Ben & Jerry’s: a Role Model in B-Corp Innovation

Ben & Jerry’s is an American company that manufactures ice cream, frozen yogurt, and sorbet. “It all started in 7th grade gym class.” writes the co-founder of the now-iconic Ben & Jerry’s Ice Cream. Their little ice cream store, which started in an old gas station, went on to change the definition of business. The company was founded in Vermont by Ben Cohen and Jerry Greenfield in 1978 and was sold in 2000 to Unilever. When Ben and Jerry’s ice cream business started taking off, they decided that, if they could not grow the business by spreading the wealth across the community, they did not want to do it at all. This required a change in management techniques, new metrics, and a new way of thinking about the role and importance of a business in a community. Finally, Ben & Jerry’s social mission, which influenced and was influenced by the companies it partners with, shows how its transformative partnerships make Ben & Jerry’s a values-led company.

Their support for family dairy farms, as outlined in their Sustainable Model of Linked Prosperity, operates on a three-part mission that aims to create prosperity for everyone connected to their business. Some of the more well-known, long-standing examples of linked prosperity include their livable wage policy, ongoing support for family dairy farms, commitment to supporting small-holder agricultural producers by purchasing Fairtrade-certified ingredients, and investment in values-led sourcing partnerships, among other things. Moreover, Ben & Jerry knew from the start that they couldn’t make quality ice cream without milk from quality cows in the care of quality dairy farmers. Therefore, in 2010, the Ben & Jerry’s Caring Dairy™ program was established to offer a practical framework for understanding, evaluating, and improving the sustainability of their partner farmers’ dairy operations. This shows how a successful, mission-driven business can influence and be influenced by other mission-driven businesses as they grow together over the years.

Their support for family dairy farms, as outlined in their Sustainable Model of Linked Prosperity, operates on a three-part mission that aims to create prosperity for everyone connected to their business. Some of the more well-known, long-standing examples of linked prosperity include their livable wage policy, ongoing support for family dairy farms, commitment to supporting small-holder agricultural producers by purchasing Fairtrade-certified ingredients, and investment in values-led sourcing partnerships, among other things. Moreover, Ben & Jerry knew from the start that they couldn’t make quality ice cream without milk from quality cows in the care of quality dairy farmers. Therefore, in 2010, the Ben & Jerry’s Caring Dairy™ program was established to offer a practical framework for understanding, evaluating, and improving the sustainability of their partner farmers’ dairy operations. This shows how a successful, mission-driven business can influence and be influenced by other mission-driven businesses as they grow together over the years.

In 2012, Ben & Jerry’s became a Certified Benefit Corporation with B-Corp legal status, which measures and benchmarks the social impact of a company. During the same year, they started the Producer Development Initiative (PDI), which is the process of mapping their whole value chain, starting with supporting farming communities around the globe, and working with them to improve their environmental footprint. Its dairy farmers follow strict environmental standards that get stricter every year, and Ben & Jerry’s helps the farmers cover the cost of meeting these increasing standards. Like Ben & Jerry’s, benefit corporations don’t get special tax breaks. The difference is that decision-making at a traditional corporation is usually focused on maximizing profits for the benefit of its shareholders, and pursuing a public good may be viewed as inconsistent with this motive. Benefit corporations, on the other hand, have expanded their purpose beyond shareholder value to explicitly include general and specific public interests and social causes.

Thus, Ben & Jerry’s is committed to paying all of its workers a livable wage, and their Livable Wage Policy covers all full and part-time employees. They defined “livable” wage to mean the amount needed to sustain a reasonable quality of life, which includes expenditures for housing, utilities, out-of-pocket health care, transportation, food, recreation, savings, taxes, and other expenses. Since 1995, they have adjusted this livable wage annually to ensure the relative value is sustained in today’s marketplace. For instance, in 2015, it was set at almost $17 per hour, compared to the Vermont minimum wage of $13.

