As he was pondering the idea of expansion many years ago, the late Jay Chiat of southern California ad agency Chiat-Day once thought, “Let’s just see how big we can get before we get bad.” As such, the volume of work increased, the agency grew and although there were still “home runs” of memorable work in the bunch, it could be argued there were fewer of them.
It’s a question that many wonder but few can concretely define – how big can a company be to reach its peak of effectiveness and brand equity before it begins to be tarnished? It’s one that even us in the advertising and marketing business can’t agree on (5 people? 30 people? No more than 100 people?). How much work should we agree to come through the door in order to balance the quality of what we believe in delivering with what we want to achieve in revenue?
It’s something Goose Island has to seriously ask itself in a new era. One of our city’s greatest beers, the popularity of Goose Island has only grown and grown until it was recently sold to, of all companies…Budweiser. Now, anybody who knows a beer “purist” understands that this amounts to a cardinal sin. But then, on top of that startling twist, came news that Goose Island was moving production of its popular 312 line of beer from Chicago…to New York.
There’s nothing wrong with a beer company wanting to sell more beer. And from what I’ve gathered from client experience, it’s certainly not easy being a craft brewer. You want to stay true to the ingredients that make for a better beer, you want to build distribution channels and you want to do right by the loyal fans who chose you over visibly cheaper options. Yet, as you expand, you have to ask yourself at what level does increased production compromise what you’ve built? Is it worth it if it comes at the expense of your brand’s heritage or your most die-hard fans?
In contrast, take the example of the Boston Beer Company, brewers of Sam Adams. Founder Jim Koch brewed his first batch of beer in 1984, debuted it in 1985 and within a year expanded beyond Massachusetts to Connecticut. He would also expand to breweries in Ohio and Pennsylvania. Now you can get Sam Adams in many grocery stores, yet Jim Koch never sold his company to all the big macrobrewers who came calling.
I don’t expect Greg Koch of Stone Brewing Co. (no relation to Jim) to sell to the Big Boys of Beer either. Yet Stone Brewing enjoys large distribution and has grown by 50% every year. He is a self-described “beer geek” and as such found a calling. It’s not his goal to dominate the beer world. And he doesn’t want to sell to the “generic” consumer because he believes those consumers will only choose safe and familiar – even if they know those choices are not the best choices. Could Greg Koch sell to Budweiser, watch Stone get distributed in even more places and see oodles of money roll in? He could. Easily. But it wouldn’t be true to his brand’s heritage and values. And since he is the poster boy for craft brewing, it would be hypocritical to his very core to sell to a giant brewer (just view his keynote at the 2009 Craft Brewers Conference, “I Am A Craft Brewer“). You’d stand a better chance of seeing Wrigley Field re-named Cardinalville.
Perhaps a sale to Budweiser and production moving out of Chicago doesn’t mean much to the average beer drinker. But considering the company they keep in the craft brewing community, it should’ve mattered more to Goose Island. Founder John Hall says he hopes to return to all brewing to Chicago within a few years with a new plant that’s built here.
While I look forward to that day, let’s hope he hasn’t alienated too many people by then.
What about you? Have you defined a set of values that guide your company so concretely that increased sales and distribution are always on the same page as your brand without compromise? You don’t have to brew beer for a living – regardless of industry, feel free to share them here.
Just think of the other admired brands out there (Apple, Google, Lexus, Ikea, etc.)…how do they continue to get bigger without losing their positive image? Just like you described…Have a solid plan for growth…and know when to turn down business and when to take it. But with the mentality that you cannot compromise the standards you have decided upon.
Thanks Rob! Excellent observation and insight. Whether craft brewing companies or small ad agencies, I can’t tell you how many times a company I’ve admired sells to another, both parties say “nothing will change and we’ll stay true to the brand,” and then not surprisingly, things change…and usually, not for the better. It seems the lure of the almighty dollar is too great in these circumstances, which makes me applaud the ones who never compromise. Especially in an economy where it would be terribly easy to cash in and sell out. Call me a hopeless idealist, but I believe there’s still an ability to have your standards and higher revenue too.
There is no question that companies (and their owners) can have high standards while raising revenue. In fact, they actually go hand in hand. Most business owners think they have to lower standards to get the business, but those who don’t actually get more business. In fact, more LOYAL business.
I think, for me, this rings true in the coffee/tea world as well. Obviously, we have the shining beacon on coffee promiscuity, Starbucks. More locally, however, we have some brands that are getting big and not necessarily better.
The best on I can think of locally would be Argo Tea. Founded here in Chicago only a few years ago, it has grown into a large number of stores (14, last I heard) here in Chicago, several in New York, and plans to build elsewhere. True, lots of people still really enjoy their product, but what that company lacks is quality for it’s workforce. Maybe my view is a bit skewed (I worked there, and did not have the quality of life they touted so often), so take it with a grain of salt.
Workers are all underpaid (generally minimum wage, though, at least they are getting paid), especially for the amount of work asked for. While there, out of the 20-ish baristas I worked with, maybe only two people actually liked it. On top of that, the baristas who had been there for years all had the same view: It’s gone downhill. I’d be happy to go further on the subject, but don’t wish to take up your blog with a rant. 🙂
Thanks for your candid response, Jordan. I’ve certainly seen Argo around town but being more of a coffee drinker than tea person, I’ve ventured to java locations. But if what you’re saying is consistent with how other employees feel, that’s definitely going to catch up with the company at some point.
Similarly, I’ve witnessed companies that franchised too fast in the name of expansion and tried to re-address a host of internal issues including customer service. Trying to fix that down the road when you’ve blown up to 200 locations rather than early stages of growth isn’t pretty. It stands to reason that if your workers aren’t happy, your customers are going to notice it in their attitude or quality of helpfulness. And those customers will use social media outlets (i.e. Yelp, Facebook, etc.) to share that experience with friends. In other words, take care of your own people and build a better culture if you want to build a consistent brand as you grow. Why not get more advocates via the employee base as well as customers?
Those companies that miss the opportunity to give the employees a better understanding of why they’re important to the business miss out on a larger opportunity. Starbucks employees seem to be happy working there (generally speaking … but not all) because they have a purpose…to offer an experience. Ever look at their vision and mission statement? You can see it at: http://www.starbucks.com/about-us/company-information/mission-statement. Notice their Mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time. If you don’t feel important after experiencing their culture (internally) and training, you’ll know it and leave.
My question to you would be do you have that type of goal and ambition where you work? If not, maybe the owners need to do a little soul searching in figure out why they started the business. It might change the current direction.
Sorry to butt into your conversation, but it seemed to need to be said.
No apologies necessary, Rob! Your comments are always welcome. In the past, I’ve had to do the very soul searching you speak of. Both as employee and as business owner – did I still feel my purpose or was I living for other reasons (and therefore cheating myself out of happiness I deserved). It’s a hard conversation to have with yourself but probably one of the most worthwhile I’ve had in years.
Another really great example of smart growth by a company on their terms is Zingerman’s in Michigan (www.zingermanscommunity.com). They have a terrific visioning system that they bring into reality with each “brand extension” and seem to have preserved the inclusive culture they started with very well.