You are provided with a case study where a business faces a series of challenges. As the newly appointed General Manager of the Cunningham Holdings’ recently acquired business, you must take into account a number of divergent problems among various stakeholders, including, but not limited to: the due diligence data from the acquisition, the current and future growth trends relative to this industry and this business, identification of the sweet spots for competitive advantage and managing the friction within this multi-dimensional problem. These combined challenges present you with the task of creating an innovative solution that addresses the complexities you face as a General Manager who wants to innovate a lasting successful solution.

You will need to communicate your innovative solution to this problem in form of a five-minute presentation and a report to the Board.

Work-based skills

This assessment incorporates the following work-based skills:

1. Develop personal capacity for continuous innovation by implementing Flow practices

2. Create an innovative culture in a collaborative/organisational setting

3. Evaluate innovation tools and techniques and their fit for the problem a business is facing.

Learning objectives

Related subject learning objectives LO1: Examine tools and techniques to implement creative responses to the marketplace

Specific learning objectives

Specifically, this assessment demonstrates your ability to: - Study and analyse the commercial data provided in relation to the purchase of My Crazy Panda Foods Pty Ltd (MCPF) by Cunningham Holdings - Identify and evaluate the short-, medium- and long-term goals for sustainable growth - Analyse global trends and their possible impacts on the short-, medium- and long-term goals of the company - Iterate your innovative skills in relation to creating and leading a coherent team to address the complexities of the problem faced - Apply Flow theory to overcome the divergent problems and create competitive innovation that can be implemented successfully.

