INCREASING THE EFFICIENCY OF A PRODUCER BUSINESS MODEL

Lyofood is a freeze-dried food producer. Lyofood products are fast to prepare, but they are preservatives free and you can store them long time. They are made only of natural ingredients. The product has unique features and superior quality, but nowadays even a great product is not enough to successfully build growing business. One needs an efficient business model. Today I talk to Laura Godek – Lyofood co-founder about Lyofood business model and its’ growth levers.

Agnieszka Węglarz: Laura, how did you come up with the idea of your product in the first place?

Laura Godek: Idea of the freeze-dried meals has a long history. My father is using this method of food preservation since 1989. First successful test of freeze-drying whole meals was made upon the request of Polish Himalayan expeditions in late 90’s. Supplying freeze-drying food ingredients for expeditions wasn’t my fathers’ core business. It was kind of a hobby in return for which he received postcards from travelers from all over the world.

But in fact, during those years there were more and more expeditions and single travelers calling the company and sending requests for this special type of the expedition food.

At some point me and my sister got involved in taking care of this unprofitable part of our dad’s business. Seeing its’ potential and receiving positive feedback from the market, we decided to try to create a dedicated food brand for travelers. And this is how we launched Lyofood brand in 2010.

AW: What were the beginnings – how did you commercialize the product at the early stage? What came first? What gave you the first traction?

LG: We had the privilege to have an unlimited access to the technology and the capital of recognition among the community of professional Polish travelers. Based on their feedback we have developed Lyofood menu and without any specific business plan we decided to launch product online through dedicated online store.

We have invested in brand – we found a designer who made an outstanding look of our brand and soon became our friend and business partner. To be honest, the first traction came to us as a result of design awards, but thanks to Polish outdoor community we started sales straight away after launching online.

Since it was a niche market, we could still call it more a hobby than a company. We wanted to gain same recognition in Europe so we started to support some international expeditions. With very positive feedback on the product we decided to apply for Outdoor Industry Award during the biggest European Outdoor Trade show. We won GOLD! The highest price, first in the history for a Food brand.

AW: What new challenges appeared as the business started to grow? What were the incentives to start working on the business model of your company?

LG: The award gave us traction, so the outdoor stores started to recognise our brand. We had no pricing policy, nor distribution model, we were learning from experience in an attempt to adapt to the market.

Knowing the expectations of retailers, having no outside investors, we knew that we could not afford market entry through distributors, mainly due to the high production costs of our meals and limited budget left for distribution costs.

So, we gradually started selling directly to outdoor stores. Year after year, sales grew and we got more and more ideas. Despite this growth, we ended the year with a budget barely sufficient to hire employees.

That was the moment when we started to really think about our business model. Of course, this doesn’t mean that we didn’t have one, but you could say that the model was created intuitively. Now we wanted to dig deeper into what we have created so far, understand it and think about what our next steps should be.

As I’ve already mentioned we are a very creative team, which in general is a strength, but unfortunately sometimes it turns out to be our weakness.  I felt that we kept starting new projects, catching new opportunities and losing sight of what was most important.

AW: What were the weaknesses of your model that you have identified at the beginning of the change process?

 LG: To be honest, as I mentioned before, we did not have a real business model, or should I say we never sat down to create one and think about all our activities and resources. At the end of the 2019 we finished product development of new products range which were supposed to increase our market share and broaden our target group. But since it was totally new field, our attempts to enter the market have not been successful. Then came the pandemic and all plans for B2B events were cancelled.

We knew we had to focus on e-commerce, we had a lot of ideas, but it was difficult to put them into practice. We knew that we have to think about new product differently than we did with our expedition food.

I came across Business Model Mastering program at Google Campus and thought it might be good opportunity to verify our ideas. To be frank, I also saw this program as a motivation for our team to prepare a full and thorough plan for the product launch.

AW: What was this new product range about? Who did you want to target and what was the offer? And what were the gaps that you have identified during the Business Model Mastering Program?

 LG: LYO Bistro is a product line of gourmet quality, organic meals effortless to prepare anytime, anywhere. It is our solution for everyday, busy life. A meal for everyone who needs convenient, quick and easy to prepare food. You just need to add hot water to our compostable cup, wait 5 minutes and you can enjoy natural and nutritious meal.

We have created menu with unique „clean-label” recipes, all products are certified organic and use only natural ingredients. Our actual range is all vegan and allergen free, however thanks to customer surveys, we know we need to expand our tastes.

At the beginning of the Programme we have identified lack of segmentation and targeting strategy as well as lack of clear business objectives. We were unsure about the distribution model we should choose, as we didn’t have defined buying personas and couldn’t determine their potential or reach. Even though we have defined huge potential target group, we found out that the cost  and effort of reaching this one will be impossible at this stage. Thanks to deeper analysis we were able to define our buying personas and different value proposition, so we could analyze and decide where to focus our attention.

AW: And what were the growth levers that you have identified to increase the efficiency of your model?

 LG: Absolutely our lever for growth is our Product and everything what stands behind it, our value proposition which is “To eat fast but healthy every day, anywhere”, and our scalability.

