The biggest changes to the food industry since the late 1800s are forcing companies to dramatically re-think what’s important in today’s market, including valuing their failures.
The expatriate Australian, who until recently led the iconic US giant Kellogg Company, says the strict businesses structures which evolved to protect companies from making mistakes have also stopped good, fresh ideas flourishing.
“We naturally hate to fail and we deliberately have all these business rules and quality processes in place to avoid failure, but if we don’t fail we don’t learn anything new,” said John Bryant.
After more than a century of perfecting safe, modern food processing and marketing techniques, big household brand names like Kellogg were now confronted with a fast changing market.
Many in the food retailing and supply chain had been caught flat-footed and struggled to know how to respond.
Don’t dismiss outright any idea which could be different to the way you do business at the moment.
E-commerce currently handled only about two per cent of US food sales, but in the Europe more than 10pc of sales were transacted through online markets, and in China consumer purchases via digital platforms had jumped to 30pc.
“E-commerce will fundamentally disrupt retail and manufacturing traditions and ideas in a way we haven’t seen since late 1800s,” Mr Bryant told a major agribusiness event Sydney.
Smaller, new and agile food businesses were now chewing into the market share built by the big global brands for the first time since the 1940s.
They were rapidly responding to consumer trends and new marketing technologies.
In fact, because these new players were often so good at reading and adapting to consumer preferences, Kellogg and other big companies now outsourced up to 30pc of their food production to these emerging businesses.
“We must embrace our failures and have better tolerance of frequent failure – if we don’t fail, we don’t learn,” Mr Bryant said.
“Don’t dismiss outright any idea which could be different to the way you do business at the moment.”
Back in Australia to address the recent Rabobank leadership dinner, the former Queenslander, who retired as Kellogg chairman in March and had been chief executive officer for six years, said he even created annual awards for the failures which taught the big breakfast cereal business valued lessons.
“In the year we introduced these awards we had four key failures which stood out as valuable learning experiences,” Mr Bryant said.
“Unfortunately by the time we’d identified the key four people involved, they’d left the company – sometimes voluntarily.”
“Large companies tend to spend a lot of time and energy protecting their past and reputation, but what we need to be doing is engaging in creating the future.”
Indicative of just how much the food business was changing, Kellogg – arguably the world’s best known breakfast cereal name – today generated only 40pc of its business from breakfast market sales, compared with 90pc 20 years ago.
Snack foods, including crackers, biscuits, confectionery bars and the Pringles savory snack brand, now provide much of the company’s revenue.
Since Mr Bryant’s first days at Kellogg in the 1990s the business had also diversified into non-traditional, non-western markets from Russia to Nigeria, Brazil and Egypt.
There’s more change in the food production and retail supply chain today than we’ve seen since the rise of large scale food processing and mass newspaper distribution to consumers in the 1880s.
The Kellogg Company is 40pc owned by the world’s fifth largest charity, Kellogg Foundation, which also has other business interests and gives away about $550m annually to child health care and education projects worldwide.
John Bryant, whose North Queensland and Darling Downs farming family roots go back five generations before him, studied commerce at Australian National University before his accounting career led to leadership positions at brewer, Lion Nathan, then overseas.
He is now a director of US retailer Macy’s, the Compass Group food service chain, food processing equipment business Ball Corporation, among other board roles.
He said good leadership was about stepping in and making decisions which recognised the formula for business success in the past was not what would make companies successful in the future.
“Rather than spend $40 million on a television marketing campaign, we took 40pc of Kellogg’s TV budget and put it into social, mobile and digital marketing initiatives – with no idea if it would work, or not,” he said.
“We had to learn from the experience.
Plenty of people want to look like Kim Kardashian, so they eat like Kim Kardashian
“There’s more change in the food production and retail supply chain today than we’ve seen since the rise of large scale food processing and mass newspaper distribution to consumers in the 1880s.
“Today’s consumers don’t just turn to doctors or professional literature for nutritional information, they follow what celebrities eat and talk about.
“There are plenty of people who want to look like Kim Kardashian, so they’ll eat like Kim Kardashian – even if it doesn’t actually work that way in reality.”
Food companies must also acknowledge responsibility in promoting sustainable food production, working with non-government organisation campaigners in the developed and developing world.
“Two decades ago food processors didn’t really think about the farming environment, but we’ve realised it’s absolutely critical we look together at how we can make a difference,” he said.
“If farmers aren’t environmentally and economically sustainable the food business is in serious trouble.”
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