nutritional solutions.
Pressure is mounting today on the producer. There are questions around sustainability, environment, ecosystems and health. The Sustainable Development Goals as set out by the World Health Organisation, provide a framework for social auditing. There are 17 different elements and we should all have considered these within our businesses by now. As a business I think these goals force us to think more about our consumers as well as how we get to the point of serving them. They make us think about what we have to change to remain relevant in this new dynamic environment. Food is the perfect vehicle for a transaction to occur between the producer and purchaser. This transaction is around trust, transparency and traceability.
The Insentia “Face of Disruption” leaders report published 3 months ago stated that: “NZ and Australian business leaders were positioning themselves as conservative, committed, and methodical, rather than disruptive, creative or agile”. Somewhere along the line our businesses have become risk adverse. Surely in todays changing and challenging environment doing the same thing that we have always done is the worst strategy possible? We need to start designing what our proposition for the future is going to look like and this needs to start with a focus of 10 years into the future, with a view towards 20 years as well.
Reference the article by Julia Jones in the NZ Herald on 27.07.19. For these changes that Julia has described to actually occur, would mean that we would have successfully created more value from what we are already producing. Additionally, we will really value the grower, the producer of our food. Pressures such as sustainability and environmental drivers, being carbon neutral, all of these will become burden as this cost will be worn by the grower.
Higher value products is a critical part of the solution.
I challenge all of you at your next team meeting, whether it be a leadership, executive or governance level: Think 10 years in advance and throw out some ideas, write them down and keep revisiting them every meeting until they become embedded into your vision for the future. When we tie all these factors together, we begin to operate from a product pull model. We avoid commodity transactions and we gain our value from extracts and ingredients with proven efficacy towards benefit to our health. Importantly, this approach allows us to constantly invest in the backfill of sustainable and regenerative practices because of this connection and understanding to your end consumer.
Our industry faces this change and also beckons the beginning of the relatively new and highly complementary seaweed industry. There is a unique opportunity to get involved and design the industry, from scratch. Here, we can go beyond sustainability and into regenerative principles that can solve our bigger problems through a systems thinking approach. Problems like nutrient run-off, bioplastics, climate change and carbon sequestration can all be tackled. This except from the film 2040 below provides insight on the power of this product to transform our farming and the world. This new industry also provides an opportunity for groups that can often be on opposite sides to work together from day one towards complementary goals. This is exactly what the group REGENSEA proposes to achieve through stakeholder lead mediated modelling approach.
Aquaculture growers, as stakeholders, have the responsibility to approach opportunities such as off-shore farming, and other technology advances BY DESIGN. Whether it be finfish, mussels or seaweed, the value proposition for the product needs to be higher and further differentiated from what we are currently doing. We need to look beyond the actual challenge of merely breaking new ground. Today more than ever we have to question conformity, we need to be thinking strategically, we need to be thinking medium to long term and we need to applying a systems approach to our planning.
Any new Industry in the agricultural and food sector within NZ has a responsibility to balance profit making with our ability to solve environmental problems and provide solutions to assist others. This is how you will engage with your audience and with consumers. This is how NZ will lead the world.