Coca-Cola India has a new ambition – to become a complete beverage company. Which essentially means providing more choice to the consumer by offering newer beverages and many based on fruit and fruit juices. This has been inspired by the concept of the circular economy or a virtuous economic cycle. This initiative will create a spurt in the company’s local procurement of fruit and farm level interventions and will have a positive impact on the Indian horticulture ecosystem. The two key components of this project are, launching new and innovative products and sustainable sourcing.
Product innovation and taking them to market is handled by Asim Parekh VP, Fruit Circular Economy, Coca-Cola India who says “To spark the change we’re bringing many other drinks like tea, coconut water, and juices to our customers. We are launching several new local brands at various price points and for different customer categories. Infact, we are now emulating a start up with 17 brand launches in 2018 and many more slated for 2019. We have made small teams that are quick to innovate, quick to market and adapt. Our core philosophy aided by a sustainable supply chain is about reaching customers and mapping their journeys in detail,”
This way of functioning is a big shift and is rooted in the understanding that India is not exactly a homogenous country, besides social and cultural diversity, there is economic classification. In addition, the modern consumer in big and small cities and even semi-urban areas wants personalization of their products and services. Keeping the potential growth of the economy in mind, even seemingly small customer segments could be large value generators.
One such sustainable sourcing program is Unnati Mango. The program was started to increase crop yields, save water, bring in ‘Good Agricultural practices” and improve the livelihoods of mango farmers in Chittoor district of Andhra Pradesh. Emboldened by the success of the program, the company has now extended this framework to other fruits and placed it under a strategic framework called the “Fruit Circular Economy”. Under this program orange sourcing and farming initiatives were launched in 2016 across the water stressed regions of Maharashtra and Madhya Pradesh. It encouraged the adoption of newer varieties of orange that have 50% higher juice content. Says, Ishteyaque Amjad, VP, Public Affairs, Communications and Sustainability, Coca-Cola India and South West Asia , “Entering and staying in the fruit production and processing ecosystem is part of our long term strategy and commitment to the country. Through these sustainable agricultural initiatives we plan to double farmer’s incomes. All projects under the Fruit Circular Economy framework consist of modern nurseries with high quality plants, intensive training to farmers, drip irrigation techniques and an assured buy back. About 250,000 farmers would be benefited over 10 years through these programs. At one level, these projects help the company in creating resilient high quality supply chains at another they also ensure that the shift towards juice based beverages is a smooth transition.”
Coca-Cola’s 2020 sustainability goals put sustainable sourcing of key agricultural ingredients as a top priority. Concerted efforts are being made by the company and nearly 250 bottling partners in more than 200 countries and territories to ensure this becomes a reality. The Coca-Cola Company is one of the largest buyers of Indian agricultural produce, sourcing 95% of its ingredients locally. This helps the company in sourcing high quality produce and also benefits the local farmers who get a ready market. India is the second largest producer of the fruits and vegetables in the world. The country grows the most amounts of bananas, papaya, mangoes, guavas, pomegranates and is the second largest producers of potatoes, green peas, tomatoes, cabbage and cauliflower. However, only 2.2% of fruits and vegetable output in India is processed. Coca-Cola views this as India’s untapped potential.
Business is hitting against two important headwinds; climate change and technological disruption. In a recent panel discussion at Economic Times Global Business Summit, Dr. Ajay Mathur of TERI spoke of the worrying impact a world warming by 2 degrees will have on India with increased floods and droughts and erratic monsoons. Water would perhaps be one of the biggest challenges in the near future. Additionally, extreme poverty, waste, energy and biodiversity, are all discrete elements that need to be fixed, not just in India, but the world over. In this scenario, what kind of leadership will be needed to create an equitable and sustainable society? Can sustainability be achieved at scale? Can we limit emissions?
Increasingly, companies are dedicating teams to work on social responsibility and sustainability issues. They map the material risks that their companies face, interface with stakeholders, develop strategies to mitigate or eliminate them. The finance function that until recently merely counted the pennies that the company made has started to look at ways to measure the impact of the company’s sustainable and social actions. The production department tasked with improving the efficiency of operations now also concerns itself with using sustainable materials. The marketing team not only promotes the products but also promotes the well-being of people. The CEO’s thinking is moving from shareholder value maximisation towards maximising value for all stakeholders.
