Future of social enterprise | Jeff Ericson | TEDxSno-Isle Libraries
This past summer I received a call from TEDx. The voice on the other end of the line asked me to speak at a TEDx event in November. At first I was hesitant. I was nervous.
I speak in front of small crowds all the time. I’ve had the honor to lecture on social entrepreneurship at the University of Washington and abroad in India. I’ve even been on the radio. But I’ve never spoken to such a large crowd full of distinguished thinkers, businesspeople and local leaders.
But what an awesome opportunity! So I went for it. I shared the business model of Camano Island Coffee Roasters. I shared the impact the buyers of our coffee have on coffee-growing communities worldwide.
Did you know that coffee is the second most traded commodity in the world? Only oil is traded for more money each year. And yet, despite a healthy market demand for great coffee, many coffee growers struggle to make ends meet and their communities face extreme poverty.
At Camano Island Coffee Roasters, we’re focused on solving this discrepancy with responsible business practices and social entrepreneurship. I explain much more about this in my talk.
You can watch my TEDx talk in it’s entirety here. I’d love to hear what you think.
Jeff Ericson : A good social enterprise is a system or a structure of different groups working together all while dedicated to solving the social, economic, and environmental problems that have long plagued human kind like hunger, homelessness, disease, and ignorance. Let me tell you a little bit about my story. From the time I was very young I had an entrepreneurial passion. I was always finding ways to make extra money, start part time jobs, find some concept that would get my juices flowing and it usually centered around business, but I had a family structure that was very much involved in ministry and so I was very conflicted, almost as if I was the black sheep because business got me juiced up.
When it came time for college I made a decision. I was going to take the high road. I was going to attend seminary. Great decision except for the only problem was my mind kept wandering back to the passion of business and I would get these part time jobs. I would get involved in more ventures and eventually I realized that my future was going to be in the world of business. In the day you had to make a decision so my decision to go into business meant I was going to take all the training in seminary, put it in a folder, put it back on a shelf and never turn around and look at it again. By outside appearances I was the picture of success. I had surpassed all my wildest financial dreams but inside I was empty, I was unhappy, I weighed 420 pounds.
Everything inside was broken. After a prolonged illness at the age of 30 the doctors told me I had 6 months to live. I’ll never forget that day sitting in the chair and realizing I had made the wrong decision. I didn’t know my wife and kids. Something had gone wrong. I had taken the wrong path. I kept looking back at that folder and thinking for as long as I have left somehow I have to take this passion for business but I have to open up that folder. I somehow have to connect my beliefs that I can change the world, that I can actually make a difference in the world with my passion for business. That led us to a goal. Remember, this is 20 years ago. The word social enterprise, social business didn’t exist. We actually had to stop and say what does this mean?
We decided that we were going to take the passion and the energy of a for profit business, we were going to fold in the ideological core values of a not for profit, we were then going to take this and attach it to a product that would actually add value to the customer because if you’re not adding value you don’t have a business to talk about, and then we were going to use that to attach to a story of a disadvantaged group or a chosen group. In our case it was going to be agricultural farmers in the poorest countries in the world. We created a company by the name of Camano Island Coffee Roasters and people ask me all the time why did you start in the coffee business?
Well I absolutely love coffee but that wasn’t the reason. Coffee is the second most traded commodity on earth next to oil. More money trades hands in this whole concept of coffee than anything else next to oil. We knew in that there was a solution and yet the agricultural farmers that work so hard for this product that you enjoy every day rarely get to share in the rewards of the profits of this product. Somehow we had to change that. How are we going to create this new dimension for capitalism? By the way, I am a capitalist. I believe in capitalism but I believe there’s a new definition. How are we going to fold it in and actually have this goal of fulfilling human need?
Over these 18 years of Camano Island Coffee Roasters and lots of small wins and big wins and setbacks and failures and all of that we have come up to the conclusion that there are 4 main groups in a social enterprise model. I am going to have an imaginary picture for you because this is going to get a little complex and I want to make sure everyone follows with me. I’m going to have a table here, this is a dinner table. We’re going to call it the table of capitalism and I’m going to invite 4 guests to this dinner party. The first guest is going to be my farmer. We call it the chosen group.
