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U.S. mycotoxin report: Here’s what you need to know

Submitted by eivantsova on Wed, 10/26/2016 - 09:50

Five mycotoxin minutes with Randy Asher, Alltech regional sales manager (and overall mycotoxin expert)

As the 2016 crop rolls in, now is the time to get the scoop on this year’s harvest and what that means for your operation. We grabbed Randy Asher, Alltech’s regional sales manager, with a host of consulting experience on mycotoxin issues for beef and dairy operations, for a little Q and A. 

What’s made the conditions for mycotoxins particularly unique this year?

The weather was a huge factor this summer. Regionally, weather conditions varied a lot, with Kansas having heavy rainfall and a large crop, whereas other areas, like West Texas and New Mexico, were historically dry and production was down.

The overall amount of stress was pretty high, too, because of the weather. Even the regions that got rain had long dry periods in the middle of the growing season and then lots of rain right before harvest, especially in the Corn Belt. This created an inconsistent environment, with both wet and dry patches in the crop, which, unfortunately, is perfect for mold and mycotoxin growth. Producers should really be on the lookout this year, just as Dr. Max Hawkins described in his Animal AgWired interview.  

What have you heard about the 2016 crop so far? What does it mean for feeding cattle?

DON will be the story this year. DON, also known as vomitoxin or deoxynivalenol, is one of an array of trichothecene mycotoxins produced by Fusarium graminearum and looks to be at much higher levels than normal. Aflatoxin levels also look to be high in this year’s crop. What DON and aflatoxins are known to do is inhibit the synthesis of protein in cattle and alter the immune system. As a result, feed conversion, particularly in lightweight feedlot cattle, is really affected and overall performance goes down. 

To combat this, everyone needs to be diligent in testing their corn and corn silages. Producers should have their feedstuffs and forages tested at laboratories, such as the Alltech 37+® mycotoxin analytical services laboratory, to determine if any of their silages or hay has a mycotoxin prevalence before feeding. It’s really important to discard any feed ingredients you can tell are already moldy and musty smelling and use a sequestering agent in feed to prevent and/or offset the negative effects of molds and mycotoxins. 

How can producers tell if there’s a high mycotoxin load? Are there any early indication signs?

The big challenge when it comes to mycotoxins is that everything is dosage-dependent. Meaning, both the volume and duration of mycotoxins have a compounding effect over time. As a result, producers might not see any impact at all on day one, but don’t confuse that with thinking there isn’t an issue. It’s easy to blame a drop in performance on management or breed influences when the real problem could be right in the feed itself. 

Testing for mycotoxins is critical, but also let your cattle tell you what’s going on. Visually, there are a few cues: 
•    Rough or dull hair coats
•    Stiff joints and/or lameness 
•    Increases in respiratory-related incidents
•    Gut irritation that causes inconsistent or loose stool samples 

This year in particular is the right time to focus on nutrition to boost the immune system to combat the varied mycotoxin load cattle will face.  

Lastly, what’s the one thing the farming public needs to know about mycotoxins that they might not already know?

For me, I hear lots of producers worrying about aflatoxins and testing for them, which is good, but we know there are as many 1,200 different mycotoxins overall that can potentially be in feedstuffs. What I think farmers need to know is that testing for aflatoxins alone isn’t enough. 

I’ve said it before, but it’s the additive or synergistic effect of mycotoxins that really causes the issue. It takes a comprehensive management strategy, including testing and feed application, to drive the health and performance of cattle. That’s what’s best for cattle and supports profitable production at the end of the day.

To learn more about the Alltech® Mycotoxin Management program, visit www.knowmycotoxins.com.

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What do U.S. cattle producers need to know about the 2016 harvest?

Living in the age of the prosumer

Submitted by msimpson on Mon, 10/17/2016 - 10:52

The following is an excerpt from a post by Chief Innovation Officer Aidan Connolly on LinkedIn.

