September 23rd Clustre Breakfast Briefing – Executive Summary

Streamlining your business during a pandemic

Neil Crew is the recently appointed Group IT Director for Mezzan, a 70-year-old food manufacturing and wholesaling giant with more than 360 individual brands selling over 840,000 items a day in seven countries.

Neil was the guest speaker at our executive briefing on 22nd September where he shared his experience of dealing with the unprecedented challenge of the Covid-19 pandemic.

He took up his role just before Covid-19 hit. Suddenly, a business that previously had no direct consumer sales, found itself having to sell directly, via new channels and delivery methods, at the same time as modernising their supply chain system.

Mezzan is a manufacturer and importer of food, beverage, FMCG and pharmaceutical products and is a distributer for the likes of Reckitt Benckiser, Johnson & Johnson, Sarah Lee and Red Bull across the Gulf Cooperation Council (GCC) states. Started as a family business in the 1940’s it is now one of the leading conglomorates in the Middle East.

Locked down in Kuwait

Kuwait has a population of some 4.5million, around 70% of whom are expats who account for a large proportion of the low wage economy and a significant proportion of senior management roles, especially in the oil business, which is, of course, the country’s principal industry.

Neil landed in Kuwait on 11th February and within two weeks the country was being locked down. By the middle of March everyone was confined to their homes 22 hours per day, with prescribed exercise at 4:30 in the afternoon and a single weekly shopping trip, which had to be booked in advance.

The scale of the challenge was daunting and, reflecting on how the company rose to meet it, Neil summarised their response in two phrases:

  • “Necessity is the mother of invention”, and
  • “I’m sure I’ve got something in my shed for that”.

A lot of the usual barriers to rapid change – “corporate blockers” – have been removed or circumvented because the business has had to respond quickly to events outside it’s control. Not being able to control direction or pace has requried people to get creative.

Adapting quickly to selling direct-to-consumer

There are around 40 different companies in the Mezzan group, of which 20 to 25 are significant businesses, each with their own General Manager and each encouraged and required to be entrepreneurial. This is very different from the sort of corporate structures that are common in Europe, where the tendancy is for multiple business units to form part of a more cohesive, command-and-control entity.

So, when Covid-19 hit and the lockdown was implemented, Mezzan had 20 to 25 companies, each with their own management and culture, reacting independently to the challenge. Each looking at their own supply chains, plant staffing issues etc.

Importantly, each of the businesses, of necessity, started talking directly to the consumer. They each went out and found their own website company to build them a website to enable direct-to-consumer sales. Something that had previously been seen as a “nice-to-have” was now firmly on the CEO agenda.

New role for technology in solving urgent operational problems

As the newly appointed Group IT director, Neil found himself at the heart of the daily crisis management meetings, more tightly involved that would be normal for IT and more connected to the immediate operational issues.

For example, the business had to move quickly to reorganise its staff, building dormitories on site because people’s homes were fully locked down. The government needed Mezzan to keep working but the staff couldn’t get to work because so they were so tightly locked down. Mezzan needed to get those staff out of their homes and into onsite dormitories quickly and find wasy to share those staff between businesses. For IT, this meant finding ways to give each business visibility of where the people were housed and where they were working.

Getting things done quickly also requires you to use small teams of deep experts, like Pivot, who are SAP experts.

“I’m sure I’ve got something in the shed for that ..”

For a lot of the things that were needed, there were tools “in the shed”. The most obvious example being videoconferencing. A set of tools (Zoom, Teams, etc.) that were already available, but not heavily used, suddenly became the lifeline for the entire business. And everyone quickly became expert-users, putting tremendous pressure on IT.

Similarly, the power of being able to grab data, put it on a spreadsheet and get it quickly into the hands of the managers who needed it to make decisions, became critical. And the ability to use existing collaboration software, like Sharepoint, to build collaborative environments, and even a bit of workflow.

Looking to the future, we have a massive learning opportunity. This has re-taught us how to do things quickly, flexibly, nimbly and there is a discussion to be had about how we want to do these things going forward.

During the height of the crisis, Neil got lots of emails from people wanting to sell workflow and automation tools, but there was no time to implement new software. So, what has this experience taught us about how we examine and change processes, using what’s already “in the shed” and to what extent do we need to go back and “industrialise” these quick-and-dirty solutions?