Case STUDY

The case study Background Cunningham Holdings have recently acquired My Crazy Panda Foods Pty Ltd (MCPF), an Asian finger food manufacturing company. The company is a bulk manufacturer of Asian finger food in Australia, with contracts for frozen food shelf products in the three major retailers: Coles, Woolworths and Aldi. The company sells various sizes of frozen food packages on the shelf but suffers from low profitability margins due to the heavily discounted promotional schedules that the supermarket retailers insist on and require in order to retain continuing supermarket presence. Each supermarket conducts a rotational range review of each product on its shelves annually and poor sales volumes will result in supermarkets requesting suppliers to explain why the products should not be delisted. Thus there is the implicit requirement for big-cut promotional spending where suppliers discount their products up to 50 per cent. Gross sales in Australia are currently in excess of $20 million per annum, but net profit is only approximately five percent of turnover. The company has diversified its production by manufacturing prawn and vegetable dumplings in China in order to improve margins. Pork and chicken meat products have to be manufactured in Australia as there is a ban on the import of such meat. You have been appointed the new General Manager of MCPF. You have been provided with the financial operating balance sheets, sales projections, HR details on personnel retained by Cunningham Holdings, the sales manager’s overseas sales plans and projections, and are aware of the friction in the Cunningham Board as a result of this purchase. Further, you have been provided with the report from KMP Financial Planning that Cunningham received prior to purchase, which identifies: 1. Potential new markets and the need to diversify and the stresses between the various options 2. Problems within the HR profiles of the acquired staff and the Board’s split feelings about the purchase 3. Financial constraints in adopting any one or more route(s) for innovation. Your task as the newly appointed GM of this subsidiary of Cunningham Holdings is to focus on processes to innovate solutions to the divergent problems facing the newly acquired company by applying your understanding of the innovation genome and Flow theory. Market research KMP market research identified a number of potential new markets for innovating new consumer products in response to changing consumer demographics. This research identified the structural problems facing the existing frozen food market, which include: 1. The low profit margins as a result of deep cut promotions 2. The exposure to risks from such low margins such as product recall events from packaging and labelling mistakes under Australian Consumer Law or product quality complaints, especially from imported products where MCPF does not maintain quality control personnel 3. Supermarket-driven consumer trends whereby consumers buy according to promotions and MCPF has not developed a consumer loyalty club 4. The need for innovative changes to packaging that would create greater customer loyalty and identification with MCPF product 5. Expanding the customer base to include changing demographics, which highlight growth in refrigerated products in the form of single take-home meals ready to heat and eat with stir-through sauces 6. Expanding from cheap animal-protein-based Asian-style food to creative vegan and vegetarian refrigerated products that are more upmarket, with greater profitability margins and potential to spread the companies risks associated with the growing resistance to caged animal husbandry 7. Diversifying into free range and organic products 8. Expanding the retail outlets to include food service chains such as convenience stores, health food stores, cinemas, sports facilities, restaurants 9. Creating the business framework for starting up a Crazy Panda fast food chain 10. Revamping the existing trademark, which is a Chinese panda armed with chopsticks eating a plate of dumplings (KMP research indicated the need to merge that trademark into a 2020 virtual-style one or alternatively to create a new trademark that markets similar products but at a premium level and to some extent competes with the existing brand). Human resources KMP market research identified the strengths and weaknesses of the retained personnel structure. • The retained Sales Manager has been with MCPF since its inception and had the support of the MCPF board for exploring business opportunities overseas, especially in China, in the form of Aussie beef or lamb dumplings. Despite considerable time and capital in establishing a corporate presence in China not one dumpling has been sold. • The Sales Manager is reluctant to give up the China strategy and is also reluctant to reposition the company in the Australian market, despite his solid relationships with Australian retailers. • The Manufacturing Manager who oversees the 20 personnel at the MCPF production factory is very knowledgeable and competent. She has created an effective factory team employing mostly Sri Lankans like herself. However, she is reluctant to embrace changes to production such as vegetarian or vegan and doesn’t comprehend all the fuss about caged animal husbandry. The report also identified the conflict within the board prior to and continuing after the purchase of the MCPF asset. • Four of the executive board members together with one non-executive board member focussed on the medium-term potential, which they concluded as an opportunity to increase MCPF turnover and market share and then sell the asset to a larger competitor. • These board members experienced no conflict of interest in managing an asset, which the other board members considered was ethically compromised and not sustainable from many perspectives. • The three opposing executive board members and one non-executive board member passionately expressed serious ethical and commercial reservations against investing in what they considered would become zombie assets in the brave new world. There were conflicting views on what the vision of the company is and why Cunningham Holdings should invest in this new commercial venture which was outside its current portfolio. • The purely profit-driven board members only focussed on the potential profit/loss analysis in order to meet their fiduciary obligations to Cunningham Holdings. The other board members, resigned to a majority board decision to purchase MCPF, nonetheless expressed their vision for transitioning the MCPF subsidiary to a leading edge innovative retail food purveyor, driving changes in consumer choices and educating consumers in the context of the entire food chain footprint. From this perspective these board members saw possibilities for linkages to the existing Cunningham portfolio. These board members also had reservations regarding the imported Chinese products and the exploitation by caged animal husbandry. The stress within the board structure is palpable and has resulted in considerable inertia by the board to respond to important decisions affecting the future path for MCPF. Financial constraints KMP market research also identified the financial constraints facing the new company as a result of intense production growth and the pursuit of several market shares, including the export R&D. The report also identified low profitability returns from supermarket business due to intensive promotional schedules. While acknowledging in another part of the report the substantial opportunities in this consumer market, the report expressed caution as to the cost-benefit analyses of each new market and how such opportunities were problematic, especially in light of the internal conflicts within the board and HR, and the lack of a coherent vision. Tasks You have been appointed the GM of this new asset with a seriously long list of KPIs and associated timelines for implementation. This is a make-or-break opportunity for you and your career. Further, the bonus stock acquisition package will establish you financially for life if you are successful. You plan to present a plan for innovation that helps this company seize this opportunity for growth. Your challenge is to manage all the divergent problems and navigate a path through them that garnishes the support of all the stakeholders and establishes the groundwork for success. You will need to: • Analyse all the due diligence provided to you. • Consider your personnel (the retained MCPF staff) including the sales manager, the production manager and the factory team structure. Study their performances from the KMP report, identify the stress points and innovate an interconnected path forward. • Apply the skills you have learned to create a Flow profile ( by identifying the curiosities and creative options for shared passion and purpose) to manage your team’s culture and innovation potential and describe your leadership approach to innovation. • Implement a Flow response (by implementing Google’s nine principles) that presents customers’ viewpoints and projects financially viable goals, embeds your innovation culture in your team and manages the friction within the Board of Cunningham Holdings so that your report will be accepted by all members. • Create and present your innovative solution to the Board by way of 1) a recorded 5-minute oral presentation plus a brief dot point handout, and 2) an accompanying complete report no longer than 1500 words

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