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What's better: pure or big?
Feb 27, 2008
What's the better "good experience":
• remaining absolutely true to one's principles, creating the best possible experience, and probably staying small as a result?
• or compromising (just a little bit, we promise!) in order to spread the still-mostly-good product or service much more widely?
As the green-organic-socially-responsible movement grows in exposure and success, more and more notable brands are having to engage this question. Big companies want a piece of the small-and-good action, and they're willing to pay for it.
There have been many recent examples - three come to mind immediately: Ben & Jerry's (bought by Unilever), then Tom's of Maine (bought by Colgate), and now Honest Tea.
Seth Goldman, Gel 2004 speaker and co-founder of Honest Tea, recently announced that Coca-Cola is taking a 40% stake in his company.
Some Honest Tea customers are disappointed. Coke is a multinational company whose past behavior has sometimes been at odds with Honest Tea's organic, pro-community stance.
This week Seth posted a conversation he's had with one disappointed customer. The customer sums it up:
I am writing to express my surprise and disappointment upon hearing the recent news that Coca-Cola will acquire a 40% stake in Honest Tea ... As a business that has built its reputation over the past decade on a commitment to healthy organic products, environmental quality, and social justice for its producers, Honest Tea’s decision to partner with Coca-Cola - a multinational corporation that has consistently violated all three of these principles in their global business practices - confounds me.
I salute Seth for his openness in posting the back-and-forth, and still I have to admit that the conversation takes much the same course that I've observed in past examples: "with a teeny-tiny little compromise, look at how much further we can take our vision!"
I'm not saying this is the right or wrong decision; Seth is a good guy and I imagine cofounder Barry is, too... I know they've made a thoughtful decision. But the customer has a point, too. In the end I think the "right" choice is dependent on one's goals. Achieving one's goals might require a certain reach, or size, even with small compromises in the vision. For others, purity is the entire reason for doing the work at all - regardless of who shows up.
For more and more companies who create a good experience, this will be the dilemma: do we want to be pure or big?
As it so often times is, it is hard to say what one would do being in the same situation.
From the companies perspectives, it could possibly be good for both parties and so become a win-win and that's always a good thing. Honest Tea was looking for more support and great distribution while hopefully maintaining their principles. Coke is looking to expand its business more into this realm of beverages and also business type/approach. If it works, it's a success.
Tea is continuing to grow and is a very attractive business to at least consider getting into. Couple that with Honest Teas business practices and you have yourself a very attractive package to look at and consider. Honest Tea with their past financial risks and long hours, etc. may be looking for some help and support, PLUS being able to get more of their product out.
As to the supposed "evils" of Coke, everyone has to make their own decision about that. As to whether Honest Tea will become "corrupted" having partnered with Coke, only time will tell.
As to whether an entity stays pure or goes big? Well, aside from a non-for-profit cause, businesses only go into business for one reason regardless of any concept, principle, idea or practice. That's to make money, simple as that. You don't risk your personal finances, burn all your personal time, and lose sleep for any other reason. With that said, I can see a company being pure to go big either because of the concept of being and remaining pure or to attract someone bigger that would be interested in them because of that concept. But I can also see staying pure just for the sake of being "pure" on principle alone.
Being like everyone else and not knowing exactly what I would do in the same situation, I would venture to say that I'd go pure and hopefully go big for being pure just on principle alone. And in the end, doesn't it wind up the same anyway?
Don't you think that one's principles tend to change quite naturally through the course of one's development? As time passes and we accumulate experiences, we decide that some principles are more important than others, or reinterpret old catechisms in the face of new evidence. So what's better, pure or big? Pure at one age, big at another...
One supposes that if the Ben & Jerrys and Toms and Honest Teas of the world are really pure -- if their principles are the best -- then they can take this opportunity, this meeting across the boardroom table, to teach the Unilevers and Colgates and Cokes of the world how to clean up their act.
Hence'm inclined to reserve judgment. I'd say it depends the nature of the compromise. What do you suppose is one's obligation to someone who owns 40% of you, at least financially speaking, anyway? Sure, there's one kind of formal 'obligation', written down in arcane legal texts, but I wonder more: is there a moral one?
I'm racking my brain to remember when a larger company or corporation's takeover of a "small is beautiful" company has ever changed the larger for the better.
Cynically, these buy outs and take-overs tend to be a way to "buy" innovation, market share, or image. It often comes at the cost of product quality, and in many cases the closing of local plant/loss of local jobs.
A fine local granola company here in Fairfield County has just gone through this scenario. "Bare Naked" granola: small 'garage' start-up, pedaled locally, quality and service = rocket success, bought by big corporation, local plant closed, product to be mass produced by corporation.
