Case Study Description of Ecovative Design LLC: A Biological Materials Startup
Ecovative Designs (Ecovative), a start-up company in upstate New York, uses an innovative process to combine agricultural waste and mycelium (mushroom "roots") to grow forms for use in a wide variety of applications, especially a protective packaging material. Not only does this new product replace the need for the environmentally harmful alternative, extruded polystyrene, but the production process is less energy intensive. It exemplifies the cradle-to-cradle design indicative of a sustainably embedded product and attractive to companies looking to reduce their carbon footprint. In just a few years, Ecovative has expanded from a lab to a large facility funded partly through research grants and partly from contracts with two large corporations. In 2013, the partners are considering whether to sign a contract with Sealed Air, one of the largest distributors of packaging materials in the world, but the deal would mean relinquishing control over the only profitable segment of their company. They are considering alternative growth strategies to find the one that fits best with their goal: to have the largest impact on the planet while remaining profitable. Chris Laszlo, Abdel Latif Ladki, and Abraham Weiner are affiliated with Case Western Reserve University.
Authors :: Chris Laszlo, Abdel Latif Ladki, Abraham Weiner
Swot Analysis of "Ecovative Design LLC: A Biological Materials Startup" written by Chris Laszlo, Abdel Latif Ladki, Abraham Weiner includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ecovative Cradle facing as an external strategic factors. Some of the topics covered in Ecovative Design LLC: A Biological Materials Startup case study are - Strategic Management Strategies, Marketing, Strategy and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Ecovative Design LLC: A Biological Materials Startup casestudy better are - – increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China,
technology disruption, increasing energy prices, etc
Introduction to SWOT Analysis of Ecovative Design LLC: A Biological Materials Startup
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Ecovative Design LLC: A Biological Materials Startup case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ecovative Cradle, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ecovative Cradle 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 Ecovative Design LLC: A Biological Materials Startup can be done for the following purposes –
1. Strategic planning using facts provided in Ecovative Design LLC: A Biological Materials Startup case study
2. Improving business portfolio management of Ecovative Cradle
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ecovative Cradle
Strengths Ecovative Design LLC: A Biological Materials Startup | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ecovative Cradle in Ecovative Design LLC: A Biological Materials Startup Harvard Business Review case study are -
High switching costs
– The high switching costs that Ecovative Cradle 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.
Operational resilience
– The operational resilience strategy in the Ecovative Design LLC: A Biological Materials Startup 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 Leadership & Managing People field
– Ecovative Cradle 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 Ecovative Cradle in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Ecovative Cradle digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ecovative Cradle has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Ecovative Cradle has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ecovative Cradle to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Ecovative Cradle 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.
Strong track record of project management
– Ecovative Cradle is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Ecovative Cradle 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 Ecovative Design LLC: A Biological Materials Startup - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Ecovative Cradle has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ecovative Cradle has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Ecovative Cradle in the sector have low bargaining power. Ecovative Design LLC: A Biological Materials Startup has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ecovative Cradle to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Ecovative Cradle has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Ecovative Design LLC: A Biological Materials Startup 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.
Learning organization
- Ecovative Cradle 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 Ecovative Cradle is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Ecovative Design LLC: A Biological Materials Startup Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Ecovative Design LLC: A Biological Materials Startup | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ecovative Design LLC: A Biological Materials Startup are -
Aligning sales with marketing
– It come across in the case study Ecovative Design LLC: A Biological Materials Startup 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 Ecovative Design LLC: A Biological Materials Startup can leverage the sales team experience to cultivate customer relationships as Ecovative Cradle is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Ecovative Cradle 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Ecovative Design LLC: A Biological Materials Startup, it seems that the employees of Ecovative Cradle 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.
No frontier risks strategy
– After analyzing the HBR case study Ecovative Design LLC: A Biological Materials Startup, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Ecovative Design LLC: A Biological Materials Startup, in the dynamic environment Ecovative Cradle has struggled to respond to the nimble upstart competition. Ecovative Cradle has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Ecovative Cradle supply chain. Even after few cautionary changes mentioned in the HBR case study - Ecovative Design LLC: A Biological Materials Startup, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ecovative Cradle vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Ecovative Cradle 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Ecovative Design LLC: A Biological Materials Startup, is just above the industry average. Ecovative Cradle needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Low market penetration in new markets
– Outside its home market of Ecovative Cradle, firm in the HBR case study Ecovative Design LLC: A Biological Materials Startup needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Ecovative Cradle products
– To increase the profitability and margins on the products, Ecovative Cradle needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Ecovative Design LLC: A Biological Materials Startup HBR case study mentions - Ecovative Cradle takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Ecovative Design LLC: A Biological Materials Startup | 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 Ecovative Design LLC: A Biological Materials Startup are -
Creating value in data economy
– The success of analytics program of Ecovative Cradle has opened avenues for new revenue streams for the organization in the industry. This can help Ecovative Cradle to build a more holistic ecosystem as suggested in the Ecovative Design LLC: A Biological Materials Startup case study. Ecovative Cradle can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ecovative Cradle can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Ecovative Cradle 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 Leadership & Managing People segment.
Buying journey improvements
– Ecovative Cradle can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Ecovative Design LLC: A Biological Materials Startup suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Ecovative Cradle can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Ecovative Cradle 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ecovative Cradle to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Ecovative Cradle to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ecovative Cradle can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Ecovative Cradle can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Better consumer reach
– The expansion of the 5G network will help Ecovative Cradle to increase its market reach. Ecovative Cradle 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.
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 Ecovative Cradle 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ecovative Cradle can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ecovative Cradle in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ecovative Cradle is facing challenges because of the dominance of functional experts in the organization. Ecovative Design LLC: A Biological Materials Startup case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Ecovative Design LLC: A Biological Materials Startup External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Ecovative Design LLC: A Biological Materials Startup are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Ecovative Cradle needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Environmental challenges
– Ecovative Cradle needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ecovative Cradle can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing wage structure of Ecovative Cradle
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Ecovative Cradle.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ecovative Cradle in the Leadership & Managing People industry. The Leadership & Managing People 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Ecovative Design LLC: A Biological Materials Startup, Ecovative Cradle may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Ecovative Cradle.
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. Ecovative Cradle 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.
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 Ecovative Cradle business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Ecovative Cradle 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.
Technology acceleration in Forth Industrial Revolution
– Ecovative Cradle has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Ecovative Cradle needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ecovative Cradle can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Ecovative Design LLC: A Biological Materials Startup .
Consumer confidence and its impact on Ecovative Cradle 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Ecovative Design LLC: A Biological Materials Startup 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 Ecovative Design LLC: A Biological Materials Startup 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 Ecovative Design LLC: A Biological Materials Startup 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 Ecovative Design LLC: A Biological Materials Startup 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 Ecovative Design LLC: A Biological Materials Startup 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 Ecovative Cradle needs to make to build a sustainable competitive advantage.