THURSDAY, JULY 23, 2009 AT 7:25PM | ROB SMART
The first leap one must make in embracing Pro Food is that significant change is required in how we grow, process, distribute, prepare and consume food.
As nearly a month has passed since Pro Food Is was published, it is safe to report that people, mostly industry and corporate representatives, don’t see the need to change. They vigorously defend the status quo, while refusing to seriously consider the concerns of a growing percentage of consumers, entrepreneurs and sustainable food advocates. Worse, they regularly deflect any inquires by claiming that those asking questions and/or seeking change are “demonizing” farmers and taking away individual “freedoms” and “choices.”
What I fear the entrenched industrial food system is missing are historic indicators that should give them pause, at a minimum, and ideally get them to gain new perspective and seriously consider embracing some or all of Pro Food’s core principles. What they need to do is consider the following transcript from an interview in the film Blind Spot with Utah State University historian and anthropologist Joseph Tainter:
In ancient societies that I studied, for example the Roman Empire, the great problem that they faced was when they would have to incur very high costs just to maintain the status quo. Invest very high amounts in solving problems that don’t yield a net positive return, but instead simply allowed them to maintain what they already got. This decreases the net benefit of being a complex society.
While the dominate food industry players try opening their minds to the idea that their now-overly-complex system may be on the verge of collapse, Pro Food entrepreneurs are busy working to capitalize on emerging opportunities. Like the early days of the Internet, when foundational ideas were taking shape, today’s foodpreneurs sense openings throughout the food chain to disrupt the status quo. These foodpreneurs will be armed with Pro Food’s unique set of tools that will be difficult, if not impossible, for most industrial food companies to emulate.
I like to think of these tools as The Five Stones of Pro Food, each specially designed to attract mainstream customers, while striking at one of several core weaknesses of industrialized food (a.k.a., Goliath). Over time, as more Pro Food entrepreneurs jump in, building on earlier successes, Goliaths will begin to fall, some faster than others.
Stone #1 – Decentralization
The foundation of America’s economy is best represented by millions of small businesses that start, grow, prosper and fail every year. The U.S. Small Business Administration (SBA) in 2006 identified nearly six million firms with fewer than 100 employees, representing 98 percent of all U.S. firms, 35 percent of all employees, and 30 percent or nearly $1.5 trillion in annual payroll.
A handful of these ventures, starting with nothing, grow to levels never imagined, e.g., Wal-Mart, which belongs to the elite class of U.S. firms employing over 10,000 employees (one of 953 such firms in 2006). With such growth, ownership nearly always moves from within the company to outside investors, contributing to these companies gradually losing sight of the path they took to such prominence and dominance in the first place. This trend is especially troubling with regard to food, something that every American needs to survive, which has ended up being controlled by few.
Thankfully, Americans love the underdog. We distrust power. We are inspired by Herculean efforts against equally big odds. And, at the end of the day, we value community over corporations.
ADVANTAGE, Pro Food
Stone #2 – Triple Bottom Line
While decentralization is an outcome of the Pro Food revolution, it’s the bottom line focus of Pro Food companies that will fuel momentum. And unlike the pure profit plays dominating today’s industrial food landscape, true Pro Food companies embrace a triple bottom-line approach to building great companies.
Haven’t heard of triple bottom line? You’re not alone, as corporate America, with few exceptions, hasn’t either. In the simplest terms, “triple bottom line (TBL) accounting means expanding the traditional reporting framework to take into account ecological and social performance in addition to financial performance.” You may also hear TBL referred to as “corporate social responsibility.”
While some companies, e.g., Green Mountain Coffee Roasters and Seventh Generation, have done a great job of integrating these ideas into day-to-day operations of traditional corporate structures, today’s new ventures, including those formed by Pro Food foodpreneurs, have new options for incorporate their mission and values into the actual structure of the company’s charter by forming a low-profit limited liability corporation (L3C) or B Corp. In my 20 years of experience in Silicon Valley and beyond, there has never been a better time to be a socially responsible company than today.
ADVANTAGE, Pro Food
Stone #3 – Sustainable Food
As outlined in Pro Food Is, our efforts center on “fresh, healthy, and sustainable food,” which starts with farmers and ends with consumers cooking and eating meals incorporating those foods. Seems straightforward enough, but not to those defending cheap calories as a substitute for real food.
