Reinventing Growth: Locally-Focused Businesses Scaling Deep, Not Wide

By Vale Jokisch at BALLE conference 2010

Many folks in the local economy movement believe that small businesses can compete effectively.  But what happens when a community-based business wants or feels the pressure to grow?  Is it possible for a small, local business to grow without compromising its commitment to sustainability, people, and community?  Are there different ways of thinking about “growth” that diverge from what traditional economic theory tells us?

These questions are ones that BALLE businesses frequently ask themselves.  At the 2010 Annual BALLE Business Conference, co-founder Judy Wicks explained that it was two events in 1999 that made her first think about this issue: the WTO protests in Seattle, WA, and the sale of Ben & Jerry’s to Unilever.  Many people in the industry were worried about Ben & Jerry’s ability to preserve its social mission under the umbrella of a large multi-national and the protests demonstrated how much push-back there was on globalization in general.

Judy’s White Dog Café had become a landmark in Philadelphia and a shining example of a socially-conscious, community-focused and locally-sourced restaurant.  Instead of taking that and growing it wide, however, Wicks decided to grow deep.  She started leading programs to educate the Philadelphia community about local food and agriculture and opened an adjoining business, the Black Cat Gift Shop, to give residents a place to buy fair trade gifts.  Eventually she decided that growth meant spreading the word about the value of local economies by creating the Sustainable Business Network of Philadelphia and the Business Alliance for Local Living Economies.

Paul Saginaw of the Zingerman’s Family of Businesses tells a similar story.  Paul and his partner Ari Weinzweig opened Zingerman’s Delicatessen in 1982 with little other ambition than making the best corned beef sandwich, ever.  Their original business vision, which consisted of 12 paragraphs churned out on a typewriter, stated that they would never try to grow by replicating because they wanted to be “unique and great, not really big.”  Corporate giving was built into their financial statements as a line item just like rent and utilities–one that wouldn’t disappear even when business was slow.  After experiencing considerable success for the first 10 years, Saginaw and his partner found that other businesses in the community were trying copy them and realized that they needed to innovate to survive.

What resulted was a year-long discussion and a 15-year strategic plan entitled “Zingerman’s 2009: A Food Odyssey.”   Saginaw and his partner knew they didn’t want to open a new Zingerman’s Deli, but they did want to improve what they were already doing within the food business in Ann Arbor, Michigan.  That meant incorporating more democratic elements into the workplace, providing more opportunities for ownership, and ensuring robust benefits and living wages for all of their employees.  Despite the concern of their lawyers and accountants about their taking on new partners, they developed a plan to open a dozen food businesses under the same brand utilizing committed, passionate business partners that upheld the same ideals of community involvement.  The Zingerman’s Family of Businesses is now a group of eight for-profit businesses owned by 16 partners and making $39 million in sales.  Their new plan, Zingermans’ 2020, is a continuation of their original mission with a more ambitious goal: “changing the world.”  Part of achieving that goal is using partner business ZingTrain to train other forward-thinking organizations in Zingermans’ innovative practices including open-book finance.

The key to undertaking this kind of deep growth, according to Saginaw, is having good, organized systems and a written set of guiding principles that are openly discussed and devoutly practiced.  These two practices help to define the culture of the business and maintain the organization’s original promise.

Vale Jokisch is a first year MBA student at Duke University’s Fuqua School of Business and is interested in how for-profit businesses are finding innovative ways to create social and environmental value.  Her specific interests are around community economic development, local economies, and impact investing.  Prior to enrolling at Fuqua she was the Deputy Director at Empowerment Group, a non-profit  microenterprise development organization based in Philadelphia.  Jokisch has a BA in Economics and  Political Science from Swarthmore College.

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