Furthermore, Ben Cohen had courage and a deep, intuitive connection to his customers. He was a pioneer of the Benefit corporation, which requires a balanced consideration of the impact of their decisions not only on shareholders, but across all the community. The movement for marriage equality, which now seems to be a solidified societal achievement, was supported by Ben & Jerry’s since its early stages. In the late ’80s, they began offering health and insurance benefits to all domestic partners, . In the UK, they support community empowerment via their partnership with Bob Marley’s 1Love Foundation. In Jamaica, they partner with with Partners for Youth Empowerment, and in Australia, they advocate for the Great Barrier Reef.

Since 2011, Ben & Jerry’s has also partnered with the social entrepreneurship organization Ashoka to run Join Our Core, an international competition aimed to find and help support the best young social entrepreneurs. Innovative businesses with strong financial sustainability and a positive social and environmental impact are invited to apply for the prize. Ben & Jerry’s has a progressive, nonpartisan social mission that seeks to meet human needs and eliminate injustices by integrating these concerns into their day-to-day business activities. All of the suppliers for Ben & Jerry’s ice cream are expected to follow practices consistent with the Code of Business Principles of their parent company, Unilever.

In 2015, Ben & Jerry’s defined a comprehensive climate justice strategy, which includes a self-imposed price on carbon. These revenues are invested in projects and innovative technologies to help achieve their ambitious long-term goal of reducing the absolute carbon footprint of their business by 80% by 2050, which is in line with globally established targets. Today, Ben & Jerry’s B Lab score is about double that of an average sustainable business, while maintaining the $1,232 billion (global sales) business economically healthy, showing that it was not only one of the first to become a model for the benefit corporation, but also that it is still among the best.


Lionel Coezy is an exchange student from Guadeloupe, a French island in the West Indies, and is studying at Rensselaer Polytechnic Institute. Lionel studies in Paris at ESSEC Business School. The multiculturalism of his native island Guadeloupe built the open minded person he aims to be. Therefore, the comprehension of the world as a whole is his top priority.

Photo by Opacitatic from Wikimedia Commons

Innovation and the Gig Economy: Could the rise of the gig economy lead to an increase in the number of breakthrough (revolutionary) innovations?

Innovation within an organization may be impacted by a variety of different external factors, such as the economy, industry regulations, labor strikes, etc. One major external factor that could impact innovation within a specific company significantly is the rise of alternative work environments. An example of this  is the gig economy.

As defined by techtarget, the gig economy is “an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements.” Some industries and occupations lend themselves to the gig economy, including ride sharing (i.e. Uber, Lyft), delivery driving, consulting, computer programming, and engineering design.  What’s the impact of this new work option on innovation?  We don’t know yet, but I believe it will be positive. In other words, we should expect to see more breakthrough innovations as a result of the rise of the gig economy. Here’s why.

Increased Collaboration

With the gig economy gaining much traction in the last few years, with it comes an increase in collaboration between independent contractors (commonly referred to as freelancers) and gig clients (often established companies). In an effort to support strategic intent and define/identify potential new business domains that might be crucial in the future (but which might not be possible now), these companies invest heavily in what is known as the “discovery” phase of innovation. As part of this investment, these companies look both internally and externally for new, breakthrough ideas. Participation in the gig economy is one way of doing this. By hiring external, independent contractors, larger organizations are able to (as mentioned by Fortune) use “freelance workers as a source of fresh ideas and ‘knowledge transfer’ from the wider world (better yet, their broader industry)” and tackle the same problem in order to come up with a variety of solutions. This increase in collaboration between established organizations and external parties (as a result of these idea-generation investments) lead to increased teamwork and more free-flowing ideas from the company’s perspective, since hiring independent contractors pushes the company to coordinate with multiple parties and gives them a wider perspective on and more diverse solution set to major issues they might face, thus increasing the likelihood for both evolutionary and revolutionary innovation to occur. As Ian Morley mentioned in his article, The rapidly expanding gig economy is not merely a response to changing economic conditions, “Just about everyone agrees that more collaboration is what’s needed in the modern workplace. That’s because teamwork generates more and better ideas, driving the innovation needed to be competitive in the global economy.”

