Key words:Blue Ocean Strategy, Repeatable Scalable Model, Growth Path, Strategic Expansion, Strategic Focus, Starting from the Core, Harvard Classic Cases, Benchmarking Research.
In the last part, we talked about OLAM's use of the rural direct purchase model to start and explore its own repeated and expandable model - first along the category of the single origin to do a thorough job in Nigeria; Then copy Nigeria's successful model to emerging markets in Africa and Asia, and even the world, and finally form a global hegemony of categories; With the help of capital leverage, new category expansion is carried out, and value extension is carried out along the first-chain link, forming a full-scale first-chain customized service capability ......At each stage, OLAM focuses its resources on a single core business. Each round of expansion has a clear value theme and is done to the extreme. In the low-growth traditional industry, it has embarked on a step-by-step, high-profitability growth path. In this article, we will analyze the secret behind OLAM's success. First, cut into the niche market and open up a blue ocean in traditional industries
Olam opted for niche crops such as cashews, cocoa and coffee. As a late entrant to the agricultural products industry, it has avoided the bulk categories monopolized by giants; These agricultural products are usually produced in economically backward and politically chaotic areas, and the production areas are scattered and high-risk, which is an area that giants and downstream customers are reluctant to interfere in. The consumption of nuts, coffee and chocolate is often in developed countries, with natural geographical differences and poor information, and there are huge opportunities for chain innovation; At the same time, although the trading volume of niche crops is far less than that of bulk products, the downstream premium is high, and the brands operating related categories have strong strength and purchasing power, which can ensure a higher rate of return.
In addition to categories, OLAM has also avoided developed countries and opted for investment in emerging markets. The countries of Asia and Africa have low agricultural costs but large populations and rapid economic development. Whether it is a production area or an emerging consumer market, there is strong room for growth. After accumulating strong enough service capabilities and global market experience, Olam has gained a firm foothold in a very short period of time through the mergers and acquisitions of professional giants such as rice and cotton, superimposed its own global network and customer resources, and rapidly increased its business scale and influence. 2. Always focus on customer value innovation
Olam does not position itself as a first-class agricultural product enterprise and is satisfied with making a difference, but continuously improves the efficiency, integrity and flexibility of value chain services as the needs of customers shift. EventuallyProvide customers with customized solutions with the ability of full chain management. 
Wanwei Junzhuo initially opened a processing plant based on public information to reduce the cost of shell compression and transportation and improve the efficiency of the first chain; Because customers in the confectionery industry who purchase cashew nuts need cocoa, and customers who purchase coffee have the demand to purchase dairy products, the scattered procurement of customers has led to the ...... of unstable qualityThese customer questions became the most original motivation for OLAM to enter new categories and expand new businessWhether it solves problems for customers, creates new value, adds value to the value chain, and improves the differentiation ability of its own first-class chain services.
In his book Discovering the Profit Zone, Slevowski says: "The profit zone is constantly changing, and this change is changed by the change in customer preferences. "OLAM's business expansion has been able to grow profitably precisely because it is keenly aware of customer pain points and has always developed new businesses along the lines of its core competencies.
3. Organizational design that supports the repetitive and expandable model
Nearly all CEOs highlight the organizational challenges of expanding into new markets. Is it about integrating the new business with the core business? Or do you want to remain independent? Are different cultures allowed to survive in new businesses? How do you deal with the complexities that come with organizational expansion?
OLAM's organization has two core functions: business operations and investment.
Business operations are guided by a management committee, which is composed of professional managers and domain experts. Olam has 15 innovation centers around the world to provide customers with integrated **chain solutions. These solutions are then implemented into project units through a matrix organization of "product x area x function", and there are one or two hundred such units, each of which is a profit center.
Such a structure may seem fragmented, but the advantage is that project-based organizations are more likely to be customer-centric; Ensuring autonomy, dedication and professionalism in all lines; Employees are only 2-3 layers away from the person in charge of the profit center, and each project manager is responsible for the profit and loss of the profit center, ensuring flat management, achieving more efficient decision-making, performance management and management talent training; It is easier to replicate and dismantle, and supports the implementation of the repeatable expansion model. At the same time, OLAM uses a strong corporate culture, the integration and empowerment of data and information, and the intensive management of core talents to achieve the cohesion of decentralized organizations and reduce the complexity of information asymmetry and management.
The investment function is mainly led by the executive committee, which is composed mainly of the company's veterans, ensuring that the M&A behavior is highly strategically oriented, responsible for the systematic implementation of cultural values, and avoiding speculation and short-term behavior. The Executive Committee sets clear M&A value orientation and selection criteria. The specific project selection, value chain analysis and growth space assessment, business integration and other practical work are carried out by a professional team to ensure efficiency and professionalism.
OLAM has a strong track record in M&A management. On the one hand, thanks to the professional integration capabilities and rich experience of the M&A team, OLAM will inject its own standardized business methods and risk management capabilities into its own global resources to inject new business and maximize the release of growth space.
More importantly, in the process of introducing corporate culture, we should adopt a respectful and respectful, soft and soft way to complete the systematic implantation of our own cultural values. This allows 97 98% of M&A companies to retain their talent and maximize their potential.
