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A business born out of boredom
Not many company founders start a business venture out of boredom but that is what Ben Cohen and Jerry Greenfield did. In 1977, boyhood friends Cohen and Greenfield wanted to do something fun and so decided to start a food business. Despite a lack of knowledge, the duo settled on ice cream as it did not require the costly equipment that their original idea of bagels did. To learn more about ice cream, they signed up for a $5 correspondence course in ice cream making by the Pennsylvania State University. In 1978, Cohen and Greenfield opened their ice cream scoop shop in a renovated gas station in Vermont.
To get customers to the store to try their ice cream, they adopted a unique marketing ploy - they organized a free film festival during the summer where they projected films onto the back of the building. Their differentiated approach to marketing also extended to how they named and made the flavours. Some of their popular items included Cherry Garcia which was named in honour of the rock band, Grateful Dead lead singer Jerry Garcia, and Dastardly Mash which had nuts, chocolate chips and raisins. With their 12 unique flavoursand offerings that stood out from the run of the mill, the store quickly became a success.
While the partners were inventive with flavours, managing the finance of the shop was a struggle as neither were very good with money. At one point, they even closed the shop for a day just to sort out the paperwork. Realizing they lacked the necessary skills and needed an experienced person to handle their books, they hired local nightclub owner Fred "Chico" Lager as their first COO. With Lager handling the books, the partners were free to concentrate on making and marketing ice cream and both sales and profits rose rapidly.
Two years after they opened their shop, Cohen and Greenfield began packaging their ice cream in pints which they distributed to local grocery stores and restaurants. Demand grew for the premium ice cream and the partners were forced to move from the mill where they were packaging their ice cream in pints to a larger facility in 1981. During that year, Time Magazine did a cover story about ice cream makers and Ben & Jerry's was one of the products they featured. Ben & Jerry's was named as "best ice cream in the world", and other superlatives were bestowed on a couple of other brands as well. Recognizing an opportunity, Cohen took that phrase from the magazine to drive their marketing, and milked that one article for all its worth. Their reputation grew and by 1984, they had sales of over $4 million.
Ben & Jerry's made a name for itself with its innovative marketing and advertising campaigns. At every stage when competition tried to arm twist distributors to stop carrying their ice creams, Ben & Jerry's came up with high decibel innovative ad campaigns that put competition on the back foot, increased consumer awareness of their brand, and thus actually increased their sales rather than getting them bogged down.
A new vision
Unlike many entrepreneurs who would be delighted with their rapid success, both men began to suffer a crisis of conscience. Cohen contemplated whether to sell the business as they were now no longer ice cream men but instead businessmen, while Greenfield went into retirement. Cohen decided instead to adapt the company to a vision of being more than a business. Just like their marketing, their philanthropy had a unique approach. They began by returning some of their profits to the Vermont community by sponsoring local concerts and film festivals and gave away free ice cream at charity events. In 1985, Greenfield began to oversee the Ben & Jerry's Foundation which donated 7.5 percent of the company's pre-tax profits to charity.
Cohen and Greenfield formulated a three fold mission - product, economic and social - that would be linked through all the company's policies and practices to become a unique corporate culture. Its product mission was to produce the best quality ice cream using natural ingredients using business practices that would not harm the environment. Its economic mission was to operate in a profitable basis and create opportunities for development for employees while its social mission focused on philanthropic efforts.
In line with its vision, the company had a different approach to its employees. The company's worker-focused policies included rewarding employees with profit-sharing programs, free health club memberships, day-care service and college tuition aid. Employees were also entitled to three free pints of ice cream a day. While these policies fostered a sense of community among its employees, it was their pay scale policy that would cause ruffle among management.
Cohen established a pay scale where the highest-paid employee could not earn more than five times the salary of an entry-level worker. The scale was adjusted slowly over the years but it continued to cause friction among senior management as the company grew and expanded and more personnel had to be hired. Many senior-level employees came from traditional business backgrounds and were more focused on profits than philanthropy unlike Cohen and Greenfield. Managers eventually realized that the founders would not abandon linking their philanthropic and economic aims and the salary caps would not be removed. Those who disagreed left for other opportunities.
Change at helm
Despite the idiosyncratic culture, the company's flair for innovative tasty ice cream flavours saw sales soar till the mid-1990s . However, as a culture of calorie-conscious consumers cutting back on ice cream started to take hold, sales started to dip. In late 1994, Cohen decided to step down as chief executive recognizing the company needed an experienced professional manager to develop new markets and new products.
Keeping with their quirky approach to business, they organized a "Yo! I'm your CEO" contest in addition to hiring a recruitment firm. The contest not only brought in 2000 entries but also some publicity to the company's ice cream.
The company's first hire, Robert Holland Jr, stepped down after a year and half as he felt he was not the right person for the tasks and the job eventually fell to his replacement, Perry Odak. Under Odak's helm, the company grew internationally as well as domestically. In 2000, Ben & Jerry's was acquired by Unilever for $326 million in cash. The Anglo-Dutch giant promised to maintain Ben & Jerry's commitment to social causes, even as it took Ben & Jerry's to markets across the globe.
A heady cocktail
For any entrepreneur - whether in the ice cream business or in financial services, the lessons from Ben & Jerry's are just the same. A passion for what you do, an innovative bent of mind, strong marketing skills, wisdom to know what you don't know and getting quality talent to support you, sharp focus on creating a truly inclusive work culture and a big heart that sees you giving back generously to society - that's a heady cocktail that contributes to success beyond the ordinary.
Content is created by Wealth Forum and must not be construed as an opinion by Reliance Mutual Fund.
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