As a consumer-driven economy, they know that what matters most at the end of the day is how consumers spend their food dollars. Sustainable foods face the daunting challenge of competing against their heavily subsidized highly processed foods, cheaply made and cheaply sold. This cost advantage is unlikely to change anytime soon.
For the foodpreneur, this represents opportunities to create new, more effective ways for consumers to engage with the food they eat, which can happen anywhere in the food chain, including at the farm, processor, distributor or retail level. Innovations in retail experiences, from how foods are packaged to how retail space is configured, offer fertile ground for change. As the number of ventures increases, consumers will gain more access to sustainable foods, while the established industrial food system will simultaneously find itself being challenged on multiple fronts. In the end, sustainable food will triumph over cheap calories.
ADVANTAGE, Pro Food
Stone #4 – Transparency
Beyond increasing access to sustainable food, what consumers will most quickly recognize is how the sustainable food they are finding offers transparency all the way the back to its source. This is a significant departure from today’s cheap calories, chock full of highly processed ingredients, many of which come from genetically modified (GM) crops, especially soybean and corn, which respectively account for 85 percent and 45 percent of all crops planted in the United State. Moving downstream, it has been estimated that 70-75 percent of processed foods contain one or more GM ingredients.
The problem is that consumers have no way of telling if the food they are buying or eating contain things like GM ingredients. Does it seem like too much to ask to know what is in our food? Apparently it is for companies like Monsanto and name-brand industrial food (calorie) manufacturers. Why? Because they know that given the choice, many consumers would opt for foods without GM ingredients, which would devastate profits.
With transparency, on a voluntary basis, comes trust. Industrial food doesn’t do voluntary, although it points to those who do as an example of food people can buy without, say, GM ingredients.
Pro Food entrepreneurs value transparency as core to their missions. Consumers deserve the right to know where food comes from, how it was grown/raised/processed and what is in it. By practicing transparency from the get go, Pro Food ventures will quickly intersect with growing consumer demands, and thus accelerate a shift in market share away from the hidden ingredients at the core of cheap calories.
ADVANTAGE, Pro Food
Stone #5 – Accessibility
What may be Pro Food’s greatest competitive advantage is its ability to build new ventures, leveraging triple bottom-line structures and sustainable food as its primary product, to address food security issues that plague low-income and disadvantaged segments of the U.S. population.
What industrial food tells the public, backed by hundreds of millions of dollars of advertising expenditures, is that it can feed the world. While I work hard to maintain my objectivity, this particular marketing message crosses the line. There are one billion people around the global that go hungry every day, while a billion more are characterized as obese. How can a food system make claims of feeding the world when it is clearly leaving both ends of the global population wanting?
It can’t. Pro Food can and will, as one of its most important core principles is ensuring communities are enriched, including every citizen, despite socio-economic status.
ADVANTAGE, Pro Food
Clearly, new food ventures utilizing The Five Stones of Pro Food have the opportunity to disrupt the industrial food system at various points. There are already examples of this happening throughout the food chain, from Will Allen’s Growing Power to an alliance between Good Natured Family Farms and Ball Food Stores, to name a few.
Early Pro Food pioneers, with dirt on their hands, lessons learned and progress made, played a critical role in defining the right set of stones. Some of those companies have grown dramatically, e.g., Green Mountain Coffee Roasters (NASDAQ: GMCR; market cap of ~$2.5 billion). Others have been acquired by larger companies, e.g., Stonyfield Yogurt (acquired by Groupe Danone), Ben & Jerry’s (Unilever), Burt’s Bees (The Clorox Company). Still others have remained independent.
The next wave of start ups, which I characterize as Pro Food 1.0, will have the advantage of leveraging the many lessons learned by these pioneers, which will allow them more time to focus on how best to utilize their Pro Food Stones, e.g., as a set of stones to take down a Goliath, to build a strong arch with the all important keystone for locking other stones in place, or to create a long and formidable path through dangerous terrain (more on this in future posts).
The potential of The Five Stones of Pro Food is clear. With concerted entrepreneurial effort, and corresponding consumer support, these five stones have the potential to take down the industrial food Goliaths.
It is no longer a matter of if, but when.
Pro Food – The Business of Sustainable Food™