In recent weeks, Chipotle has been through a number of crises where customers have grown ill. The first involved e coli-infected in Washington and Oregon. This week, 80 students fell sick with the in Massachusetts. Because I like to use Chipotle to explain integrated thinking, I’ve been paying special attention to this news.


Integrated thinking can be a powerful way of understanding what drives a company’s success. I often use Chipotle and Taco Bell as an illustration of how to unpack value creation using corporate capitals. The two companies seem as different as you can be and still sell the “same” kind of products (tacos and burritos). Chipotle emphasizes their values around healthy and sustainable food. Taco Bell, around cheap food available for a late-night munchie run. Chipotle has different standards for its suppliers but they both have standards to avoid food-borne contamination. This table shows some of the differences (and similarities):

 

PARTNERS

Relationship

PURPOSE

Strategic

PROPERTY

Structural

PEOPLE

Human

PLANET

Natural

Chipotle

Consumers driven by concern for where and how food is sourced.

“Food with Integrity”

Processes for supply chain, food prep and restaurant management. Recipes. Store locations.

Low paid hourly workers.

Focus on sustainable production of ingredients.

Taco Bell

Consumers focused on price and availability

“Food for All”

Processes for supply chain, food prep and restaurant management. Recipes. Store locations.

Low paid hourly workers.

[no visible sustainability information on the website]

 

Revenues

Profits

Costs and Investments

 

Reputation and Valuation

This simple analysis doesn’t begin to give either company justice but it gives you an idea about how to use the capitals framework to compare the two companies. Each company is attracting a different kind of customer (relationship capital) based on very different value propositions (strategic capital). Their processes and real estate strategies (structural capital) are probably pretty similar, even though their recipes and designs differ. Interestingly, they both rely on low-paid workers (human capital). Finally, there is a clear difference in how they talk about their environmental footprint (natural capital).


The reason that I like the capitals approach is that it forces you to consider all the components of the value creation system of a company. In the Chipotle food crises, the table prompts some thoughts:

  • Chipotle focuses on an important aspect of food quality: local, sustainable production. This is an important goal. But this is just one piece of the overall puzzle. They are largely silent on a lot of other sustainability issues such as water or air (and don't produce any kind of sustainability reporting).
  • They don’t necessarily focus on creating the best jobs for their workers. Livable wages are an emerging issue in this industry. Chipotle is probably with the majority right now in not focusing on wages and worker wellbeing as much as they might. And their recent one-day hiring campaign in September might have brought a large contingent of inexperienced front-line workers.
  • Their good intentions may or may not be backed up by rigorous processes. This is often the most important driver of success—how well you ensure that you, your suppliers and partners all live up to your standards. Recently, one of Chipotle’s co-CEO’s said, “The procedures we’re putting in place today are so above industry norms that we are going to be the safest place to eat.”

Many consumers are passionate supporters of Chipotle’s values. But values have to be backed up by a value creation system. The system includes people, partners, property, planet, all in service of your purpose. Problems are rarely caused by just one piece of the system. Fixing it requires an integrated, holistic view. I don’t have the answer to Chipotle’s issues. But I can offer integrated thinking as a powerful way to start asking the right questions.

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