Autonomy

By allowing for people to not be restricted to one sole employer, the rise of the gig economy gives independent contractors the freedom to work with many different organizations within an industry (and not be constrained/limited by one specific organizational culture). By doing so, their perspective is widened to a variety of industry and market issues. This diverse perspective may then be leveraged by and used to benefit established organizations, exposing them to a different, unique way of thinking, allowing them to gain access to expertise they don’t currently have in-house, and aiding in the facilitation of identifying breakthrough opportunities through extrapolation and application of these diverse solution sets (created by independent contractors) to major industry issues. As previously mentioned, this significantly supports the “discovery” phase of innovation (which can often be very costly, as shown by the pharmaceutical industry) and allows companies to increase their chances of identifying potential breakthroughs. Upon identification and proper evaluation, these ideas then have the potential to be incubated and commercialized (accelerated) using organizational resources and investors.

Drawbacks

Although the gig economy brings with it an increase in collaboration and the exchange of ideas, there are definite drawbacks to organizations seeking to commercialize externally-generated innovative ideas. A major disadvantage is that the opportunity recognizer does not work for the company.  Does this “innovation migration” lead to an overall increase in breakthrough innovations within industries? Or does it ultimately deprive brilliant innovators of resources necessary for them to change the game and subject these breakthrough ideas to those who don’t fully understand them?

Resources


Shaeed McLeod is a student at Rensselaer Polytechnic Institute pursuing a master’s degree in Systems Engineering and Technology Management. A native of Jamaica, NY and brother of Alpha Phi Alpha Fraternity Incorporated, Shaeed has been active in a multitude of on-campus organizations such as the Multicultural Leadership Council, Black Students’ Alliance, and the National Society of Black Engineers. After graduation, he will be working at Deloitte’s New York office as a Business Technology Analyst.

Photo by Jakub Gorajek on Unsplash

Should Strategies for Breakthrough Innovation be Reversed?

During the past decades, most large established companies have struggled to develop a platform that allows them to continuously develop breakthrough innovations and bring them to the market.  Instead, many companies focus on incremental innovations that bring short term profits but lack new and revolutionary technologies or entrance to a new market. Realizing the need for breakthrough innovation, many companies have tried different techniques to sponsor corporate entrepreneurship and help commercialize breakthrough discoveries and ideas. However, most efforts have been carried out in vain since the fundamental problem lies in the organizational and financial lack of tolerance for the risks and uncertainties associated with developing such innovations.

In Innovation: The Classic Traps, Rosabeth Moss Kanter offers a strategy aimed to help corporations establish a sustainable way of innovating. The strategy called the “innovation pyramid” suggests that corporations should structure their ideas so that at the top, there are a few “reach” ideas. These ideas could offer new viable directions for the company to pursue. In the middle section of the pyramid, the author suggests companies should have an archive of hopeful ideas that are assigned to teams and are constantly being developed and tested. Finally, the base of the pyramid should consist of incremental innovations that allow for rapid production and product improvements.

This strategy shows promise because it allows for the financial comfort and competitive aspect of constantly having new products to release and improve upon while also permitting time and funds to develop large scale breakthrough innovations. However, the middle section allows for a lot of creativity in problem detection which companies and their employees often limit to the scope of the societies and environments in which they are operating in; lacking perspective and restraining possibilities for breakthrough.

reverse_innovation_triangle.pngThe idea of reverse innovation is “the strategy of innovating in emerging markets and then distributing/marketing these innovations in the developed markets” and could be added as a layer in this middle section to broaden the ideas and problems that first world companies tackle. Innovating in emerging countries first could allow companies to achieve breakthrough innovation not only by expanding into new markets, but also by creating new market items and technologies that are likely to be much more simple than what the general idea of breakthrough innovation suggests. Some examples of breakthrough innovations developed for the third world market include the shoe that grows, the water-gen, and more.

People in first world societies face many “elemental” problems that are often overlooked by the demand and competition of adapting to the high end technologies being developed.  Reverse innovation would allow for these simple but impactful innovations to be tested and developed somewhere where the need might be greater and a “lower end” project might be given priority. Once the project is completed and tested in an emerging market where impact is greater and cost is lower, the technology can then be brought to the developed countries with fewer risks and uncertainties. In addition, innovating in emerging markets also allows for companies to create and engage in social good, possibly creating more jobs and worldwide benefits. Overall, the idea of implementing reverse innovation as a strategy in a big corporation could be considered a breakthrough innovation in itself, offering wholly new benefits to a current organization. Therefore, like any other breakthrough innovation, it would also require a good amount of tolerance and testing but could lead to remarkable outcomes that promote more constant breakthrough innovations but also equality through innovation.


