Product Alignment Strategy
October 27, 2009
Cabot Corporation's Case Study in B2B Competitive Advantage
As customer interest in "green" continues to grow, more companies are finding themselves in need of a quick and bold entry into the market with the right message about their product or service. For companies high upstream in the value chain and far removed from the consumer, making the "green" B2B value proposition can be especially challenging.
Recently, the Cabot Corporation, a global leader in the manufacture and production of performance materials, sought a way to strengthen its long-term position in one of its core products. Because Cabot's products are market leaders across a wide spectrum of industries, its staff faced an ever-growing mix of downstream sustainability requirements varying by region, product, and market sector. Martin O'Neill, Vice President of Safety, Health & Environment for the Cabot Corporation and Libby Bernick, Senior Consultant with Five Winds, offer some insights into the effort to apply a product alignment strategy.
What problem was the company facing?
For decades, Cabot's market domination was achieved by meeting consumer demands for cost, safety, environmental performance and durability, and by being recognized as a reliable supplier. More recently, its customers (and its customers' customers) were dealing with regulatory requirements driven by a desire for "green" performance in the supply chain, and Cabot knew it required a strategy to stay out front. As O'Neill notes, "We were looking out across the global markets at current and future sustainability trends, and wanted to ensure that our ‘number one' market position remained solid." Cabot also knew that its competitors were poised to leverage these sustainability requirements, and wanted to fend off material substitution.
How was the product alignment strategy applied?
First, Cabot strategically evaluated its options. Like many other leading companies trying to make sense of business risks and opportunities around sustainability, they considered conducting a full Life Cycle Assessment of a key product. Five Winds and Cabot worked together to evaluate alternatives that might offer strategic data about life cycle impacts, and at the same time provide insights about market needs. Bernick explains the rationale for selecting the product alignment strategy: "Five Winds' qualitative product alignment strategy uses cradle-to-grave thinking about market levers and sustainability issues, so it was a natural fit - not only to address Cabot's immediate need - but also to give them more control over future product positioning." A key advantage is that the multi-stage product analysis can be completed in a relatively short time - about 60 days.
Cabot's second strategic move was to apply laser-like focus. O'Neill explains, "The project team critically evaluated Cabot's business, and carved out isolated portions where we could deliver the largest impact." The team knew that the process could be replicated on other business segments at a later date, and chose to maximize the effort on a product and region where critical sustainability issues were reaching a tipping point.
Following the initial screening, the project team scanned internal and external stakeholder positions, and out of a dizzying array of over forty sustainability drivers, identified the most relevant regulatory and supply chain impacts. Sustainability requirements were ranked using a value chain analysis tool to assess market scope, probability, magnitude, and value chain position.
Next, the life cycle diagnostic applied several management tools to quantify the risks and opportunities associated with the more critical sustainability drivers. The team pinpointed the effects of various impacts (and aggregated their effects) using a SWOT target tool and a "risk to opportunity" bow-tie tool, and then assigned priority action order. Key benefits to using the tools were their graphic outputs, which organized complex data sets and facilitated decision-making around the priorities.
The third stage of the process, the strategic options analysis, brought the company's key stakeholders together to evaluate the technical feasibility and costs of alternative solutions that would allow the company to position its product to capture market opportunities. The final stage was to formulate a strategy with all the necessary points for implementation, using the results from the product alignment strategy and the insights from the stakeholder workshop.
What were some of the key findings?
There was a possibility of a substitution risk by a competitor product that presented apparent "greener" attributes. The analysis identified significant opportunities to bridge that gap and helped to develop a clear roadmap with short term and long-term actions. Interestingly, the team found "green" characteristics in Cabot's product that could be more fully leveraged in marketing communications and R&D activities.
Did the company benefit in other ways?
Moving forward, the company can use the product alignment strategy's results to improve the development of its sustainability strategy - taking its existing, award-winning environmental compliance program to a higher level that includes the right mix of product stewardship programs.
As a result of the alignment strategy application, Cabot now has a process to align other priority product attributes. The product alignment strategy gave the company a way to gather new information, couple it to what the company's internal experts already knew, and transform it into a cohesive business strategy. In a globally situated company, this is of great importance.
In general, what benefits can a company expect through implementing product alignment strategy?
Product alignment strategy gets companies out of reaction mode. Regardless of the product or application, management gains the ability to be strategic rather than tactical about sustainability. It allows them to embed strategies that incorporate customer and stakeholder requirements and at the same time integrate the values of environmental sustainability into their products.
Increased information flow between business units also translates into marketing opportunities: customer's customers are able to communicate valuable sustainability stories, thereby increasing the positioning and branding potential of a product.
Why is the product alignment strategy becoming more relevant?
It's becoming even more imperative in North America as new environmental regulations and requirements are put in place and retailer requirements trickle up the value chain. Presently, it's very difficult for an upstream supplier or midstream manufacturer or producer to fully understand and manage the complex web of sustainability drivers that impact the value chain of a product.
Organizations are faced with so many multifaceted issues when attempting to integrate sustainable practices into business processes; the product alignment strategy brings everything into focus.
For more information about how to use the alignment strategy, contact Libby Bernick at +1 (610) 640-2302 ext. 102.