The good news is that small, fleet-of-foot start-ups will continue. They will keep the larger businesses on their toes.
So, can any of you come up with that big firm made better by the small fish swallowed?
NWG
Given that this is the Good Experience blog, it would make sense to me to flip the perspective. Instead of asking, "should my company be pure or big, or can we be both," it might be helpful to ask from the customer's experience, "How important is pure? How important is big?"
In the examples we're talking about, "Big" tends to translate to "more accessible" from the customer's perspective. I was camping in the middle of Death Valley last week, out in the middle of nowhere, with only one "general store" within hundreds of miles. But that store had Ben & Jerry's Coffee Heath Bar Crunch. If Ben & Jerry hadn't sold their souls, I'd have been out of luck and had to eat Haagen Dass or a Nestle Crunch. So Big was valuable to me.
On the other hand, if Ben & Jerry's multi-national corporate masters were foolish enough to make the product with hormone-laced cream, and if they used waxy hershey bars instead of real chocolate in New York Super Fudge Chunk, then, from the customer's perspective, they would have sacrificed Pure, and I wouldn't have bought it no matter how accessible.
One of my local bagel places recently sold out to some anonymous money grubbing chain. I think it's a little cheaper now, but the portions are smaller, the quality is lower, and they posted signs saying they're no longer kosher. They even had the audacity to start offering a breakfast bagel with bacon. From my perspective as a customer, they blew it--they traded too much of the Pure to get the Big.
Looking from the customer's perspective, I place relative values on Pure and Big. I'm not so concerned about whether the founders sold their soul. I'm concerned, as always, about my experience. And maybe that's ultimately what the owners need to be most concerned about.
Corporate social responsibility is a topic recently getting more and more attention in the world. However, at least in capitalism economies, we have Adam Smith’s theory of invisible hands justifing how people’s self interest can generate wealth. I think Honest Tea’s decision to come together with Coke is an economical decision which can be explained by Mr Smith’s theory.
In terms of pure and big, based on Mr Smith theory, a company will have the intention to go big, and therefore gradually it will become bigger and bigger anyway becuase of the need to increase economic of scales, obtain bigger market share etc. However, we can only hope that it will be pure enough even it has become very big. As My own experience of working on companies of different sizes, when a company is growing, the owner’s original vision will be skewed but hopefully the main part of the vision is still there.
Interesting question, and one that is not easy to answer. Big is not necessarily bad, if the core values of the acquired brand are not compromised.
I would say that the acquisition of the Hummer brand by GM resulted in good things for the Hummer brand.
Similarly, to continue talking about cars, the way Toyota handles its several brands: Toyota, Lexus and Scion, shows that it is possible to have separate brand identities and business strategies for different brands.
If brands are managed properly and their core identity is not compromised, it really shouldn't matter much if the parent company is a mom and pop operation or a big conglomerate.
"Better?"
If "better" means more widely distributed, then I suppose there are instances where partial ownership or takeover have helped. But if "better" means sticking to the essence of what made the product different in the first place, then I can't think of any - moving to a mass market generally means moving away from some of the uniqueness and more into the mainstream.
Hi Everyone,
Not trying to crash the party, and I appreciate/agree with most of the opinions but did want to comment on two points. The first is the opening assumption that Honest Tea is compromising "just a little bit, we promise." I know it's early in our partnership with Coke, but I challenge someone to find a way that Honest Tea has compromised its product or behavior since the deal was finalized with Coke. There has not been any discussion about us making our product less organic, sweeter than our 17-50 calories taste profile or less Fair Trade certified. In fact, this year we're introducing new Fair Trade varieties, two new 17-calorie teas (which is on the lower end of our spectrum) and also introducing two new "Green Energy" teas where we pay offsets to support wind power in exchange for the energy we consume to produce those drinks.
The other question that was raised was whether there was precedent for a big company being made better after swallowing a smaller fish. For me the most immediate example that comes to mind is when Groupe Danone (Dannon) bought majority control of Stonyfield Farm. I am most familiar with what happened there because Stonyfield's CE-Yo, Gary Hirshberg, is on Honest Tea's board. Danone is now launching more organic products around the world, and my conversations with Danone's top management make it clear that they have swallowed not only Gary's yogurt but also his vision for sustainability. Last year Danone announced a major partnership with Grameen Bank and Nobel Prize winner Muhammad Yunus to invest in microenterprise in Bangladesh (http://www.grameen-info.org/dialogue/dialogue63/regularfl2.html)
Finally, it's also important to recognize that Stonyfield has continued to drive change in the natural foods industry since their deal with Danone -- they were the first to reduce packaging by eliminating plastic lids, and in 2007 they converted their entire product line to USDA Organic certification.