 

‘Prosumer’ is a term used to describe consumers who actively become involved with the design, production and delivery of the goods and services they consume. Considering the power of social media, prosumers have become vocal advocates for products and brands, and what they choose to consume reflects their values, aspirations and beliefs. From a company perspective, it means that more and more prosumers shape, and even control, the message and drive demand — not the manufacturer.

(Food producers & farmers must) expect to meet consumer demands, not just those they have defined today but those they think of tomorrow. -   Walter Robb, CEO, Whole Foods, at the Alltech REBELation Conference, Lexington, KY. May 2015.

 

Nowhere is this more evident than in the changing world of food production. Food is becoming incredibly cheap, representing less than 10 percent of the household expenditure in the Western world. For the first time perhaps in history, the biggest challenges facing the food chain involve not just production technologies or costs, but the environmental and social impact of both production processes and the food itself.

Sales of processed foods are dropping as consumers turn to products with ‘clean labels’ (ingredients that you would find in a home kitchen) and organic foods. Sales of carbonated soda drinks, potato chips, packaged cereals, frozen dinners, chewing gum and even orange juice have dropped by as much as 25 percent in the last five years as consumers come to see these as unhealthy food choices. By contrast, the growth in craft beers and craft breads, artisanal cheeses, coffee shops and organic stores reflect the intersection of craft and mass marketing. At the same time, recognizing these changes, government regulators, non-governmental organizations, suppliers of goods and services, and even potential employees are more proactive and outspoken than ever.

Welcome to the era of the prosumer.

Consumers who can easily research ingredients, processes and companies to make more informed decisions regarding food safety and nutrition are driving the pace and imperative for change in the food industry. According to Forbes’ contributing author Susan Gunelius, these prosumers are “product and brand advocates,” who now significantly affect the success or failure of companies, products and brands through their involvement on the social web.

 
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Considering the power of social media, prosumers have become vocal advocates for products and brands, and what they choose to consume reflects their values, aspirations and beliefs.

Technology advances in the agriculture industry: The Keenan Green Machine

Submitted by eivantsova on Wed, 08/10/2016 - 10:57

During ONE: The Alltech Ideas Conference, attendees at the International Welcome Dinner were greeted by a VIP guest, a 6-ton Keenan mixer wagon, also known as the “Green Machine.” After the recent Alltech acquisition of Keenan, Dr. Pearse Lyons, founder and president of Alltech, wanted to share the story of Keenan and show people what this mixer has to offer.  

The Keenan mixer wagon is the brainchild of Richard Keenan. Having first seen a total mixed ration (TMR) mixer wagon in the U.S., he wanted to make a real difference for farmers. He brought the idea to Ireland in 1978 and began improving upon it, tailoring it to suit the Irish animal diet. He went on to develop a system that was suitable for Northern Europe. The first Keenan mixer wagon was built in 1983; there are now machines in more than 35 countries across the globe.

The secret to the wagon’s success is the technology behind it. No matter what feed and forages you use, there are two things that are crucial: the quality and the consistency of the mix. Independent research shows the mix needs to be the same, day in and day out, to deliver the best results. That means evenly, thoroughly mixed feed that is never over- or under-mixed, with ingredients that are consistently added in the same order and ratios. The wagon does all this and more. It breaks down the mix to produce fibers with clean-cut ends, which help provide an optimum rumen condition when digested by the animal. This “optimal physical mix” allows for greater absorption of energy and nutrients.

François Derot, general manager of Keenan in France, discussed how farmers using the mixer wagon have seen an improvement in feed efficiency at ONE: The Alltech Ideas Conference.

“What makes this machine special is that it creates a unique mix, which is made by retaining fiber structure to ensure optimum feed efficiency,” said Derot. “Thanks to its gentle mixing action, the mix is left light and fluffy. The technology behind the mix is where nutrition comes into play.”

But there’s more to the Green Machine than meets the eye. PACE Connect, a small box that sits on the Keenan mixer wagon, provides farmers with guidance on the order of loading and mixing and the number of paddle revolutions to achieve this optimal physical mix. This technology draws on Keenan’s ingredient database, which separates feed types into eight different categories. This small box provides the farmer with the correct loading sequence and the paddle revolutions needed.

