Welcome to the third season of the Troubleshooting Innovation podcast. Josh Allen, award-winning artisan baker and founder of Companion Baking in St. Louis, is redefining ways to think about artisan bread production. In this episode, he outlines ways that bakers can think outside-the-box to baseline efficiencies and streamline productivity.

Listen to Troubleshooting Innovation on Apple, Spotify or Google. Hosted by Joanie Spencer, Commercial Baking editor-in-chief. Sponsored by AB Mauri North America.

 

Joanie Spencer: So last week, we had a really interesting discussion about how fixing the trash at your bakery really changed how you operate. So first, I’d love to just quickly recap the impact that made on the business and how your waste management practices have become a baseline for productivity.

Josh Allen: Yeah, I think we talked last week about the big measurement that we look at. We look at two things relative to waste.

First, we look at real pounds and then a kind of a trailing, 12-month look at how many pounds are we generating on an annual basis in terms of waste, and that’s a combination of both waste for landfill and also composting. So both of our partners/vendors in that do weigh what they take away from us and send us a report monthly to give us a weight. So it’s not a number that we can manipulate here.

And then we also look at trash in what we call trash efficiency, which is our sales divided by pounds of trash. And obviously, as we retract our business as we did during the pandemic, or as we grow our business, we just want to be more efficient with our waste creation. And obviously, we’re looking to eliminate it completely. But that’s maybe not realistic in a manufacturing environment. But relative to sales, we want that number to continue to climb. And obviously the weight, the real pound number is going to go down. I don’t like looking at charts that go down. They’re not really like psychologically motivating to me. So turning it on its head and looking at trash efficiency as that’s the number that we want to see go up. And the sales per pound of trash for us, it’s relative; everybody’s business is different. But as an example, when we started that metric, I believe we were at about $5.80 in sales for every pound of trash generated. And we’ve gotten that number up to almost $13 on an annualized basis.

You know, at almost 2.5-times where we started, it’s had a huge impact. It’s had the impact where you would expect it to — in gross margin and labor savings, because we’re not producing all this product that’s never making it to the customer in ingredient savings for the same reason, obviously — but also just the real trash hauling savings has been pretty dramatic. And we’ve seen that snowball throughout the bakery. We’ve seen it in office supplies, because we used to print multiple copies of every invoice that went out. We would ask the question of ourselves, what do we do with that additional copy of that invoice, and we realized that if the customers didn’t require proof of signature, that we were just discarding those invoices and those POC slips when they came back to the bakery. So we realized that if we’d just printed one copy and left it with the customer, that’s all that we needed. Except for that there were maybe four or five deliveries on a daily basis, out of a couple hundred, that they required us to be able to prove that they signed for the product. So we’d bring those back and keep those, but the rest of them… That was reams and reams of paper on a weekly basis that we weren’t recycling or throwing away or whatever is happening. So we tried to trickle that down everywhere that we could. And in all of those different places, we found that composting was less expensive than sending trash to landfill. And so just everywhere that we’ve been able to look, the waste measurements have had a profound financial impact. It took the bank off of our back, and thankfully. I love the bank, they’ve been a huge supporter of ours, but it’s no fun when they’re looking over your shoulder as aggressively as certainly as they were for us.

Spencer: I can only imagine that it’s quite a motivator when the bank says, “We’re going to come have a conversation.”

Allen: Yeah, because they bring a team of people that you’ve never met before. They bring that kind of, I don’t know, emergency turnaround team or whatever they call themselves. And yeah, it’s not a fun time around the conference table.

Spencer: Okay, so you said something that I thought was really interesting: how you don’t like looking at charts that are trending downward. So you kind of look at them in a different way to see what you’re doing right and improve on that. I think that’s a really interesting mindset to have because it can be a little bit different, realizing when you’re looking at what’s going wrong.

Allen: Oh, yeah, absolutely. And we have a QA metric here that we do, we haven’t really landed on a name yet. But essentially, it’s sales per complaint. Our QA department obviously logs complaints that come in from distributors and customers. If there’s a product out of spec, if it’s underweight, overweight, a baking problem, a packing issue, a labeling issue, whatever that might be, we log all of those complaints and we try to resolve them. But we were just tracking that number. And that’s the same kind of thing, like with real pounds of trash: You want the complaint number to go down, right? But then you’re looking at a chart that’s going the wrong direction.

So again, sort of flipping it on its head and saying, “Look, as we grow our business, as long as we can keep our complaints less than where we were previously, as we continue to grow, then we’re going to be more efficient, and it’s going to be less energy. It means we’re producing a better quality, it means we’re creating better credibility.” So we look at that same number, which is sales dollars per complaint, and establish some goals for that, and some baselines for that as we move forward. That’s another terrific thing, because it’s a great balance against the waste number. I do believe that what gets measured gets managed. And there’s a tendency when you’re managing trash for folks to want to push product through the system. Because “Okay, I know, Josh doesn’t want us throwing anything away. So this product may be sort of on the cusp, but let’s get it out the door, because maybe it’s okay.” And what we don’t want to do is inadvertently incentivize our teams to send out bad product in an effort to generate less waste, right? So we’ve got to make sure we have some balancing metrics to do that.

The trash efficiency is one we’ll do over time, because if you can’t grow your business or because you’re producing poor quality product, eventually it’ll catch up with you in the trash efficiency. But it’ll catch up with you faster in the sales per complaint. So if we’re logging a ton of complaints and a ton of issues, then we can look at that in conjunction with the trash efficiency and say, “Okay, it’s great that the trash numbers are getting better. But we’re sending out poor product. And we got to fix that first. And so we try to have those kind of balances and the sales per complaint. One is a great check on quality. And another great one to celebrate vs. celebrating the number of complaints, right? Like nobody wants to talk about that, as much as it’s important to pay attention to it.

Spencer: I really love this. This is incredibly fascinating because I haven’t really heard of a bakery using customer complaints as a metric. That’s incredible. And I love how you use it in conjunction with fixing the trash, because you’re right, that can inherently become a risk. I heard some really good advice once: Solving a problem by creating another problem is not a solution.

Allen: Absolutely. Yes, that’s actually the case.

Spencer: It’s like an extension of the waste management. So are we truly solving the waste problem? Or are we creating a problem elsewhere? Like you’re taking it to the next step. And then I also like that you’re using it as a positive to say, “Here’s how we’re celebrating how we’re fixing those customer complaints.” That’s incredible.

Allen: If the pandemic has taught us anything — or has taught me anything, I won’t put words in anybody else — what I’ve learned through the pandemic is that it’s really difficult to motivate people to line my pockets with more money. Like to go out on the floor and say, “Okay, let’s really drive this gross margin,” or “Let’s really knock this operating income out of the out of the park.”

You know, a sustainable business needs to generate income to be able to take care of all the things that it wants to take care of. And I certainly believe that, but I do believe there are ways in which we can measure success and find ways to celebrate things that in the end will create a very viable, sustainable business without necessarily having to talk directly about the reduction of labor costs or ingredient cost as a percentage of sales. We’re paying attention to those things, don’t get me wrong, but when we talk about like a scorecard for our business, and the transparency of inviting everybody into that process and doing our best to make sure everybody on the floor and in the dish room and in the sanitation team are involved, and all of that really understands if we’re doing a good job or not… Then that’s not a huge motivating factor, at least currently in the marketplace that we’re seeing.

We need to create some metrics that people can get excited about. And people have gotten excited about trash and its reduction. They have gotten excited about, you know, we’re really talking about taking care of the customer, then if we can sell more stuff per every time the customer finds a problem with us, then we’re doing a good job. In the end, we know that yields better profitability. That’s just kind of intuitive, but we don’t have to talk about it that way. We can talk about it in other terms. Everybody calls a customer service desk when they have a problem. everybody complains to a manager or writes a Yelp review when they have a problem, so they understand complaints. It’s an easy thing to talk about. So how do we reduce complaints? This is what this product is supposed to look like, this is how many are supposed to go in the box, this is what we’re trying to do to take care of our customer. Let’s do that and get less of those complaints. It’s a really easy thing for everybody here to get their arms around and understand.

Spencer: I like the concept of looking at these metrics from the point of view of every aspect of the bakery, because you’re right, if someone is coming in for a certain amount of hours a day and they’re in maintenance, or they’re in sanitation, they’re not thinking about metrics and the success of the company in the same way someone in R&D would be thinking about it, or someone on the sales side or in accounting. So I think that’s great that you’re really looking at it holistically.

And when you said that, you mentioned a scorecard. So if you were to sketch out a scorecard of your metrics and business success, what would that scorecard look like after you’ve got the trash and you’ve got the complaints? What are some other line items that would be on that scorecard?

Allen: Well, we’ve talked in episode one before about our four C’s. The first C in our four C’s is our companions. So if we believe that our first obligation is to take care of our own folks, then safety has to be on there. So safety is on there for us. We track safety through injury frequency rate, which is a fairly common metric. The formula the simple. It starts with accidents, and we use lost time accidents, which is an accident that would keep somebody from being able to finish a shift or come the next day to their shift or multiple shifts, as opposed to somebody who cuts their finger and puts a Band-Aid on it comes back on the floor. So it’s lost time incidents times 200,000 divided by the hours worked in the bakery. What that basically gives us is for every 100 people — because 200,000 is roughly what 100 people would work full-time in a year — for every 100 people, how many injuries we’re having on an annual basis.

And there are metrics across all industries and across all spectrums, and across all sizes of companies that we can compare ourselves to, because we take it per 100 employees. And if you Google “injury frequency rate (IFR)”, you’ll see that sometimes they do it per million hours worked. We do it per 200,000 because as opposed to looking at 500, you know, it’s easier to talk about internally. We’re not quite at 100 people. But it’s easy to say, hey, if we had 100 people on the floor, this is how many injuries we would expect to have.

