This book is about the power of decentralized organizations; I decided to read it after seeing the co-author, Rod Beckstrom, at the annual Inc 500 conference.

Readers are asked to consider why, for example, Al Qaida is so powerful. How were they able to inflict such damage and emotional terror on Americans?  (As a frequent traveler, this is something I unfortunately think about every time I pass through security. The size limit on liquid and gel containers particularly impacts me since I can no longer travel with 12-ounce bottles of chocolate syrup samples for customers.  Since the gel ban, I think I have become one of UPS’s best customers.  And the last time I packed bottles in my checked baggage, all my syrups were confiscated.  In their place was a note from the TSA saying my bag had been examined. The business appointment that afternoon didn’t go so well!)

So the book looks at how decentralized, leaderless organizations with a strong sense of community can produce outsized, amazing results.  One of the examples is Wikipedia.  No real hierarchy, just people who want to contribute articles about myriad subjects and a self-policing community that ensures the articles are accurate.  One of the comments Beckstrom made in his talk was that, as organizations give up control, they have to increase their trust. When graphed, it looks like this:

As he spoke I kept nodding my head in agreement,; I realized how this applies to Mont Blanc’s business model. Because we use a number of regional production plants, our trust in the plants’ quality operations goes up and some of our control goes down. Giving up some control allows us to greatly expand our production capabilities.  But in the end, we still make and deliver on our promises.

Our unique business model has been key to keeping down costs and maintaining the same level of quality as we weather the current economic storm.

Maybe we are a starfish organization after all.

The largest grocery store chain in the United States recently announced its earnings. Profits were up almost 3.5 percent.  What is most striking about the numbers is not the increase in revenues and profits, but that more than 25 percent of the total revenue is a result of private label products.  The private label category is the fastest growing for the entire chain.

At Mont Blanc Gourmet, we are experiencing the same thing. Our lab is developing more and more private label products for our customers, and those products represent the fastest growing part of our sales.

We create private label products for well-known, well-established consumer brands, enabling these national entities to effectively extend their brand identity into more aspects of their operations.

One customer offers to consumers a private label retail bottle of chocolate syrup that is the same product they use for making their mochas.  Another client supplies its franchise partners with proprietary products to ensure consistency in drinks served in stores that they don’t operate.

CoffeeTalk, a major specialty coffee trade journal, published a private label article in its September issue entitled “Build Your Own Brand through Private Labeling.”

With both the foodservice and retail packages, Mont Blanc has experienced significant sales increases in the past year.  The private label trend is strong and growing.  In tough economic times, it makes sense to act on the strong trends.

It is one of the great discussions within the specialty coffee industry.  We are working with a large retailer that is asking for a Fair Trade certified hot cocoa drink mix.  The company has specified that the product needs to have the Fair Trade logo on it because it believes customers will react favorably to it.

I am a big believer in the fair trade system.  (Uncapitalized, in this context, and, unfortunately, always undercapitalized!)  However, in this instance, we are faced with one of the ironies of using the branded Fair Trade logo.  Namely, products can only be branded with the Trans Fair logo if they come from a cooperative.  One of our cocoa sources is in Ghana, and we have a very strong relationship with them.

Because of the governmental system in place in Ghana, farmers sell their beans directly to the government, and in return receive a reasonable price.  In Ghana, 9 million people make their living from growing cocoa, so it is in the government’s interest to ensure the price is as high as possible, and they have successfully done so for decades.  But this company is not a co-op.  So we can’t use their cocoa for this product.  Which is a shame, since we would be purchasing a significant amount of cocoa powder, the money would go straight back to Ghana, and make a significant impact on all of their lives.  It is a curious system.

Day 3 of the Sustainable Brands Conference and common themes are emerging from all of the speakers:

1. Innovation - All of the products being discussed are innovative and cutting edge. The cleaning supplies such as Method or Clorox’s Green Works all had to prove to be as good as their non eco-friendly counterparts before they could be widely adopted. The Toyota Prius is another example of innovation that leads to adoption. One of the other ideas being discussed is that consumers are unwilling to sacrifice utility for sustainability.

2. Efficiency – Talk revolves around efficiency within product development and supply chains and how the challenges of being more efficient is creating more sustainable solutions. One company developed a machine for cleaning floors that uses ionized water instead of chemicals. Although it costs more than its counterpart, it is more efficient, cleans better, and people that use it are more comfortable with it because they don’t have to worry about being in constant contact with toxic chemicals. In terms of supply chain efficiency, one company is shipping product from Los Angeles to New York rather than trucking. It takes longer, but it costs less and uses much less carbon.

3. Doing good is profitable - All of the companies here are profitable, and all are sustainable businesses committed to making a difference in their products and how they interact with their employees, customers, and vendors. It is refreshing to hear that doing the right thing is a sound rationale for ethical business practices.

4. Consumers connect - Consumers are connecting with companies and their products on a very emotional, personal level, such as New Belgium Brewery’s advocates and their Tour de Fat bicycle events. I viewed remarkable video clips of thousands of customers all riding their bikes at the event. In addition, New Belgium is promoting bike riding as an alternative to driving which is the ultimate in sustainable transportation and also strengthens the bond with their customers.

Two of the speakers yesterday were from Dow Chemical and Clorox. The speaker from Clorox spoke about the company’s acquisition of Burt’s Bees for a billion dollars and how they were focused on growing that brand and not screwing it up in the process.

I had a conversation during the coffee break (appropriately enough) with an old friend, a well-known coffee roaster and environmental and social activist who I have known for 15 years. I asked him what he thought about the presentations. His comment was that it was all very sophisticated, whereas the types of sustainable development projects that he is used to involve some cash (twenty dollar bills), PVC tubing and a large water tank to try and provide clean water for a coffee beneficio in Guatemala.

As we stood in the hall drinking our coffee and talking about the specialty coffee industry, we both agreed that the idea of spending a billion dollars to buy a company making beeswax lipbalm and shampoo was just something that we couldn’t relate to. But we were certainly going to increase our next donation to Coffee Kids.