Category Archives for "Case Studies"

How one company grew to $60 Million in Annual Revenue by creating a Community of Businesses in their Hometown

I have been working with companies to combine purpose and profits for over 15 years.

Throughout that time, there has been one thing that I have consistently seen lead to the most innovation, creativity and growth.

But we’ll come back to that in a minute.

 

For now let’s go back to 1992, when Paul Saginaw and Ari Weinzweig sat on a bench outside their already successful Deli.

They knew that they wanted to expand beyond their $5 million a year in revenue and single building.

But they weren’t sure how.

They had to address what felt like a hard question:

Where did they want their business to go from here?

It seemed like they faced a binary choice.

Either they could stay with their singular successful location or replicate their model through franchising or additional stores.

The problem was neither option to growth seemed right for them and their business.

Here’s the story of where they went from there.

Part 1: Saw a Problem with the Options in front of them

Lots of businesses follow the two options Paul and Ari had been considering.

In fact, there has been heavy growth of the franchise model starting in the 80’s and continuing on an upward trajectory.

But the model has downsides.

In particular, it can be hard to control your brand and even harder, as a purpose-driven Entrepreneur, to ensure that the values you’ve baked into your business will follow into the franchises.

This is not only true for small and mid-sized businesses.

Here’s what Howard Shultz had to say to Harvard Business Review about what it was like when he returned to the CEO role at Starbucks,

“The marketplace was saying, “Starbucks needs to undo all these company-owned stores and franchise the system.”

That would have given us a war chest of cash and significantly increased return on capital.

It’s a good argument economically.
It’s a good argument for shareholder value.

But it would have fractured the culture of the company.

You can’t get out of this by trying to navigate with a different road map, one that isn’t true to yourself.

You have to be authentic, you have to be true, and you have to believe in your heart that this is going to work.”

Howard Shultz

Starbucks

Just like for Mr. Shultz, opening more locations didn’t  seem like a better option for Zingerman’s Deli.

While opening more locations would have allowed them to grow in alignment with their culture it would have:

  • Not given them substantial diversification in their offerings (or risks!)
  • Required geographic expansion to enter new markets
  • No opportunity to let employees grow their own business

DOWNSIDES of Traditional EXPANSION

Faced with these options, they started to consider if there was another way to grow their business.

Could they grow it without experiencing the downsides of either traditional expansion or franchising?

Part 2: Refused to accept the normal answers, Asked “what if”? And came up with a novel solution

Remember how I spoke at the beginning about the one thing that really moves the needle in creating growth businesses with purpose at their core?

The next step in this story starts to show what that is because what makes their story exceptional is that they found another way.  

A new way.

They didn’t accept that the paths that most businesses took were the only paths available to them.

Instead, Paul and Ari started thinking along the lines of “What if we built a community of businesses?”

Over two years they began to envision this united but unique “Community of Businesses”.

The businesses would be united not just by the Zingerman’s name but also by:

  • shared guiding principles
  • triple bottom line approach
  • sustainability practices
  • transparency practices
  • location
  • food
  • and a sense of togetherness!

This was uncharted territory.

The first step was to get really clear on the vision.

Screen Shot 2017-05-19 at 12.49.11 PM

In 1994 they did just that. They laid out a vision for where they wanted to go by 2009.

We envision a Community in which each member business shares with Zingerman’s a common vision, a common road map toward the year 2009, a common set of guiding principles.

Each is committed to the success of the other, committed to working in the best interests of the entire organization, linked financially, and emotionally.

Each is committed to the success of its staff, and beyond all else, the satisfaction of our customers.

But significantly, each of these businesses will be owned and managed by a someone who has chosen to be our partner in that particular venture.

A partner with a passion for a particular food or service.

A passion for creating an exceptional business that has a personality of its own, yet is grounded in the principles that have been such an important part of making Zingerman’s what it is

Zingerman’s 2009

Zingerman’s 2009: A Food Odyssey

 

That document became the North Star that would guide them forward as they created the new community.

Part 2: Pilot the Idea

In that same year – 1994 – that they finalized their vision for 2009, they also launched the first new business.

They encouraged employees to share business ideas.

They also lay the groundwork for making this ideas relevant to their approach by using their “secret sauce”: sharing.


QuoteSecretSauce

If an employee had a business idea, there was already an understanding – starting from day 1 – of how Zingermans business worked.

