Getting to Scale: Growing Your Business Without Selling Out - Softcover

Bamburg, Jill

 
9781576754160: Getting to Scale: Growing Your Business Without Selling Out
Softcover
ISBN 10: 1576754162 ISBN 13: 9781576754160
Verlag: Berrett-Koehler Publishers, 2006

Inhaltsangabe

Ben & Jerry’s. Stonyfield Farm. The Body Shop. Tom’s of Maine. All leaders in the socially responsible business movement—and all eventually sold to mega-corporations. Do values-driven businesses have to choose between staying small, selling off, or selling out?

Jill Bamburg says no. Based on intensive interviews with more than thirty growth-oriented, mission-driven entrepreneurs—including American Apparel, Give Something Back, Wild Planet Toys, Organic Valley Family of Farms, and Village Real Estate—her book explodes the myths of scale from both ends of the spectrum. She debunks both the limiting “small is beautiful” approach as well as the “you have to sell out to grow” mandate.

Focusing on the unique challenges that socially conscious companies face, Getting to Scale addresses the issues that affect all businesses:

Production and personnel
Access to capital and markets
Changes in organizational structure
Ownership and control
Corporate culture

Filled with practical and tested advice, Getting to Scale provides a blueprint for socially responsible entrepreneurs in any industry who want to benefit larger groups of customers, have a greater positive impact on their communities, and maintain their independence by scaling up their enterprises.

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Über die Autorin bzw. den Autor

Jill Bamburg is the dean of the MBA program at the Bainbridge Graduate Institute (BGI; www.bgiedu.org), a new institution offering an MBA, certificate programs, and short courses with a focus on sustainable business. She is a founding faculty member of BGI, has spearheaded the development of its unique curriculum, and has lived the lessons of getting to scale as the organization has grown from 10 students to more than 100 in four years. Her academic experience also includes seven years of teaching marketing, strategy, and general management to midcareer managers in the Graduate Management Program at Antioch University/Seattle.

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There IS Another Way

1
BEN & JERRY’S STONYFIELD FARM THE BODY SHOP
FOUNDED: 1978 FOUNDED: 1983 FOUNDED: 1976
SOLD: 2000 SOLD: 2001 SOLD: 2002/06
THREE SOCIALLY RESPONSIBLE BUSINESSES, three iconoclastic sets of entrepreneurs, three epic journeys, a single shared end: sale of the company to a new group of owners, an end to the era of founder control, and serious questions about the future of each company’s commitment to the values that made it special. In the case of Ben & Jerry’s, the founders were forced out by a decision of the public shareholders to sell to Unilever. With Stonyfield Farm, the owner decided to sell to one of its multinational competitors, Groupe Danone, in an effort to extend its reach. The Body Shop went public in 1984 but remained closely held and controlled by its founders until the early 2000s, when they tried, unsuccessfully, to sell the company and subsequently removed themselves from day-to-day operations. In March 2006, the firm was acquired by the French cosmetics giant, L’Oréal.

The three stories hit my personal radar in close enough proximity to make me wonder whether there was a fundamental flaw in our thinking about socially responsible business. Was there something peculiar to these businesses that made it impossible for them to stay independent and still grow to scale? Was the whole socially responsible business movement doomed to remain marginalized in the land of mom-and-pops? Would we have to give up our dream of changing the world by changing the way the world does business?

Or were there alternatives?2

This book began with more questions than answers. The overriding question was whether (and how) socially responsible businesses could “scale up” without compromising their core values. Specifically:


Could they compete on price while absorbing social and environmental costs?
Could they obtain financing for their multiple-bottom-line values from single-bottom-line sources?
Could they grow big enough to matter without losing the essential values of their “small is beautiful” corporate cultures?
Could they be good global competitors without becoming bad local citizens?
Could they build new cooperative structures that would successfully compete with conventional economies of scale?
Could the businesses be sold without selling out their values?

These are some of the questions this book attempts to answer for entrepreneurs who are struggling with them in the present—or hoping to be successful enough to struggle with them in the future.

