There is a shift that is occurring in business strategy, one comprised of many subtle and complex parts but with no single force dominating the change. It’s “shift by a thousand cuts,” and I believe we are at the inflection point, best represented by the current fad of business claiming to be “purpose-driven” and driving strategy based on that.
The higher-level shift, in my view, is a move from an emphasis on economic capital to one of social capital, and I believe much of it is due to disruption of the supply chain. Because almost any business can store and distribute their product in massive distribution systems (Amazon the obvious example), the traditional levers of profit, and profit as the primary measure of success, are no longer sustainable. Instead, forward-thinking companies are monitoring many measures of success, believing that the long-term sustainability (and thus profitability) of their company is through optimizing social capital. The way they maximize social capital is through creating trust (see what I did there? 😬). This shift impacts everyone - large and small, digital and analog, old and new.
For example, there is a store in the City Market in Kansas City named Locally Sourced Meats (http://locallysourcedmeats.net) that I love. They are 100% focused on delivering affordable, locally-sourced, humanely-treated, and sustainably-raised meat to Kansas City residents. I stopped in recently to buy a roasting chicken, only to find none in the cooler. Assuming they hadn’t been stocked, I asked the proprietor about them, and she explained, painfully, how she couldn’t get roasting chickens that week from the usual suppliers because they could now sell directly to consumers anywhere, and this high demand made them prohibitively expensive at the local level. As us small biz owners know, if you don’t have inventory, you can’t sell anything, and cash flow disappears. It’s a dreaded death spiral.
How does Locally Sourced Meats fix their problem? Their challenge is not the value proposition or brand positioning, but primarily from the disruption of the supply chain. The traditional market advantage this business may have had - unique access to local brands - is no longer sustainable and that strategic leverage has permanently disappeared. So the first order of business blocking and tackling is to lock down supply (no easy negotiation). That’s a fundamental business strategy issue that’s been true since the dawn of time. But what’s different is that when they do, it’s not just back to business as usual. They are then going to have to focus on creating trust to build the social capital that will get customers to insist on this local brand over getting meat conveniently shipped from somewhere else. These are customers who will expect quality, value, and sustainability (historical differentiators) as basic requirements and the key to success will be in getting them to believe and experience that buying through Locally Sourced Meats benefits them (and all Kansas Citians) in many ways - their health, the environment, the economy, and even their relationships with others.
Creating this level of emotional trust is hard. If you’d like to see how we think about trust, head over to our free FaceBook page at @FakeNotArena and start watching some of the videos. We’re building a unique community of brand professionals that are dedicated to the hard work of building sustainable brands in a time when so much seems fake. If you like what you see, sign up to be notified of our launch at www.fakenot.com or join us for free on FaceBook or Twitter at @FakeNotArena.