The PACE Connect database currently holds details on over 10 million categorized ingredients drawn from over 1,700 farms in a wide range of countries. This technology utilizes the mobile phone network to connect the mixer wagon to a secure site that can be accessed by authorized users from anywhere in the world on any web-enabled device.

This information can then be accessed by Keenan nutritionists, who can offer live support through their InTouch technology. Here, a live review service ensures the herd gets exactly what it needs every day. The nutritionists provide constant advice on how to improve the TMR to enhance the performance of the herd. This allows farmers to manage herd health, ration formulation, weight gain and yield.  

Between Alltech’s primacy in science and Keenan’s manufacturing strength and technological know-how, Alltech has a winning combination to deliver greater farm efficiency and profitability directly to its farming customers.

 

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Will we run out of food?

Submitted by eivantsova on Wed, 07/27/2016 - 11:26

 The following is an excerpt from a post by Chief Innovation Officer Aidan Connolly on LinkedIn.

For the first time, perhaps in history, the biggest challenges facing the food chain involve not just productivity, but the environmental impact of production and the social impact of both production processes and the food itself. A paper published by Alltech five years ago and is about to be republished, uses the acronym GLIMPSE™ to summarize the seven factors (Government, Losses, Infrastructure, Markets, People, Science and Innovation, and Environment) that limit farmers from producing the food we will need.

A new in-depth study (Sodre et al) has been conducted with three distinct parts: 59 interviews with experts; a survey with 527 industry leaders; and an analysis of 1.3 million websites using different social media applications to determine public perception and to validate the initial research, which will determine if the same factors originally identified in the GLIMPSE framework still represent the major concerns and barriers for the agribusiness sector.

To discover the seven barriers farmers face in feeding the world, read the rest of Aidan's post.

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The Chipotle Crisis: Crucial lessons from a cautionary tale

Submitted by eivantsova on Tue, 07/26/2016 - 11:30

“Transparency, in the age of internet, is no longer an option; it’s essential,” said Aidan Connolly, chief innovation officer and vice president of corporate accounts, Alltech, during his talk about the Chipotle crisis at ONE: The Alltech Ideas Conference.

Chipotle has been a leading advocate of food chain transparency while also endeavoring to elevate the experience of fast food. The company embodies the “fast casual” definition – a step above fast food but not quite a sit-down restaurant.

“It sets the standard for the future, and specifically, a tremendous commitment to sustainability,” noted Connolly.

Yet, in 2015, Chipotle suffered a crushing food safety crisis when more than 500 customers reported being affected by E. coli, norovirus and Salmonella over a seven-month period from July to December in the United States. Food safety experts estimated that among 500 people that were affected, at least ten of the cases went undiagnosed.

Steve Ells, Chipotle’s founder and co-CEO, publicly apologized to everyone who’d fallen ill. Demonstrating remorse and resolution, he announced a more comprehensive food safety program and changes to the company’s supply chain. However, this should have been done after the first case was reported.

“When you have that crisis you need to demonstrate the usual three rules: (1) You have a clear person in charge, (2) you have a plan of action to address the problem and (3) the plan is working. I think Chipotle has done that but a little late having five issues in a row,” said Connolly.

Despite the apology and renewed commitment to customer safety, the crisis’ effect on the brand was devastating. Chipotle’s crisis has significantly widened the gap between analysts’ high and low stock-price targets in two months, after the E. coli outbreak was reported.

“There’s nothing worse from a trust perspective. This is not the kind of problem that you can market your way out of,” said Mark Crumpacker, then chief marketing and development officer, Chipotle.

Chipotle went from a company that portrayed themselves as sustainable to being perceived as causing life-threatening diseases. Consumers thought the brand was “smug” and didn’t take it seriously enough in the beginning.

