The Coolest Small Company in America

There was just one problem: Weinzweig was dead set against it. "I didn't want to spend my time flying to Kansas City to see some mediocre Zingerman's," he explains. "For me, it was important to be part of something great and unique. You lose the uniqueness when you try to replicate the original. I said to Paul, 'I can't say you're wrong from a business standpoint. If that's what you want, maybe you should do it, but it's not something I want to be associated with. I'll leave.'"

"You have to understand," says Saginaw, "Ari is a guy who studies the history of orange marmalade. He has an emotional attachment to the product. He was afraid the coleslaw would be bad, and his name would be on the door. I said, 'Your name isn't on the door, and I don't care about the coleslaw. We can throw it out. But if you care so much about it, fine. We'll find another way.'"

That other way, however, proved frustratingly elusive. Saginaw and Weinzweig had no interest in pursuing acquisitions or moving to another location, and they knew of no alternative growth strategies for small companies like theirs. So they did a lot of reading, thinking, and talking -- meeting regularly to discuss their ideas at a picnic table next to the deli. They wrote vision statements and then rewrote them, soliciting input from people inside and outside the business. By 1994 the outlines of a grand design had emerged. The Zingerman's Community of Businesses was ready to be born.

Weinzweig and Saginaw envisioned a company comprising 12 to 15 separate businesses by 2009. Like Zingerman's Delicatessen and Zingerman's Bakehouse (which was already up and running), the new businesses would be small and located in the Ann Arbor area. Each would bear the Zingerman's name but would have its own specialty and identity. Each would have at least one managing partner who would work in the business and be an owner. Internal entrepreneurship would be encouraged and supported, but partnership would be open to outsiders as well. And whereas not every new company would be a food business, all would be designed to enhance the quality of food and service offered to Zingerman's customers and to improve the financial performance of ZCoB and its components. Initial funding would come from Weinzweig, Saginaw, and the new partners themselves, with the goal of reaching breakeven on a cash-flow basis as soon as possible.

"The key was having partners who were real owners," says Weinzweig. "We wanted the passion. We wanted people who had visions of their own. Otherwise, whatever we did would be mediocre, and the whole idea was to elevate the quality of each element of the company."

In the summer of 1994, Weinzweig and Saginaw presented their vision in a document titled "Zingerman's 2009: A Food Odyssey." It took the form of a long conversational letter from Weinzweig to the company's managers and employees. He wrote a similar letter to customers, whom he and Saginaw considered important members of the Zingerman's community.

Although the partners had prepared the groundwork carefully, their plans drew mixed reviews. Customers didn't understand why it was necessary to change a business they considered nearly perfect. Lawyers and accountants told the founders they were crazy to let the new partners have real stock and to run the new companies as separate businesses. But the most negative response came from Zingerman's managers, who voted with their feet. In the 18 months after the rollout, more than 80% left. "People had gotten comfortable," says Weinzweig. "We told them that we were going to have a significant culture change. It would be a lot like going back to a start-up. We'd have to work 90 hours a week again, and no one would be going home at 4 on Friday anymore. A lot of people didn't want to do that."

It was a tumultuous period, Emberling recalls. From her position as pastry manager at the bakery, she viewed the transformation of Zingerman's into ZCoB with misgivings. First came the establishment of the Zingerman's Service Network, or ZingNet, a central administrative unit that would provide marketing, finance, and human-resources services to the businesses. At about the same time, a CFO was hired who began asking for new financial reports from the bakery staff. Emberling feared that the company was becoming bureaucratic and impersonal. She also worried about the exodus of veteran managers, not to mention the various management experiments, some of which struck her as nutty.

"They started a deli council, with the staff voting on everything," she recalls. "I thought that was insane. How could 17-year-olds make decisions for the company? They knew nothing about the business."

Accustomed to operating autonomously, Emberling and her coworkers worried that the bakery might be expected to follow the deli's lead and play by its rules. "As a manufacturer, we were very into process, rigor, accuracy," she says. "The deli had a different style. We didn't see the value of being in the ZCoB with them. We just wanted the deli to buy our bread and pastries and leave us alone."

In 1996, Emberling left the company when her husband took a job in Denmark. In 2000, Frank Carollo, managing partner of the bakery, asked her to be his co-managing partner, and she returned to Ann Arbor with her family. "By the time I came back, it was a different company," she says. "They'd managed to implement ZCoB very well. There was a partners group that met regularly. And they'd done an incredible job of building a common culture. I don't know if they realized what they were doing when they did it, but they definitely got it right."

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