And look, if it’s about safety, we got to drive that number down, right? And we’ve got to help each other drive that number down. Going back to that idea of what gets measured gets managed, if we’re if we’re just thinking about it, the number comes down, because people are starting to look out for each other. Every month, Josh stops us and tells us what our IFR is. And we want it to be smaller, you know, we want that number to be better than it was before. And so I’m going to pay attention. I’m going to say, “Hey, these pans are stacked too high. Hey, that cart has got a bad wheel on it. Hey, there’s a little lip when you roll in and out of the oven that we ought to get fixed.” Things that maybe we weren’t thinking about before, that we’re now thinking about because we’re talking about it. There’s so many things that folks do in bakeries that you just sort of do because that’s the way you’ve always done it. And it’s interesting, we made one simple change a few months ago. It’s been 30 years we’ve been baking and we’ve always loaded a rack with no gloves on because everybody was comfortable doing it. You push the rack in, you turn the timer on, and when you come back, you put the gloves on, because obviously the rack is hot. Well, we had a handful of burns and somebody said, “Why don’t we just why don’t we just load the oven with the gloves on? Why don’t we just change that? We have so many new people who aren’t so comfortable pushing around a rack with strap pans that are heavy, or various things that can be kind of precarious. Let’s put the gloves on before we load the oven.” We haven’t had a burn since on the ovens. You know, burns are terrible, burns suck. They’re painful and they take a long time to heal. And you’re going to potentially miss work depending on how bad it is, especially when it’s on your hands. So that was an idea that came from just talking about safety more, you know, every day, every meeting or anything that we’re doing, we’re just we’re updating ourselves on what that safety is. And we’ve got to do that.

I believe that we’re going to see long term retention improve because we’re paying attention to safety. People come here and their families trust that they’re going to come back with 10 fingers and 10 toes. And that’s really it, right? Like if you trust the people that you work for, you’re apt to stay longer. And the trust comes from building that credibility. So what are the things that we’re doing? We actually stopped everybody the other day because unfortunately in the storm, last week, we had a slip and fall in the parking lot. We do everything we can inside the bakery. We have a service that comes in and ices, but it started to melt and then it refreezes overnight. Somebody hit a patch of ice and fell; they couldn’t even start their shift. And they’re going to be out for a few days. And that’s a reportable accident for us that we feel terrible about. We put a new policy in place about how we’re going to handle the overnight freeze and thaw issues. But then we also talked about it. And by bringing everybody together and saying, “Look, this is what happened.” We haven’t had another one because I think now people are getting out of their car and going, “Oh, wow, she had a slip and fall, maybe just I should just pay a little bit more attention.” But if we hadn’t talked about it, I don’t know that we wouldn’t had another one because maybe nobody else would have been paying attention getting out of their car. There’s so many opportunities for accidents to happen. So safety is No. 1 for us on our scorecard. It always needs to be and will continue to be.

We also track retention, just a typical management of retention and turnover. Obviously, it’s become a much greater issue in the last two years and will continue to be moving forward. And we look at it in a couple different ways. We look at just a pure turnover calculation, which is terminations divided by the number of active employees that we have on a regular basis. And then we also look at average tenure. So we take all of our active employees and take the average tenure of that group. What we’ve seen is that we’ve lost almost one and a quarter years of average tenure through the pandemic. So a combination of losing some long-term people for some various reasons through the pandemic, and then also, as we’ve rehired having so many people on staff that are so new, that’s a pretty big percentage. I think we went from seven and a half years down to like six and a quarter years. And that’s a big year. I mean, we know how long it takes to learn things. And we know how much people continue to learn in a bakery environment and how much knowledge they carry in their head and experience and comfortability, and just ease of operation and knowing what to bring back with you when you go put something down. So that year and a quarter has been costly.

We’ve got to continue to pay attention to that, you know, looking at average tenure forces us to not only pay attention to the new folks that are coming in to keep them here, but also looking at our long-term folks to make sure that we’re continuing to provide personal and professional development opportunities for them so that they stay. That’s a big one for us, too, as we look at our companions, and then from a company standpoint, our big thing has been — again, through the pandemic — has been fill rate. So for us, if customers place an order, you know how much of that order is making it out the door. And we’ve certainly struggled with that over the course of the pandemic at various times. So we look at it on like a trailing 52 week — so what’s the annualized fill rate number that we’re able to achieve? — and then on a shorter, more volatile trailing month four-week basis because that’s a hugely important number for us too. Because that’s about building credibility with our customer. We talk about it on the floor with our team, like, “Look, if you have a favorite restaurant that you go to, and you love the steak, if you go one week and you order the steak and they say, ‘Boy, we know it’s great, but we just don’t we ran out of steak this week. Do you want to try the chicken?’ You might try the chicken that week because you like them. And you’re forgiving of one week having that issue. But you know, two weeks later, you make a reservation, you go back and you order the steak, they’re like, ‘Yeah, well, sorry, we don’t have it again. You want to try the chicken?’ And you’re like, this is two weeks in a row. You’re starting to lose my trust. I might find another place to go get a steak.”

Spencer: Yeah.

Allen: And we can’t afford that. It’s too hard to get a customer, it’s too hard to keep a customer. God forbid, if they place an order, we got to figure out how to fill it. And that’s a combination from open communication upfront, like you place the order for two or three weeks from now, whatever it might be with our frozen business, we might need an extra week or let’s juggle this PO, maybe these products are going to be hard for us to make. But if we have that upfront communication and get the PO changed, or if we get the order changed so that we know we can be successful, then they know what they can anticipate. They change the PO and then we can fill what we told them we could do, but through the pandemic — and it’s happened to everybody; it certainly happened to us — we think everything’s fine and then two days before we have seven people call off sick and all of a sudden we couldn’t finish the order. Or we couldn’t get it packed. Or we had some issues with mixes or we had to cancel mixes because we didn’t have anybody at the end of the shift. Whatever happens. And it’s when we don’t have that transparency, that credibility starts to suffer.

So fill rates, something that even though it was not fun to look at through the pandemic, it’s been something that we’ve paid a lot more attention to. And it’s something that we can continue to celebrate as we get better. But it’s also a story to tell for new customers as we start to do better. So if our sales team can talk to somebody and say, “Look, we’re running a 92% fill rate for the last year even through a pretty difficult time of the pandemic, but in the last four to six weeks, we’ve been running 99% fill rate”… That starts to build credibility with those customers because they’re having issues with other vendors. And so if we can lead with that and make that part of the conversation, it becomes pretty powerful.

It’s not about price. And it’s not about some other things when we’re gonna get you what you need. It sort of changes the conversation. It’s no different if anybody’s tried to buy a car during the pandemic, right? Like you don’t get to negotiate on price anymore, you just hope that the car that you want is there. Or that you’re going to be able to get it in the next six months or whatever period of time that is. Price all of a sudden isn’t even relevant to the conversation. At least the dickering on price sort of goes away. It’s been really interesting. We’ve been able to arm our sales team with much more knowledge of that: of the logistics, of the supply chain. And they are going to come out stronger because of it, again, because we’re tracking it. And because it’s on our scorecard, it’s important.

And then the last one is just sort of a productivity we look at. We produce bread that goes into a case, so for us, it’s cases per man hour. Sotal cases sold divided by the number of hours that we worked the week previous. And we look at that number on a regular basis. A smaller bakery can do, you know, pounds per hour or loaves per hour or whatever metric works. But that productivity measurement, what I like about cases or pounds or loads or something is it takes the dollars out of the conversation. So it isn’t a function of telling a group of people, how many dollars in sales were generated against their hours of work, that it’s really about what it is that we make. And let’s see if we can get more efficient at making more of those things per hour worked. For us, we believe that sanitation needs to be in there because if the bakery’s not clean and the dishes aren’t clean, we’re not going to be able to be efficient. We believe that for our logistics team and our packers, and so we put everybody in the organization in that number because we believe that overall number is what we need to be able to drive. If we decide we need to hire another person in customer service, that’s going to affect our cases per man hour, so we got to make sure we have an increase in sales coming to justify the need to have a new person in customer service because they’re going to impact those productivity measurements.

Spencer: Okay, so I have a question to go back to the fill rate. When you have those metrics on the fill rate, how do you develop? And this may be an impossible question, considering just how unpredictable things are these days in the pandemic. But how do you develop an action plan if your fill rate drops or you see it start to drop? Where you’re like, “Okay, this is trending in the wrong direction.” How do you take those metrics and develop steps toward, like, what I guess is a contingency plan?

Allen: Well, I’ll tell you what we did during the pandemic, because we really struggled for people for an extended period of time. What we said to ourselves, we looked at it the same way, we use a lot of restaurant analogies here because many folks here have come from the industry. They just make sense in this business. So we look at a restaurant analogy, and we say, “Look at seven o’clock, there’s 50 seats in a restaurant and we can only seat 50 people. If we take reservations for 75 people, we’re gonna piss off 25 people. They’re not gonna have anywhere to sit, right? And the kitchen only has the ability to handle a certain velocity of people. We know what the average table turn is. Maybe we seat 25 at 7 p.m. and 25 more at 7:20.”

So really, the fill rate problems that we ran into could go all the way back to when we took the order. And if we could fix it at the order point, what we did was we looked at how many cases are we really capable of producing on a weekly basis right now given our labor challenges, and it wasn’t anything we ever had to think about because we used to just take whatever orders we could get. We could figure out how to make the bread and that went away in the pandemic with labor challenges. So we had a finite number of cases that we could ship, and anytime we took orders for more cases, then we just failed. So we just put a cap on it. We said, “I’m sorry, reservations for that week are full and here’s when I can get you your product.” It was difficult at first because they had never heard that from us. People had never heard “no” when it related to orders, but they appreciated the fact that if when we said “yes” that we were going to do better with it. So, “I’m sorry, I can’t get that to you on Tuesday. But if you come on Friday, I could have it. Or if you’re willing to come the following Monday, we can have that product produced for you.”