“We need to be clear that the fact of something being organic or natural is not an excuse for it to be unsafe,” stated Connolly. 

Chipotle was facing lawsuits, supply challenges, brand attacks, slowing sales and first quarter losses. Shares have fallen more than 40 percent from all-time high of USD $742 in July last year. Restaurant growth has also been a lot slower.

Nonetheless, Chipotle is bouncing back by proving they took the issue seriously through changes in internal trainings, practices and suppliers.

“Chipotle still has a very strong image and brand reputation for taste and uniqueness, but they cannot afford another mistake,” noted Connolly.

Chipotle is far from the first or last food company to be caught in a crisis. Connolly had some advice for all companies.

“We have one hour, the ‘Golden Hour’, to react to a crisis. What you do in the first hour is absolutely essential,” said Connolly.

Connolly recommended a strategy for businesses when faced with a crisis:

  • Acknowledge the situation within the “Golden Hour”
  • Promise to discover the cause, be relentless in this pursuit, share your findings and, most importantly, the actions you are taking to prevent any recurrance
  • Keep updating the public
  • Engage on social media

The bottom line is: A food safety crisis can be more preventable through proper crisis management, via four stages:

1. Prevention:

  • Employ a good food safety program. This is a minimum requirement.
  • Stay current on risk factors
  • Integrate from top to bottom. All members must follow protocol.
  • One conclusion from the Chipotle crisis is, when there are problems in several states within a few months, you have a systemic problem that you need to address in terms of education to your employees.

2. Preparation:

  • Proactively plan: Study other companies’ successes and failures
  • Monitor public discussion: Know where your customers communicate and use social media to stay in control

3. Management:

  • Acknowledge the issue
  • Buy time to get the facts
  • Do not deny involvement or responsibility
  • Do not attempt to estimate the magnitude of the problem
  • Commit to a speedy, but thorough investigation

4. Recovery:

  • Reassess your risk exposure at the end of the crisis
  • Explain implementation of changes
  • Evaluate again one year later to measure progress against your risk mitigation goals

 

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Following the pig feed to the pork chop

Submitted by msimpson on Wed, 06/29/2016 - 14:51
It is well known that feed costs represent the biggest input for producers — up to 70 percent of the production costs. Yet, without enough quality feed, producers can’t produce enough pigs of good condition and good weight. In other words, they won’t make money.
 
Converting quality feed to quality meat is what producers aim to do. But what is the process? How does a pig convert a grain-based diet into a delicious grilled tenderloin or pork chop?

It all starts in the pig’s mouth

 
To help with digestion of the nutrients, feed grains are ground into smaller particles before mixing with the other components of the final feed. All pig feed starts as mash feed — ground and mixed — but may be further processed into pellets or mixed with water for liquid feeding.
 
The starting point for the conversion of feed to food is the mouth of the pig, which may be the most important phase. Here, the feed is further broken down by the grinding action of the teeth and by natural chemical breakdown with salivary enzymes. Afterward, the feed passes through the pharynx and esophagus and enters the stomach.

Fun fact: The pH during this phase is between 1.5 and 2.5. Lemon juice, which is acidic enough to irritate your skin, has a pH around 2.2.

Getting things ready in the stomach

The stomach is where interesting things start to happen. Here, digestive enzymes, like pepsin, are released and combine with the feed, furthering the digestive process. Gastric glands secrete hydrochloric acid, reducing the pH and killing bacteria that may have traveled with the feed. Throughout the stomach, a coating of mucus protects the tissue from the low pH.
 

Nutrients find a home

As the chyme is released into the small intestine, digestion continues and absorption of nutrients begins. The pancreas plays a vital role here in releasing additional digestive enzymes, breaking down the proteins, fats and carbohydrates from the feed.
 
Passing into the second and third section of the small intestine, absorption of nutrients takes place through the intestinal mucosa, which is comprised of finger-like projections called villi. Once absorbed, nutrients like amino acids and simple sugars pass through to the circulatory system. Dietary fats enter the lymphatic system and are released into general circulation via the thoracic duct.
 