Today, OLAM's investment function is one of the core businesses of OLAM Holdings, which is independently listed. We will continue to explore the possibility of new growth space for OLAM in new business portfolio investment, digital platform and product innovation, technology application and sustainability research, and new business incubation.
This organizational operation mode ensures the stability of the main business, professionalism and the institutionalized exploration of the second curve, and always follows the strategic intent.
Fourth, systematic talent development
The readiness of the talent pool is another important factor in determining whether or not OLAM makes an investment decision.
The company recruits entry-level managers from top business schools in Asia and provides rigorous training for 6 months. Founder George Verghese travels to different regions 3-4 times a year, each with a 4-day in-person workshop to introduce OLAM's vision, business model and core values to new employees.
After unraveling the mysteries of origin management at an early stage, George Verghese paid great attention to the experience of managers in the "rural direct purchase" position in the agro-producing countries. The grassroots environment is difficult, the political ecology is complex, and the new managers of 2 3 will leave within 2 years. But this "jungle experience" is extremely valuable, and those who can persevere not only gain the ability to deal with complex problems, but also fully identify with OLAM's business and culture, and will maintain a high level of loyalty and combat effectiveness in the company.
Mature managers who have proven their capabilities at the grassroots level will be invited to join the Global Assignee Talent Pool. GATP members have a deep understanding of Ollam's business model, operating systems, risk management mechanisms, key business processes and culture: they are always on call and ready to move on to new roles. This model has provided a steady stream of new force for OLAM's global expansion plans.
5. Strong strategic management ability
OLAM's development history has shown its strong strategic intent traction, and the company plans for a three-year strategic cycle and two cycles in advance. Each round of strategy formulation fully considers the insight of macro trends and changes in customer value, so that each round of development has a distinct growth theme.
OLAM sets strict standards for investment decisions. At the launch of the upstream expansion plan, George Verghese explained that "as we worked to go upstream, we found that not every product and every country or region was profitable. For example, agriculture is not 'accessible' in about half of the world's countries because it is protected by subsidies and/or import and export restrictions. Therefore, we must be cautious about going upstream. We have 44 items on 12 platforms. We evaluate each of these commodities to determine the distribution of profits along the value chain. We then analyze the Ålan interior to understand the gaps in our capabilities and develop a plan to close the gaps. Later, we assess what happens when commodities are deep in the cycle, and when manufacturers start losing money. ”
Once a decision is made, the team has the efficiency of a bulldozer. Taking the '09 expansion as an example, OLAM's executives prioritized 48 growth projects proposed by 20 business units to be implemented in the first three-year cycle. "We do a thorough analysis of each business and realistically make sure that they are operating in the best order to be truly successful," "We don't think about resource constraints first, we just prioritize development, and then cut down on businesses that really don't have the resources to support them." We have also identified areas where capital can be released. As a result, 27 profit centres and 2 business units were completely axed". This process lasted six months – resolutely not to waste resources at non-strategic points of opportunity.
Strategic Plan for 2009 (excerpted from company documents).
Write at the end
"olam" is taken from the Hebrew word "beyond borders." Behind the dynamism of its success is the courage of its founder, George Verghese, and his team to continue to step beyond boundaries and deliver on their commitment to purpose. As he puts it: "Changing strategies is like walking on a rope without a safety net." The more successful a company is, the harder it is to change. However, change is precisely the mission of leaders. "OLAM's case can be described as a pixel-level restoration of the law of business leadership. I believe that readers have also fully felt the power of the entrepreneur's system view in this case. 
This strength originates from the commitment to shareholder returns, the perception and creation of customer value, the strong consistency of strategic insight and strategy execution system, and the construction of a strong core business and the exploration of innovation beyond the core, and the establishment of balance. It is worthy of continuous reflection and practice of each of our business managers.
Finally, when considering expanding into a new business, we might as well go back to a few questions from Chriszuk, a frank self-assessment:
1.What exactly is my core business?
2.Was the previous business expansion successful? Do I have a repeatable growth model to discover new areas of growth? Am I pushing it to the limit?
3.Do competitors have a repeatable pattern? Does the other party have a credible expansion plan?
4.Is my new business expansion leveraging the costs, capabilities, and customers of my core business?
5.What are the odds that we will be a leader in a new business or a new field?
6.Does entering a new area protect our existing core business?
7.To what extent can this opportunity strengthen the position of the existing core business?
8.Is investment a key step in strategic expansion priorities?
9.Can you be sure that our expansion into these areas will be carried out well?
10.When is the best time to expand, and when is it a last resort?
11.What factors influence the success of an expansion plan, and what are the most important organizational drivers and resistances?
Reference: "Expanding from the Core" Chris Zuk.
OLAM's official website and annual report.
Oran New Journey, Harvard Business School, 2013
scaling impact in asia:achieving purpose and profit》october 2022，ciip, smu,and accenture
Bringing to Scale, Cambridge University Press, 2022
Previous Recommendations: Growth Paradigm Benchmarking: The Expansion Road of the New Generation of Olam of International Grain Merchants (Part I).
This article was written by:
Ms. Duan Ying, Consulting Director of Wanwei Junzhuo Enterprise Management Consulting Company, was the Director of Chinese Talent Development of LG Chem and the Director of Shenzhou Academy of UCAR. He has accumulated rich theoretical and practical experience in organizational change, innovation capacity building and leadership transformation.