So really, being honest and recognizing and learning what we were capable of… And we still stumbled, don’t get me wrong. We’d lose a few more people or somebody else would get sick or, you know, our guesstimates of what we were capable of didn’t always hit those numbers. But we did much better by limiting that. And we’re only now starting to take the cap off some weeks. And as we start to move out of this — and that’s the hope obviously, that we don’t have to do that — but the lesson learned is still that on any regular basis, we know what we can produce. And if we have more orders than that, maybe we’re gonna have to hire so we’re starting to see those numbers trending higher, we’re going to have to figure something out. But really understanding: How many seats do you have? And how many seats can your kitchen handle at any one time? The way to fix it is that forward planning and the true understanding of who you are. Once you’ve taken the orders, and you’re just killing yourself, there’s really no fallback position at that point.

Spencer: Yeah. I heard you say, you’ll tell a customer, “I’m sorry, we can’t get that to you by Tuesday. But what we can do is we can get you this by Friday.” And I think that’s so important. You have to be able to come back with a solution. We can’t do this, and you can’t just put a period at the end of that statement, right? There has to be a follow up with a solution.

Allen: Oh, absolutely. You got to make sure that you’ve talked to the right teams inside the bakery to know what that solution is, before we make that call back. We all want to answer the customer as fast as we can, obviously, but we need to take that minute to take a breath and say, “Okay, it’s going to be no, but it’s going to be no with this solution and this option.” And I’ll tell you that in 99.5% of the time, they took the option. There were instances where somebody said, “Look, I’m going to panic, I can’t do it.” And we said, “Okay, how about if you cut the order in half? Like what do you really need? Yeah, you have 100 cases on order? What do you really have to have?” And they would be like, “Well, I need these 30 cases, because this customers out of product.” “Okay, we can get you the 30. And then we’ll worry about the rest of it later.” Or we could work through that with them.

It opened the door to that sort of communication that didn’t ever exist before. You know, it was easy for distributors to be like, “No, I’m placing this order.” And I mean, we have distributors that pre-pandemic, they’d have penalties against you if you filled less than 98% of the order. There’d be a chargeback. Like the expectation in the industry, as I think it should be is, I’m going to give you an order with whatever lead time you ask for and that you’re going to fill the order. That’s how it works. And it’s only in the last couple of years that we have so much volatility everywhere, that they backed off on that, thankfully. At the same time, it opened up the opportunities for conversation. And that’s all this is. It’s about the relationship. If we’re honest with people, people want to help, right? Like, if you say, “I’m in big trouble here, I’m really struggling. This is what I can do. Is that okay?” In almost every instance, they’ll say that’s okay. But most of us were too embarrassed to ask or afraid to ask or something like that. And so you kept saying, “sure, I’ll have it,” and then you put 25% of it on the truck, and then they get irritated. And that cost them money because they sent a truck or you ship the truck that’s only 25% full, like there’s so much inefficiencies in the lack of honesty.

Spencer: When you were talking about the average tenure of your employees, and with that fill rate, part of the factor in the struggles that you had with the fill rate was if you didn’t have the labor. You said that you’ve noticed in the past couple of years that you’ve lost about a year and a half off the average tenure of your employees, right?

Allen: Yes.

Spencer: Okay. And so I know you’re working to get that back up. But again, I have a journalism degree, so math is not my strong suit haha. So what is sort of the formula? And how long does it take, if you lose a year and a half off of the average tenure, to get that year and a half back?

Allen: I mean, that’s math. So it’s dependent on how many people you have and how many new people you add. So if you stopped hiring, and everybody stayed, then probably more quickly that number will start to go up, because everybody that’s here starts to have more tenure every month. But you know, with the natural course of things — and again, with the volatility and people making different kinds of decisions than they used to make, there’s still a fair bit of volatility both with long-term and short-term people — every time you hire somebody new, you’re starting with somebody with zero tenure. And so it depends if you’re hiring a ton of people, then that number is going to continue to go down for a while because you’re adding a lot of new people. It’s just a different way to look at that retention number and look at that workforce number.

So I guess the answer to a journalist would be: It depends. And even to somebody who pretends to know math, I think it still depends. And so I think, I guess my answer to that is that it’s going to take a while. Because we are growing as the pandemic is sort of starting to wane, we know that it’s not gone. And we’re going to deal with whatever we’re going to deal with. In this moment, we’re seeing growth, but we need more people in order to achieve that. So it’s going to get worse before it gets better. I think it’s definitely a lagging indicator of the pandemic, because that number will continue to go down as we hire new folks. But it’s still something to pay attention to over time and start to see if there’s a sweet spot or see if when it turns, do we see any changes.

To me, tracking all this stuff is interesting. But where it really gets interesting is when you can look at the curve of any of these sort of non-traditional metrics, and then put them up against gross margin or operating income or whatever it is, and start to see, okay, when we get safety to this number, or we get trash efficiency to this number, that’s when we start to really see and drive profitability. For the leadership of the organization, that’s what we’re trying to do. And we believe that these metrics on our scorecard will have a positive impact financially. But that’s just an assumption. Then we have to prove it. So we still talk about it internally, we talk about the scorecard with everybody on the floor. And then we got to start to weigh those scorecard metrics against the actual financial metrics, and make sure that those things are headed in the right direction because we may find that driving a certain number, in the end, doesn’t drive profitability. And then if what measured gets managed, we gotta stop measuring it, because it’s not the right thing to be looking at. Those mistakes certainly can happen. I still think they can be interesting and things to learn from, we can understand why and maybe it’s tweaking it or looking at it slightly differently, but all of that stuff is sort of important to look at in concert with the financial aspect of the business.

Spencer: And you know, that’s funny, I was gonna say, if you look at the scorecard and then you compare it against the financials, and it’s not there, my initial thought was, well, then what do you do? So I like how you said that you have to tweak it or find different metrics.

Allen: There are certain points, I will say, during the pandemic that with the depressed sales and the challenges of the pandemic, it was very difficult. It has been very difficult for us to make any money and to show any real level of profitability through what we’re dealing with. That being said, we can look at the velocity of things going the wrong way. And the financials slowing down, as we turn some of these metrics around, it might be later on that we can really marry them up. I mean, the last two years have been such an anomaly as it relates to so many different things. We have to believe that the metrics are the right thing. We’ve had enough experience pre-pandemic with a lot of these metrics to know that they work. So it’s still worth driving them. Even if our sales go down 60%, like they did for the first eight or 10 months of the year, it didn’t keep us from paying attention to trash, even when we weren’t gonna make any money with sales down that far. But that doesn’t mean that we stopped paying attention to trash.

Spencer: Right? So just kind of two thoughts that I had. One is there has to be a level of hypothesizing I guess, before you decide to dive into non traditional metrics, you can’t just think this is something cool that we should measure and then cross our fingers and hope that it supports the profitability, you really have to sit down and say, Okay, these are things that we should be measuring so that we can manage them, because we have a reason to believe that managing these specific aspects will lead to better profitability, right?

Allen: Yes, absolutely. And I think some of it comes with experience. Some of that comes from listening to other folks in the industry and what they’re doing. A lot of it comes from listening to folks in other industries, because in the end, we’re manufacturers and it’s not that different than making anything. We happen to we get a kick out of it because we make something that we love, and we like to eat what we make, and there’s there’s an element of bakery that’s special, but it’s not different. I think there are so many places you can turn to, to learn some of the stuff and pay attention to some of these things. The internet is a great resource for looking at non-conventional metrics and conventions and educational opportunities, and all that stuff exists. But at an end moment, you’re going to have to say, “Okay, I believe that paying attention to safety, for me, is going to be a metric that drives better retention. And it’s going to help our production because if we keep our people working and on the floor, as opposed to out because they’ve hurt themselves, you know, we’re going to make better product.” You got to believe all that stuff and think that there’s going to be an effect down the road.

Spencer: Mm hmm. This is my last observation, and I think it’s going to be a good closing thought. It goes back to one of the first things that you said in this conversation. And that is, you don’t want to have your companions have an assumption that it’s about lining your pockets. And would you say it’s a fair assumption that when you have these types of metrics, with the waste management and the companion safety, and the fill rate and the retention, it leads people to really be able to participate and feel like they have a hand in making these changes. So then when they do lead to profitability, it’s not Josh’s company is better, it’s our company is better because we participated in this.

Allen: I absolutely believe that. And I also believe that it’s a lot more fun to celebrate the success of a group than it is to celebrate the success of a business owner. It’s hard to think pre-pandemic, because it’s been so long, but what it has given us are things to celebrate. Even in the midst of a pandemic, as challenging as things were, we could celebrate our continued improvement in our trash efficiency. We could continue to celebrate an improvement in our sales dollars per complaint, even through the pandemic. And so, look, we didn’t have a lot of good news to share. Hey, we lost this customer, we lost this volume of business, we got this number of people sick, we got to wear masks all the time. All the things that we kept imposing on folks that weren’t positive pieces of news, but to be able to stop monthly and say, “Okay, that’s great. We got to be honest about what’s happening in the world. But we can also celebrate that we’re still going here, and we’re still getting better, and that we’re going to be better, even on the other side of this.” That means a lot to people and to continue to celebrate Companion of the Month and things that folks are doing to contribute positively to everything that’s happening here. And finding metrics that we could continue to celebrate even during financially challenging times I think is super important, because there wasn’t a lot of positive things to hold onto in or out of work. So we got to try to create those moments. We’re not trying to just manufacture those out of nothing for the sake of celebrating things. I mean, these are true things that we do believe long-term are going to have hugely positive impacts on the business. And so it’s been great to be able to celebrate those and continue to do so as we wind through this experience.

Spencer: I love that. And Josh, this was such an interesting conversation. Thank you so much for sharing your very unique philosophies on metrics and how you’re finding success and things to celebrate with the entire bakery team. It’s really cool. And I’m excited for next week because we are going to go in a totally different direction. We’re going to move away from those hard metrics to talking about how you learn some lessons from improv on how to create a successful business. I’m excited for that one, too. See you next week!

