March 15, 2012
Ice cream entrepreneur taps into the ‘spiritual aspect’ of business
How Ben Cohen of Ben & Jerry's refocused the definition of business from profits to the social good
After Ben Cohen and business partner Jerry Greenfield completed a course on ice cream making, they established their first ice cream shop in 1978 and went on to build Ben & Jerry’s Ice Cream —a $300 million empire and one of the largest ice cream businesses in America.
Choosing ice cream over bagels as their vehicle to prosperity, they initially lacked location. “We figured if it was going to be ice cream, it should be a warm, rural college town,” Cohen noted. But their analysis revealed that competition had already beaten them to the hot spots. “So we decided to throw out the criteria of warm and ended up in Burlington, Vt.,” where cold and snowy winters are legendary. Cohen still calls Burlington home.
Cohen, preferring social activism to the daily business grind— a throwback to his hippie youth— resigned as CEO in 1995 but continued to serve as board chair and then on the advisory board because he believes strongly that business has a “spiritual aspect” that should be recognized by the business world. “There is a spiritual aspect to business just as there is to the lives of individuals. As you give, you receive. As you help others, you’re helped in return,” Cohen asserted. He didn’t come to this conclusion overnight. Cohen’s business philosophy evolved as the company grew.
Ben & Jerry’s faced many early challenges. Banks were wary about financing those who lacked business experience, collateral and credit histories. To get a bank loan, they needed a business plan. Without knowing how to prepare one, they used a template for a pizza parlor that sold pizza by the slice, simply plugging in “ice cream cone” wherever “pizza slice” was mentioned, and got their initial seed money.
They broke even in their first year, but two years later, things started changing. According to Cohen, “We were at the very end of our rope and losing money ... and finally, in a last-ditch effort to survive, we decided to pack our ice cream in pint containers,” which revolutionized their business in the 1980s.
Entering Boston, their first major U.S. market, nearly brought their business to an end. Häagen-Dazs, owned by Pillsbury, was fierce competition, and Ben & Jerry’s’ distributor wanted to drop the Vermont-based company as a client. Ben & Jerry’s quickly printed banners and flew them around major Boston sport stadiums, and rented signs on Boston transit buses that featured two pudgy hands squeezing a pint of Ben & Jerry’s ice cream, saying, “Don’t let Pillsbury’s dollars strangle Ben & Jerry’s ice cream. What’s the Doughboy afraid of?”
This proved a successful act of chutzpah. “Pillsbury was getting such a black eye from their tactics of trying to keep us out of distribution that they relented and allowed us to continue distributing our ice cream,” Cohen said.
Annual sales rose into the millions, and the two spent most of their time hiring, firing and meeting financial advisers. “We felt like we were becoming just another part of the economic machine that tends to oppress a lot of people,” Cohen lamented.
Then a friend told Cohen, “If there’s something you don’t like about business, why don’t you just change the way you do it?” For Cohen, this was genius. Venture capitalists wanted desperately to invest. “We decided to use this need for cash as an opportunity to make the community the owners of our business,” he recalled.
In an unusual move, they held the first in-state Vermont public stock offering, which made many Vermont residents part owners of the company. A national public stock offering followed, with the formal creation of the Ben & Jerry’s Foundation. The offering prospectus stated that the Foundation would be getting 7.5 percent of pre-tax profits, the highest amount of any publicly held company that gives to charity.
So many requests for help came in that only 5 percent of the applications could be funded, a common problem for foundations throughout the world.
How did Cohen react? He and Greenfield developed a new definition of business from “an entity that produces a product or provides a service” to “the combination of organized human energy, plus money, which equals power.” For Cohen, business was the strongest force in society, but unlike religion and government, whose purpose was to improve quality of life, “Business has never had that as part of its brief.”
Cohen believed that only if spiritual concerns are integrated with business, which possessed the resources to actually make a difference, could positive change happen.
He felt the very definition of success was an obstacle because it is measured “by profit, how much money is left over at the end of the month or at the end of the year.” Instead, Ben & Jerry’s decided to change the way success is measured by measuring success through a “two-part bottom line”—by how much the company has helped to improve quality of life in the community and how much money it has made. However, their managers had bad news: When company energy was devoted to improving the quality of life in the community, it took away from improving profits.
Cohen and Greenfield were astonished. They recognized that money is a means, not an end, but values combined with social purpose should be their focus, integrating social concerns with an eye on profits.
The company bought coffee from a Mexican cooperative, improving Mexican coffee farmers’ quality of life by purchasing their beans. It bought blueberries from a Native American tribe, which helped benefit them. It purchases $3 million worth of brownies annually from Greyston Bakery, which provides employment opportunities for those in need. Ben & Jerry’s recently committed to making all of its ingredients Fair Trade certified by the end of 2013.
According to Cohen, “Our actions are based on deeply held values, that it’s an integrated and holistic effort to meet another set of our customers’ needs—the need to solve the social problems of our day—and that it provides added value. It’s a unique selling proposition. It motivates our employees. It helps with recruiting, and it builds tremendous consumer loyalty that’s based on shared values.”
Cohen believes business should take responsibility for the common good rather than focus on self-interest. He believes that business, as a powerful social force, can integrate social concerns throughout its activities, while supporting service organizations in order to help people.
According to Cohen, “As your business supports the community, the community supports your business. We are all interconnected, and as we help others, we cannot avoid helping ourselves.”
Arthur Wolak is a Vancouver-based freelance writer.