Finally, any undigested feed passes into the large intestine. Though some nutrient absorption takes place here, the main function of the large intestine is the absorption of water. With most of the water now gone, the undigested feed is condensed into a semi-solid material and passes out of the pig.
 

Making every bite count

The average conversion of feed to pork is around 2.4, meaning that for every 2.4 pounds of feed eaten, the pig will gain 1 pound. Every bite of feed not digested by the pig represents a loss for the producer. Making sure every bite counts is essential.
 
Enzymes added to the feed can help producers get the most out of their feed by improving digestion of nutrients. Specifically, Alltech uses solid state fermentation, a process that dates back to 2600 B.C. in Egypt, to produce a feed enzyme complex. Allzyme® SSF provides enzymes that work in synergy with the pig’s digestive system, helping it to digest feed and convert it to food as efficiently as possible.
 
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Packing up for ag journalism boot camp

Submitted by klampert on Wed, 06/29/2016 - 09:37

Ten international agricultural journalists are packing their bags for boot camp, a special ag media tactical training in Bonn, Germany, just prior to the annual congress for the International Federation of Agricultural Journalists (IFAJ).

The lucky travelers are winners of the 11th annual IFAJ-Alltech Young Leaders Award, which recognizes 10 exceptional communicators from across the globe. This year’s group will represent North America, Belgium, Ghana, Australia, Austria, Norway, Burkina Faso, New Zealand and the United Kingdom.

According to the participants, the international diversity and interaction is a major attraction. They are eager to strengthen their reporting skills, but they also hope to learn about the agriculture industry in the boot camp’s host country of Germany and trade information with other attendees on agricultural issues from their home countries. 

“My expectations are to learn a lot from other outstanding agricultural journalists, network with my international peers at the event and enjoy learning more about German and European agriculture on the tours,” said Sarah Hill, a freelance journalist from South Dakota.

Hill is specifically hoping to learn more about what the dairy and beef industries are like in Germany and Europe. She also said she hopes to hone her skills as a writer, photographer and marketer.

Julienne Isaacs, a freelance writer based out of Canada, feels like the conference will offer a lot of new ideas for her and the other journalists in attendance.

“I have been told by other journalists that they make the IFAJ Congress a priority every year, no matter where in the world it is held,” she said. “I am expecting the conference will offer an abundance of new ideas and opportunities to connect with colleagues from around the globe.”

Isaacs is also looking forward to deepening her skills as an agricultural journalist, but mostly she is hoping to develop friendships with professionals working in very different contexts than her own and to learn from their experiences.

Inoussa Maiga, a multimedia communicator from Burkina Faso, shares the same views as Hill and Isaacs in the sense that she expects to learn new ideas from different sectors of the world.

“This is, for me, a unique opportunity to learn from others’ experiences, the state of agricultural journalism and communication in their countries,” said Maiga.

A lot of the participants are already friends through social media, so they are looking forward to meeting each other in person.

Jennifer Latzke, a previous boot camp participant and winner of the IFAJ-Alltech Young Leaders Award in 2013, explained that she and the other participants started a Facebook group about a month before meeting so that they could all introduce themselves.

“When we finally got together in person, it was like seeing old friends,” she said.

For Latzke, the coolest part was meeting people from around the world, talking about agriculture in their own regions and realizing that they really have more in common than they have differences.

“Agriculture is such a global industry today that it's so powerful to have connections around the world to talk to about global events that affect not just U.S. farmers, but their foreign counterparts, too,” she said.

Latzke also shared that they may just be together for 10 days or so, but they will make lifelong friends. Her final advice to the 2016 participants:

“Be prepared to not only learn from your instructors, but from each other as well. It's the sharing of lessons from your countries, those personal experiences and connections, that will prove more lasting than you can imagine. We may not all have the same skills sets, but we all have the common purpose of communication and education of our readers and listeners. You'd be amazed at what you'll pick up from your counterpart halfway around the world!”