Welcome to the third season of the Troubleshooting Innovation podcast. Josh Allen, award-winning artisan baker and founder of Companion Baking in St. Louis, is redefining ways to think about artisan bread production. In this episode, he tells the story of his team’s trash journey — which led him to be named as a Sustainability Hero by the Tiptree World Bread Awards last year — and how other companies can make sustainability work for their bottom line.

Listen to Troubleshooting Innovation on Apple, Spotify or Google. Hosted by Joanie Spencer, Commercial Baking editor-in-chief. Sponsored by AB Mauri North America.

 

Joanie Spencer: I’m really excited about this particular episode, because it is such a cool story and I think it looks at sustainability in a very different way than bakers may be used to looking at it. So not long after we met, I got a press release that you were named the Tiptree World Bread Awards’ Sustainability Hero. Now, some heroes are born, and others are made. Would you say you set out to become a beacon for sustainability practices? Or did it look a little different?

Josh Allen: It definitely looked a little different for us. I absolutely did not set out to be a beacon for sustainability. I mean, we were thrilled about the award— my team was incredibly proud of it, and I’m incredibly proud of it — but I still don’t think that we’re beacons for sustainability. But I think where we’ve gotten to has been super interesting and has been very beneficial for our organization in a lot of different ways.

Spencer: So I’ve talked to a lot of bakers who hesitate to create sustainability programs because it’s really hard to make a business case for it. Sometimes it requires a financial investment, and they’re looking at ROI through a very specific lens. But for you, the path was a little different. So I really want to learn how the business need came first. Can you start at the very beginning with how the business came before the sustainability and the benefit that you reaped from that?

Allen: Absolutely. That’s the basis of the whole thing. So [the company was] about 22 years old, I guess, we’d been baking in South St. Louis for 20 years, had dabbled a little bit in some frozen manufacturing. But for the most part, we were a fresh daily local bakery. And as a business owner, and as somebody who cares deeply about the professional and personal development opportunities for my team, in this particular market (St. Louis) — which isn’t growing and doesn’t do a great job of attracting business travel and convention business — the opportunity for us to grow the business and keep expanding was to do some things regionally and potentially nationally. Obviously, freezing plays a role in our ability to distribute our products outside of St. Louis. So in 2014, we found a building. We spent about a year retrofitting it and moved into a new facility in the end of 2015, in order to expand the business and grow into frozen manufacturing. That was sort of the direction that we were headed. What we absolutely failed to do was anticipate or appreciate the challenges of scaling up in the business. And as much as I probably wouldn’t have admitted it then, we completely dropped the ball on a million fronts. We went from about 15,000 square feet to 42,000 square feet we now were responsible for. We were leasing space actually from my family and a larger operation. They had since sold that business, but we still had a great relationship with the folks that had bought it and they were doing our shipping and receiving, or they were managing the dock, they were loading trucks. They were doing things for us that we didn’t really appreciate how much was getting done or taking care of, and even the facility upkeep, they were responsible for the outside of the building because we were just leasing space within it. So it all overwhelmed us, candidly, and we pushed all of our chips into the center of the table as a relatively small business in order to make the investment for the new business. And we just got completely overwhelmed.

The bank was somewhat patient with us for a couple of years. But the bank called me in 2017 and said, “Okay, we better talk about this now because we’re not generating any cash and things aren’t looking in a particularly good direction. It’s time to have a sit down.” And we had never had to do that, you know, we had grown the business pretty consistently for 20+ years and with the generated cash, we were able to pay for investments if we needed them in our old facility. We hadn’t really made that big leap that we made in 2015. So in preparation for the meeting, I just tried to gather my senses about me and figure out kind of where we were and what was going wrong, or what I thought was going wrong. But we still just felt like we were constantly plugging holes in a dam.

As part of it, when we had made the transition — again, because they used to take care of everything and we used to just pay, I don’t know, $600 a month for trash — we never really paid any attention to waste. You know, we threw stuff away in the dumpster, they called when it got filled, and it went away and it came back empty. We never worried about it. And now we were responsible for trash.

So we contracted with the waste management company. They installed the compactor, they picked it up, and then they would send me a bill every month: Here’s the compactor fee, here’s the hauling fee and here’s how many pounds of trash you dumped. I never paid much attention to it for the first couple of years. Again, I didn’t have any context in which to look at the numbers, so I wasn’t paying attention. Well, I just thought that, ‘look, I love to chart things. I like to look at things sometimes unconventionally, so let me put a chart together of what our trash has been. Maybe I’ll learn something as I was gathering all this data.’ I charted these numbers, and I realized that we were generating like 1.6 million lbs. of trash per year.

Spencer: Oh, my God.

Allen: And it just kind of floored me. I mean, we were making about 10 million lbs. of bread then. So it was a number that was just astronomical to me, like it embarrassed me more than anything else.

I’ve always had a good relationship with the bank. So we sort of sat down at this meeting and went through a couple of slides about how poor our gross margin was, and how overwhelmed we were, and then I threw this trash number up. I said, “Look, I think this is the answer. Like I am incredibly embarrassed by this number. I’m not sure, but I think it impacts everything to a much greater degree than I realize. And I don’t think we have the bandwidth to do much more than like really go after one metric right now, because we’re still kind of overwhelmed.” We were still growing, but training new people and it was all this new equipment and just weren’t doing very well. I [asked the bank] to give me a little bit of time to just attack this number. And I think I can solve the financial metrics if we can fix the trash.

So it had zero to do with the idea of being sustainable. We never use the word sustainability. The idea was, let’s fix the trash, because this is embarrassing, and it’s got to be killing us. And we sort of started this three-year journey, where every decision that we made related to trash generation. I said, “Let’s throw everything out. We still gotta make bread for our customers, we still got to do what we’re doing, but let’s make decisions about what equipment to invest in, what process to change and not change, and everything else… just look at it from the standpoint of waste reduction.” Needless to say, this three-year journey led to over 1 million lbs. a year in trash reduction.

Spencer: Wow.

Allen: It’s sort of fixed all the metrics. In the end, that just makes sense. In going after it, we realized that it was fixing metrics that we didn’t really anticipate — yes, of course, your ingredient costs go down when you generate less trash, and yes, the labor costs go down — but we significantly increased our capacity, too. It’s because we were mixing so much more dough than we needed, because of the trim generated by machines or by mistakes or by rushing or whatever it was. So all of a sudden, if you only have to mix five mixes instead of six, you’re increasing your capacity by 18-20%. All of a sudden, all these different metrics started changing and working themselves out. And it was completely, only about the business case. You mentioned that normally it’s hard to make the business case, but that’s the only reason that we did it… and it dramatically improved everything: multiple points of gross margin, multiple points of operating income. This was all it really culminated, and things were going really well obviously heading into the pandemic. We’ve taken some steps back as it relates to profitability, certainly, but the trash journey has continued. And we’re doing better. We created a metric for ourselves that we refer to as trash efficiency. Between safety and trash efficiency, those are the two things that we’re really focused on here. Trash efficiency is sales divided by pounds of trash generated, and we’ve more than doubled that number. So that number was $5.70 in sales per pound of trash when we started the journey, and we just hit almost $13 in sales per pound of trash. That’s had this huge positive impact on the business, and in the end, it’s led to some other great conversations about sustainability, zero trash for landfill and new goals that we’re now generating.

But honestly, none of that stuff was on the table when we started. It was about how the bank breathing is down our neck — as they should be, candidly — and we’ve got to fix this problem quickly. So we just we went after the trash, and it had a huge positive impact and continues to have a huge positive impact on the organization.

Spencer: Josh, I have a journalism degree, so I’m not as good with charts as you are. And you talked about how much trash you are generating, and that you reduced it by more than 1 million lbs. What is the percentage in that three-year journey? What’s the percentage of the waste reduction?

Allen: Well, from an overall trash perspective, it’s somewhere in the neighborhood of 60%. I believe we’re at like 76% diversion from landfill, from where we were, which we’re excited about because what grew out of it was obviously a much more aggressive recycling program. Also a composting program that we were so overwhelmed with when we moved in, that we didn’t really get started with, so all of that 1.6 million lbs. in that first couple of years was going straight to landfill.

What we’ve done in the process of reducing is also figuring out a lot of different ways in which to divert. So our goal now is to get to zero trash for landfill by the end of 2024. I mean, we’re hoping to do it sooner, but you know, that would encompass composting almost everything that we can, recycling what we can, and we’ll still obviously have potentially a little bit of trash, but really looking at it from a much more sustainable standpoint. Obviously the best thing that we can do, and the most important thing, is to not produce the trash or the waste in the first place. So diversion is great, but the real savings comes from not even generating it in the first place.

Spencer: How do you get the companions on board to champion this? Because it can’t just come from you, you crunch the numbers, you see the problem, and you identify a way that you can fix this. But how do you get everyone in the bakery excited about this, to think about it first to not generate trash?

Allen: I’m gonna use the term “easy.” Maybe it’s not the right term. But it’s a little bit easier when you’re talking about trash, because we have folks that come to work every day and want to do a great job. I believe that’s the case with almost all bakers, all employees in every situation. I believe in my heart that people want to come and do good work. And there was nothing worse than coming and doing good work and then throwing it away that for some reason it was out of spec, underweight, overweight, underbaked, overbaked, whatever would happen… and that product would end up going into the trash. That doesn’t feel good, right? There’s an inherent lack of pride that comes with that. What I love about the business is that we take something from nothing every day, and we create a product that customers want. And what we were doing in our new factory was creating a whole bunch of stuff that nobody wanted, and that we had to throw away for any variety of reasons. So when we started talking about it in terms of, “let’s stop doing that, like that doesn’t feel good,” then all these different ideas started generating themselves. And I think everybody contributed.