That gives Employees a leg up in starting new ventures.

The Community of Business approach provided other kinds of support too.

An employee typically only puts up 10-15% of the capital needed for the enterprise.

Plus they get the benefit of the Zingerman’s brand power, industry and community knowledge.

With this powerful infrastructure in place, the model took off.

Part 3: Expanded the Model and Built the Community of Businesses

Today, there are ten businesses in the Zingerman’s Community.

Collectively they are doing more than $60 million in annual revenue.

All are located within the Ann Arbor area.

Map of Zing Biz

Each one is an independent business that none the less benefits from the Zingerman’s brand and expertise.

Each has a logical connection to their industry expertise.

For example there’s a bakery, a creamery and a catering service.

Zingbake

Each of the businesses are also lead by a managing partner who has often worked their way up through one of the businesses in the Community and now has an ownership stake in the new enterprise.

This structure has allowed Zingerman’s to attract and retain talent even as people move into positions of business ownership.

The Community has a common thread of culture that is about much more than food – it’s about a shared experience.

 

 

Equally important, they haven’t stopped visioning. They’ve now published a Vision 2020 that they began in 2006.

They built it in collaboration with all of the Managing Partners, and input from hundreds of staff.  The vision articulates a next level of commitment to their values:

We have a strategy for growth that is about the long-term economic health of our Community of Businesses and our local economy.

When we talk about “great service” we refer not only to our customers, our community and each other, but also to our planet; we push ourselves to go beyond basic compliance on environmental issues.

We must be profitable in order to survive but our primary purpose is to contribute to a better life for everyone we touch.

We do this by providing meaningful work, dignified employment, beneficial goods and services, and relationships of trust and caring that are the foundations of a healthy community.

Through this work we have helped to create true prosperity, economic security and democracy in our larger community.

It also articulates that they will aim to create up to 18 businesses, each unique and continuing to stay in the Ann Arbor area and offering “radically better food” and becoming an educational destination.

The thing that is truly amazing about Zingerman’s Community of Businesses is that they have managed to achieve as much, or possibly even more growth than they would have if they taken either of the traditional paths that they had been considering.

Back in 1992, they were getting requests to franchise. They were in a single cramped building and unclear on how they could grow without compromising their values.

They found not only a new path, and a path that aligned with their values, but also recognized that in order to achieve their mission they needed to continue to profitable and grow.

And that’s what I’ve seen, over and over again – Values Based Vision – that’s the one thing that will drive purposeful businesses to growth


The path they created could offer more jobs, have a bigger impact on the community. I think when you read their vision 2020, you see that reflected.

The purpose is so deeply baked in. The uniqueness is part of what they want to support and what they are celebrating in the Community of Businesses.

They may not have envisioned back in the early 90’s exactly how it would work.

Yet, they saw clearly that there was a pathway that could really meet their true intention and fulfill that intention in the world.

And this way of doing it  had so much more benefit for the community that they were a part of, for the employees they wanted to have different opportunities for and for their own businesses and growth.

I hope if you ever go to Ann Arbor you’ll go and visit them and have the experience for yourself!

Even more importantly, I hope you’ll find inspiration in their model of non-traditional business growth as you seek to expand your own business in line with your purpose.

Part 4: Find Your Own Path to Growth in Line with Your Values

Lots of people think that the traditional path to business growth is the only one.

In fact there are lots of ways to define growth on your own terms and leave a legacy you’ll feel great about.

I’ve seen it time and time again – values based vision is the critical ingredient to another path to success. Mix that with a healthy dose of fact-based decision making and you are on the road!

I’ve shared lots of tips about finding that path in the past, and here are a few of my favorite articles on the topic to help you out:

I’d love to hear about what non-traditional approaches to your own business growth you are considering or putting into practice!

 

CYNTHIA JAGGI, CEO of Gatherwell

In the mid-2000’s I made Partner at the Inc 5000 Management Consulting firm Fitzgerald Analytics, where results included helping a division of a Fortune 500 company achieve profit growth of 59%, and 100% of our clients gave us repeat business. I advised both for and non-profits, including members of the Fortune 500 and New Profit portfolio social innovators.

Now I only work 4 days a week, take a minimum of six weeks off a year, and only work with business leaders I enjoy being friends with, balancing my work transforming the economy with time with my daughter and family.

