Competing on price alone = a race to the bottom: Prioritization of the lowest possible price (even by pence/cents) at the expense of all other criteria as a means of achieving competitive advantage – being the cheapest is not a competitive differentiator (see Michael Porter)
Unconscious bias and implicit mental models, further compounded with a lack of capacity for taking a gender, diversity and inclusion lens:
Simply accepting that this is the way things have always been done. 9-5, 5-day week, in an office/on-site, because that is the experience of those in decision-making positions.
Insufficient recognition that investing in people is both good for business and the engine of the business, combined with rigidity in skills/HR/recruitment and overemphasis on higher education qualifications that exclude those with limited access to higher education in the first place
What are some of the challenges lead firms face in promoting business models for decent work?
Pressure from Wall Street or Silicon Valley style investors.
Danger of competitors getting a free ride (Comapny A trains extensively, Company B poaches the newly trained staff).
so just introducing certifications and related audits often is not enough, change will not happen automatically in many circumstances…you often need additional support to suppliers in the chain
For any good models to scale, do we need to re-frame what business model success looks like? The Covid pandemic has focused attention on longer-term resilience, which is a helpful lens vs only focusing on the short term bottom line
Always a win-win for businesses to have models for decent work?
In reality, businesses have proven that rather than a trade-off, having a responsible business model can be a source of value in itself for customers.
But I wonder… Can business models for decent work always be a win-win for business owners and workers? Often, cost factors are major factors when defining the business model of a firm. What other factors should be considered and how to frame them in a positive way?
Fear - the old schools of management and marketing have not taught leaders to lead with fairness, compassion, and humanity. Old schools have taught management and business leaders “to win” and “maximise profits”. There are many leaders who have progressed in their career pursuing these goals so it might be scary to all of a sudden start talking ethics… it would, in effect, highlight the fact that they haven’t been talking ethics throughout their career. Financial focus - the nature of business has been centred around the question of growth and financial success for as long as I’m aware. The good / ethical / progressive businesses do not get celebrated by the mainstream media, rewarded by higher stock value, nor talked about in mainstream parlance. Instead, the celebrations and acknowledgements occur within our echo chamber of progressive, humane, business. Differentiation - in the world of marketing, two of the key objectives for brand managers are distinction and differentiation. One of the challenges with promoting an ethical basis to the company is that it risks falling into a sea of sameness and, given the likelihood that some (if not many) less ethical companies will jump on the bandwagon of proclaiming ethical practice, without walking the walk, ethical companies risk being tarnished with the same brush. As a result, simply doing the right thing, and either a) hoping, or b) relying on others, to promote these practices feels like the safest thing to do.
The most obvious challenge when a company unilaterally looks to make changes to its business model to achieve decent work outcomes for workers, is that it may become uncompetitive if its competitors fail to take action too. The lack of a level playing field is critical barrier.
Coronavirus has also highlighted the vulnerability of traditional supply chain structures. In agriculture, lockdowns and interrupted transport have led to huge amounts of produce getting stuck at source, creating a perverse situation where food is wasted in countries where a large number of households simultaneously face food insecurity. Even rural households who managed to harvest food for their own use in the short term, are now struggling to secure new inputs and seeds for next seasons planting. That means food supply chains – and food security more broadly – will remain challenging for some time. Rebuilding better has to consider factors beyond efficiency.
And the half - Humility / normality of ethics - for some of these businesses the nature of operating ethically and with a fair business model is to be expected, not something to use as a marketing tool. Interestingly, as we’re seeing through a lot of our purpose advisory work, if these aspects are indeed a core part of the brand’s identity, then this should be unashamedly embraced, rather than either hidden or manipulated for enhanced marketing effect
One of the key challenges of course has been that externalising costs on vulnerable stakeholders in global supply chains has been a dominant factor of many business models. Short term increases in costs associated with efforts to address decent work in the supply chain can be a deterrent, for example, if the value proposition of the company is centred on offering lowest cost goods or services to consumers, decoupled from increases in costs of production, and/or where production or sourcing is relocated when wages increase in manufacturing or sourcing countries.
Thanks Flynn! Of course, it is impossible to talk about challenges to decent work without talking about gender: 89 percent of working women in sub-Saharan Africa are in the informal sector, leaving them open to lower wages and unsafe working conditions. Any attempts by lead firms to improve the lives of workers will therefore need be gender-sensitive. We are striving to apply a gender lens to all our partnerships with the private sector.
I think the COVID pandemic is the true test of our values and we are seeing brands continuing with their commitments and looking at how risks can be shared.
A2
Also challenging is that there are few examples of large companies transforming their business model to address decent work issues. Alternative models, where they exist, are often in a pilot program, or in the business models of start ups. When such a start-up is acquired by a larger company, at best we see efforts to retain that business model in a ring-fenced scenario, but little evidence of the model influencing the larger acquiring company.
With my background in the business and finance world, business model is about capturing value from the value chain. I see the current pandemic opportunity, as the world is deleveraging from China as the manufacturing base of the global market. Who (countries/communities) can step into delivering and capturing that value? i.e. what does the African market need to step up into that opportunity. This goes for service industries not just manufacturing industrial sector.
A2:
· Finally, the modern business start-up model, at least in some markets, is skewed towards those ‘disruptive businesses’ that find new ways of working and identify novel ways to deploy technology that reduces business cost and makes businesses leaner from a cost-base perspective. Without adequate impact prevention and mitigation efforts, this can exacerbate existing vulnerabilities (such as the lack of protections associated with full-time or permanent employment).
One example is the Waitrose Foundation, a supply chain partnership set up to strengthen Waitrose’s relationships with it’s growers and farming communites in developing countries, with a view to securing the supply chain - not just for Waitrose and it’s customers, but for the people who grow, pick and pack them. It does this through 2% of the retail sale value of fresh fruit, veg and flowers, when coming from developing countries, being invested back into the workforce and the farming community in which it was sourced. Importantly, through worker committees, the workforce are involved in determining how this money is spent, be it on health and wellbeing, education etc. Because Waitrose is a co-owned business (a form of social enterprise in itself) worker voice is instrinsic to how the Foundation operates, incentivising higher quality and security of supply to Waitrose and in turn generating funds to invest back into their community. And it’s not new - this win-win business model has been operating for 15 years now!
Experience shows, that it is not easy for companies to design and optimize a sustainable supply chain.
Having an overview of the entire value chain up to the extraction of raw materials is challenging for companies.
The same applies to the question of key sustainability issues and priority fields of action.
Many companies are not sufficiently up to the challenge of encouraging their direct and sub-suppliers to make their production processes more sustainable.
If companies want to make their supply chains sustainable and responsible, it is important at the beginning to analyse the structure of their supply chain and then the company should focus on parts of its supply chain and collect basic information about the parts in order to identify sustainability risks and opportunities . This should be followed by a dialogue on the significance of the individual sustainability issues, focusing on the likelihood of a risk occurring and the intensity of its impact from the perspective of those affected/the environment and the company.
Based on this assessment, the company then decides which measures to take. For this purpose, the company should draw up an action plan structured according to fields of action.
In general, it is important that companies raise awareness of the issue throughout the company and thus anchor the topic. Clear responsibilities and sufficient resources should therefore be allocated to the topic to guarantee success.