What’s also been exciting is that we were able to go to manufacturers and have the same conversation: “Here’s what’s happening with your equipment. Here’s the challenge that we’re facing with your equipment. Help us figure out a way to solve this problem.” As we started to go through this journey, we recognize that what we were doing was sacrificing waste for speed. When we first moved in, we always thought speed was the most important thing: How fast can we process dough? When you run things three across, you have to trim the outside pieces so that all three have equal weights as they’re coming down. That created a lot of trim. What we were finding is that we would be running upwards of maybe 8-12% trim on some doughs, right? We weren’t big enough and we had allergen issues or different issues and the way our manufacturing worked in our process, we couldn’t just reincorporate that trim back into the dough. It wouldn’t produce the same quality that we were looking for. We didn’t necessarily mix those things enough that we could take them back to the mixer, we weren’t able to necessarily recapture the trim back into the same product again because we weren’t producing it regularly enough, or whatever happens. So a lot of our waste was trim. When we went back to them and had that conversation, they said, “Look, the larger line runs at a faster speed, but you would run two up instead of three up. And with two up, you have no trim.”

So when we started looking at the piece of equipment from a waste reduction standpoint and not a speed standpoint, we realized that it would cash flow itself right out of the gate. The trim has an expense, but so does the mixing, because if it takes us 25-30 minutes per mix all in, you’ve got the labor cost with the mix. And because with 12% trim, if every six mixes you have to do another mix to get the same yield, you know, you could get more yield and less mixes. So when we started doing the math, recognizing our volume, our size and kind of where we were, we recognize that the machine would pay for itself. That particular investment, which we made at the end of 2019, was a huge component of this whole thing. So we originally were running products with 8-15% trim, depending on what the product was, and when we went to zero, that had a huge impact on our trash. It also made better quality product. It did some other things that we knew it was going to do, but we couldn’t pull the trigger on it or we didn’t appreciate it until we started recognizing the real savings that would take place. If we hadn’t have gone through this kind of trash narrative internally, I don’t think we ever would have looked at the math that way.

So just increasing the speed, we weren’t really big enough to afford it if it didn’t include the savings. The way we were looking at it before, it was hard to pull the trigger. But when we started looking at it in the new sense, and what the trash was costing us to do the hauling and just everything involved with receiving more goods into the building and the handling of ingredients and all of that, when a percentage of those things were going out into the trash, when you reduce all of that, the savings became dramatic. That particular line essentially paid for itself on day one. And it completely changed the way we looked at a lot of different things. That’s been the biggest one from an equipment standpoint. At the same time, we’ve been able to do that with other things, whether it’s different ways in which we handle pre-ferments, recapturing some flour at the dusting stations, all kinds of different little decisions. It’s a series of incremental small decisions that have made most of the savings. But the big savings came from that change in that particular line.

Spencer: I think it’s one of the biggest lessons that is often learned in commercial bakery production: Speed isn’t always about going faster. There are so many drawbacks to just going faster. If you just take a moment and look at the efficiency and shift your thinking, you could find so many more benefits. I feel like that’s what happened with you in this journey of fixing the trash. You discovered a lot of efficiencies.

Allen: Oh, no question about it. Another thing that made a huge impact when you talk about speed is dough checks at various spots. So we never really had an official dough check coming out of the mixer, for instance. A mixer would do it. They would sort of check their own doughs and then they would push it through the fermentation process. And in doing this, we recognized there were inherent problems downstream because of that lack of checks. So we instituted a supervisor dough check at every mix. Is the temperature right? Is the development right? Everybody crossed out every ingredient, and it dramatically improved quality of the products and rework and all of these things by slowing down the process. Because it takes time, like if you have a dough check and the supervisor is not standing next to you, it could be five or six minutes before that can take place. But slowing that down has had a hugely positive impact. The quality improved to the mixes because you knew somebody was going to come check it. But at the same time, we also got a second pair of eyes on a dough to make sure that it was right or if it was at the high end. So let’s say a dough has a 74 to 78 degree tolerance level, like we’ll send the dough downstream if we’re in that rage, but 78 ferments differently than 74. And so at least by having the information, we can pass that on to folks in make-up and let them know, “Hey, this dough might run a little faster, or here’s what you should be anticipating, because here’s what we saw at the mixer.”

It opened up this level of conversation that we didn’t have before, especially in an industry where if you have a 2- or 3-hour primary fermentation, sometimes the mixer has gone home before the dough even makes it to make-up. So when you see something different, you don’t have anybody to ask, right? Because they’re gone for the day. And there’s somebody and they’re like, “I don’t know, I wasn’t here when that dough mixed.” So that communication level has had a huge impact, but it slowed the process down. But you’re absolutely right. Slowing down to speed up makes all the sense in the world. It just was so against what we thought we were supposed to do. And again, the trash thing has really changed our approach to that in a very, very beneficial way.

Spencer: I would say the assumption about speeding up to go faster is pretty typical. But the way that you got to the conclusion through waste reduction strategies, I think, is atypical. I think it’s really interesting. So let’s get back to all of this waste reduction journey. It led you to this Sustainability Hero Award, which you never set out to do. So what was your reaction when you were told you were going to be named a sustainability hero?

Allen: Look, I was thrilled. And I was thrilled mainly for our team, because they’ve worked so hard on this whole trash journey. I mentioned to you that I was invited to do a TED Talk recently in St. Louis about the trash journey, which kind of surprised me. But I think it’s a great story to tell. And in the end, looking back on it — and you know, 1 million lbs. of trash reduction is a really cool number — we’re thrilled that that’s sort of what has what has come out of it. And I think moving forward, now sustainability becomes a big part of the value that we set forth. We certainly don’t want to go back to this waste-creating organization that we were a handful of years ago. So how do we keep from doing that so it stays top of mind? It’s still a big part of our decision-making process, which is pretty cool, but it certainly wasn’t expected. And candidly, as we mentioned at the top, it certainly wasn’t the goal. And we never used the term “sustainability.” Anywhere in this whole thing, I really felt like folks could understand and appreciate that we just got to throw less stuff away. Like let’s stop creating all this trash. If you were doing this at your house, what would you do differently? Because it’s embarrassing, you know, and everybody has gotten on board because it just feels good. Creating sustainable businesses feels good for people. Maybe that in itself is enough of the business plan that it needs to be, because in the end, if we can get investment from our whole team into finding ways to improve, you can’t ask for any more than that.

Spencer: Yeah, I mean, it is just such a good case study and making sustainability an inherent part of the business plan.

Allen: Yeah, absolutely. And I don’t know necessarily how to articulate it any more than saying, “Look, part of your focus ought to be from a business case standpoint, reducing trash reducing waste, and making sure that you don’t create any more than you have to in your process.” I’m frustrated to think because of the 20-year history that we had in the other facility where we weren’t paying any attention to it, because we didn’t have to, that we could have done more than. Obviously I can’t fix that, but certainly moving forward and as I talk to other bakers, you got to make it a function of the whole thing. Trash costs a lot of money. I mean, we went from spending $8,000 to $9,000 a month in waste removal down to $2,000 a month. That’s an awful lot of money just in and of itself, just in spending less in trash. But then the impact that it’s had, and the ripple effect that it’s had through the organization, has been really phenomenal.

Spencer: Well, I think a hidden lesson here. I think you hit the nail on the head, you weren’t looking at it in the old facility. You didn’t look at it simply because you didn’t have to. I would say that’s an invitation for other bakers to lift up those rocks they didn’t think they needed to look underneath.

Allen: Whatever way you can measure it, right. Like we happen to be lucky here in the sense that our folks were weighing it and sending us a report every month. So now we get a report from our composting company: This is how many pounds we picked up from you and from our waste management company. So we know every month how many pounds we’re generating. But you can put a tick mark next to the dumpster every time you walk out with it with a trash can to see how many times are you going out to the dumpster, or take a picture of it and then take a picture of it every Monday to see how full it is, and come up with some kind of measurement. But you got to know where you are to figure out how to reduce it. There are definitely ways to measure even if you’re not getting those waste reports. Then you just figure out how to go after it. What could we do differently to generate less trash? And I will tell you, as someone who’s gone through the journey, that it will have a huge impact on way more than just how much stuff is in there. And then it becomes hugely valuable. It’s a great conversation to have and it’s easy to have with your folks. Because everybody wants that to be successful.

Spencer: Well, I think that is a perfect note to end on. I just love this journey. It’s such an interesting story, such an important lesson and a well-deserved award. I think you are a hero, and you may not have intended to be, but I think you are a beacon for sustainability practices.

Allen: Well, thank you for saying that. I don’t know that I feel that way, but thank you very much for saying it.

Spencer: So Josh, next week, we’re going to take the next step in this conversation and talk about some other unconventional metrics that you use in your production to identify and baseline efficiencies. So I’m really looking forward to next week’s conversation as well.

Allen: Terrific. I’m looking forward to it too. Thanks again for having me on.

Welcome to the third season of the Troubleshooting Innovation podcast. Josh Allen, award-winning artisan baker and founder of Companion Baking in St. Louis, is redefining ways to think about artisan bread production. In this episode, he discusses the importance of relationships in a transactional environment, the benefits and challenges to creating products for someone else to tell their story, and more.

Listen to Troubleshooting Innovation on Apple, Spotify or Google. Hosted by Joanie Spencer, Commercial Baking editor-in-chief. Sponsored by AB Mauri North America.

 

Joanie Spencer: So I have gotten to know you over the past month or two, and I know that you have some really different approaches to how you go about baking. I’m really excited to dive deep into this episode with exploring breadmaking as storytelling. I’d like to start first with your background because you grew up sort of on the periphery of the industry in distribution. I think it’s great context to start with how you were taught the importance of things like relationships in a transactional type of environment.

Josh Allen: I grew up in the food business, but from the broadline distribution standpoint, so never from a manufacturing standpoint or a production standpoint, but my family had a large regional broadline distribution company that sold everything from frozen foods to seafood to produce to grocery to janitorial. Eventually, they sold that company. I believe they were 101 years old in 2002 when they sold the business to US foods, when US Foods was rolling up regional businesses across the country and kind of getting started here. So you know, they always competed against some national players and some other regional players. And my family was always about relationships, and that’s certainly what we talked about.