As Ben Cohen and Jerry Greenfield wrote in their business biography, Ben & Jerry’s Double-Dip,

[We] believed that business was a machine for making money. Therefore we thought the best way to make Ben & Jerry’s a force for progressive social change was to grow bigger so we could make more profits and give more money away. We’d decided to give away 10 percent of our profits every year. Ten percent of the profits of a $100 million company could do a lot more good than 10 percent of the $3 [million] or $4 million we were currently doing.… We decided to go to the next level.1

For many mission-driven entrepreneurs, the desire to “go to the next level” in order to do more good in the world is equivalent to the conventional entrepreneur’s desire to grow the business in order to make more money. Sometimes the desire to grow is based on a desire to give away more money, as it was for Ben and Jerry; more frequently, it’s based on a desire to extend the benefits of the business’s core environmental or social value proposition to a broader market. And in some cases, for mission-driven entrepreneurs as well as their more financially driven counterparts, growth is an imperative—not a choice. In some industries, “grow or die” is a fundamental business reality, whether they like it or not.3

Gary Hirschberg, the legendary CEO of Stonyfield Farm, the organic yogurt company that he sold in 2001 to multinational Groupe Danone, ran into those dynamics long before the company sold:

Our problem was that the yogurt was a huge hit. The demand far exceeded what we could produce. But we were losing money on every sale.… Commercial yogurt making is very capital intensive. This was not about getting big. It was about getting to a scale that could be profitable.

Also, you face the problem that supermarkets charge slotting fees to carry your product.… Once you enter the supermarket—but by no means do I want to implicate only the supermarket—once you’re in the marketplace, unfortunately, the pie theory takes over. The universe is only so big; the market is only so big. And if you don’t grow, and someone is growing faster than the market, then you shrink. In other words, your slice shrinks. And unfortunately, shelf space—which is the Holy Grail in my business—and shelf position, which is a subset of shelf space—are completely dependent on who’s delivering more profitability.

You know, the supermarket’s little secret of my business is that they don’t make money selling food, they make it selling real estate. And you have to be competitive to even hold your place, let alone grow it.2

I began this book with three theoretical perspectives on scale. The first had to do with conventional economies of scale and whether those realities might somehow be at odds with the ideals of social enterprise or mission-driven firms. The second pertained to the “small is beautiful” arguments originally made by E. F. Schumaker in the 1970s3 and recently extended by Michael Shuman and others to embrace the idea that “local is beautiful.”4 The concern there was whether the intrinsic values of “small” and “local” might somehow trump the virtues of scale—that big might be bad, period. The third was a set of ideas, coming from multiple sources, that had to do with “mass customization”5 and notions about “appropriate” scale. Were there, perhaps, some intermediate approaches that could combine the virtues of both big and small?4


Conventional Economies of Scale


While it is popular among some business critics to argue that the drive for growth is fueled by simple greed and power lust, that argument has at best only partial validity. Much of the drive toward growth in business has to do with economies of scale, a value-neutral idea that is both simple and intuitive: in many (but not all) production systems, the more units you produce, the less each unit costs.

The classic example of economies of scale is the proverbial widget factory with a set of fixed costs that remain the same regardless of the number of widgets produced. It costs a certain amount of money to build the plant, turn on the lights, run the equipment, warehouse the inventory, ship goods to market, and sell the goods to customers. While some of these costs are variable—that is, directly related to the volume of goods produced—many others are not. They are the same whether the factory produces a hundred widgets or a thousand.

What changes with volume is the amount of these fixed costs, or overhead, that must be covered by each unit sold. If the fixed costs are, say, $100,000, and the plant produces 100 units, each unit must be priced to recover $1,000 in fixed costs alone. But if the same plant produces 1,000 units, each unit can be priced to recover only $100 in fixed costs. In competitive, capital-intensive industries, such economies of scale frequently determine the winners and losers.5

But the concept of scale is by no means limited to manufacturing operations....

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Verlag
Berrett-Koehler Publishers
Erscheinungsdatum
2006
Sprache
Englisch
ISBN 10 
1576754162
ISBN 13 
9781576754160
Einband
Taschenbuch
Anzahl der Seiten
192
Kontakt zum Hersteller
eucomplyOÜ
hello@eucompliancepartner.com

Pärnu mnt. 139b-14
Tallinn
11317
Estland

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