There's been a lot of talk lately about the power of values in business, and rightfully so. Companies that have strong values are often more successful than companies that lack them. In his book The Leadership Engine, Noel Tichy had this to say about leaders of highly successful organizations: "The leaders and the organizations have strong values that everyone understands and lives up to. The values support the business ideas and are deeply embedded, and everyone is held accountable to them, even in seemingly minor everyday decisions and actions."
At Stonyfield Farm, the $80 million-a-year producer of organic yogurt and other products that I have led since 1983 in Londonderry, New Hampshire, our values and social mission are central to everything that we do, and they are embedded deeply in our organizational DNA. We are in business, for sure, to make a profit, but we are in business to do far more than simply attain a positive financial goal.
We are in business to change the world.
And we are changing the world, one step at a time, through the strong social mission that forms the foundation on which our business is built. (See sidebar.) Key to that social mission is advocating for organic food and closing the gaps between people and their food system by pushing for more sustainable agriculture. We wear our values on our sleeves, and they have been instrumental in our success. We are the number-four yogurt producer in the United States, and we're quickly closing in on the number-three spot.
As it turns out, social activists and even ex-hippies can be businesspeople, too. In fact, even the most liberal-minded activists need to embrace sound business practices to ultimately succeed. Regardless, the story of Stonyfield Farm demonstrates that a substantial portion of the consumer marketplace is willing and eager to support a product that is uncompromising in quality and that is marketed by a values-driven company. Our story also proves that a company can use positive values and high standards of performance in tandem to develop a healthy and motivated workforce.
Despite rumors to the contrary, improving the world and your bottom line are not mutually exclusive goals for a corporation. Going one step more, improving the world is one of the best ways to build your brand and your bottom line. Not only has having this mission been a competitive advantage in our fight against the big players in our industry, it's also gotten us through some very hard times. Our mission is also incredibly important for employee loyalty and retention, and for consumer loyalty and retention.
We're doing all this with a fraction of the dollars that our competitors invest, and we're being successful because we are willing to lead with our hearts, our values, and also our humility. The last two decades have certainly been an insane and wild ride as we've established our brand as an integral player in supermarkets from coast to coast. But, as the company approaches $100 million in annual revenues, our focus has stayed the same: delivering the highest quality product with a promise of a values proposition that will also deliver environmental support and action, a dialogue with our stakeholders and a promise to continue to learn and improve as we go. This focus has stimulated and inspired our customers, our investors, and our employees.
Every new product that we roll out must follow this proposition: healthy for the individual (for example, probiotics, calcium-boosting, no artificial anything and certified organic) and healthy for the planet (post-consumer recycled packaging, environmental programs and premiums for kids, our Profits for the Planet program with 10 percent of annual profits going to causes that protect and restore the earth) and sourcing from family farmers as well as converting more of our products to certified organic.
The other side of the corporate social responsibility coin, though, is that only when business addresses important social needs such as these will the solutions become a top priority for society. Why? Because business always finds a way to get things done. Sure, one can be in business simply to extract money, but this does little to correlate to personal happiness. Research shows that there are lots of financially successful people who are far from satisfied with themselves or their lives. In fact, a good number are downright miserable and many more are lacking passion for their work. Too many people are unhappy with themselves and their work, and our planet and communities are worse for the lost opportunity of harnessing their commitment.I am not proposing, however, that more CEOs simply adopt corporate social responsibility strategies to find personal happiness. What I am suggesting is that building a values-driven business that fulfills or exceeds your customers' quality expectations is an exhilarating way to live, albeit often enough traumatic and definitely not for everyone.
I have learned something very important in my many years at the helm of Stonyfield Farm: that business can actually make the world a better place to live, work, and breathe. I call it "values-driven enterprise." You might decide to simply call it a better way to do business, no matter what your perspective. But one thing is certain: You will feel better about yourself.
Stonyfield Farm yogurt has grown into an $80 million business from countless late-night conversations, six Jersey cows, and one seemingly improbable mission statement. The mission, which has five components to it, is premised on the assumption that businesses that genuinely dedicate themselves to championing social and environmental causes will be more financially successful in a fast-moving and ever-changing business climate.
Our customers tend to be culturally and environmentally aware -- and they know that they can use their dollars at the cash register to literally vote for the kind of world that they want. By providing the best product possible and a strong social mission, our customers get two benefits when they buy our products: they get the product itself and they get the good feeling of supporting a company that's advocating for things they believe in.
Of course, our mission statement was more like a hypothesis in 1983, but today, its premises have been proved, and Stonyfield is but one example. There are countless other companies that have achieved exceptional financial results and have met their social or environmental objectives. Interface Corporation, BP, Patagonia, Ben and Jerry's, and others have been pioneers in corporate social responsibility. These models have shown others that less pollution translates to bottom-line savings. They have also shown that employee retention improves when people feel good about giving back in their work and that community commitment can be more effective in building customer loyalty than expensive advertising.Simply put, a business can do well by doing good.
A significant portion of the leader's job is inspiring the people who work for the business, giving them a glimpse of a future vision that is both compelling and attainable. The problem is, when I hire new employees, I can't assume that they give a hoot about my vision or the mission of Stonyfield Farm, let alone share it. To address this issue, we do some very tangible things.
