Trend Vision Argon & Co: Protecting transformations against idea overkill

Under pressure from the Corporate Sustainability Reporting Directive (CSRD) and the need for more sustainability and circularity, food & beverage companies must undergo radical transformations. But only 25 to 40% of these transformations are successful. According to Aart Willem de Wolf of consultancy firm Argon & Co, this is due to an overkill of initiatives with unmeasurable results. To separate the wheat from the chaff, he recommends the outside-in method.

These are challenging times for companies in the food & beverage industry. They need to make their supply chains transparent, so that consumers can see the origins of ingredients and the total carbon footprint of each product. There is societal pressure to make products more sustainable and packaging more circular. ‘This is quite a tricky one,’ De Wolf observes. ‘R&D departments try to incorporate as many sustainable raw materials in their products as possible, but without compromising on flavour, aroma or the overall experience. Then the resulting products must also be taken to market successfully. Meat substitutes illustrate how difficult that is.’

Recipe for failure

According to him, these megatrends call for profound changes at all sorts of levels: in IT systems, people skills, in the choice of suppliers, and in how the supply chain is steered. ‘The fact that this all has to happen simultaneously is in itself a recipe for failure. The transition quickly becomes too big, and if it stretches out over several years it is hard to keep the momentum going. You can see this in the figures; only 25 to 40% of transitions are successful.’ There are many reasons for this, including lack of good leadership, inability to free up resources, and poor communication. But as the main cause, he mentions the lack of a concrete goal for the transition.

Making everything data-driven

There is an idea overkill at most companies, he observes. ‘In a whitepaper, I once called this “corporate sickness”. There are many more initiatives being started than there are people to implement them. Our approach is to make this extremely visible as the basis for deciding what you should and shouldn’t do. This requires hard data. If someone says: “Our CO₂ footprint has to be reduced, let’s start nearshoring!”, then we say: “Fine, but how big is the current footprint, by how much do you want to reduce it, and what will nearshoring contribute to that?” You should only implement the measures that make the biggest contribution to the business goal, and ignore the rest. We call that the outside-in perspective.’

Behaviour determines success

Unfortunately this still does not guarantee success, he cautions. ‘When is a transition successful? Some people say that it’s when the programme is complete, i.e. when the IT systems are in place, the processes are in place and everyone has received the necessary training. But those are just the preconditions. It is ultimately about behavioural change. Will buyers actually source more sustainably, or will they still prefer to stick with the suppliers they know? Breaking ingrained behavioural patterns is the most difficult part of a transition.’ That is why it is important to be able to translate goals into observable behaviour, according to De Wolf. ‘Every strategic change must manifest itself in a change in implementation processes. If that is not the case, the whole transition is pointless.’

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