I’m on a mission to push humanity forward through regenerative approaches to business, working with business owners that want to do good and feel good about their legacy, and who want their social impact to work with their bottom line.

 

 

In Rural Kansas, an Experiment Makes Hitchhiking Safe Again

What a fascinating take on hacking transportation in rural America!

 

This article originally appeared at Shareable.net.

Photo by Shutterstock.

Photo by Shutterstock.

“We’re not stuck in a traffic jam. We are the traffic jam.”

What I love best about the sharing economy is how it squeezes good value out of the unused bits of our society that would otherwise go to waste. And nowhere do you have so much waste as in our transportation system. A personal car uses less than 1 percent of its energy to move a passenger, and 80 percent of our passenger capacity is driving around empty.

That’s hundreds of millions of empty seats in this country! Meanwhile, 45 percent of the country has no access to transit. What a perfect opportunity to share!

Of course, plenty of smart people are already employing new Smartphone apps to put those empty seats to work. For example, I could use the Lyft or Uber apps to call up a citizen taxi, or download the Carma app to share my morning commute. That is, I could do these things if I lived in a big city like San Francisco or Austin. Unfortunately, I live in rural Northeast Kansas where we have neither transit, nor the critical mass of people needed for those apps to work well.

Hitchhiking is an easy, cheap, and flexible way to get around—in many countries it’s a primary mode of transit.

We denizens of the countryside have historically accepted a big trade-off. Peaceable enjoyment and low housing costs come at the price of a tremendous amount of driving. And when the car is our only option, we are incredibly vulnerable to fluctuations in the price and disruptions in the supply of gas. I spent two years grumbling about all the driving, but feeling helpless to do anything about it.

Then I heard a radio podcast about hitchhiking and how it’s not nearly as dangerous as the media have led us to believe. The point was made that hitchhiking is such an easy, cheap, and flexible way to get around—in many countries it’s a primary mode of transit. So the show argued, we should give it another chance. For some reason, this idea grabbed me so fiercely that I thought about little else until I had designed a way to do just that—mainstream hitchhiking and make it safe, easy, reliable, and fun. What I came up with was a nonprofit organization that I called Lawrence OnBoard.

Here’s how it works: participants can sign up as riders or drivers or both. Drivers can sign up for free. They get a window cling with their member number. Riders pay a membership fee and we provide them with a background check, a photo ID and a folding dry erase board branded with the club logo. The rider can write his destination on the board, stand by a safe roadside, hold up the board and wait for a passing car to stop. The rider can then text in the driver’s member number (or license plate number if the driver is not a member) to Lawrence OnBoard.

That makes a record of the ride which is important as a safety backup, as a way to leave feedback and it enters the driver in a drawing for a prize. The prize is a fun incentive for the driver that doesn’t require an awkward cash transaction and doesn’t turn the driver into an unlicensed taxi service. Lawrence OnBoard will provide training, a map of good locations, and a marketing campaign.

With the power of the sharing economy, we now have the chance to build a brand new model for public transportation.

That’s the plan, and in 2013, I conducted field tests to see if it could work. Twenty-three volunteers went out on 121 test rides in and around the Lawrence area and the results were pretty astonishing. Even with random strangers picking up, 95 percent of the volunteers got a ride in less than half an hour, and our average wait time was less than seven minutes! In some prime locations, we could reliably get a ride in less than two minutes. When I saw these results, I know we were onto something.

I personally used my dry erase board to commute to town for most of the summer and I found that it was safe, easy, and reliable and saved a lot of gas. But even better, I met more of my neighbors, learned what was happening in the neighborhood and even made a couple of business deals. Building community like this is the big strength of the sharing economy and it’s something we are sadly missing when we all drive alone.

Of course, this ridesharing concept does have its limitations. One shouldn’t do it at night, it’s not good for transporting small children, and riders need to be over 18 and use good judgment. We still need to conduct another season of research to back up the preliminary findings and continue to test and map good locations to ride from. We’re also raising funds through grants and some crowdfunding to launch a pilot, hopefully before the end of the year. You can help our efforts by making a donation at RocketHub.

Americans are eager for better transportation solutions. The carless college students in Lawrence, environmentally conscious families who want to pare down to one car, and populations who can’t drive are especially interested in this project, since it focuses on short, local trips.

