Sustainability and risk mitigation

Henrik Stamm Kristensen

The fast-changing and complex world in which we live makes crucial for companies the creation of sustainable businesses. They must be able to better understand their supply chains to optimize their costs, mitigate their risks, and innovate in an environment in which their business can potentially be disrupted. For food companies, a better understanding of their supply chains is key in order to preserve security and safety and to optimize their operational models due to the challenging goal of feeding a growing population.

In The Big Pivot. Radically Practical Strategies for a Hotter, Scarcer, and More Open Word, Andrew Winston presents this fast-changing world as a context of both risk and opportunity. Climate change, resource constraints and rising commodity prices, and technology-driven demands for more transparency, are the three mega challenges that are very much related to sustainability and which imply new opportunities for businesses. From his point of view, future development requires sustainability to be a core issue rather than a niche for the so-called green businesses.

Focusing on sustainability drives to a new type of open enterprises, better aligned with a more connected world in which more transparency is demanded. In the food supply chain, transparency allows operational business model optimization, mitigating risk and boosting innovation through collaboration. That’s a radical change when involving food powder blends, a link in the food value chain that traditionally has operated with opacity through the “black boxes”. Thought to protect intellectual property, they also have been hiding information from food manufactures that would allow them to improve their products by reducing their cost or producing them more sustainably; innovating more, by having more access to crucial know-how, and reducing inherent risks in the food sector, through a more sustainable supply chain.

This model is obsolete in an open world in which among some of the issues referred to in The Big Pivot as more concerning for companies’ leaders, are:

  • “Fight short-term focus that distracts from creating value”. Andrew Winston states that companies must strengthen their relationships with communities and customers rather than worrying exclusively about stock analysis.
  • “Basing company goals on science and the targets we all must hit”, meaning that they must pursue the solution of great challenges, such as eliminating hunger in the case of food companies, as the context of their operations and product or services portfolio.
  • “Systematically asking heretical questions”, which is exploring new possibilities and finding out how to contribute, through their everyday activities, to solve the world’s greatest challenges.
  • “Collaborate with unexpected partners”, meaning that they must think strategically about how different stakeholders can make them successful.
  • “Setting out to build resilient and regenerative businesses” to better adapt to change and manage risks such as resource constraints.

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