Wednesday, April 20, 2016

Defining Objectives at Ben & Jerry's

This week’s readings served to further demystify the concept of strategy. Collis and Rukstad identified three critical components of effective strategy: Scope, Advantage, and Objective [1]. After mapping these ideas to Ben & Jerry’s, I feel that Ben & Jerry’s has defined scope and advantage, but is lacking in objective. It is clear that they cater to customers that do not mind paying a premium price for high quality ice cream. They introduced low-fat frozen yogurt, but it was to meet the changing demands of the same customer base.  Further, they have competitive advantage among other high quality ice cream manufacturers because they specialize in “mix-in” ice-cream and represent social initiative. I think the challenge that Bob Holland faces is to develop specific objectives to meet product, economic, and social goals. Its economic goal is oriented towards profit generation, but it is clear that the growth of product line and the reach of products is the direction that its processes are headed towards. Ben & Jerry’s has a unique product and a culture that boosts its product, but it needs structure to maintain its growth.

Ben & Jerry’s has significant advantages it can leverage. Its product beat the competition on two occasions. When Haagen-Dazs introduced Extraas, it did not deter Ben & Jerry’s mix-in ice cream. Even though Ben & Jerry’s introduced its low-fat frozen yogurt after Haagen-Dazs, it dominated market share. Ben & Jerry’s stresses its choice preservative free ingredients. The free publicity and image created by its social causes is another strong advantage. Customers feel inclined towards Ben & Jerry’s not only for the product itself, but also to indirectly support causes they care about.

The lack of objective hinders the effect of some of these advantages. For example, Ben & Jerry’s intuitively creates flavors. There is no market research done on which flavors customers prefer. Resources are wasted producing unpopular flavors instead of ones in demand [2]. Manufacturing and distribution process are not optimal, even though it is in the company’s best interest to expand reach. Furthermore, Ben & Jerry’s champions commendable values. For example, a narrower gap in employee income or purchasing ingredients to support good causes. What is missing is a protocol or structure to uphold these values consistently. I believe a structure is created when there are clear objectives to guide every decision.

In my opinion, Holland should concentrate on building objectives for Ben & Jerry’s. These objectives need to gear the company toward growth and away from their current economic goal of profit generation. As mentioned in The Coherence Premium, a strategy is only coherent when every process in the company is aligned towards the strategy [3]. Holland must develop distribution and manufacturing so that Ben & Jerry’s will not have to depend on Dreyer. Finally, objectives to guide social initiatives must be developed so that the company knows exactly how they will meet their social goals. This will be beneficial in situations like determining an executive’s pay or letting go of a special ingredient vendor.

Sources
[1] Collis, Rukstad. "Can You Say What Your Strategy Is?" Harvard Business Review (2008)
[2] Collis. “Ben & Jerry’s Homemade Ice Cream Inc.: A Period of Transition, Harvard Business School (2005)

[3] Leinwand, Mainardi, “The Coherence Premium” Harvard Business Review (2010)

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