Monsantos downfall could be attributed to several reasons. The passion of Alan Shapiros vision blinded the Company into making rash decisions and the large amounts of money spent pursuing the objective prevented any U-turns later. The companys unshaken beliefs that it was correct had made it arrogant and not listen to the outrage all around. Monsanto underestimated consumer resistance.
There was no obvious benefit in the products introduced. It may have been a different story if the products were introduced in developing counties where transport is poor or people starving from crop failures.
Monsanto also ignored cultural differences. Canada and US were indifferent to genetically modified products but there was anger in Europe and the UK. Recent blunders by government handling the BSE and Mad Cow outbreaks dampened peoples confidence in genetically modified products.
Selling the idea of genetically modified crops is not easy. The industry needs to persuade people of the benefits and the companies must be seen to be socially responsible, socially responsive and ethical. Companies mission statements must not seem to be solely profit driven.
Introduction – Monsanto and Alan Shapiro’s Vision
“It’s about the earth, it’s about the environment, and its about food. It’s about health and nutrition. Those are deep, ancient things for civilisation, and they are for the people.” – Alan Shapiro
The Monsanto Company in 1995 led by Alan Shapiro was involved in agriculture, pharmaceuticals, food and chemicals. Shapiro’s passionate vision was the application of biology to food, nutrition and human health. He believed that people would want the products offered by Monsanto. The products themselves are protected by patents, thus restricting competition. All Monsanto needed to do was dominate and position all their products as either number one or two in their respective markets.
Consolidation started in the seed market that was already concentrated in the hands of a few companies. By 1999 Monsanto spent more than $8 billion making acquisitions. Four corn seed companies had controlled 87% of the US market in 1996. Monsanto acquired two of them, Holden’s Foundation Seeds and DeKalb. Delta & Land Pine controlled 75% of the cottonseed market and Monsanto made a bid for that company too.
It was a simple winning strategy preached by Jack Welch at GE, dominate your market or get out.
Mission Statement Did Not Include All Stakeholders V Ethical Issues
All entities, individuals and companies should have a mission statement, a set of beliefs and priorities that guide actions and ethics in decisions. Typical mission statements include paying particular attention to the demands and requirements of certain, if not all stakeholders. For an individual, it may be the family and employer, for a company, it can include shareholders, customers etc. The term stakeholders for a company can be narrowly defined to include only shareholders, customers and employees or a wider definition to encompass the community and society generally.
Mission statements or objectives are an integral part of any organisations culture. These beliefs are so deeply entrenched into staffs disposition that they would act automatically on them. I have no doubt that Shapiros passionate belief in genetically modified (GM) products would have had a strong influence on the Companys corporate objective. Shapiros passion and having $8 billion committed (sunk cost factor) to this strategy would have effected his decisions. Their confidence on the technology may even have promoted arrogance within the organisation.
With hindsight, it can be seen that Monsanto’s mission or corporate objective did not include listening to the community and society generally. As Shapiro confirmed at a Greenpeace conference in 1999 Because we thought our job to persuade, too often we forgot to listen. If Monsantos mission statement included care for the society and the community it operated in, it is unlikely that it would have suffered the fate it did. A poorly defined objective resulted in the Companys unethical behavior anad ultimately its demise.
Incorrect Product and Target Market V Social Issues
Monsanto targeted the wrong segment of the market. Developed countries, especially Europe did not appreciate, or need genetically modified foodstuffs. These products offered no obvious benefit, solved no problems but posed possible risks.
R&D has been focused on the needs of the U.S. society. Hence, the largest segments of GM products are seeds that are herbicide tolerant. Unfortunately, developing countries cannot afford herbicide whilst European consumers prefer organic produce.
Many commentators believed that the range of GM seeds and products introduced were unsuitable for developed nations. Consumers who were not starving and health conscious would appreciate a cholesterol free egg more than a delayed ripening tomato. If Monsanto introduced a rice with increased pro-vitamin A to underdeveloped countries, where vitamin A deficiency was a major cause of child blindness, Shapiro would be placed on the same stage as Fred Hollows and not treated as an outcast.
This lack of social commitment and responsibility by Monsanto resulted in it being criticised and branded MonSatan. They should have listened, surveyed and anticipated the peoples opinion.
Different Countries, Different Cultures V Political Issues
In the US and Canada, consumers were indifferent to GM products. However, in Europe and the UK there was outrage at their introduction. Recent failures of Government agencies and departments to deal with BSE had undermined public confidence. Monsanto failed to consider this localised sentiment.
Europeans are very much more conscious of the environment. The introduction of herbicide resistant crops would encourage mass spraying of fields and widespread effect on insect and bird life. Cross-pollination of herbicide resistant crops with weeds could result in herbicide tolerant weeds.
There is a growing belief that humans should not tinker with nature. In order to pacify the electorate, political parties adopted the extreme and banned many GM products. As highlighted by the Working Party of the Nuffield Council in the U.K., this Avoidance Principal tilts the balance towards the avoidance of harm as opposed to the achievement of good.