Making a meal out of dishonest business

Supermarket ‘thoroughbred’ ‘Tesco‘ was guilty of making a meal out of dishonest business during the horsemeat scandal.

Matters lurched south in Jan 2013 when the company took out national ads apologising for its home-brand burger containing a reported 30% horsemeat. Then the public had to stomach the notion that consuming a ‘Spaghetti Western‘ didn’t necessarily involve watching horses on the telly. And when Tesco thought the PR couldn’t worsen, well it did…

On February 18th 2013 a Tesco delivery driver ran over and killed a horse in Warwickshire.

Why the stew?

Making Tesco the single mule for the hippophagy (horse-eating) mess is unfair. Organisations such as Findus and Birds Eye were implicated too. And according to BBC’s Panorama, less well-known distribution and food production companies (spread right across Europe) were also involved in making a meal out of dishonest business.

But whilst eating horsemeat is taboo in the UK, it is an accepted part of the diet in many cultures. Britain’s ‘pedigree chums’, the French seemingly have more of an appetite for a ‘stable’ diet. Food historian Dr Annie Gray, who lived in France for 3 years, says for her it was completely natural to eat horsemeat since it was sold by her local butcher.

“I am far more concerned with where the food is from. I would far rather eat ethically sourced, well-cared for horse, than battery chicken, for example,” she says.

The source is critical

Dr Gray’s point demonstrates why the scandal’s impact was so widespread. It’s not that people are eating horse, it’s the fact suppliers misled consumers about the ingredients and their origins. As a consequence, the fundamental issue of trust took a whipping and people said ‘nay’ to meat.

According to a February 2013 poll of 2,200 adults (conducted by Consumer Intelligence research company), the presence of horse (sold as beef) led British consumers to buy less meat. Products were pulled from supermarket shelves as one in five adults said they were changing their shopping habits. Over 65% of respondents said they trusted food labels less.

From field to fork

In our highly connected world, people have far greater access to information and are able to make much more informed purchasing decisions. Food retail is now about both low price and high quality and I’m informed by an industry specialist that there is no headroom in a competitive market to trade off one against the other. Critically, the customer wants both.

To build reputation, food retailers have focused more on the issue of provenance to generate confidence and trust between buyer and seller. Provenance gives the retailer better quality control with individual products traceable from ‘field to fork’; among other things the customer gets a nice photo of the smiling farmer on the packaging.

But whether it’s economic pressure, plain greed or both, deceitful food producers have managed to hide unwelcome ingredients within processed foods. And once disguised in a branded wrapper oozing trust, food of dubious origin smuggles its way onto our supermarket shelves.

Digesting the lessons

This scandal still has a distance to go. And as a result of current economic pressures it would not surprise me if we didn’t see other retailers making a meal out of dishonest business as well.

However, this event whilst having greatest impact on large organisations, relays several important messages to people starting out in or running a small business.

Trust & Openness

It takes time, money and effort to create a trusted sustainable brand. But the horsemeat saga demonstrates brilliantly how trust can be lost in no time at all. All that hard work goes to the wall. For more on this issue I recommend Stephen Covey’s ‘Speed of Trust’ – page 237 also summarises the key issues underpinning organisational trust.

Being open with customers as well as suppliers fosters a culture of mutual understanding. Increasingly consumers expect and enjoy being more involved with an organisation. One example of this is the restaurant chain ‘Leon’ where customers are encouraged to actively participate with the business. The food is great too – wholeheartedly recommend their ‘Porridge of the Gods’.

Values verses cash

Every business experiences problems with cashflow and the issue is typically most acute in the early years. When financial pressures arise there can be a temptation to cut corners with the service or product delivery in order to protect or save money.

However, as the horsemeat scandal has demonstrated, the consequences of prioritising money over core values can lead you quickly down to the knackers yard. This short audio story featuring entrepreneurial guru Seth Godin highlights the importance of being true to yourself and the fact that ‘what you stand for is more important than the month’s revenue’.

Adversity brings opportunity

As this post hopefully demonstrates, horsemeat is not bad. However, the public reaction and outcry has revealed much about the British psyche and as the research demonstrated, has changed buying behaviour too.

Where there is new information and when people change habits, there are opportunities for clever entrepreneurial minds.  Just like the hitchhiker, headway is often made when you’re prepared to think differently and tackle rather than run from adversity.

And speaking publicly (the first time since the crisis took hold) Tesco CEO Philip Clarke, said his supermarket is now looking to source more locally and work closely with farmers and in greater partnership with suppliers. I bet other supermarkets will follow suit. And if you want to supply this market, this may be a good time to back yourself.

Key Learning Points: Learn from the mistakes of organisations embroiled in the horsemeat scandal. Work closely with suppliers and foster relationships with customers. People want to trade with suppliers that are truthful and honest. In contrast, we gallop away from those making a meal out of dishonest business.