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The enzyme evolution in animal feed

Submitted by eivantsova on Wed, 06/22/2016 - 09:29

Even though the first exogenous enzyme was synthesized in 1969, enzymes in animal nutrition have been used in animal nutrition for less than 30 years. Their original purpose was to degrade so-called anti-nutritional molecules from grains used in feedstuffs, such as wheat, barley and wheatgrass. These grains, when used as a primary source of carbohydrates in an animal diet, presented less digestibility and nutritional content when compared with other grains such as corn and sorghum. As a result, they often led to decreases in animal performance.

A brief history of enzyme use in animal feed

The first enzymes developed by the biotech industry were the arabinoxylans and beta glucanases. Their function was to degrade non-starch polysaccharides, which are the fibrous portions of the grain. These enzymes reduced the viscosity of the non-digested grain in the intestine. The first trials proved that adding exogenous enzymes to wheat-based diets improved digestibility in monogastric animals. These early studies also helped scientists understand the mode of action of these enzymes and enabled them to develop new enzymes capable of working on a wider variety of substrates.

At the beginning of the 1990s, the main topic of conversation among nutritionists and researchers was what they considered to be the inevitable decline of sources of phosphorus in animal feed. The additives and supplements industry responded quickly to this challenge by focusing on enzymes capable of releasing more phosphorous through a molecule usually not present in livestock animals: phytate. Fungal phytase were able to chemically breakdown the phytate, releasing additional phosphorus in feed for pigs and poultry. While the nutritional matrixes of phytase would not be consolidated until 2000, they showed promising initial values of 0.05 phosphorus and a maximum of 0.10 percent available phosphorus.

The benefits of enzymes

Even though there are still some segments of the pig and poultry industries that do not use exogenous enzymes, the growth of the enzyme market has been substantial. Since enzymes improve the digestibility of plant-based feed ingredients, they offer immediate economic benefits to animal production. Enzymes have allowed producers to further improve their feed conversion rates, the uniformity of their flocks and herds, and the efficiency of their feed mills since fewer grains are needed to be purchased and processed.  

With all these benefits available to producers, the animal nutrition industry is becoming more eager to study enzyme technology in greater depth with the aim of further optimizing animal production. Research is ongoing on the effects of degradation of different substrates, different methods of producing enzymes, epigenetic effects of enzymes in the formation and development of the intestine, and interaction with the microbiota and intestinal health, as well as their direct or indirect action on the immune system. As our understanding of enzymes evolves, we should expect a revolution in how we feed our animals.

Click here for more information about the Alltech Enzyme Management Program.

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Dr. Pearse Lyons : Remembering The Greatest, Muhammad Ali

Submitted by eivantsova on Sat, 06/04/2016 - 08:57

What do you say about an iconic individual that you are fortunate enough to have spent moments with in life?  What do you say about someone who, when we brought him to Ireland, packed the hall? He was a man who said the least but also the most. 
 
When we brought Muhammad Ali to Ennis, Co. Clare, Ireland, to Turnpike Road, where his great-grandfather, Abe Grady, came from, to say the streets were packed would be an understatement.  With ties from all over the world right there in the middle of Ennis, we laid a stone commemorating the return of a long lost brother to Ireland. 
 
I will never forget seeing him when I was a 26-year-old, fight Blue Lewis from Detroit, right there in my home of Dublin at Croke Park.  The pounding these men gave each other was remarkable, and you would have to be there to hear it to understand.  When I said to him many years later, as I saluted him at our annual Symposium event in 2009,  "You know when you were in your prime, and I was in my prime, I always reckoned that I could take you in three."  He looked at me, looked at the audience, and signaled on his head with his finger that I was loopy. 
 
At the 2010 Alltech FEI World Equestrian Games, Ali was most at home when he was greeting the children from Haiti.  They sat on his knee, and he tickled their tummies, and they knew they were safe with him. 
 
