#51: The sensible approach

How resilience is a side-effect of building sustainable business models.

I’m Vaughn Tan; this is another of my weekly attempts to make sense of the state of not-knowing. The first issue explains what the newsletter is about; you can see all the issues here.

My first book, The Uncertainty Mindset, is a behind-the-scenes look at cutting-edge high-end cuisine … and what it can teach us about designing organizations to be more adaptable and innovative. You can get it hereIf you like it, help me out by leaving a review somewhere. Book events are coming soon—tell me what you’d like to see and sign up for notifications here.

Hello again, friends,

tl;dr: Why do so few businesses recognize how sensible it is to build business models that are both more sustainable (in the broad sense of the word) and also more resilient to uncertainty? 

Resilience is being able to either tolerate change or change quickly when conditions demand it.

Over the last couple of weeks, I’ve been putting together a panel to talk about resilient business models for the food industry. I was fortunate to get Ben Chapman and Mike Harrison from Super 8 (Brat, Kiln, and Smoking Goat), Matt Jozwiak from Rethink Food, and Nick Kokonas from The Alinea Group to join me. We recorded the panel yesterday and you can see it this Saturday (10/24) at noon US Eastern (5pm UK) as part of WRLDCTY— I’ll post the video next week too.

Our discussion yesterday illustrates how building assets that allow businesses to adapt in uncertain times almost always looks like leaving money on the table.

Super 8, Rethink Food, and Alinea Group represent three superficially different approaches to running food businesses.

  • Super 8 operates a group of quite different restaurants that has invested in long-term cross-restaurant direct buying relationships with growers and producers.

  • Rethink Food is building and scaling up (by replication) a small restaurant business model anchored on reducing food waste and increasing community access to food. (Rethink Food is a not-for-profit that, fortunately, tries to run itself as a business—I’m on the executive board.)

  • Alinea Group developed an in-house system for owning and managing customer relationship data across its restaurants.

These differences are only superficial, though. All three are intentionally leaving money on the table in ways that make them more long-term sustainable, more resilient businesses. Each of these businesses invested in doing things which were either “unnecessary” or “impossible” because they seemed worth doing at the time:

  • Super 8 wanted to get access to better product by working directly with growers.

  • Rethink Food wanted to give restaurants a business model that would allow them to stay operational (and thus preserve employment) while also reducing food waste and supplying food to community organizations that needed it.

  • Alinea Group wanted to have more detailed insight into its customers across its groups than existing booking systems could provide.

These supposedly unnecessary or impossible things were hard to do but inherently worthwhile—they were neither unnecessary nor impossible:

  • Super 8’s willingness to commit to long-term buying and to pre-payment means that they get extraordinarily good product that wouldn’t otherwise be available.

  • Rethink Food’s partnerships with local restaurants allowed them to produce meals that were higher quality and more culturally appropriate meals than were possible with its previous commissary model.

  • Alinea Group was able to spin out its customer relationship management tool into a successful company (Tock, the cloud reservations management system).

But there was an unexpected benefit from doing these things that were worth doing anyway: they made each business more sustainable and resilient:

  • Long-term relationships and prepayment are desirable for growers, who now offer very favorable pricing to Super 8. This allows the restaurant group to produce high-quality food while charging customers unexpectedly low prices for it. Super 8’s restaurants offer great value, and this has led to sustained customer loyalty, crucial both now (with restrictions on movement and dining times) and into the future.

  • Rethink’s move to a distributed, partner-oriented model allowed it to continue to operate through the pandemic restrictions and will probably let it scale across the US both more easily and in a more context-specific way.

  • Alinea Group’s long-standing investment in managing customer relationships in-house allowed it to quickly and inexpensively reach its customers with appropriate new takeaway offerings. They were tracking pre-pandemic revenues within 2-3 weeks of changing their product offerings and reached record revenues during the pandemic lockdown.

When Ben, Mike, Matt, and Nick talk about what their businesses are doing, it seems patently obvious that everyone in the food industry should be rushing to move in the same direction. But only a handful are doing this. Why do so few businesses recognize how sensible it is to build business models that are both more sustainable (in the broad sense of the word) and also more resilient to uncertainty?

In fact, it is not so hard to understand why so few businesses are choosing to do the right thing in ways that also make them more resilient. The usual answer is lack of financial or physical resources. It’s true that being resilient is easier with, for instance, lots of cash in the bank.

But probably the real obstacle is mindset and approach. A fundamental requirement for resilience is being willing to admit that how things are currently done isn’t the only way they can be done—and to act on that admission. In turn, this requires pragmatic imagination and a willingness to embrace uncertainty: remaining grounded in reality while trying to conceive of and build something that doesn’t exist yet, which others may say is either unnecessary or impossible.

I suppose most businesses just don’t have what it takes.

I could be wrong.

Bonuses:

  1. Laetitia’s article about innovation lessons from the frontiers of food is now also in English.

  2. Lost on the internet.

Photos from the field: Until Issue #52, each week I’ll include some photos of everyday work in culinary R&D teams, selected from thousands I took during fieldwork.

Rescuing a sauce from ignominy (at Amaja, 2011)

Fixing a quality problem with the White Rabbit’s watch (at the Fat Duck, 2011).

Trying a little beet snack (at ThinkFoodTank, 2010).

By the way: This newsletter is hard to categorize and probably not for everyone—but if you know unconventional thinkers who might enjoy it, please share it with them.

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Find me on the web at www.vaughntan.org, on Twitter @vaughn_tan, on Instagram @vaughn.tan, or by email at <uncertaintymindset@vaughntan.org>. You can also find out more about my book at www.uncertaintymindset.org.