The second guest is going to be the not for profit. The third guest is going to be the for profit and the fourth guest is going to be the customer or the consumer. Now that you know who my guests are let’s kind of zero in on these people and find out what makes them tick. Here’s what I’ve learned over these 20 years. What we do and who we are is two completely different things. Everybody viewed me as a money making machine, somebody that could just get in business and go for it. Making money and making a profit and growing a business is what I do. It’s not who I am. With our farmers farming is just what they do. They are people with the same goals and desires that we have.
When I was given the 6-month death sentence I had a chain of printing companies and I had to get out of dodge quickly. I didn’t have much time and so how am I going to sell these businesses? I was really inspired by the creators of the employee stock ownership programs and as I dug into their model I realized something. In situations where the business owner gave the company to his employees they almost surely failed and yet in the situations where the owners taught the employees to think like owners, to make the critical decisions of ownership not only did the companies do as well they usually flourished and did better. When we started working with the farmers the first thing we said is ownership is going to be the answer.
We started with land ownership opportunities. We actually signed deeds to our farmers. Everyone’s going deeds? How are they going to pay for them? We’re going to work with them on that. There’s something significant that happens when your skin’s in the game, when you actually have a stake in the ground. The first thing we did, because we do believe in some other important things like the environment is we said to the farmers if you grow organic coffee we’ll pay you a premium. If you grow coffee in the shade of the rain forest and don’t remove the rain forest, premium. Because we’re capitalists if you grow the top 1% of ravica coffee, produce excellence we’ll pay you a big premium. With those premiums you can pay your land payments and you’re going to have extra to take care of your kids, healthcare systems, clean water systems, and so forth. What happened?
The first thing is they quit saying thank you. They got to work. Ownership is pivotal to this paradigm change in social enterprise. All of the sudden they’re not thinking about dinner, they’re making long term decisions. The land is theirs, it’s going to be their kid’s. The environment’s important. All of the sudden things start falling into line. Ownership is a very important part of sustainability. The next group is our not for profit. In the beginning we partnered with organizations like [inaudible 00:08:19] international and some other really awesome not for profits that did really great work in ownership arenas. Guess what? The thing the not for profits talk about all the time, sustainability, rarely applies to their own business process. They’re in a donor model. I call them the gleaners. They’re constantly asking for donations and when the big donors disappear they have to work harder. Guess what’s happening?
The donors are disappearing. There’s a paradigm shift and we knew in this opportunity we had to do something different. We had to work with the not for profits to increase their influence. We had to get them out of the fund raising mode and into the work mode. You know what? We know who the non profits are. These are the people doing the good work. These are the people whose feet are on the ground and they are actually changing the world. Other partners need to come together and produce the fuel to fuel that machine. We can’t make them produce the fuel and have the machine at the same time.
The third guest is our for profit corporation. What a misunderstood group. You know we disrespect them for making a profit and then we come and want to take their profit. Making a profit’s what a corporation does but there’s people in that corporation that want to make a difference in the world. The first thing we need to do is tell them put their checkbook away because we see them for who they really are, a for profit corporation works for years to create trust with their customers and in that circle of trust that they have with their customers they have an amazing wealth. We go to the for profit and we ask them for their influence. Can you share the stories of our farmers and the great work that the not for profits are doing? By the way, use it as your corporate social responsibility and as you share those stories your influence will increase. We’re not taking anything from you.
All of the sudden the not for profits are gaining more exposure, more money’s coming in and the great thing about the old missionary model of tell people what to grow and do is it’s not a build it and they will come, it’s a build it and we’re out there hustling to get them to come. We’re exposing the customers to more of the farmer’s great work. The fourth partner at the table is our customer or consumer. That’s really changing. 20, 30 years ago we told people make money and then write checks to charity. The problem is the money’s not falling from heaven like it used to and the stresses are through the roof. We can’t practice emotional extortion anymore with our customers. We have to tie, we have to connect products that they purchase every day to the good that they can do every day.
