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CEO Summit Highlights Globalization, Innovation

WASHINGTON—Tetra Pak  hosted a two-day summit for C-level executives of North American-based food and beverage companies, focusing discussions on global competition and success through innovation, unique strategy, cost management and sustainable practices. The event, called "Redefining Reality: For Sustainable Profit Growth," took place at the Mandarin Oriental Hotel and the U.S. Institute of Peace in the nation's capital Jan. 9 and 10, 2013.

Speakers featured at the summit included: John Kao, bestselling author of Innovation Nation and chairman of the Global Advisory Council on Innovation of the World Economic Forum in Davos, Switzerland; Pepper Schwartz, sociologist and professor at University of Washington, Seattle, and a leading relationship expert; Renee Mauborgne, distinguished fellow and affiliate professor at INSEAD and co-author of the award-winning international best-seller book Blue Ocean Strategy: How to Create Uncontested Market Spaces and Make Competition Irrelevant; James Allen, senior partner at Bain & Company, London, where he is co-head of Global Strategy; Steven Rattner, chairman of Willett Advisors LLC, the investment arm for New York Mayor Michael R. Bloomberg’s personal and philanthropic assets, and head of the Obama Administration’s successful effort to restructure the automobile industry; Arnold Dratt and John Chen of Hilco Trading, one of the world’s largest and most respected asset valuation advisories; and Alan Hinchman, global marketing director for infrastructure at GE Intelligent Platforms’ Energy, Oil & Gas, Water and Commercial Buildings.

Among the highlights, Mauborgne detailed how blue oceans, uninhabited spaces of potential new markets and business, differ from red oceans, the crowded spaces of existing markets marked by head-on competition for market share. "In overcrowded industries, growth opportunities are increasingly limited," she said. Instead, she suggested creating new market space—Cirque Du Soleil, Starbucks and Vitamin Water are examples—can open up new demand. Another example used focused on how Casella Wines saw an untapped alcohol segment in the United States, where beer drinkers far outnumber wine drinkers, and offered its simplified Yellow Tail wine to American tastes and sensibilities, to great success. "Yellow Tail redefined its strategy ...  easy drinking, easy selection and fun and adventure," she noted.

Allen, who co-authored Repeatability: Build Enduring Businesses for the World of Constant Change, also talked strategy, but talked about the value of red ocean business and how to improve this competition by expanding with a global focus. He advised business leaders to build off a strong core, define repeatable models, stay paranoid and leverage partners. "Complexity is the silent killer of growth," he added.

Rattner, who was counsel to the U.S Treasury Secretary during the GM bailout, detailed the causes and solutions involved with the auto "rescue"—as he preferred to call it—and pointed to lessons other businesses can take from the extraordinary situation. He noted GM management was woefully unaware of its detailed financial condition, and part of the solution was firing GM CEO Rick Wagoner and other key management figures.

Dratt and Chen offered similar cautions via stories of their past clients, which either at or near end-of-life financial condition and ended up restructuring with sound business advice or folding. The pair suggested companies embrace change, kill complacency, avoid a culture of denial among management, organize the business structure towards harmony, focus on long-term impact and focus on the price-value expectations of customers.

One of the least obvious areas of concerns for businesses is water management, an issue Hinchman painted as not just one of environmental footprint, but also of long-term business cost, quality and survival. He provided some glaring stats and facts, such as:

  • 20 to 30 percent of the world has no access to fresh water;
  • Municipal water loss in Canada, Mexico and the United States ranges between 20 and 50 percent; and
  • More companies are locating in water-challenged areas.

In fact, he explained wind, solar and other such green technologies have a very long time-to-ROI (return on investment), making water a better target for businesses looking to control operational costs and increase their sustainability. "North America has a huge water infrastructure bill coming due," he warned, adding increased demand and reduced availability of quality water is increasing the cost of water and risk of productivity disruptions.

Hinchman noted agriculture is the number user of water, but food and beverage companies also depend on quality water. Major beverage companies are already addressing this water issue via water reuse and recycling efforts, including treating their own water and employing closed loop systems. To work toward a better water future, companies should analyze their water profiles—how they use water, what it costs and where it comes from—consider various water recycling approaches and promote governmental policy changes, which are notoriously difficult to initiate. "The water system in the United States was built primarily in the 30s," Hinchman noted. "There has been no new technology breakthrough [in water infrastructure] in a long time."

Michael Zacka, president and CEO of Tetra Pak United States and Canada, reported around 70 CEOs from leading companies attended this inaugural summit. "We wanted to offer speakers that provoked and helped energize CEOs to think about how they can innovate and help their organizations grow and bring better products," he said, discussing Tetra Pak's goal in creating this summit.

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