The example that I saw set all the time — and obviously things are, to a certain extent, based on price — but to a bigger extent, it was based on relationships. My dad’s feelings were always that taking care of the customer would pay dividends in the long term. He coached me in soccer and baseball and things when I was a kid, and I can’t remember a day that we didn’t make a delivery on the way to a game or the way home from a game. We would go and get something out of the freezer and take it to a customer, or something to make sure that his customers were always taken care of. And we kind of lived and breathed that all the way through and especially as a family business that was multi-generational and included a pretty diverse group of family members. It was just sort of our ethos. And I certainly took that to heart and have tried to maintain that relationship and kind of maintain that reputation, especially in St. Louis with our local business for the last 30, almost 30 years.

Spencer: So correct me if I’m wrong, but didn’t you sort of have a lifelong plan to step into the family business and go into distribution?

Allen: I don’t know that it was a lifelong plan more than just sort of what was expected. I went to school in the Bay Area and really got introduced to food in the Bay Area and started seeing what all these amazing bakeries were doing out there. Sort of by happenstance, I was racing my bike and racing triathlons and looking for jobs in the evening or overnight. That actually turned out to be restaurant work at first and then it turned out to be bakery work, and I just fell in love with it. And for those that have gone into the industry, you’ll know what I’m talking about in the sense that three days in, you either love it or you go screaming. I just happened to fall in love with the process of taking, you know, four or five simple ingredients and making something every day from scratch. And knock on wood. I still get to do that every day 32 years later, however long it’s been.

Spencer: So I want to talk a little bit about that “you either love it or you hate it and you know right away.” Can you describe that experience? Do you know where you were when you fell in love with baking?

Allen: It was probably… Well, I still have one in my office today. I have the original Easy Bake Oven. I do remember stealing my sister’s Easy Bake Oven and there was nothing more magical to me than making brownies with a light bulb. And I still sort of feel that way every time I open the oven. I’m still sort of enchanted by the idea of the transformation that takes place in baking and still load the oven thinking that I’m not sure what’s going to come out right or if it’s going to be correct. I think that kind of curiosity and just kind of excitement about the craft is something that you need to stick it out. Certainly it is a monotonous craft and a monotonous job, one that if we’re doing everything right, then nothing changes every day. And to some that would be incredibly boring. To me, it’s really exciting to try to figure out how to orchestrate 30,000 pounds a day through a system in which nothing ever goes wrong. And obviously things go wrong every day. But, you know, hoping for that one day where it all works perfectly, kind of keeps us coming back every day.

Spencer: This is something that I do find so interesting about you, because this is a craft that, like you said, it has to come out the same every single time if you’re doing it correctly. That said, though, you have some pretty unique approaches for how you do things. And I learned that when I came to St. Louis to visit the bakery. That’s really why I titled your story, “Bread Bakers, Storytellers.” I think it’s probably safe to say that all bakers are storytellers in some way, shape or form. But in a lot of ways, you’re so unconventional. I’m curious to know, what was your aha moment when you realized that you had this ability to create a narrative on a plate?

Allen: As you and I talked about when you were here, it’s for me, and for us, much more about somebody else’s story. So we really love the storytelling process. But we also recognize as a producer for customers, especially in foodservice and fine dining or even fast casual, everybody has a story they’re trying to tell with their food. As the world gets more competitive, and things are starting to change, they need those points of differentiation. And what we love more than anything is a customer who comes to us needing help to tell their story. If bread can play a role in that, whether it’s the first experience with a certain story they want to tell when they put table bread down in front of a table of four at the beginning of a meal, or if it’s a sandwich, or if it’s some kind of appetizer and the way bread plays a role in that — whatever that story is —we’re excited to help them tell it. We don’t have to take ownership in that story.

I think that’s the piece, you know, that goes back to the relationship thing that my family did. Certainly as a broadline distributor, they weren’t selling anything that was going to tell a story at all had to be transformed by those customers, but they needed those products. And we’re needed in the process to tell the story. And we have an opportunity to contribute. But again, we’re very much a supporting cast. I think the humbleness of that and the humility in that is what is most attractive to me. We’re driven by trying to figure out ways for our customers to be super successful. And if we can help them do that, then where are they going to go? Because we’re producing for them exactly what they asked for, and exactly what they were looking for. And it creates a sense of relationship and a sense of loyalty. That’s very difficult to compete with. And you can’t compete with that on price, if you’re giving the kind of attention that you have to give to help them tell that story.

I think our biggest skill is the ability to listen and the ability to not try to overwhelm the conversation and not try to push our narrative on their plate, but help them kind of articulate their own and figure out: How can we support that? What does that bread look like? What is the crust? What is the crumb? Sometimes it’s what is the distribution model? Maybe they have multiple locations and they’re in different parts of the country. And we have to help work through the challenges of whatever it takes to get there. We’ve got to help them try to figure out how to do that, and we really get a kick out of it. I think that’s become our point of difference. We’re looking to grow Companion, but we’re not growing the brand, we’re really growing those relationships.

Spencer: I think it’s kind of funny, your dad sort of trained you to be a baker without realizing that’s what he was doing. Because there is so much relationship that goes into the baking process, aside from putting the product together. I think you had a really firm foundation in thinking about things in terms of relationships.

Allen: Yeah, and I think more than anything, it’s helping folks solve problems. Maybe it’s a distribution problem, maybe it’s a pack problem. Our competition in many instances is so much bigger than us that they can’t necessarily react to a multi-unit operator with just 15 or 20 or 50 locations. And so their choices with the larger manufacturers are “here’s the stock list of products that are available, pick one of those,” and what we try to do — the niche we try to sit on — is you don’t have to pick one of those. Let’s talk about exactly what it is that you need. And maybe for some it’s a mixed pack of something, not that I’m advocating for that but we’ve done that in some instances, or whatever it comes out to be. If we listen to the problem, and then try to solve the problem, as opposed to like a lot of people just throwing our stuff on the table and trying to talk about features and benefits of our products — and that’s great — but in the end, the customer sitting there just thinking, “Okay, here’s what my problem is. And this is all that I want to solve. And you can go through your spiel if you want to. But in the end, this is the problem that I need to solve. And that’s why I am willing to give you a few minutes of my time.”

So we just go have conversations, and a lot of the times those conversations will lead to those opportunities, because we’re listening to what the challenges are. Maybe they need a clean ingredient declaration that they haven’t been able to find before. Again, maybe it’s a certain pack size, or maybe it’s something else that they’re really struggling with. If we can solve that problem, that’s a huge relief to them. Then later on, we can look to sell more things or expand that relationship. But first, you have to solve the problem. And only when you’re willing to listen, and only when you’re really interested in the relationship and not just the sale, do those opportunities truly present themselves.

Spencer: Definitely. And when you’re talking about telling someone else’s story and really hearing what their needs are, and the problem that they’re trying to solve — we talked about this a little bit when I visited you — it reminds me of a book I was reading. It was about an architecture firm, and the introduction to the book talked about the skill of an architect: They put all of their resources and creativity into creating something that’s for the use of someone else. So they build this, they put themselves into it, and then they pass it on for their client to use or their client’s customers to use. There is such a parallel there when talking about your craft. How do you put yourself into developing a product for someone else’s story to tell?

Allen: I think you have to enjoy the challenge of it. So you have to be intrigued by and interested in the process. Because sometimes it can take a long time. You know, some folks are very particular and have a very specific vision. Sometimes those visions are hard for them to articulate. So you’ll go through a number of iterations and every time you’ll think you’re there, then they may change something. At the end, they may say, “oh yeah, but also, this was the characteristic that we were looking for. And we haven’t achieved that.” And sometimes they don’t come out unless you’re willing to go through the process. So we have to let go of trying to get to the end too fast. We really want to take our time and helping them really define what that looks like.

The parallel that you bring up is exactly right. Everybody has a particular style, or they have a thought process or an experience, let’s say as an architect, but still you have to listen to what your customer’s needs are. And you have to understand how many people are going to be in the office, if you’re doing the commercial space, or how many customers are coming in or what the interaction needs to be. It may not exactly fit what you want it to do, the aesthetic may end up having to be different, there’s going to be compromises that have to be made. But if you can let go of your ego in that process, and really be interested in helping that customer tell their story, then I think it’s huge.

And we can help them in a lot of times because, especially with bread, the customers can’t necessarily articulate it all the way through. They don’t know exactly what they want until we go through a few things. And then they have to put it through their process. So you know, we’ve developed buns for customers and we think we’ve got it figured out, and then you know, we go in to do a test and we find out that they put the buns on the flat grill and then throw them into a Cambro for 20 minutes. And you know, the bun has to be able to hold differently than we expected. It’s just the way that it gets handled in the actual operation may require certain formulation changes or different kinds of crusts or different ingredients because they’re going to get abused a little bit, you know, where the rubber meets the road is how their cooks or chefs are going to handle it in the process.

It’s funny, we’ve developed ciabatta for a small restaurant group and they wanted a really traditional ciabatta. We made that. Then in practice, we had holes in there and the crumb structure was open, which they loved in the tasting. But then when they were turning it into bruschetta, the toppings would fall through and that wasn’t working for them. So they wanted us to go back and reformulate or change the process, as we spent more time in it and started to understand a little bit more and we ended up making a change to which oven system it baked in. That solved the issue that they needed, and now they’re thrilled because it’s exactly what they wanted. And again, going through that process with them has really deepened the relationship because they recognize that it was really about getting them to a product that they wanted. It wasn’t about us or what we wanted. It was about what they wanted and what they needed. The biggest benefit, which we talked about a minute ago, is purely just that relationship. It’s no different than with your spouse, with your kids or with anybody. If you listen to somebody, full-body listening and responding to what their needs are and putting folks’ needs in front of your own, it has a tremendous amount of value. And you have to be willing to do that and be able to present that in a very transparent way. It goes a long way.