I sat with him in the car waiting to go into the Kentucky Horse Park outdoor arena for the Opening Ceremonies of the Alltech FEI World Equestrian Games, and Coach Calipari had gone in the stadium just before us. I said to Ali, "Let's hold back.  This is your time."  As soon as he heard the crowds, it was like an electric switch went off in his brain.  He waved to the left and to the right to all his adoring fans.  That is the Muhammad Ali I will always remember. 
 
I have a collage of pictures in my office of our memories together, and not a day goes by that I don't see it. To have had the opportunity to meet him when we brought him across to Ireland to visit his great-grandfather’s home, and to watch his face as we relived his fights on the plane’s movie screens on the trip over is something that I will never forget.  We lost an icon.  We lost a great man. 

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Dive into your blue ocean

Submitted by amartin on Wed, 05/25/2016 - 21:25

In today’s world, competition in the marketplace is significantly greater than it was 50 years ago. Damien McLoughlin, Anthony C. Cunningham Professor of Marketing at the University College Dublin Michael Smurfit Graduate Business School, opened up the final plenary session of ONE: The Alltech Ideas Conference by discussing a strategy for differentiation.

“What is it that you can do to make your competition irrelevant?” asked McLoughlin. “What is it that you can do to make competition less significant in your competitive and business life?”

The theme of McLoughlin’s talk pivoted off these questions. He gave many reasons why he believes competition is more intense right now, but the most important factor is the advance in technology.

“Today, all of the power is with the buyer,” said McLoughlin.

He said places like China, the Philippines, Vietnam and other competitors of the U.S “have access to ideas from the old world and they are applying those at new markets in the new world.”

“They’re pushing competitive activity in a way that we haven’t experienced before,” he explained. “These first three forces (Technology, globalization, demographic change), of course, are all beyond the control of any person in this room… However, there is one other force, which is impacting our ability to affect competition; that’s the strategic or strategy choice.”

McLoughlin then explored the “red ocean” and “blue ocean” strategies that define businesses.
 

Red ocean strategy
 

A prime example of a “red ocean” business is the soda industry. McLoughlin said that when you see soda in a grocery store, everything is priced the same and looks exactly alike.

“When their competitor takes action, they copy it straight away,” he said, illustrating one of the signs of a red ocean.

He believes this strategy consists of companies that compete in existing market spaces, beat the competition, exploit existing demand, make the value-cost trade-off and align the firm’s activities with its strategic choice of differentiation or low cost.

According to one of McLoughlin’s slides, the “red ocean” is the death of a firm.
 

Blue ocean strategy
 

McLoughlin used Southwest Airlines as an example of a “blue ocean” business. 

“They smashed the rules of competitive engagement, created large uncontested new markets, simultaneously pursued value and low cost,” he said.

The outcome of this strategy was that Southwest Airline is now the number one airline in the U.S, with an 18.5 percent market share in 2016.

A blue ocean strategy is the exact opposite of the red ocean strategy. You will know you have a blue ocean company if you, “create uncontested market spaces, make the competition irrelevant, create and capture new demand, break the idea of value-cost trade-off, align the whole system of a firm’s activity in pursuit of differentiation and low cost,” said McLoughlin.

“It’s a tall task,” he said.

McLoughlin says that the main core principle of blue ocean strategy is value innovation. “What I mean by that is, we find ways to reduce our cost,” he said.

The craft beer industry, Ocado (an online supermarket in the United Kingdom) and Justin Trudeau, prime minister of Canada, are also successful utilizers of blue ocean strategies.

McLoughlin asked the audience two questions:
 

1.Do you dare to be different?

2.Are you willing to invest the strategic thinking time needed to create blue oceans?

He said four tools are needed for a blue ocean strategy within a company:

  1. The strategy canvas.
  2. The four actions framework.
  3. Find new customers by looking for non-customers.
  4. Price corridor of the masses - Price to encourage as many people as possible to buy the product.
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Professor Damien McLoughlin details the “blue ocean” strategy to make your competition irrelevant.

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