When I presented the research findings to the Transportation Research Board I got an enthusiastic response from transportation professionals all across the country. Lawrence OnBoard has been featured on podcasts, public radio stations, blogs, and the news. Most recently, we were named a finalist in the TEDxFulbright Social Innovation Challenge and got to pitch the idea on a TED stage!

We are so fortunate to live in this modern age. With the tools and technology currently at our disposal and the power of the sharing economy, we now have the chance to build a brand-new model for public transportation. Imagine a network of neighbors driving neighbors. This network is nimble and can fill in the gaps between trains, buses, and bikes. It’s cheap and efficient because it makes better use of the cars already on the road. And it’s a transportation system that’s built on our best resource: our human kindness.

Check out on our progress at www.lawrenceonboard.org.

See you on the road!


Jennifer O’Brien wrote this article for Shareable.net, where it originally appeared. Jennifer is CEO of the nonprofit Lawrence OnBoard, and the owner of CASA Kids Studio in Lawrence, Kansas.

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Social Enterprise Enables Hazelnut Farming in Bhutan

Speaker(s): Daniel Spitzer, founder & CEO, Mountain Hazelnuts

Operating a successful social enterprise requires providing meaningful economic value to people. In this audio lecture, Daniel Spitzer, founder of Mountain Hazelnuts, describes his experience creating supply chain value to develop a hazelnut farming social enterprise in Bhutan. Spitzer details how he enhances supply chains through corporate citizenship, and leverages data captured from Android phones. Spitzer describes why there is nothing is more important than people in operating a profitable business through corporate social responsibility.

Operating a successful social enterprise requires providing meaningful economics to people, in both income and personal worth. In this audio lecture, Daniel Spitzer, founder of Mountain Hazelnuts, describes his experience in applying specific approaches to supply chains and value-creating tools to develop a successful hazelnut farming social enterprise in Bhutan. In this podcast episode of Stanford University’s Social Innovation Conversations, Spitzer details how he enhances supply chains through corporate citizenship and leverages data of all kinds captured from Android phones with specialized apps. From his hands-on experience dealing with supply chains, Spitzer describes why there is nothing is more important than people in operating a profitable business that delivers value to all stakeholders through corporate social responsibility.

Daniel Spitzer is Chairman & CEO of Mountain Hazelnuts Group. Daniel has spent most of the past twenty years as Chairman and/or CEO of companies in Asia. Daniel founded several ventures that have successfully combined financial objectives with social and environmental goals, including Plantation Timber Products Group (PTP), which he built into China’s largest sustainable forestry company. PTP established US $200 million of new facilities to process logs grown by 700,000 farmers in the interior of China. Daniel spent the first ten years of his career in finance, and was Managing Director of a global merchant bank and Partner & Managing Director of a major private investment fund. He received his Bachelor’s degree from University of California, Berkeley and his Master’s from Stanford University.

Daniel Spitzer

More from this series : Responsibly Supply Chains Conference

Related Stuff

Mondragón and the System Problem

This article originally appeared at Truthout.

Fagor Home Appliances

Workers assemble washing machines at Fagor Home Appliances, a cooperative owned and operated company that recently declared bankruptcy. Photo by Mark Dworkin and Melissa Young, Shift Change.

As America moves more deeply into its growing systemic crisis, it is becoming increasingly important for activists and theorists to distinguish clearly between important projects and “institutional elements,” on the one hand, and systemic change and systemic design, on the other.

The recent economic failure of one of the most important units of the Mondragón cooperatives offers an opportunity to clarify the issue and begin to think more clearly about our own strategy in the United States.

But what do you do when you are up against radical cost challenges from Chinese and other low-cost producers?

Mondragón Corporation is an extraordinary 80,000-person grouping of worker-owned cooperatives based in Spain’s Basque region that is teaching the world how to move the ideas of worker-ownership and cooperation into high gear and large scale. The first Mondragón cooperatives date from the mid-1950s, and the overall effort has evolved over the years into a federation of 110 cooperatives, 147 subsidiary companies, eight foundations and a benefit society with total assets of 35.8 billion euros and total revenues of 14 billion euros.

Each year, it also teaches some 10,000 students in its education centers and has roughly 2,000 researchers working at 15 research centers, the University of Mondragón, and within its industrial cooperatives. It also actively educates its workers about cooperatives’ principles, with around 3,000 people a year participating in its Cooperative Training program and 400 in its Leadership and Team Work program.

