Adapting in uncertain times
There is a great opportunity to welcome outside perspective and embrace best practices from unlikely sources.
The coronavirus pandemic has sent milk flying off the shelves as people stock up on essentials, but has also eliminated much of the dairy needed by institutions ranging from schools to restaurants. The effects are disrupting supply chains, labor forces, importing and exporting.
The most disruptive attribute is that no one knows how this will all play out. It’s the uncertainty that is most unsettling for business owners, farmers and producers. Welcome to the new normal.
The good news is the dairy industry is resilient, resourceful and ready to take on these challenges. The industry can also look to venture capital for guidance on adapting in uncertain times. Venture capitalists must make investments and decisions, despite constant change and future outcomes that are entirely unpredictable. Here are three tips for adapting in uncertain times from the VC playbook.
Look to external innovation
The challenges we are facing are not limited to the dairy industry. Myriad industries, sectors and businesses are grappling with similar disruption challenges.
There is a great opportunity to welcome outside perspective and embrace best practices from unlikely sources. Joy’s Law is the principle that "no matter who you are, most of the smartest people work for someone else.” Opening your challenges to emerging technologies and startups is a way to learn, spark new revenue streams and find creative solutions to streamline your business.
Perhaps Otto Motors could enable fully autonomous, flexible material handling. Could Loop help your consumers order directly from you in a sustainable manner and eliminate single-use containers? Could accelerators help develop new dairy-focused products that create new demand and drive meaningful sales?
Embrace rapid experimentation
Retooling your entire processor facility with state-of-the-art robotics is an intense capital expenditure even in the best of times. In 1906, Vilfredo Pareto discovered that 20% of the peapods in his garden produced 80% of the peas. The Pareto principle later informed a Silicon Valley principle known as Power Law Distribution: The lion's share of returns is earned from a small number of investments.
These types of mental models are incredibly helpful in times of uncertainty because they help guide us even as the rules of the game are changing. To put them into practice, make many small, affordable, rapid experiments and measure their impact. Double down on the ones that show results, and quickly eliminate those that are not helping your business. Don’t bet the farm on one magic solution.
Perhaps a solution could involve looking to Brightseed to identify novel nutrients that can be combined with dairy to deliver new superfood combinations. Or perhaps Notpla could help make packaging "disappear." Or perhaps you could discover your consumers’ taste and smell preferences by tapping into applied neuroscience and biometric testing by Thimus. The key is to rapidly experiment with a number of solutions that can deliver outsized gains rather than limit yourself to a larger, more costly investment that promises only incremental improvements.
Connect directly with consumers
It used to be that you talked with your customers as you dropped off their milk. Yet we got further and further from our customers and lost that direct feedback loop. Our priority shifted toward servicing the middleman rather than the end consumer.
Many of the unicorns in Silicon Valley disrupted huge packaged goods companies by simply working directly with consumers and using data to better reach and understand them. Many adapted the milkman model of years past to ensure the direct relationship.
This goes to prove that often, “what’s old is new again.” Consumer preferences are an evolving and moving target. Those with relationships with their consumers can hear those changes directly and move more quickly to optimize for success. Look into instant consumer feedback on packaging, preferences and needs from companies like Perksy. Start a podcast letting consumers understand the people beyond the farm with Messy.Fm.
We are living in an uncertain world where the only thing we can count on is constant change. The most adaptable companies are the ones that will thrive.
Listen to your consumers, and experiment to serve them better with the help from emerging and inventive solutions. This sets you up for short-term success and builds enduring mental models that will serve you, regardless what tomorrow brings.
