Meet the new breed of socially responsible CEOs. They share the goals of activist pioneers like Body Shop cofounder Anita Roddick and Ben Jerry's Ben Cohen -- but are taking radically different approaches to activism.
The pioneers of socially responsible companies -- stars like Anita Roddick and Ben Cohen -- had big hearts and even bigger mouths. They hated capitalism but loved what it could help them do. Now they have followers. Sort of. Meet the new generation of activist entrepreneurs
"When we first started Ben & Jerry's, we had no intention of going into 'business' -- we saw it as pretty much a lark. Then there came a time about five years ago when Jerry and I noticed that we were no longer scooping ice-cream cones behind a counter and working in the ice-cream shop, that we were bosses and administrators who were spending a lot of time on the phone and doing paperwork. When we were introduced to people and they asked, 'What do you do?' there came a point when the answer was not 'I'm a homemade ice-cream shop owner' but 'I'm a businessman.' And I had a hard time mouthing those words." -- Ben Cohen, cofounder of Ben & Jerry's Homemade Inc., in the article "Coming of Age," in Inc.'s 10th-anniversary issue, 1989
The times they are a-changin'
Chances are, when you hear the term socially responsible business, a handful of companies -- and their founders -- leap to mind: Ben & Jerry's Homemade (Ben Cohen, Jerry Greenfield). The Body Shop International (Anita and Gordon Roddick). Smith & Hawken (Paul Hawken). Patagonia (Yvon Chouinard). They're the (once) wild-and-crazy pioneers of a new frontier -- the folks who brought us ice cream named for devotees of electric Kool-Aid and shampoo squeezed out of mud from the Atlas Mountains. At the same time they espoused "principles before profits" and a commitment to making the world -- from the New York City subways to the Pentagon to the Amazon rain forest -- a better place. They set up shop in the late 1970s or the 1980s, and most of them, with the help of doting media, grew fast and furiously.
But the road to success had its bumps as well. For a self-professed socially responsible company, fast growth doesn't present just the typical entrepreneurial challenges -- things like maintaining product quality, keeping pace with demand, managing cash flow, and coping with sales shortfalls. It also presents special challenges, ones that come with adhering to a higher standard -- that is, doing all of the above while treating employees, suppliers, and customers well, which includes being forthright in marketing claims and vendor relationships. In other words, walking the talk is the name of the game.
"All I can say is that we strive to be socially responsible," says Wild Planet's Daniel Grossman.
And that's where, for all the positive change they effected, some of the 1980s icons got into trouble in the mid 1990s. Ben & Jerry's got called on the carpet for claiming that its Rainforest Crunch ice cream was made with nuts collected by Amazon "forest peoples." In fact, to compensate for quality problems, the nut supplier, Community Products Inc. (which Cohen also owned), bought 95% of the nuts from commercial vendors. In a similar fashion, the Body Shop got skewered when a magazine article questioned its claims about animal testing, alleged that the company used petrochemicals in some of its "natural" products, and charged that its Trade Not Aid program accounted for less of its supplies than it had claimed. (The Body Shop denied all the magazine's charges.)
The people who started socially responsible companies in the '90s had the benefit of learning from their predecessors' mistakes. Which made us wonder: How did those lessons influence the way the new founders shaped their companies?
The younger entrepreneurs are quick to acknowledge their '80s counterparts as their mentors, the people who laid the groundwork for a whole new way of doing business. "They are prophets," says Wild Planet CEO Daniel Grossman. "There is no doubt." But the new breed has added its own, decidedly more pragmatic ingredients to the socially responsible business mix. "Ben and Jerry basically threw everything on the wall to see if it stuck," says Sustainable Harvest founder David Griswold. "That's not the process kind of approach that today's socially responsible businesses are taking."
The differences we uncovered between the '80s revolutionaries and today's company builders were as startling to our minds as a first taste of Ben & Jerry's "Orgasmic Flavors" of ice cream was to our palates more than two decades ago.
What you sell is important
The product or service of the new companies, not just the mission, must be socially responsible -- that is, it must advance the health and well-being of those it affects (individuals, companies, the environment), not undercut them. (See "The Young Turks," below, for profiles of the seven companies we've chosen to represent the new breed.) Hence: barely sweetened iced tea and totally biodegradable tea bags (Honest Tea Inc.); garden, home, and pet products made from recycled or organic materials (WorldWise Inc.); organic, shade-grown coffee with a guaranteed base price for growers (Sustainable Harvest Inc.); Web development using urban workers (CitySoft Inc.); nonsexist, nonviolent toys (Wild Planet Toys Inc.); revitalized communities and neighborhoods (Village Real Estate Services); and recycled paper products (New Leaf Paper LLC). "We want the product that we're providing to have an impact," says Seth Goldman, cofounder of Honest Tea.
Proud to be in business
Most of the current batch of ceos either went to business school or intended to (but got sidetracked by a business opportunity). But those who didn't go that route, like New Leaf Paper cofounder Jeff Mendelsohn, understand the necessity of management expertise. "The best thing I did was hire a really good operations guy with a commitment to social responsibility, because he knows how to manage, run sales operations, and so on, better than I do," says Mendelsohn.
The young founders are businesspeople -- and proud of it. "I did a lot of entrepreneurial things from a young age," boasts WorldWise CEO Aaron Lamstein. "I started one of the first computer bulletin boards in Marin County in 1980, using a TRS-80 Model 3 -- that's before the IBM PC." Lamstein was planning to study for both law and business degrees when his mentor swayed him in another direction by suggesting that he start a company around an environmental concept. Seth Goldman even won a business-plan competition as a student at the Yale School of Management and later started Honest Tea with one of his professors.