Mondragón has been justly cited as a leading example of what can be done through cooperative organization. It has evolved a highly participatory decision-making structure, and a top-to-bottom compensation structure in a highly advanced economic institution that challenges economic practices throughout the corporate capitalist world: In the vast majority of its cooperatives, the ratio of compensation between top executives and the lowest-paid members is between three to one and six to one; in a few of the larger cooperatives it can be as high as around nine to one. Comparable private corporations often operate with top-to-median compensation ratios of 250 to one or 300 to one or higher.

Although it has been criticized for violating its cooperative principles through somewhat “imperial” control of some of its foreign operations, for its use of non-cooperative labor, and for a less-than-active concern with environmental problems, in recent years Mondragón has begun to address deficiencies in these areas.

Bankruptcy for Fagor Electrodomésticos

Mondragón Corporation’s historically most important unit is Fagor Electrodomésticos Group, which makes consumer appliances—”white goods” such as dishwashers, cookers and other related household items. It is the fifth-largest manufacturer of such products in Europe. It employs roughly 2,000 people in five factories in the Basque region and has and additional 3,500 in eight factories in France, China, Poland, and Morocco. Its direct predecessor (ULGOR) was the first-ever Mondragón cooperative—established in 1956 by five young students of José María Arizmendiarrieta, the spiritual founder of Mondragón cooperative network.

Mondragón recently announced that Fagor was failing and that the company would be filing for bankruptcy protection. Ultimately, Fagor was unable to find financing to pay off debts of around $1.5 billion related to a 37 percent slump in sales since 2007 that resulted from Spain’s economic crisis and housing market collapse. Under Spanish law, the company now has four months to negotiate with its creditors—which include the Basque government, banks and others—and formulate a restructuring plan.

As part of any restructuring or liquidation, Mondragón will provide jobs and income security for a certain period for some its workers in Spain. This is one of the cooperative network’s great advantages. It has announced that its internal insurance company Lagun Aro will pay 80 percent of the cooperative members’ salaries for two years, and the corporation will strive to relocate as many employees as possible to other cooperatives in the network.

The fate of the roughly 3,500 non-Spanish wage laborers (i.e., not cooperative members) in other countries, however, is unclear.

Some specific problems

Given its importance, we are certain to see any number of economic reports on the specific problems that created the failure of Fagor. The larger questions posed by the failure, however, are the relationship of large-scale economic institutions to the market in any system, and the lessons for long-term systemic design for people concerned with moving beyond the failings of corporate capitalism and traditional socialism.

Moving to scale means that the fate of the institution also rests on the fate of the larger market.

Mondragón itself, and proposals for systemic change based on larger-scale cooperatives in general, have only occasionally directly confronted some of the larger challenges that the market poses to cooperative institutional forms. Mondragón’s primary emphasis has been on effective and efficient competition. But what do you do when you are up against a global economic recession, on the one hand, or radical cost challenges from Chinese and other low-cost producers, on the other?

The same challenges face anyone who hopes to project a new system based on cooperative ownership in any country. There is nothing inherently wrong with such a system; far from it, the principle is one to be advanced and supported. The question of interest, however—and especially to the degree we begin to face the question of what to do about larger industry—is whether trusting in open market competition is a sufficient answer to the problem of longer-term systemic design.

The Fagor failure is a strong reminder that ignoring the question can have consequences.

The specific problems are obvious: The first has to do with whether any system allows the global market to set the terms of reference for the economy in general and specific (larger scale) firms structured along cooperative lines in particular. A serious “next stage” systemic design almost certainly will have to adopt one or another form of “planned trade” rather than “free market trade”—else the fate of specific firms, and specific groups of workers, and also the communities in which both exist, become subject to the ever-intensifying challenges as corporations play one low-wage country off against another, with the destruction of wage standards and firms (cooperative or otherwise) the inevitable result.

The second challenge takes us beyond the question of planning in connection with trade to planning in connection with the domestic market: It was never the goal of the Mondragón Corporation to seek a planning solution to the problems of the Spanish economy. Nor was “changing the system” part and parcel of its primary mission. It always sought to compete successfully in the existing system, at the same time demonstrating a superior form of internal organization.

Americans concerned about fundamental, longer-term change need to ponder this particular point carefully. The challenge any system-changing vision presents is at least twofold: First, how to include new models of cooperative organization in a larger strategy that includes managing (and restructuring) the wider economy in its goals; second, how to begin to think through much more carefully issues of sectoral planning within larger democratic or participatory planning goals.

