Business Model Innovation Meat

Prime Future 55: Two masters: customer or competitor focused?


“The US meat industry has been able to focus on high volume low complexity production, but Europe is different. There is more complexity built in with more SKUs and smaller volume runs in factories. This is because of fundamental differences in how Americans shop and eat, and how Europeans do. Food culture is entirely different between the two. While American consumers have an expectation for homogeneity and in many cases are happy to find the same offering at every retailer, that is not an acceptable retail model in Europe. There are a variety of food cultures within Europe that retailers are serving, and further processors like OSI must reflect this.”

– Nicole Johnson-Hoffman, OSI Managing Director – Europe Further Processing & Chief Sustainability Officer

Nicole spent much of her career in the North America meat business and is now with OSI Europe. I reached out to ask about her learnings around the differences & similarities between the two regions. Keep that quote in mind as we dive into today’s topic…

Walk into the office of almost any packer or integrator (in North America) and you’ll see a poster on the wall about the company’s values. Almost always it includes something along the lines of “customer focus”.

Walk into almost any management meeting at those same companies and you’re likely to hear a discussion centered around benchmarking the company’s performance relative to competitors. Especially in poultry, where the blue book reigns supreme (if you know you know).

So which is it, is the company focused on customers or competitors?

More importantly, can a business effectively focus on both?

The book Invent and Wander led me down the rabbit hole of 20+ years of Jeff Bezos’  annual letter to shareholders. First of all, the consistency of philosophy from 1997 to 2020 is uncanny. The manifestation of the philosophy has expanded over time, but the elements of the vision have remained consistent. Granted, Amazon had the same CEO over that time while most companies see more frequent leadership changes. But what other large, or high growth, company has stayed committed to the same principles over 20+ years? The whats have changed, the hows have remained the same…and its hard to argue with the results.

One of the single most consistent theme from 20 years of Bezos’ writing is the idea of focusing on the customer more than the competitor.

Which made me wonder what application that idea has across livestock, meat & dairy.

I want to acknowledge the obvious rebuttal to this train of thought which sounds something like “but Amazon was not playing in a highly competitive commodity market like most livestock & poultry producers & processors.”

Except the entire Amazon business model was built around lower prices and better selection than competitors. They of course started with books – the same books offered in any other book store. Aren’t the hallmarks of a commodity market 1) competing on the dimension of price, and 2) an undifferentiated product? So the argument could be made that Amazon actually proved its model in a pseudo commodity market.

Of course ‘customer focus’ doesn’t mean that happenings at Walmart or or Costco or Facebook Marketplace weren’t of interest to Amazon leadership. But did every management meeting center around a comparison to competitors for the week prior? I’m guessing not…

There’s a difference in aligning the management of your business around how competitors are performing, versus being informed and appropriately calibrated to the context you operate in. Let’s call the latter being ‘competitor aware’. That’s basic blocking and tackling of running a business. The question is where do you focus. The definition of focus is literally ‘the center of interest or activity.’

Competitor-focus looks like management by industry benchmarking and incremental advances within an existing model.
Customer-focus looks like continual progress: new products, new markets, new business lines, new business models.

It makes intuitive sense; we tend to go where we focus, as individuals, as organizations, and as industries. That’s why I find Nicole’s insights above so terribly fascinating. There’s this entire industry orientation that factors in. Nicole also pointed out:

“The European market is complicated in different ways than North America. The great joy of the meat industry is that it’s a system. You can’t work one part of the system in isolation, you have to work the whole system to accomplish big goals. People with intellectual curiosity gravitate to the meat industry because there are no simple answers.”

The meat industry on both sides of the pond are led by smart people running complex systems (companies) that make money. And within North America’s high throughput & efficiency driven business there are customer led companies just as (I assume) within Europe’s customer led business there are competitor focused companies.