Business leaders, depending on their varied contexts are also prioritizing various approaches to sustainability challenges. For instance, Sanjiv Paul of TATA Steel says that sustainability strategy needs to be embedded into business to manage environmental risk, Tony Henshaw of Aditya Birla talks of the need to map supply chains in a transparent manner keeping sustainability issues in mind. Dr. Srikanta Panigrahi of IISD believes that global reporting standards can solve many of the sustainability issues of companies and Arun Maira who has been part of many large companies feels that a systems thinking approach is the way to go.
Yet, something is amiss. None of the environmental or responsibility challenges seem even close to being solved. For instance, the connected world, used to moving things and information, has no automatic way of managing discarded products. Which is why our landfills are showing no signs of reducing and possibly never will unless we start thinking of ourselves as part of a system that needs to be redesigned. As JP Chalasani, CEO, Suzlon says, “Our energy related issues are not just about adding more capacity but redesigning the grid to factor in renewables”. The flows of value—not just of materials, but of data, knowledge and participation need to drive a radical new design of business.
The more significant challenge is that we are in an age where large multinational corporations are themselves being disrupted by new challengers who have digital skills at their very core.
Perhaps the need of the hour for business is to hire more designers. Systems thinking is not just about mapping the system but about designing a better system. The future will witness a rate of change at a velocity never seen before. Acceleration due to technological change may bring the world closer, but it could also lead to a faster pace of wanton destruction. Designing a better world will not just be about new processes but a better way of thinking and communicating. Balancing the impact of our actions on people, the environment and everything around us. We therefore need people who are willing to collaborate in mapping customer journeys and product journeys with empathy as the central belief.
A new kind of leadership is needed that builds trust, is driven by values and is open to change. The leader has to be a trustee to all the stakeholders, rising above the stereotypes to decide what she will and will not do. As a trustee to the organisation, there is no exit strategy. The leader is responsible for the impact of her decisions. This could be food for thought for venture-funded companies that are currently destroying business models without taking responsibility for the damages caused. Deep, meaningful conversations and not just excel sheets hold the key to responsibility. Thinking not just about what new perspectives might be needed, but also finding entirely new ways to create and update our thinking models over time in collaboration with other people in the industry, policy makers and customers themselves. The corporate brand needs to be more human, responsive and above all trustworthy.
Based on Panel Discussion at ET-GBS 2019: “Sustainability – Embedded Strategic Planning”
Applied Materials has grown from a small start-up founded in 1967, into one of the world’s most admired global companies. Applied is a leader in materials engineering solutions used to produce virtually every new chip and advanced display in the world. One of the company’s fundamental commitments is to maintain sustainable and ethical business practices. According to Srinivas Satya, President and MD of Applied Materials India, “We strive to make a positive contribution not only to our industry but to our larger communities and the world around us. So, the whole concept of sustainability is very important for us.
Applied’s mission is to provide materials engineering solutions that enable customers to transform possibilities into reality. The company’s competencies are in highly sophisticated methods of materials deposition, removal, modification and analysis. The company applies these technologies primarily in systems used by its customers for semiconductor manufacturing. Applied Materials also plays a leadership role in display manufacturing systems. So, virtually every new flat panel TV or smartphone display that one sees has been processed on one of its systems. This involves forming thin layers of material on a glass substrate. Srinivas Satya says, “Our expertise in modifying materials at atomic levels and on an industrial scale applies to both glass substrates and silicon wafers.”
Applied Materials has a very active program called design for environment. The goal of this program is to design products and services to minimise the consumption of natural resources and maximise efficiency. The team asks questions like: How do we minimise the footprint energy consumption of our products? What design choices can we be making to optimise usage of electricity? How do we reduce emissions? How do we internally have additional steps so that the output has less impact on the environment? The company has reasonably aggressive standards on how much it wants to reduce the energy footprint of its machines. The India centre also contributes significantly to these initiatives.
The company’s actions are not limited to manufacturing alone; they link to the operations as well. Beginning from the supply chain and getting the material into the factory, each of the machines has thousands of parts that come together. For the sophisticated products the company ships it could be conservative and use a lot of packaging materials that would end up as waste. But then the energy footprint goes up. Thus, the company has a packaging technology team as well. They have expertise in designing reusable packaging, including specially engineered boxes, crates, shipping containers and transport carriers.