We use advanced food preservation method to prolong food expiration date, lower the weight and make it fast and easy to prepare. The incredible strength of our model is the use of our own resources from product development, through production process to brand communication. Our organic-approach is not just another marketing slogan and includes not only product itself but also packaging, distribution model and sustainability, which means thoughtful and reasonable growth. This is why we call ourselves a True Brand.

AW: What changes did you introduce since BMM?

LG: You could say that in terms of standards and good business practices we were rebels. We didn’t set measurable goals, we didn’t analyze new ideas or projects in great detail. We simply acted, sometimes the results was a great success and sometimes a failure.

It may seem unbelievable, but this is how we developed the company for many years, successfully, without outside investors, slowly, but on our own terms. Slow growth and financing our own failures was possible when the company was smaller.

Once we become one of the important producers of freeze-dry meals on European market we found that structures, Objective Key Results and Key Performance Indicators might be very useful and desirable.

So, first of all what we did was a detailed analysis of our current business and we set OKR’s and measurable KPI for whole our company, not only for new product brand we were working on during BMM. We have created transformation roadmap which we implement to prepare all the necessary steps to introduce new brand on the market but also to develop our company.

AW: What are your plans for the future, how do you intend to grow further?

LG: Focus on the most important things and get it done without loosing our creative and rebellious style :). And more seriously we want to focus on what we do the best our goal is to become a quality leader in our sector. We want to grow but responsibly by bringing the highest quality products to market.

AW: Pandemic has strongly proven the advantage of digital sales channels and in general the advantage of using digital technologies to leverage business growth and efficiency. What are your latest experiences with digitalization of your business model? Which activities are digitalized and which are yet to be digitalized?

LG: Since the beginning of the company’s existence, we have relied on a sales model that was quite innovative at the time and for this type of product. Our first freeze-dried meals were sold through a simple, self-built e-commerce. It turns out that food which you don’t have to try on can be successfully sold through electronic channels.

Especially if the food is light, does not require special storage conditions and has a long shelf life. And is still natural and without preservatives – that’s what our food is! Digitalization gives us many additional opportunities to shorten the purchase process, making it easier for customers to make the right choices adapted to their diet or food preferences.

It gives also a possibility to offer the customers advanced subscription models tailored to activity, season and lifestyle. This is still ahead of us.

AW: One thing is a clear roadmap of business model digitalization, the other thing is the reality of implementation. What would be your advice for startups at the beginning of this road – your “what and hows” of successful implementation of digital initiatives?

 LG: „Do or do not. There is no try” as master Yoda said.

For me this has a double meaning. On the one hand you have to act fast when operating in a niche, no time for trying. I suspect that if we had started at the beginning of our journey with working on every detail in our business plan we would not be where we are now. We wouldn’t have done certain things our way, we wouldn’t be the brand in the outdoor food industry with the most impressive group of ambassadors and a brand that is recognized among the biggest in the industry. And most importantly, without the mistakes we have made we would not have appreciated the tools and benefits that a detailed business model can bring. So yes, listen to the experienced but don’t forget your own rebellious intuition.

This quote also has a second important meaning. There is no trying, there are goals and tasks to be done. Every team, even the smallest one, is capable of losing sight of what it was aiming at by getting distracted, catching opportunities and trying. It is important to divide responsibilities and delegate tasks, don’t be afraid to set excessive goals, but you must know how to measure them and most importantly – do it. This is the only way you will be able to tell if you are moving in the right direction.

We have unlimited access to the knowledge and tools to make management easier. The point is that it’s just trying and the thing is to actually do it by using them effectively.

So, don’t try, do and let the numbers test your intuition.

 AW: Laura, thank you very much for this conversation. I wish you and the entire Lyofood team lots’ of energy for further growth.

Agnieszka Węglarz is an independent consultant, business strategist and practitioner in B2B and B2C, as well as lecturer, speaker and blogger. She has over 20 years of professional experience working as manager in both large corporations and SMEs, where she was responsible for strategy, marketing and business development. She uses her long term executive experience and training expertise to assist companies and their managers in building their business strategy using a workshop methodology. She specializes in business modeling, segmentation, value proposition, sales and marketing strategies as well as consultative selling. She runs her own consultancy business, as well as cooperates with Google for Startups Campus in Warsaw as the leading expert in Business Model Mastering – a Program for European startups providing founders and their teams with a structured approach to run their company and accelerate their growth. Agnieszka is an author of many business publications. You can read her writing on her business blog on www.agnieszkaweglarz.com and watch her business content on her YouTube channel – Biznes Ring by Agnieszka Węglarz. You can contact her by writing to: agnieszka.weglarz@g2m.biz.pl or directly by sending a message via LinkedIN.

 Laura Godek-Miąsik

Entrepreneur, CEO and Co-founder of LYOFOOD – high quality freeze-dried gourmet meals. Working in freeze-drying business and outdoor industry since 2009. In 2016 was included in Forbes 30-UNDER-30 Europe List as a promising personality in modern industry. You can contact her by writing to: Laura.godek@gmail.com or directly by sending a message via LinkedIN.