Andrea Ramos is a student at Rensselaer Polytechnic Institute pursuing a master’s degree in Technology Commercialization and Entrepreneurship. Her background is in mechanical engineering and design innovation & society. Andrea is passionate about using technology and innovation to promote social and economic change.

Corporate Venture Capital’s New Investment Thesis: Diversity & Inclusion

If corporate venture capital has one thing on traditional venture capital, it is social impact investing. There is a palpable movement emerging in CVC to include more investment in diverse teams and socially relevant projects but will these bets really pay off? Overall, CVC is a growing source of startup funding. According to a study by CB Insights, “75 of the Fortune 100s are active in CVC, and 41 have a dedicated team.” In 2017, the most active CVC’s were Google Ventures, Qualcomm, Salesforce Ventures and Intel Capital according to the same study.

It is important to note that there are some key differences between CVC and traditional VC. For instance, corporate venture capital arms often invest in new companies for strategic reasons rather than simply for quicker returns or higher IRR. They are often looking to (pardon the pun) diversify their own approaches to emerging technologies, capturing new audiences and corporate social responsibility. By working with and investing in newer, more agile startups to research and implement new strategies, they can often save themselves enormous amounts of time, capital and pain to get to bigger wins faster.

Intel’s Diversity Fund

Intel Capital is a +$1B fund which has made over 1,000 investments over the last 26 years across the enterprise software, mobile, and manufacturing industries. It’s top co-investors include traditional VC firms New Enterprise Associates (NEA) and Sequoia Capital. The number of diversity investments at Intel Capital has increased 22% in 2017 and all told, Intel has invested $70 million in diverse startups. The legacy tech giant launched a dedicated Diversity Fund in 2015 with a $125M commitment to find diverse teams. Wendell Brooks, senior vice president at Intel Capital, said recently that it had ​already met its 2020 goal for diversity.

The diversity of the founding team plays an important factor in Intel Capital’s investment decisions as each investor looks for diversity no matter the vertical. The logic being that a startup with a diverse founding team is able to pull from a range of different backgrounds, experiences and skill sets. The fund’s definition of diversity has expanded over the years. Managing Director Christine Herron explained, “We want to pay attention to not only women and underrepresented minorities. We are actively looking for people with disabilities, members of the LGBTQ community and those in military service.”

It stands to reason that Intel’s overall hiring practices have set them apart even from other industry heavyweights like Facebook and Google. Paying special attention to include professionals from all backgrounds and walks of life certainly has its benefits. Building a reputation on the ability to identify and operate against the need for increased diversity is extremely valuable when it comes to acquiring and retaining diverse talent. In the long run, this could be the biggest benefit of all as more and more women and people of color earn advanced degrees, start companies and ultimately add enormous amounts of value. According to 2015 McKinsey study, “$28 trillion, or 26 percent, could be added to global annual GDP by 2025” by diversifying labor markets.

So What?

AOL and Comcast have also recently launched vehicles focused on diversity. Last September, Salesforce Ventures introduced a $50 million Impact Fund looking to “invest in companies that enable equal access to education, develop tools to promote equal opportunity and economic empowerment for women and underrepresented groups.” But what does this all mean?

It means that corporate venture teams see the value in diverse teams and diverse perspectives and believe that the payoff will be huge. They are doubling down on diversity not just in their communications or their advertising. They are putting significant money where their mouth is. And as current venture trends show, the amount of invested capital dedicated to this emerging deal stream is not decreasing any time soon. With competition from traditional VC to capture both ideas and spending power of the multicultural millennial and generation Z consumer, it looks like it’s a wonderful time to be an entrepreneur from a “non-traditional” background!