Spencer: You mentioned ego. And I feel like there’s a line between a baker’s passion and a baker’s ego. Is that line hard to see sometimes?

Allen: Well, I think it depends on where you come from. Growing up in the food distribution business, being an American Studies major in college, doing some restaurant work, some bakery work, I came to the business in many respects equal parts entrepreneurial and equal parts passionate bread baker. I didn’t have a cottage bakery out of my garage making a certain bread, and then I opened a bakery and that was what I loved to do. Sure, I love making products, but at the same time, I’m equally as passionate about building the business and taking care of my people and being a part of the community.

I love the aspect of being a business owner as much as I love being a baker. And so I can separate the two things. It doesn’t have to be my product exactly that presents itself. I’m okay with that. That natural progression has led us and led me and our team to being super comfortable in making products for other people that they need. And they want without having to have a particular style across anything that we’re making. You and I walked the floor, Joanie, and we talked about the fact that there’s a lot of things here that we produce that you see that aren’t exactly artisanal. We make a lot of hoagies, sandwich buns that are very specific to the needs of the customers. They were every bit as challenging to make as a beautiful loaf of sourdough bread. But in the end, the look may not be that dark crusted, blistered, hearth oven-baked loaf of bread. But it doesn’t mean that we don’t believe we’re very talented and skilled and that it didn’t take a lot of energy to get there. It’s just different, and for us, that’s okay. We don’t need a catalog of products that has this aesthetic across the board. That’s the same, we really, really, really enjoy this idea of being a kind of contract or custom manufacturer for folks and helping them achieve that that story that we talked about right out of the gate.

Spencer: It has to be a little bit thrilling to be able to create a bread that, like you said, is it by the definition of artisan “beauty”? Maybe not. But there is someone who’s going to walk into a restaurant and be like, “Oh my god, this is the best sandwich I’ve ever eaten.” And that has to be just incredibly satisfying for you.

Allen: Yeah, and it’s incredible to have the chef reach out and say, “Look, we just won best sandwich or we’re getting all these accolades for our product. And thank you for just being that little bit of part of it. Like we couldn’t have done this without what you’ve done.” Nobody else would say that, which is fine, because in the end, it’s their food and their service and their aesthetic and what they’ve done in the story they’re telling in that restaurant that deserves 99% of the accolades. But there are some micro-vendors behind the scenes, whether it’s a farmer growing them beautiful produce, or us producing a bread specific to what they were looking for. That does play a role in that. I’m just as thrilled to see that happen for them as if it were to happen for us.

Spencer: I want to shift gears just a little bit, because when we’re talking about the narrative, you’re very skilled with telling someone else’s story on the plate. But Companion has a pretty good narrative of its own too. You have two cafes, one is attached to the bakery where you produce the bread and sweet goods, so you have a brand. How hard is it for you, personally, to shift gears between creating something for your customers and staying true to Companion? Because you chose the name Companion for a very specific reason.

Allen: Well, I guess in a certain sense, we’re sort of doing the same thing for ourselves that we do for others. And my sister happens to run our retail cafes. She’s been doing that since we started, and they’re really run as very separate businesses. Working with her to create the breads and the products that she wants to be able to tell the Companion story is really what we’re doing, you know, in the factory or from the wholesale perspective in providing those products. I guess it’s not as big of a departure, obviously it’s our brand and we have ownership in it. I get to play a little bit of a role in in defining the narrative, but we kind of look at it as the same thing and the same presentation. She’s done an amazing job in helping us craft that story and tell that story that we think fits with who we want to be, which is approachable, we want to have just great simple products, we want it to be a little bit fun. And I think she’s done a terrific job with the cafes and doing that.

Spencer: I didn’t get to see the one in Ladue. But the one that is attached to the bakery is just an incredible concept. It just has such a great feeling when you walk in the door. And it’s really something to see that consumer experience when they can order a sandwich and not only watch the steps of how the bread is made for that sandwich, but also read the signage along the windows describing the “why” really behind the steps. That’s something really special about your operation.

Allen: Yeah, we really wanted to invite folks into the process. I mean, that element of transparency was something that was super important to us. And obviously microbreweries had been doing it forever. But the challenge with microbreweries, it’s a guy and a hose, cleaning the floor, you don’t really get to see or interact with the product that’s happening in a brewery other than seeing the tanks usually. By having 30 or 40 bakers working behind the scenes and the process of sort of semi-automation that we kind of talked about, where we have equipment and machines pretty much in every process from mixing to makeup to baking to packaging, but we don’t convey any products between stations. So a baker’s rolling dough in tubs along the floor, we’re dumping into the dividers, we’re hand panning everything on the end, or whatever it is. So there’s a lot of human or baker involvement. But honestly, in the end, what’s been so fascinating for me is that the opposite has also been true, which is the value that it is created for our team to see folks come in and want to eat lunch and watch what they’re doing. It has been immeasurable. I certainly never appreciated that side of the open kitchen. I worked in an open kitchen in the restaurant business, but I was a kid, maybe wasn’t paying any attention. But what we’re seeing is the fact that the bakers really love the fact that what they do is valued by the public enough that somebody wants to come in and watch and see what they’re doing and point and wave. And that’s had a tremendous amount of value for our team, especially on busy days where 200 or 300 people might come through for lunch, I mean, it means a lot to our bakers to see that kind of crowd in there.

Spencer: I love that. So we started out talking about your story and transitioned to telling other people’s stories. And then we’re talking about what’s happening inside the bakery and the bakery team getting to see consumers enjoying the product that they make. And that is also so satisfying. I think it’s only appropriate that we close this episode with talking about, and I mentioned it, the intention behind the name Companion. And with that, can you tell me about the four C’s, and how those four C’s are kind of woven into the operation?

Allen: The Latin root of companion is compagnia, which means “with bread,” so Companion was someone with whom you shared bread or broke bread. And so our mission, our hope, is that people break more bread together. We want to be a catalyst for a conversation, whether that’s bread on the table, whether that’s a great sandwich, whatever that story is that’s being told… We’d love to play a role in or be a catalyst for that to kind of get started. And so that’s where the name came from.

The four C’s that you mentioned have sort of been our value statements. It’s our companions, our customers, our community and our company. We believe that obviously our main thing is to take care of our companions, you know, to keep them safe. Let them be in an environment in which they can grow personally and professionally and they’re compensated fairly. If we take care of our companions, they in turn will take care of our customers, who we need in order to purchase the product, and purchases perpetuate the growth and the expansion of the business. We then need to invest in our community because I believe that’s our responsibility as business owners. And that’s the community in which we serve ourselves, but also the community in which our companions live in. So it’s sometimes supporting things that they’re interested in and their endeavors. And then I believe strongly that if we take care of those three things the company will be taken care of because, in the end, that’s what’s got to keep going to build a sustainable future for us. They kind of work hand-in-hand, in concert with one another. And we try to use that as the backdrop for most decisions: Will this decision benefit the four C’s? And in which way? And do we feel good about that? If the answer is yes, then we sort of move forward with whatever direction that is that presents itself.

Spencer: I love that. And I love how those four C’s are visible throughout the bakery operation, I noticed as we were walking through the facility that they were posted on the walls in various places. I think that really supports this whole idea of baking as a narrative, that it all kind of plays a role in the story that you’re telling from beginning to end.

Allen: Yeah, I can’t add to that. That was that was very well articulated. We’re thrilled to be able to do it. And we still have passion to do it every day. And, you know, our team is more and more excited every day, which is also a big part of it. And as we’ve kind of woven our way through the pandemic, and the ups and downs of that, it’s been nice to have something to sort of hold onto and fall back on and make sure that we can stay grounded. It’s been a really, really challenging two years that we’re dealing with. And it’s really nice to have that foundation, because without that foundation, I think we might just kind of be falling in space somewhere.

Spencer: Yeah. Well, Josh, those are all my questions for this week. I’m really glad that I started this season with a discussion about the art of storytelling in the baking process, because you are truly an incredible storyteller. I think our audience is going to get a lot out of these stories that you have to tell in the coming weeks. So thank you so much for joining me. Next week, we are going to talk about your business case for sustainability, which is truly interesting and landed you a Tiptree World Bread Award as a sustainability hero. I’m excited to dig into that next week.

Allen: Well, I look forward to the continued conversations.

Welcome to the final episode of this season of the Troubleshooting Innovation podcast. Engineering expert Rich Berger responds to listener questions, speaking directly to the audience about how companies can innovate on sustainability, community collaboration and beyond. Hosted by Joanie Spencer, Commercial Baking editor-in-chief.

Sponsored by Shick Esteve.

 

Joanie Spencer: In this episode, Rich and I are taking a look at some of our favorite listener questions. Rich, thanks so much for joining me today. It’s been such a joy spending the last few weeks with you.

Rich Berger: I’ve really enjoyed it, Joanie. Great conversations.

Spencer: I collected a lot of questions, and the first one is actually referring to the first episode. This listener wanted to know about a specific quote of yours. So I’m going to read this back to you: You said the current food system “offers consumers inexpensive food, but the amount of processing, the length, the distribution channels and global trade patterns favor prepared food that is calorie rich, but nutritionally deficient.” Now this person wants to know why you mentioned it as a challenge. What kind of solutions can help address this, with the driver to keep costs inexpensive — within reason, of course — as well as factors such as sustainability? How can manufacturers improve their prepared food offerings?

Berger: What we talked about in the first episode is that in large part, food production has been removed from our communities, diminishing our collective knowledge of our regional practices, really. Food produced, processed and distributed regionally will probably travel fewer food miles, maybe produced by residents within our communities, and may contribute to more economic capital into the regional economy. Perhaps even repurposing some of the vacant land.