Two big ideas:

(1) In reality, there’s probably a continuum from competitor focused to customer focused. Not only are organizations moving along the continuum at any given point of time, teams within the org are doing so. And leaders at all levels are pushing/pulling in one direction or the other. And some customers are dragging suppliers to their end of the continuum while that one competitor with 10% lower COGS is dragging the supplier to the competitor end of the continuum. It’s messy & dynamic & always in flux.

(Look for this graphic in a best selling business book near you, probably)

And its difficult! A packing plant manager in the US put it this way, “I think about it as trying to serve two masters. Which is actually impossible to do but meat companies have to try.”

(2) The strategic choice of where to focus is central to the whole system, the whole business model.

Because it’s not just about business model. Or management style. It’s also about culture. My takeaway from the book on Amazon is how Bezos drove that customer focus principle throughout the organization. In order to be part of the culture it had to become a discipline, to be an idea that consistently led to results it had to be consistently actionable.

So what does customer focus look like?

  • Really understanding customer priorities & aligning internal priorities accordingly.
  • Incentivizing people on outcomes that impact customers, not incentivizing results relative to competitors.
  • Understanding the customer’s business holistically. If every company can be split into 3 parts (Make, Buy, Sell), do you just know the function you interact with or do you understand how all 3 work together and the levers that move the entire business?
  • Continually getting ‘clean water’, talking with customers to understand current experience rather than relying on old assumptions. Asking questions….sometimes when you know the answer, sometimes when you don’t. This is NOT asking the customer what they want; customers don’t (usually) know what they want….but they (usually) know what problems they want solved.
  • The capability to test new concepts, gather feedback from customers, iterate. Repeat.

While I was at Texas A&M, Southwest CEO Gary Kelly spoke on campus and someone asked him if he was worried about moves being made by Southwest’s competitors. He replied, “Have you seen these clowns? If we can’t beat them we deserve to lose. We’re focused on making customers happy.” (Regardless of how much of that was bravado, as a frequent flier I found it pretty funny.)

Although IMO one path tends to be more compelling than the other, maybe it doesn’t matter whether you are competitor focused or customer focused, as long as it works for your company in your market context. Maybe the real trap is to believe you are customer focused but actually be competitor focused….or the deadly option, internal focused.

Share this with a colleague or 4 to spark some healthy debate 🙃

Wisdom of the Crowd

From last week:

AI became standard in US swine breeding in the early 90’s. It had been around for decades prior but not widely used. What changed? Why did it suddenly become standard practice?

Shamus Brown shared this fascinating article and some comments on the dynamics around why pig production was scaling up so rapidly in the 90’s, “product quality and consistency were key to scale, and you needed consistent genetics through a consistent program (management) to get there.” There are some takeaways about tech adoption here, stay tuned…

Question for this week:

What will be the long term implications of genomics?

Hit reply to this email or click the bubble at the top of this to leave a comment.


The Morning Brew speculated that inflation and increased meat prices might even impact the virtually unchangeable $5 rotisserie chicken at Costco. That’s saying something – that $5 chicken has been part of the core grocery strategy for years and has historically remained unchanged even when chicken prices skyrocket. It’s centrality to the strategy is also why Costco is now in the chicken business. (link)

Speaking of Costco, check out Rhishi Pethe’s interview with an executive from Pinduoduo. ‘Pinduoduo is an e-commerce retailer in China which focuses on agricultural products, and has shown a mind-boggling growth trajectory. PDD describes itself as “Costco meets Disney.”’ (link)

This WSJ article is interesting not just because of the emerging category of tech startups working to identify the sex of chickens in ovo, but because the framing via the headline “A technology race to stop the mass killing of baby chicks” is…something. (link)

Jayson Lusk highlighted 9 dynamics that could impact pork supply chains in coming years. Prime Future has highlighted some of these, and this is a great summary list. Numbers 4, 6, 8, and 9 are my bets for high impact. (link)

Prime Future is where I learn out loud about the big dynamics around livestock & meat. I’m on the Merck Animal Health Ventures team but this newsletter represents my personal views only.

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