Resources


Marcia Mitchell is is currently pursuing a master’s degree from Rensselaer Polytechnic Institute in Technology Commercialization & Entrepreneurship. She graduated from Tufts University with a bachelor’s in economics. She is currently working on the IBM – Cognitive and Immersive Systems Lab (CISL) team at RPI and will be hosting a workshop in the spring to address the needs of tech entrepreneurs; specifically women of color and diverse teams. Her goal is to create a destination for women like herself; talented visionaries from diverse backgrounds – and provide them with the tools, connections, and opportunities they need to succeed.

The Stolen Billion Dollar Idea

Snap, Inc, one of the faster growing companies of the decade, went public in 2017 for $3.4B and quickly rose to a market cap of $24B. However, as the company claimed its place in tech startup folklore, major product flops and interesting news events created an environment of skepticism and distrust amongst the financial analyst community, but its application, Snapchat, continues to be viewed by millennials as an icon of bubbling innovation. The controversy surrounding this company that has brought breakthrough innovation to the world of instant communication raises the question: Can a company formed on the basis of someone else’s idea make a go of it?

The idea for Snapchat came one evening when Reggie Brown, a student at Stanford University, was deep in thought about how he wished he could send disappearing photographs while sending intimate photos without having to worry about the photograph’s future. He ran his idea by two of his former fraternity brothers, who offered a lukewarm reaction.. Evan Spiegel, a third frat brother with a reputation for being quite an operator, grasped the concept and thought it was outstanding.  So outstanding in fact, that Evan eventually became CEO of Snap Inc. What started as a simple idea has now blossomed into a nearly $25B company and resulted in many breakthrough innovations, however frivolous they may seem. However, Evan is the CEO, and Reggie is out. As of December 2015, Snap Inc. has paid Reggie Brown $157.5M as compensation for the misappropriation of his idea. Brown claimed that Spiegel stole his idea and ran with it, and, in fact, Spiegel agreed. After forcing Brown out with no compensation, and as the valuation was rising, Brown was awarded a hefty sum for his idea.

Snap is regarded as a highly successful enterprise as indicated by their lucrative funding rounds and IPO. The company has pumped out some of the decade’s most innovative products, including Spectacles (sunglasses that snap photos), Bitmoji (personal emojis), and Zenly (an app designed to provide real-time information about where your friends are and what they are doing). These efforts have led to crazy valuations of Snap and a rat-race to work for what is considered by some to be one of the most innovative companies in the world.  Evan spearheads the innovation charge at Snap, leading his company to introduce products like Snapchat, Snapchat Stories in 2013, and Snapchat Discover and Spectacles in 2015.

More recently, Snap garnered significant backlash from its customers after they redesigned their mobile app, and Evan’s response was essentially deal with it, a telling sign that the company produces innovation, but its timing is not always perfect. As we can see, the C-suite at Snap is clearly innovative, as are the products the company produces. But the question is—if Snap has all of these great attributes regarding innovation, why do their products seem to fail?

For example, the Spectacles at the moment of release were regarded as a breakthrough innovation, but soon sputtered and disappeared. The leading reason for this failure was the botched delivery of the Spectacles.  Besides limited availability (popup shops were it),  there were few influencers willing to back the product, a lack of content, limited content portability,  and poor timing given the flop of Google Glass.

All of these failures are a crucial part of innovation in addition to C-suite guidance and overall product innovation including Snapchat, Zenly, and Bitmoji. What can be learned with Snap’s mounting problems is that innovation can turn out bad or good depending on implementation and execution.

Since innovation can be attached to c-suite management, product design and development, and the idea itself to name a few pathways, that raises the question — Can you steal innovation by stealing the idea?

Instagram may offer the answer.


Peter Kloss is a master’s student in the Technology Commercialization and Entrepreneurship program at Rensselaer Polytechnic Institute’s Lally School of Management.

Breakthrough Innovations in Internal Combustion Engines

Introduced for the 2018 model year, Nissan/Infiniti has introduced a revolutionary new engine innovation that, for the first time, allows an engine to vary its compression ratio. For background, engines traditionally have either a high compression ratio, for efficiency, or a low compression ratio, tuned for power. However, Nissan has been working for more than 20 years on an engine that can do both- the efficiency of a high compression ratio with the performance of a low compression ratio. They have accomplished an astonishing 10% gain in efficiency compared to similar engines with the same performance, with half the cost of a hybrid system that would give similar gains in efficiency.

