Monthly Archives: May 2014

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Dream. Big.

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I was admittedly surprised when Ken Grossman called my cell phone.  I had sent him a few bottles of wine, with a polite letter asking for his input on a school assignment.  But I knew very well that the founding owner and CEO of America’s second largest craft brewery wouldn’t have time to connect with every college student who wanted his attention.  And yet, there he was:  “This is Ken at Sierra Nevada.  What did you want to talk about?”

The assignment for class was to profile a “sustainable business.”  Sierra Nevada is certainly that, with everything from solar panels and fuel cells to a hybrid Peterbilt, but what I really wanted to know was this:  How did Sierra Nevada, founded in 1980 along with hundreds of breweries during the same decade, create a mob-like following of consumers who now support production of one million barrels per year?  Fortunately for me, Mr. Grossman withheld little information on that topic.

What followed was a great business leader’s humble recollection of starting a company in a barn, and growing it into a national brand.  It included all the expected, the focus on hiring and retaining great people (the brewmaster is the original, the company’s second employee) and a quest for quality over profits and growth.  It included being at the right place at the right time.  (Have you ever noticed how great leaders take very little credit for success, almost as if they stumbled upon thousands of great decisions by pure luck?)

And then came the most interesting answer to a question I had hesitated to include.  “What would you do differently, Ken, if you were starting again with a small brewery at age 30?”  (He must have guessed that I had a personal connection with the question.)  “What would I do differently?”  He repeated the question.  “I would have dared to believe that Sierra Nevada could become what it is.  From the start, I didn’t believe it.  And so I didn’t plan for it.  If I had dared to dream it from the start, imagined that we would physically outgrow the block with buildings for the brewery, I would have planned it better from the start.”

Christian

http://www.SierraNevada.com

 

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New Strategy: Ignore the Competition

Mr. Brown finished his career in software at age 50 to start a farm.  He bought a plot of land in Smalltown, Kansas, and moved his family to live on the 40 acres.  Observing the neighbors, Mr. Brown, saw that they were growing corn, wheat and soybeans, and selling their crops to the local Co-op.  He considered that strategy, therefore, to be what his previous industry would have called “best practices.”  

Mr. Brown (now Farmer Brown!) bought a 60hp John Deere Tractor, planted his fields and began to farm.  After the first harvest, he saw that the profit margins were tight.  He realized that he had to become very efficient, as his neighbors were, to have a profit left over after covering expenses.  His neighbors were familiar with that strategy, and also became more efficient.  Prices went lower, as efficiency increased.  Farmer brown eventually took a job in town to support his farming habit.  

Hold the story there for a minute.  Lets try a different, daring and possibly dangerous strategy from the start.  IGNORE THE NEIGHBORS.

Take it from the top:

Farmer Brown bought 40 acres of land in Smalltown, Kansas.  He looked around to find some potential CUSTOMERS.  A half hour drive from Smalltown, he found Middlesize, Kansas, with a population of 400,000 people.  Farmer Brown planted 2 acres of pumpkins and a small apple orchard, and advertised both in the local paper in the fall.  Many of the folks in Middlesize had never seen a pumpkin growing on a plant, and found it fascinating.  Parents were happy to pay full retail price for both pumpkins and apples, especially if the kids got the glorious experience of picking the crops themselves.  (And Farmer Brown was happy to let the kids do the work, and save him the trouble of storage, shipping, and loss of margins to a wholesaler.)  For his second year, Farmer Brown added a corn maze and a hay ride, and expanded the pumpkins and apple orchard.  The local paper wrote an article on Farmer Brown, because NOBODY HAD EVER SEEN A BUSINESS LIKE HIS in Middlesize before.  

In 2004, Authors W. Chan Kim and Renee Mauborgne published a book called Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant.  The idea, in summary, is that existing markets are “red oceans,” bloodied by the competition of companies fighting for the same customers (market share).  The authors encourage a search for “blue ocean,” wide open markets uncluttered by competition.  Blue Oceans take a little effort to discover, but they reward the adventurous with open waters and endless opportunity.

Christian 

 

 

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Good to Great

Have you read Good to Great by Jim Collins? It would have been so awesome if I had read this book in High School, though, I may not have understood it. Jim says that all highly successful companies have figured out three things: 1. What they are passionate about, 2. Where they are talented, and 3. What they can make money doing. I had not figured this out for myself when Christian and I moved to Denmark. 

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My first job out of college was in the accounting department of a humanitarian organization in Denmark. This was challenging for a number of reasons.

  1. I don’t speak Danish
  2. I passionately dislike accounting (and I’m not good at it)
  3. I was paid very poorly

I loved the organization’s mission, and that is why I stayed.   What I was missing is Jim Collins’ three circles. Of the three circles, talent, passion and economics, all I had was passion.

Finding a passion that can support your economy and that you are actually good at is not always straight-forward. I love chocolate, movies, sewing, eating, running, graphs, saving the world and, on the top of all of that, Jesus. Where do I start! I decided to start with my passion. I started with poverty. I’m deeply moved to participate with man-kind in improving the situation of those in need. That’s my passion. That organization in Denmark was working on relieving poverty in Africa. I could do something I hate and didn’t understand because it supported my passion.

Knowing what I’m passionate about was the over-arching piece of my three circles. I can now figure out how to apply my talents to my passions.  I do have talent with grazing animals and organizing projects. And farming is the place to supply the economy. Can we change the world with farming? Oh yes we can!

And when you do something you are passionate about, talented at, and that provides an income, well, it’s a beautiful thing!

Rachel

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4 Steps to a Second Career (Without Going Broke!)

Its a lot of fun to run a winery.  Its so much fun, in fact, that many are willing to run one at a loss.  The same goes for other industries, like hobby farms, breweries and coffee houses.  But most confess that living the dream is more fun if it doesn’t drain the retirement fund, and on that topic I learned some good wisdom from the owner of an excellent coffee house.  

Steve Hines had built a successful event-planning company by the time he and his wife Beth decided to start a coffee shop near their home in Gardner, Kansas.  I’ve known Steve for a long time, and know the idea behind Groundhouse Coffee was to unite the community (i.e., no profit motive).  But, as often happens when a company serves customers selflessly, it turned into a decent little business.  Naturally, I interrogated Steve over a cup of coffee.  

Here are the lessons learned on launching a second career:

1.  Scale according to your resources.  The Hines’ built the shop within their means, and left some cash available for operating expenses.  If they’d had less cash, they would have built it smaller.  There’s no reason to stretch; if the idea won’t work when its small, it likely won’t work when it gets bigger. 

2.  Plan.  Groundhouse Coffee existed on paper well before the couple bought the building and hired the staff.  Even if you’re self-funded, it’s a great idea to build a business plan on paper as if it were being offered to investors.  The process forces you to think it through, and paper is a lot cheaper than bricks. 

3.  Learn.  Steve read a lot about running a coffee shop.  He had visited a lot of coffee shops.  And when the place opened, he spent a lot of time in his own coffee shop.  Its also a good idea to take a part-time job or volunteer position in the industry you want to join.  It’s easy to get a job when you offer to work for free, and the lessons learned from the “inside” are well worth the effort. 

4.  Borrow some talent.  Knowing that he didn’t know everything about running a coffee shop, Steve recruited somebody that did: a former manager from Starbucks.  He wisely got her on board from the beginning, so the plan could take shape with her input.  

If you ever find yourself visiting Kansas City, stop by Groundhouse.  It is, in my humble opinion, the finest coffee house atmosphere available in the United States.   http://www.groundhousecoffee.com

Image  Christian   

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