How one company grew to $60 Million in Annual Revenue by creating a Community of Businesses in their Hometown
I’ve worked with Fortune 500 companies, fast-growing start-ups, established middle market companies and innovative non-profits. Throughout that time, there has been one thing that I have consistently seen lead to the most innovation, creativity and, yes, growth.
It’s the same thing that helped one company grow to $60 million in annual revenue.
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.
They could stay with their singular successful location. Or they could replicate their model through franchising or more stores.
The problem was neither option 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.
But the model has downsides.
In particular, it can be hard to control your brand. It can be even harder to make sure the values you bake into your business will follow into the franchises.
This is not only true for small and mid-sized businesses.
When Howard Shultz returned to the CEO role at Starbucks he faced these issues. Here’s what he had to say to Harvard Business Review about what it was like,
[thrive_testimonial name=”Howard Shultz” company=”Starbucks” image=””]“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.”[/thrive_testimonial]
Just like for Mr. Shultz, opening more locations didn’t seem like a better option for Zingerman’s Deli.
Opening more locations would have allowed them to grow in alignment with their culture. But it didn’t feel true to themselves. It also would have:
- Not given them much diversification in their offerings (or risks!)
- Required geographic expansion to enter new markets
- No opportunity to let employees grow their own businesses
These were the options they had in front of them. But 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?
The next step in this story starts to show what that is – because what makes their story exceptional is that Paul and Ari 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, they started thinking, “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
- and a sense of togetherness!
This was uncharted territory.
The first step was to get super clear on the vision.
In 1994 they did just that. They laid out a vision for where they wanted to go by 2009.
[thrive_testimonial name=”Zingerman’s 2009″ company=”” image=””]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[/thrive_testimonial]
That document became their North Star.
It 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 these ideas relevant to their approach.
How? By using their “secret sauce”: Sharing. And not just lip service “knowledge sharing”.
No this was radical sharing to help every employee learn and grow:
All employees learned all about the community of businesses and as much as they could absorb about the Zingermann’s approach from day 1.
If an employee had a business idea they already understood how the model worked and had some basic Management practices under their belt no matter where they sat in the company.
That gave Employees a serious leg up in starting new ventures within the community (or outside it for that matter!).
The Community of Business approach provided other kinds of support too.
An employee usually 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.
Together they are doing more than $60 million in annual revenue.
All are within the Ann Arbor area.
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 and builds on the business ecosystem they’ve created.
Each of the businesses are lead by a Managing Partner. That person has often worked their way up through one of the businesses in the Community.
Now the Managing Partner has an ownership stake in the new enterprise! The Managing Partner has also been steeped in shared principles like sustainability and open books from day one.
This structure has allowed Zingerman’s to attract and keep talent. It’s a way for employees to move into positions of business ownership without leaving.
The Community has a common thread of culture that is about much more than food. It’s about a shared experience and values.
Just as important, they haven’t stopped visioning. They’ve now published a Vision 2020 that they began in 2006.
They built the new vision in collaboration with all the Managing Partners. There was input from hundreds of staff. The vision articulates a next level of commitment to their values:
[thrive_testimonial name=”” company=”” image=””]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.[/thrive_testimonial]
It also articulates the aim to create up to 18 businesses. Each one of these will be unique and local. Each will offer “radically better food” and become an educational destination.
The thing that is truly amazing about Zingerman’s Community of Businesses is the growth trajectory. They have managed to achieve as much, or possibly even more growth, than they would have if they taken a more traditional paths.
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 created a new path. A path that aligned with their values. Also one that recognized that to achieve their mission they needed to continue to grow and profit.
And that’s what I’ve seen, over and over again. Helping humanity While You Grow. That’s the one thing that will be the engine not just behind your growth but behind your satisfaction. Behind a feeling that you are thriving as you help others thrive.
The path they created was focused on something much larger then themselves. That meant that as they grew not only did they create more jobs but they could mindfully have a bigger impact on the community through all of their principles and practices. When you read their vision 2020, you see that reflected. “our primary purpose is to contribute to a better life for everyone we touch.”
The uniqueness is part of 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.
But they saw that there was a pathway. There was a path that could meet their true intention and fulfill that intention in the world.
Their path had so much more benefit for the community. It had so much more benefit for their employees. And it had so much more benefit for their own businesses and growth.
Part 4: Help Humanity While You Grow Your Business
Let’s get right down to the heart of the matter.
The power, the force, the overwhelming “why” of your business is its growth engine.
And……helping humanity is the biggest why so it supercharges that engine.
No matter how big or small the business, I’ve seen time and again Entrepreneurs who feel like their business is ruling their life. There’s no fun in it. They feel like they’ve been burned and burdened by what they set out to do. And their why has gotten all buried.
But the traditional path to business growth is NOT the only one. You can bring your whole self to the table and truly thrive. The way to do that is by building a business that helps humanity (including you!) while it grows.
Here are a few of my favorite articles on the topic to help you get started:
Thanks for reading!
[thrive_optin color=”red” text=”Learn how to help humanity while growing your business” optin=”4702″ size=”medium” layout=”horizontal”]
CYNTHIA JAGGI, M.Sc., CEO & Founder of Gatherwell
Entrepreneur, Lean Start-up Ambassador, and founder of the unconventional wholehearted business and lifestyle site Gatherwell, Cynthia Jaggi is on an international mission to have every business help humanity while it grows. She brings a unique mix of hard core analytics, clear-eyed vision and the science of well-being to dreamers and doers who have the courage to build unflinchingly unique and gloriously one-of-a-kind businesses and lives. She also brings more then 16 years working in organizations from Fortune 500s to start-ups, experience as a Partner at the Management Consulting Firm Fitzgerald Analytics, and a complete zest for life. Her ideas and writing have been featured on Business Insider, Idealist, and the Inter-American Development Bank, among others.