The power of entrepreneurial innovation

Each of the Mezzan businesses had the automony to find their own solutions to the challenge of connecting direclty with consumers. Many moved quickly to things like selling over Whatsapp and taking orders via Instagram. There’s nothing closer to the consumer than their smartphone.

There are a lot of third party delivery companies in the GCC (similar to Deliveroo) and they all moved quickly to be able to make grocery delvieries. Kuwiat has lots of coffee shops, pharmacies and corner shops, all of whom started doing home deliveries. None of these businesses had preexisting electronic channels or supply chains, it was all done on the fly.

It’s interesting to compare this with what’s happening in Europe, where the move to direct-to-consumer has been a bit more cumbersome. Even here, though, we are seeing businesses looking for imaginative ways to short-circuit the problem. A lot of companies are using things like Shopify and other businesses have gone all-in with Amazon, effectively outsourcing the problem, albeit at a significant cost.

The conversation is changing. Companies looking at things like SAP’s direct-to-consumer offering are asking, on the one hand, how well it integrates with their existing corporate systems, and on the other how it compares with Shopify.

In London and other parts of the UK, we are seeing a great deal of entrepreneurial innovation from smaller businesses. There was a huge incease in the use of corner-shops during lockdown and many responded by finding quick solutions to the home delivery challenge.

As an aside, it’s worth noting that, in Asia, the natural solution is Wechat, which is the all-pervasive solution for direct-to-consumer offerings.

Getting back to a culture of getting things done

The Covid-19 pandemic has created a sense of crisis that has required companies to get things done quickly, putting to one side, at least temporarily, many of the normal regulatory and bureaucratic controls.

The upside is that we’ve been able to get things done much faster than normal. The question is whether and how we maintain this ability as things get back to the “new normal”.

For Neil, it was a real eye-opener to discover the extent to which the GCC has yet to adopt EDI and move away from paper in general. In Kuwait, if you want to open a new store, or change the name of a business, you need a great deal of paper work, licences, permits etc. This is now starting to change in response to the simple practicalities of the current crisis.

A simple example from the UK, is putting up Covid-secure screens on a factory floor. In the past, this would have required many months of pilots and testing and health and safety assessments. Now, you just do it, and this does call into question the time, cost and inefficiency of what we were doing before.

Covid-19 has thrown into sharp relief the contrast between a culture of getting things done and a culture of regulation and bureaucracy. Of course, we do need controls, but the current crisis has certainly highlighted the issue and the question now is where do we want to set the dial on this?

Remote working v outsourcing, what’s the difference?

One interesting consequence of the pandemic has been an increased appetite for outsourcing. Mezzan hasn’t traditionally been a big outsourcer. The IT team is largely expat, many of them from India, and the obvious question now is why pay for these resources to work remotely from their apartments in Kuwait when the work could just as easily be outsourced to companies in India at much lower cost?

An opportunity to leapfrog the competition

Mezzan responded quicky to the challenge of Covid-19 and the shift to direct-to-customer sales. The question now is what does this mean for the business going forward, will it revert or will these changes become permenant and what is the future direction for the business?

Mezzan’s CEO started this process of thinking forward and asking these fundamental questions quite early in the crisis, as soon as the “new normal” was stabilised. Sales during the height of the crisis were good (especially personal care products and staple food items) but what of the future?

The drop in oil price is a significant issue, which for Kuwait is in some ways as big as Covid, and there is also a reassessment of the levels of expatriate workers in the country (this is also true in other GCC countries). A lower oil price and smaller population, with a bigger role for technology, could mean Kuwait has a fundamentally different economy in 2021.

The Covid crisis has demonstrated the resiliance and adaptability of the human being and, in many ways, we have done a good job of keeping things going. IT and technology have played a big role in all this and the experince has raised some fundamental questions about the way we do things. We’ve learnt more in the last six months than the last six years about how to get things done.

We now need to take the opportunity to build-back-better and use what we’ve learned to leap-frog the competition, and create a more digitally focussed business model.

FUTURE EVENTS

Our next executive briefing, on 7th October, is on Project “Oasis”:

  • In just 6 weeks, 8 experts created an AI platform to capture and analyse crowdsourced Covid-19 symptom data to provide insights for the Cabinet.

For details and to register please click here.

Our next virtual coffee break, on 13th October, is on How to innovate from a distance:

  • Richard Poole – MD of Fluxx, the audacious and creative innovation consultancy – is our guest speaker. Richard will help you re-discover your innovation mojo and bring passion back to business.

For details and to register please click here.

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