Chez Panisse: Building an Open Innovation Ecosystem SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Chez Panisse: Building an Open Innovation Ecosystem
The Chez Panisse case study provides a brief history of the famous restaurant started by Alice Waters, but in the context of open innovation and the ecosystem that Waters developed over 40 years. The case study discusses Waters' local and global ecosystem using an open innovation strategy with stakeholders such as suppliers, alumni chef and staff, food writers, and others. Over the years, Chez Panisse became a launching pad for numerous prominent chefs, suppliers, and food writers, along with the well-known Edible School Yard Project (ESY) that helped fund edible schoolyards across the country. All of these members flowed in and out of Chez Panisse and became part of the restaurant's greater ecosystem, a factor that enabled and spurred numerous collaborations and innovations over the years. As Waters looked back at Chez Panisse's 43-year-old history, she was very proud of all she and her team and extended ecosystem had accomplished. Going forward, she wondered how to continue the success of the restaurant and the wide-reaching global ecosystem she had built and hoped to continue to grow, as well as how to continue to spread her philosophy that the "best-tasting food is organically and locally grown and harvested in ways that are ecologically sound by people who are taking care of the land for future generations.
Authors :: Henry W. Chesbrough, Sohyeong Kim, Alice Agogino
Swot Analysis of "Chez Panisse: Building an Open Innovation Ecosystem" written by Henry W. Chesbrough, Sohyeong Kim, Alice Agogino includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chez Panisse facing as an external strategic factors. Some of the topics covered in Chez Panisse: Building an Open Innovation Ecosystem case study are - Strategic Management Strategies, Gender, Innovation, Organizational structure, Social responsibility and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Chez Panisse: Building an Open Innovation Ecosystem casestudy better are - – there is backlash against globalization, talent flight as more people leaving formal jobs, wage bills are increasing, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic ,
there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Chez Panisse: Building an Open Innovation Ecosystem
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chez Panisse: Building an Open Innovation Ecosystem case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chez Panisse, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chez Panisse operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Chez Panisse: Building an Open Innovation Ecosystem can be done for the following purposes –
1. Strategic planning using facts provided in Chez Panisse: Building an Open Innovation Ecosystem case study
2. Improving business portfolio management of Chez Panisse
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Chez Panisse
Strengths Chez Panisse: Building an Open Innovation Ecosystem | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chez Panisse in Chez Panisse: Building an Open Innovation Ecosystem Harvard Business Review case study are -
Ability to recruit top talent
– Chez Panisse is one of the leading recruiters in the industry. Managers in the Chez Panisse: Building an Open Innovation Ecosystem are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Chez Panisse has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Chez Panisse: Building an Open Innovation Ecosystem Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Chez Panisse in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Chez Panisse in the sector have low bargaining power. Chez Panisse: Building an Open Innovation Ecosystem has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chez Panisse to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Chez Panisse has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Chez Panisse: Building an Open Innovation Ecosystem - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Chez Panisse: Building an Open Innovation Ecosystem firm has clearly differentiated products in the market place. This has enabled Chez Panisse to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Chez Panisse to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Chez Panisse: Building an Open Innovation Ecosystem Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to lead change in Innovation & Entrepreneurship field
– Chez Panisse is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Chez Panisse in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Chez Panisse has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Chez Panisse are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Chez Panisse is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Chez Panisse is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Chez Panisse: Building an Open Innovation Ecosystem Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Chez Panisse is one of the most innovative firm in sector. Manager in Chez Panisse: Building an Open Innovation Ecosystem Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Chez Panisse: Building an Open Innovation Ecosystem | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chez Panisse: Building an Open Innovation Ecosystem are -
Aligning sales with marketing
– It come across in the case study Chez Panisse: Building an Open Innovation Ecosystem that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Chez Panisse: Building an Open Innovation Ecosystem can leverage the sales team experience to cultivate customer relationships as Chez Panisse is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Chez Panisse supply chain. Even after few cautionary changes mentioned in the HBR case study - Chez Panisse: Building an Open Innovation Ecosystem, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chez Panisse vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Henry W. Chesbrough, Sohyeong Kim, Alice Agogino suggests that, Chez Panisse is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Chez Panisse: Building an Open Innovation Ecosystem, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Chez Panisse has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Chez Panisse products
– To increase the profitability and margins on the products, Chez Panisse needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Chez Panisse has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High cash cycle compare to competitors
Chez Panisse has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Chez Panisse: Building an Open Innovation Ecosystem, it seems that the employees of Chez Panisse don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Products dominated business model
– Even though Chez Panisse has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Chez Panisse: Building an Open Innovation Ecosystem should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Chez Panisse has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Chez Panisse: Building an Open Innovation Ecosystem | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Chez Panisse: Building an Open Innovation Ecosystem are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Chez Panisse in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Chez Panisse has opened avenues for new revenue streams for the organization in the industry. This can help Chez Panisse to build a more holistic ecosystem as suggested in the Chez Panisse: Building an Open Innovation Ecosystem case study. Chez Panisse can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Chez Panisse can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chez Panisse can use these opportunities to build new business models that can help the communities that Chez Panisse operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Using analytics as competitive advantage
– Chez Panisse has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Chez Panisse: Building an Open Innovation Ecosystem - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chez Panisse to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chez Panisse can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Chez Panisse to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chez Panisse can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Chez Panisse: Building an Open Innovation Ecosystem, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Chez Panisse to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Chez Panisse in the consumer business. Now Chez Panisse can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Chez Panisse can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Loyalty marketing
– Chez Panisse has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Chez Panisse to increase its market reach. Chez Panisse will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats Chez Panisse: Building an Open Innovation Ecosystem External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Chez Panisse: Building an Open Innovation Ecosystem are -
Stagnating economy with rate increase
– Chez Panisse can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Chez Panisse demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chez Panisse with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Chez Panisse business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Chez Panisse needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Technology acceleration in Forth Industrial Revolution
– Chez Panisse has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Chez Panisse needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Chez Panisse can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Chez Panisse: Building an Open Innovation Ecosystem, Chez Panisse may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
High dependence on third party suppliers
– Chez Panisse high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Chez Panisse will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Chez Panisse in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Chez Panisse in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Chez Panisse: Building an Open Innovation Ecosystem Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Chez Panisse: Building an Open Innovation Ecosystem needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Chez Panisse: Building an Open Innovation Ecosystem is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Chez Panisse: Building an Open Innovation Ecosystem is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Chez Panisse: Building an Open Innovation Ecosystem is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Chez Panisse needs to make to build a sustainable competitive advantage.