Almost certainly many smaller-scale cooperatives can succeed, if carefully managed, in small markets. But moving to scale—as Fagor did in entering the global market for appliances—means that the fate of the institution also rests on the fate of the larger market, and on competition within that market, whether global, as in the case of Fagor, or domestic, as in the case of many other industries.

Space does not permit a full discussion of how participatory planning might be achieved to deal with large-scale unemployment, and economic management in general—two of the severe challenges that have crippled economic development in Spain and contributed to Fagor’s problems. However, some of the key questions and possibilities for beginning to think through sectoral planning as part of a larger approach are suggested by considering how one significant scale industrial sector might be dealt with.

A good reference point is the auto industry in the United States. Assume, for the moment that the auto industry were to adopt new forms of worker or worker-community ownership structures. (One somewhat limited form of this, by the way, actually occurred during the recent Great Recession in 2009, when the government and autoworkers’ employee health care benefit fund assumed ownership shares in Chrysler and General Motors.) The question in the future is how might we utilize worker and community ownership more effectively and move beyond seeing the companies narrowly (like Fagor) operating in a capitalist sea and market system?

One important point: A viable alternative systemic/planning solution likely would extend the reach of these companies far beyond selling cars. Such a solution might, for instance, involve developing a long-term national investment plan to invest in worker and community-owned transportation companies in order to shift spending from cars to more efficient high-speed rail and mass transit.

Work published by the Democracy Collaborative in 2010 helps clarify how this might be done: Three alternative scenarios for how population growth to 2050 might be distributed between cities and suburbs were analyzed. The data showed that even the smallest shift in population patterns requires dramatic changes in intra-city and inter-city transportation, both to absorb the anticipated increase in population and to achieve necessary reductions in carbon emissions.

All three options would require major expansion of local public transportation, at an annual cost of at least $240 billion—$140 billion for increased operating costs and $100 billion for capital spending.

Additionally, the number of long-distance trips traveled by airplanes (the worst form of transportation from a carbon emissions standpoint) and cars would have to be reduced and replaced with high-speed rail. A good benchmark for costs on this—$2 trillion over 15 years for 25,000 kilometers of high-speed track—was put forward by Canadian analysts Richard Gilbert and Anthony Perl.

In turn, expenditures under this “plan” would be targeted to place-based economic development strategies around economic institutions structured either as worker-cooperatives or, following new models emerging in Cleveland and other cities, around joint community-worker cooperative structures.

Time to get serious

The details of any serious democratic “planning system” inevitably would change as greater sophistication and knowledge are developed—and, as noted in the above example, we looked only at one sector, rather than the larger system as a whole. Also, any larger-scale, system-changing planning effort likely would utilize direct planning as well as carefully managed markets in defined areas. The critical point from the perspective of our immediate concern is that it is time for activists and analysts who hope to build upon principles of cooperative worker ownership or joint cooperative-community ownership for larger-scale firms to get serious about the larger systemic planning issues involved.

The fate of Fagor—and the future of many other cooperatives now attempting to compete at higher levels—suggests that if “the system question” is not addressed in theory and in practice, and in sophisticated longer-term design, many of the hopes generated by even so brilliant an experiment as Mondragón may be thwarted by forces more powerful than any one element in a system can handle alone.

 


 

Gar AlperovitzCopyright, Truthout.org. Reprinted with permission.

Gar Alperovitz, author of What Then Must We Do?, is the Lionel R. Bauman professor of political economy at the University of Maryland and co-founder of the Democracy Collaborative. Thomas M. Hannna is senior research associate at the Democracy Collaborative.

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Lessons from a Pay-It-Forward Restaurant: The Importance of Gratitude

Smiling Together photo by Salander

Photo by Salander.

Imagine a restaurant where there are no prices on the menu; a place where the meal is served as a gift by volunteers, and at the end of it guests receive a bill for a total of $0.00.

The bill comes with a note that explains their meal was a gift from someone who came before them. If they wish to pay it forward, they can make a contribution for someone who comes after them and help keep the circle going. This restaurant is called Karma Kitchen—and it actually exists. And over the years, running this pay-it-forward restaurant has taught us at KindSpring.org a great deal about gratitude.

Remove gratitude from the fabric of our lives, and … we become more prone to a sense of entitlement and less available to a sense of life’s wonder and mystery.