First, we have a component of compensation tied to our mission: a bonus program that's tied to environmental responsibility. As we decrease our waste -- or increase the percentage of waste that goes out as recycled matter instead of going out to be disposed of -- our employees get increased pay. As our energy use drops, and as our water use drops per pound of production, employees see bonuses for that. Cash is a terrific motivator, and when our employees can count on rewards for attaining our mission, they are extremely motivated to do just that. And the return on our rewards investment is great. Through reuse and recycling alone, we save over $70,000 annually while preventing thousands of tons of material from reaching the landfill or incinerator -- helping us achieve our social mission of conserving resources for future generations.Second, we've employed what I call the "three-legged stool" of profit sharing, stock options (equity participation), and an open book organization. As leaders, we are continually faced with the question of how we can get our employees to take care of the businesses they work for as if they were their own -- to work hard, to take responsibility, to be accountable, to save money and resources whenever possible instead of wasting them, to be willing to give 110 percent of themselves to the organization. Of course, when employees don't have the opportunity to share in the rewards of all their hard work, when they have no stake in their organization's ownership, then there is little reason for them to treat the business as if it was their own. By sharing profits with our employees, we acknowledge their important role in our continued growth and profitability, and by providing them with stock options, we've truly made them owners of the business for which they work. Further, we treat our employees as important members of our team by opening our books to them -- they know everything there is to know about our financial position. When there's financial transparency in an organization, it not only builds employee loyalty, it enables employees to make the right decisions for the company.
In a values-based organization -- in fact, in any organization -- the power of culture to motivate and inspire employees cannot be underestimated, and culture is very much a part of the Stonyfield Farm story of success. An organization's culture acts as a catalyst to action for its employees -- aligning their efforts into a common direction and purpose -- while providing the personality that attracts clients, customers, investors, and others outside the organization. An organization's culture is shaped at the top -- by its leaders -- and it is the job of leaders to ensure that it is maintained and perpetuated into the future.
If I were to drop dead tomorrow, the mission of Stonyfield Farm will live on. That's important to me. We've developed a kind of real-time succession plan for our corporate values that we've dubbed the Stonyfield Legacy Program. The Legacy Program helps to put our employees in touch with the values that are most important to the way that we do business, by people telling stories about the values that are most important to them -- the values that we share as a company.
The Legacy Program consists of a wide variety of educational events conducted throughout the year, open to all employees but required for managers. We've had a number of retreats and a large roster of visiting lecturers -- everyone from family farmers to the environmental director at Patagonia to proponents of socially responsible investing. Stonyfield's founder -- Samuel Kaymen -- talked to our employees about soil and the importance of sustainable agriculture. A member of the National Family Farm Coalition spoke at one of our educational sessions and, at the end, people were so touched by the plight of the small family farm in New England that they literally wanted to take the money out of their pockets and donate it to him right there on the spot.Through the Legacy Program, we've been able to get people to understand and buy into our mission, and then figure out how they can push the organization toward meeting it within their own spheres of influence, whether they are in production, sales, marketing, or administration. The effect of the stories told by our visiting lecturers and others in the program has been profound, and our corporate values are continually reinforced and strengthened as a result.
Unlike most profit-making organizations, which by nature focus on one bottom line -- profit -- we have a three-part bottom line: social, environmental, and financial. In conjunction with that, we've developed a new mission report, which measures our progress against each of the five parts of our mission statement. We know we're really good at measuring and reporting on two aspects of our mission -- quality and profitability -- but we traditionally haven't reported on the other three elements.To involve our leaders in the process, we chartered a group on the management team to identify leading indicators in each of those other three mission areas and develop a report that measures our progress toward achieving our mission. Our management team was instrumental in developing the indicators and the report because, ultimately, our goal is to get each of our leaders to incorporate the Stonyfield mission into all of their decisions. While the results of our first mission report were favorable, the ultimate proof will be in whether we see those mission indicators improve over time. The task ahead is to help roll this out to the rest of the employees -- all while we're growing at 20-odd percent a year.
t is with a monumental dose of humility that since 1983 I have dedicated my life to building a business that can change the world. The greatest -- and probably, only -- hope that our children will enjoy a healthy, livable planet lies with business. If the nation's and planet's business communities don't embrace the goal of a sustainable earth, it will never happen.
If the business communities don't embrace the
goal of a sustainable earth, it will never happen.
Over the last 18 years, I have learned that being yourself and sticking to what your company does best translates to a superior competitive strategy. At my company, the cup -- filled with delicious yogurt -- is a metaphor for everything we do. We've come to realize if we don't compromise on quality, customers will buy our brand. Each time we have been threatened in what can be a cutthroat business, we responded by delivering on our promise of making delicious yogurt.Stonyfield Farm is a story of achievements -- and plenty of mistakes -- that I hope will continue to inspire individuals, CEOs, and entrepreneurs alike for many years to come. We have often been looked upon as a leading business model that has managed to maximize the company's bottom line while indeed tending to the health of our planet. For that I am grateful, and for that I am proud. And yet, 18 years into it, I feel like I am just getting to the starting line.
|The Stonyfield Farm Mission
- To provide the very highest quality, best-tasting all natural and Certified Organic products.
- To educate consumers and producers about the value of protecting the environment and of supporting family farmers and sustainable farming methods.
- To serve as a model that environmentally and socially responsible businesses can also be profitable.
- To provide a healthful, productive, and enjoyable workplace for all employees, with opportunities to gain new skills and advance personal career goals.
- To recognize our obligations to stockholders and lenders by providing an excellent return on their investment.
Copyright © 2002 by Gary Hirshberg. Reprinted with permission from Leader to Leader
, a publication of the Leader to Leader Institute and Jossey-Bass.
Hirshberg, Gary "Profits with a Conscience" Leader to Leader. 23 (Winter 2002): 24-28.
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