The question remains, though, was this a smart innovation to pursue? Companies are aggressively pursuing electrification, Nissan included. This would have been a breakthrough if it were introduced 10 or 15 years ago, but currently the breakthroughs in efficiency come from hybridization and electrification, from all segments of cars, from supercars, to minivans, to hatchbacks. While this could prolong the inevitable disappearance of the internal combustion engine, will it contribute enough to make up for its enormous R&D costs? At over 20 years and over 100 prototypes, Nissan made a long and expensive commitment to this technology. Does it even have 20 years of use in it? Furthermore, could they utilize this technology in new applications, such as truck engines, generators, etc.? Licensing could be a lucrative task if they could make large improvements in industrial engines that have traditional had poor efficiencies. Only time will tell, but this is definitely an innovation to follow closely.

–Ryan Gavin

Another Corporate Restructure or a “Cool, not Cold” Business Model?

The Chinese collective Haier, a multinational consumer electronics and home appliances headquartered in Qingdao Shandong Province, had been led by CEO Zhang Ruimin over its turnaround since the 1980’s. Its first wave of expansion was in Southeast Asia with countries like Indonesia, Philippines, Malaysia, etc. in the late 1990’s. The collective, a state-owned enterprise that resembles a consumer conglomerate, bought off GE Appliance in early 2016. With a foothold in the US, it seeks to inject innovation to spur growth in the company. It has also expanded and operates in the Middle East with countries like Pakistan, Jordan, etc., making Haier an international player. Ruimin’s next strategy is breaking up Haier to spur stagnating growth in the company.

Two factors play into this- Bill Fischer and Denis Simon of HBR state that although China is the second largest investor in R&D, their companies are not pushing out innovative technologies, so they usually doesn’t introduce disruptive business models. This comes from state policy of appropriating foreign IP coupled with lax IP enforcement. Second, Dominic Barton of Mckinsey has finally shown proof that meeting short-term expectations at the expense of neglecting long term investments in breakthroughs is like shooting yourself in the foot. He’s shown that, in a state of normalization (i.e. not an economic recession), corporations who follow a long-term strategy perform better against their short-term strategy counterparts. Many CEOs and business leaders (e.g. BlackRock CEO Larry Fink) have been rallying against short-termism for good reason; Gary Hamel and Michele Zanini show that the start-up culture hasn’t been giving America high economic growth like it used to as more wealth and power is appropriated to larger corporations. These CEOs have been sending out calls to action to these large corporations to embrace long-termism, and maybe Ruimin’s ambitious experiments will give a sustainable model to support innovation to inject a new growth mentality in Haier.

Haier has entered a new phase of its strategy, Networking Strategy. Essentially the strategy states that Haier will be producing products that meets the personalized demands of the consumers. They employ tactics such gauging customer feedback in social media forums. Ruimin moves further by adopting Open Innovation that has these tenants; user personalization, product innovation acceleration, and industry disruption. Its emphasis is “The world is our R&D center” through a focus on the customer.  Only time will tell whether he’s successful, but Ruimin’s entrepreneurial vigor has already produced a success, the Tianzun or Heaven in Mandarin which reflects this approach and its core principle of “customer service leadership.” Even the slogan comes from its customers that want to feel “Cool, not Cold.”

The major component of the restructure is splitting off existing units into smaller ZZJYT (zi zhu jing ying ti; Independent operating unit) which act has independent start-ups that compete for resources from corporate.  Haier maintains the corporate function in accounting, finance, and human-resource support. This is akin to a network of micro-enterprises with corporate acting like a venture-capital incubator. Ruimin has also taken a tactic from Zappos playbook by adopting Holacracy, a flat management system. The outcome is a customer focus embedded into these ZZJYT’s. With autonomy and control over various functions (i.e. R&D, marketing, sales and finance) to properly leverage the internet to connect with customers and each other. Most certainly, their short-term bottom line will have critics worried, but the new Haier might pan out and give critics those double-digit growth numbers they’ve been craving. Since this a long-term strategy, increase in profits and revenues maybe compromised as they invest in new ventures from the ZZJYT’s.

-Eric Dominguez