It baffles people to know that Karma Kitchen has no tracking systems—we don’t monitor how much individual tables receive and how much they give. Instead, we just focus on giving everyone a genuine experience of generosity.

When we started in 2007 in Berkeley, Calif., we had no idea whether we would sink or float. But more than six years later Karma Kitchen is still going strong. It has served more than 30,000 meals and now has chapters in half a dozen cities around the world. And it is all sustained by gratitude.

Karma Kitchen works on the deceptively simple premise that the heart that fills, spills. The nature of gratitude is to overflow its banks and circulate. It does not stand still. But remove that ineffable quality from the equation, and the virtuous cycle breaks down.

The sociologist Georg Simmel called gratitude “the moral memory of mankind.” It serves to connect us to each other in small, real, and human ways. Remove it from the fabric of our lives, and all relationship becomes an endless series of soulless transactions. We become more prone to a sense of entitlement and less available to a sense of life’s wonder and mystery.  But when we receive something as a gift as opposed to a purchase, we drop out of our patterns of constant calculation. We step out of the realm of price tags and into the realm of the priceless. This is an important shift.

What gratitude has taught us

At Karma Kitchen, the fact that there is no way to know who in the chain before you paid for your meal—and no way of knowing who exactly will receive your contribution—makes it quietly revolutionary. It gently shakes people out of our habitual quid pro quo mindset. It is a system that transcends any one person’s control and invites trust in the cycle of the whole. Gratitude is what bolsters the spirit to take that leap of faith. In this context every contribution becomes an act of profound trust. That kind of trust builds a web of resilience. It is what turns a group of people into an actual community.

Gratitude does not recognize strict boundaries, and once ignited it asserts itself in the rhythm of our daily lives.

Another lesson we’ve learned at Karma Kitchen is that there is a subtle but important difference between interactions dictated by a sense of obligation or guilt and those that are catalyzed by gratitude. With obligation or guilt there is a sense of indebtedness. It is a disempowering state. Gratitude is the opposite. It is a feeling with wings, joyful and spirited. And, paradoxically, it is the act of receiving with gratitude that puts us back in touch with our own boundless capacity to give.

Gratitude is a creative state. At Karma Kitchen, guests and volunteers alike have illustrated this fact in myriad ways. In addition to the monetary contributions from guests that keep the wheels of the restaurant turning, Karma Kitchen has witnessed thousands of other spontaneous offerings—everything from songs, poems, and artwork to exquisite magazines and inspiring DVDs that are made available to all on our “Kindness Table.”

Gratitude is a muscle that can be exercised and built up.

But perhaps even more important than what transpires at the restaurant is what happens outside its walls. Gratitude does not recognize strict boundaries, and once ignited it asserts itself in the rhythm of our daily lives. It makes us kinder and more compassionate, more willing and ready to act on our impulses for good. As one guest-turned-volunteer put it, “I’ve realized Karma Kitchen has turned me into the kind of person who now stops when I see someone with a flat tire on the highway.”

Karma Kitchen Bill
Cooking Up Karma: A Taste of the Gift Economy

There’s more to it. Science is now showing us that gratitude can positively influence our health, happiness, energy levels, and longevity. A growing number of studies indicate that gratitude is a muscle that can be exercised and built up. Simple interventions like maintaining a journal of what you’re thankful for have been demonstrated to have a deep impact. The key lies in sharpening our awareness and tuning in to the gifts that we hold in each moment.

So this November, KindSpring.org and YES! Magazine are launching a 21-Day Gratitude Challenge. Thousands of people across the world have already signed up and committed to a daily practice of gratitude every day for 21 days straight, culminating on Thanksgiving Day. When you join us, you join a community that shares insights, support, and experiences as we take on this journey together.

Karma Kitchen has taught us repeatedly that gratitude is not inert. It does not sit at the bottom of the lake like a pebble and daydream. It rises like a small sun and shines forth without scheming. And, like a sun, it gives and makes things grow.

Next week, let’s rise and shine together—with gratitude.

Sign up for the 21-Day Gratitude Challenge here.


Pavithra Mehta wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas and practical actions. Pavithra is a co-architect of ServiceSpace.org and one of the creative forces behind KindSpring.org. She is also the co-author of Infinite Vision: How Aravind Became the World’s Greatest Business Case for Compassion.

Gratitude Challenge wide graphic

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