Reflecting on future trends and sustainability Srinivas Satya says, “Artificial intelligence, big data, machine learning are at an inflexion point. We know that 5G wireless is coming, later 6G. We are assessing the potential future sustainability impacts of these technologies as part of our overall Environmental, Social and Governance (ESG) strategy. What materials are used inside these devices? Can the devices and their components be recycled? How do you handle the refresh? Increasingly in the future, the conservation of materials will become super important.”
Based on a conversation with Srinivas Satya, President and Managing Director, Applied Materials India Private Ltd.
When I was small, I remember that farmers in my village could smell the soil to decide if it was ready for sowing. For people who lived off the land, taking these decisions based on gut instinct and traditions was common. Over time, I noticed that many of them had started talking to the scientists from an agricultural research university which was near our farm. The scientists would give them knowledge about what to grow, how to protect produce from pests and more importantly how to maximise yields on their land parcels. The farmers who listened to them mostly did well, and sometimes I wondered whether other farmers would be able to get the same amount of insight.
Over time I did notice a large number of apps that frequently emerged to address farmer needs around knowledge and market access. We then undertook a study to understand how technology was helping farmers. We found that while a plethora of apps existed, their use was at best sporadic or non-existent. Not just India, this finding was consistent across Bangladesh, Cameroon, Chile, China, Ethiopia, Fiji, Ghana, Kenya, Mexico, Nigeria, Pakistan, Peru, Philippines, Rwanda, Senegal, Sri Lanka, Tanzania, Turkey, Uganda, Zambia and more. While the phone had penetrated the rural communities, it was used mainly by farmers to stay connected. The services which technology companies had launched with much fanfare and copious amounts of funding had barely any traction.
Today, five years later, the situation hasn’t changed much, as most farmers as who are in dire need of support barely get any help from solutions which seemingly have been tailor-made for them. While I am no expert on farming, I do know that at a basic level the farming ecosystem consists of land, seeds, equipment, irrigation, labour, finance, market access, information and some kinds of livelihood protection schemes.
Most agri-tech ventures including large multinationals are broadly attempting to organise this sector through some of these services:
- Organizing and providing access to information
- Equipment access and delivery
- Integration with market models and platforms
- Financing and Livelihood Protection schemes
- Efficiencies through process automation
- IOT solutions for soil and water management etc.
The reality though is, while the suite of services and solutions is growing, few are getting enough on ground traction. Whichever way you look at it, the situation boils down to a few fundamentals:
- DISCOVERABILITY – Getting people in the agricultural ecosystem to be aware of what is on offer and why they need it is a discoverability challenge that needs to be surpassed in a country as diverse as India.
- NEW MODELS – Twenty-first-century models have moved from ownership to on demand. Explaining this to people is still a complex conversation even in the urban areas. E.g. Ola vs buying a car. A trustworthy person or brand who can build confidence around the offer and ongoing services is needed.
- SCHEMES – Similarly, there are other decisions around livelihood protection schemes, market access schemes and more which need to be decoded in the ways and nuances so that people can relate to them better.
- TECHNOLOGY – With IOT and cloud-based solutions being offered convincing the customer on the efficacy of the product or service is invariably another challenge.
- VIABILITY – Many of the agri-tech companies may be startups whose own source of funds may be limited. Should the farmer be asked to sign up for the latest, greatest today with someone who may not be around tomorrow?
- REPUTATION – For the simplest of things today we read reviews to judge whether the investment is worth it. In agriculture-related decision making what is the measure of the reputation of a company?
In other words, the customer journey map has many personas who have specific needs that can be addressed across business models:
- People within the Ecosystem, Organisational Stakeholders,
- Information delivery and User experience
- Payments and service models
- Partner Ecosystem
- Data Management, Analytics
- Devices and Technology
- Training and ongoing Learning
We need to keep in mind that this is an emerging ecosystem within an increasingly fragile community. The lessons learnt from the excesses of the recent techno era need to be applied here first. We cannot afford a scorched earth situation for this community in times of climate change. While technology solutions exist, a relevant and trustworthy framework to farming needs and real-life situations is the real need of the hour.