How in the world can our customer make their house payments, take care of their kids, have two career families go through all of this and then lay their head on the pillow at night and feel guilty about the plight of the world’s poor. There’s just too much stress. We have to turn this around and through the products that they purchase every day we have to show them that there is a new world coming. We chose Camano Island Coffee Roasters in order to do that process. These are our 4 guests. It’s now time for the entrée at this dinner party. We created a monthly club called the Coffee Lover’s Club and it was a subscription based coffee program because we wanted to get the box in people’s homes and all the box is is a carrier of a message.
As these people get the box they’re going to find out a whole lot about this coffee. They think they’re buying coffee. They don’t really understand that they’re connecting to a story. With every shipment a percentage of the money from this box is going to go through the non profit and to the farmers for direct product as well as some extra help. Okay, first of all now the not for profit has some income coming in. They can reinvest that income and do good. They do know how to spend their money well. They don’t have to spend 80% of it fundraising. The farmer gets excited because the more things they can come up with they can sell so everything starts falling into place. In this box, which we view as a story stick, we get to start attaching stories and they’re never sad stories. We have no children starving.
They’re esteeming stories that tell you that the people you’re buying coffee from are forever changed because of your purchase. I like to tell a really quick story here about a woman that I met in one of the villages 7 years after she had tried to commit suicide and we brought her into the village and her life had been transformed. To really make this story short during one my personal crises in life I was in Nicaragua and went into that village and met up with her and she again was reiterating the story of her life and she said because of where I am today I know my children will never have to make the same decisions that I made. Sustainability equals hope. Charity checks actually breed fear because you’ve got to work harder for the next one. It also creates a little bit of puppetry which we don’t want to do.
The other thing is if I tell you that millions of people are starving to death that’s a big number, a little overwhelming, and did you connect to it at all? When I start showing you people’s lives, individual family’s lives who have been transformed through your purchase you’re connecting to it. My box makes the message very sticky. The unintended consequence of this box is we didn’t even think that our customers also had influence. They have family, friends, and neighbors and they take our conversation cards and move them on and it’s created quite a ripple effect that wasn’t even in our original plan. The other thing is not just the story stick, not just the fact that it’s making the invisible visible, like I am actually showing you people’s family’s lives. What it’s really doing is connecting you to the products that you use every day.
You’re not just buying a product. You’re buying a process, you’re buying life, you’re buying hope, you’re buying generational change and you’re getting to enjoy your cup of coffee. In this social enterprise cycle it’s really quite simple, and as a matter of fact these 4 players, we let them create the cycle. Guess who spoke first? The business person. They said we have power, we have influence, and we have lots of followers. What are you going to give us that we can offer our clients? A free pound of coffee. Okay, great. They get out there, they say we’d love to give you a free pound of coffee and tell you a story. If you’re interested stay on the program. It was pretty simple. By the way, we’re now gathering customers at no up front cost so what’s happening? Our profit margins are able to go to our farmers. We’re cutting out the middle men.
Of course as the for profit corporation starts telling stories of the farmers and the great work that the not for profit’s doing people are jumping in and connecting. Our customers are really starting to make a change. Here we are. Things have fallen into place. It’s 18 years later, we now have 24,000 farmers whose lives have been generationally changed. Thank you. The invisible is now visible but it’s just beginning. These farmers drive us crazy sometimes so we’ve started microeconomic programs so they can get involved in more things. They’re now involved in tilapia fish, snow peas, peppers, goats, and the list will go on and on, trust me. The list will go on and on. More importantly capitalism has taken over and these people are in control of their own future.
Years ago one of the true visionaries in the social business world, Mohammed Yunis, stated that the only place that we should see poverty is in a museum. We believe the social enterprise model takes a giant step in that direction. First of all the reminder of the table of capitalism in a social enterprise model is a reminder that we are all undeniably connected. We need to quit having dinner parties without the poorest in the world at the table. They are a guest at the table of capitalism. The other thing is that in a true social enterprise world we no longer have to wait for government to solve the problems of homelessness, hunger, disease, ignorance. We are the solution. In closing, I’m going to bring a fifth chair to this dinner party and that chair is reserved for you. I’m going to ask you how are you going to make the invisible visible? What is your role in the future of social enterprise? Is it simply as a guest, a consumer, a customer or is there another role that you can play? I invite you to be a part of this new paradigm. Thank you.