So I think manufacturers can look to local food solutions. Some examples might be to locally source or local inputs into our food and manufactured goods, production of goods by locally owned businesses, and sales through locally owned organizations. So take a look at what Added Value did. Added Value is an urban farm in the heart of Brooklyn, NY, or Calder Dairy Farm, a small, family-owned business in Michigan. They’ve demonstrated a few important lessons for other farmers and dairies looking to achieve sustainability and profit while selling only to the surrounding community. Or Dave’s Markets and how they’ve catered to individual Northeast Ohio communities. It’s one of the few remaining local chain grocery stores in Cleveland and continues to thrive and expand today. Each Dave’s features a full grocery deli and fresh produce mart. And many of these stores cater to specific ethnic populations.

Spencer: I think these are some really good examples of what we talked about in that first episode. Even national brands can take advantage of this, because if someone’s consuming a national brand and they know that brand is supporting the local economy and local farms, that doesn’t necessarily have to be the consumer’s locality. But if they know that they’re supporting that local economy, they’re going to want to support that brand, right?

Berger: Exactly. As I mentioned, there’s some of the local or regional approaches that the manufacturers can look to. But you’re exactly right. And I think consumers are really looking for that

Spencer: I’m glad that you mentioned those farms, because that is an awesome segue into the next question. I know the person who sent this question in, and she grew up in a farming community and is now a food scientist. So this is a particularly meaningful question. She’s also referring to episode one, and she wants to know: Do you think that small and medium farms and agribusinesses will continue emerging to meet the demand for local products?

Berger: Yeah, I think it’s a great question. And first, I think just asking the question: Why do we even care about the future of small- and medium-scale farming systems? Well, from my perspective, smaller farms tend to be more productive breaker than much larger farms. At least that’s what some of the data that I have seen has pointed to. Family farmers really have a vested interest in the health or fertility of their soil and the long-term productivity of their land. Just from a sustainability standpoint, long-term investments tend to pay back sooner than larger farming operations. Also, rural and urban societies and economies alike really benefit from productive small farms. It creates jobs and wealth for their communities, which then leads to public and private investment, which further leads to better infrastructure in that local region, connectivity, as well as the ability to adapt to climate change.

Personally, I believe small and medium agribusinesses will continue to emerge to meet the global demand. But it won’t come without making sure we prioritize agriculture. And the needs of small-scale farmers need to really be high on the global political agenda, and high on the list of recipients of global investments. Thriving small scale farmers and sustainable food systems, I think, will contribute to a brighter future for rural and urban populations. Like much of what we talked about in the first episode, we need to invest in market access for them, including digital technologies to allow them to understand what the market is doing and to be more agile and flexible to the market, investing in storage and transport infrastructure to reduce waste, and enable market access for them.

Spencer: That’s really interesting. It seems like you’re saying that the little guys are going to be the key to the big changes.

Berger: I believe so. And I think consumers are also looking for that, as well, in their own communities.

Spencer: And with as much M&A (mergers and acquisitions) activity that’s going on in the food industry, I think it’s important for investors to look at investing in these small regional farms. So let’s move onto the next question, and this is one that pertains to episode two. This person wants to know if you could share some examples of sustainable transformations that you personally have seen in baking and food manufacturing.

Berger: Yeah, it’s been exciting for me to see these transformations in the industry. And really, I see just about every company in the industry making a difference. I mean, the scale may be different depending on the resources and the strategic vision of each particular company. But almost everyone in the industry is trying to make a difference and is making a difference.

I think companies are asking themselves: Where can we have the biggest impact? For example, Cargill is enrolling farmers in a new regenerative agricultural program that pays farmers for improving soil. Nestle plans to invest over a billion dollars in regenerative agriculture. Simple Mills is supporting regenerative practices like cover cropping, reduced tillage, diversified crop rotation and the integration of animals into the crop ecosystem. The company also avoids using ingredients made from dominant mono crops — like corn, rice, wheat — in favor of perennials and other diverse crops. Flagstone Foods, for example, they’re embracing sustainability really in all aspects of their business, from sourcing to product assortment to packaging and manufacturing.

I also think that commercial food manufacturers aren’t the only ones that are making an impact and playing a part in this. We should also acknowledge the suppliers in our industry, and the organizations who are making a difference as well as influencing CPGs to raise their bar. It’s a holistic industry approach that’s really making a difference. For example, ABA (the American Bakers Association) has helped the baking industry become a leader in the EPA Energy Star program, which has generated energy savings measured throughout our manufacturing processes. Packaging materials suppliers have gone a long way in developing more environmentally friendly materials … for example, recyclable or compostable materials. And ingredients suppliers are also becoming sustainability leaders as well. For example, Evergreen is using saved grain from brewing and transforms that product to a circulatory sourced barley into nutrient-rich ingredients that can be used in a variety of food and beverage products.

So really, manufacturers, suppliers and even our industry organizations are all doing a great job in supporting sustainability.

Spencer: You know, I think upcycling is one of my favorite sustainability trends in the food industry right now. I mean, people are doing some really cool things that are either turning their waste into ingredients or into other baked products. It’s really the creativity and intention behind it. It’s just so cool. I really love it. And then I also want to give a shoutout to ABA. I think they’ve also done an incredible job. With the Energy Star program, really guiding and helping baking companies. In our December issue that’s coming out any day now, Jordan Winter, our digital editor, did an amazing story on sustainability in the baking industry. And she talked a lot about what ABA has done partnering with EPA Energy Star program. It’s really cool.

Berger: And Joanie, just to add to the folks that are rethinking the upcycling approach, packaging suppliers are really making a difference in that area as well. There’s just so many opportunities and so much innovation that’s going on right now to really rethink packaging materials, for sure.

Spencer: Yeah, definitely. And I’m so happy that you pointed out the whole supply chain’s responsibility in this because as retailers start putting expectations and almost restrictions on their bakery suppliers, they can’t do it alone. They have to rely on their ingredient suppliers and their equipment suppliers to help them in their sustainability efforts. Again, I also applaud the efforts of the associations who are guiding them. But it’s important to know that this is not just the food manufacturer’s responsibility. It’s those who are supplying to the food manufacturers as well.

Okay, so the next [question] is from the third episode, where we were talking about people development. And this person is wondering if you have any tips on convincing middle and upper management that the value innovation and profits you mentioned could come from making this a company focus? For many old-school managers, this is a paradigm shift. So this guy wants to know, how do we get past that?

Berger: Yeah, I think the good news here is that senior leadership teams rarely just worry about quarterly results anymore. They’re focused on long term growth strategies, which are inseparable from economic, social and environmental issues. Leadership teams are thinking about using resources wisely and ensuring that an enterprise can thrive for decades, thinking about risk mitigation, cost savings and productivity gains, all of which sustainability really support. So I guess understand that the door is open for these kinds of conversations. It’s not as if there’s no ears around to listen to how sustainability pays off. Environmentalism is really rooted in using resources wisely. And that concept leads to reduced costs and improved efficiency. So understand how a new sustainability focus can contribute to this. And that will further contribute to that conversation with the leadership team.

Focusing on sustainability really mitigates risk as well. So looking through a sustainability lens presents a new way of looking at forecasts and risks. Another area of risk involves stakeholder preferences, so socially responsible investing is growing faster than overall investments: 18% between 2000 and 2007, compared to 3% for all investments, according to Cerise. There are also regulatory risks with the emergence of climate change legislation. Smart companies are figuring out how to report and reduce their environmental impact. Those that don’t, I think, will have some financial risk.

Being green also creates new competitive and revenue opportunities. Try to size those up. And think about sustainability as fueling innovation, new products and services, business processes, and energy efficient facilities. So present a new sustainability focus almost as a driver for innovation, which really is appropriate for the topic of our podcast.

Lastly, strong sustainability values enhance employee recruiting, development and retention. With upwards of 40% of today’s workers retiring within the next 10 years, companies really have to figure out how to keep the next generation of talent around. Strong values and sustainability and planning, I think, enhance that.

Spencer: Okay, so I want to follow up on that last point you made. I had a conversation recently, talking about sort of the old school of thought that focused on shareholder value. And it’s really changed lately. This [listener who submitted a question] said that we need to have more focus on legacy than on profit or power. How do you think that applies when thinking about strong sustainability values, specifically enhancing employee recruiting and development and retention? How are we going to do that? Do you think that it is that mindset shift that paradigm shift?

Berger: Yeah, I think we covered a little bit of this in our second episode. Sustainable businesses are really redefining the corporate ecosystem by designing models that create value for all stakeholders, not just shareholders. So this includes employees, supply chains, the community and the planet. You’re right, Joanie, I think it’s a wholly different approach to creating value and who you’re creating value for vs. just shareholders. And I think the example that we talked about in the second episode was Patagonia’s purpose-driven mission to take into account the interests of workers, the community and the environment.

Spencer: Right, right. And I think that that has to be taken into consideration in order to sustainably bring the next generation of workforce along … or to even have a next generation of workforce at this point. Okay, so the next question is about last week’s episode, which was innovating through and for your brand. So this person wants to know, how can you make values-based operations and important part of the brand without it becoming all about PR? So basically, how do you keep good PR as a benefit and not the basis for values-based innovation?

Berger: I love the question. First, I’d say be authentic. Don’t think about your company’s values as a one-time event measured by, say, the initial attention it receives. Think about them in the context of authenticity of its content. For a value statement to be authentic, it doesn’t have to sound like it belongs on a Hallmark card. Values-driven companies adhere to tough — if not downright controversial — values. Really own the process. Values initiatives have nothing to do with building consensus. They’re about imposing a set of fundamental, strategically sound beliefs on a group or a broad group of people. So top managers, I think, could benefit to understand that a good values program is …. I like to compare it to sort of a great wine, right? It’s not rushed. It’s far more important for a values team to arrive at a statement that works than to reach a decision it may later regret. Executives, for example, should discuss values over a number of months. They should consider and reconsider how those standards will play out, you know, within the holes of their business.

And finally, weave core values into everything. That really connects to the third question we just discussed. From the first interview to the last day of work, employees should be constantly reminded that core values really form the basis for every decision that the company makes. That’s why it’s so important that sustainability becomes part of and woven into those values and your strategic initiatives you ended up having to sell the idea when it’s already part or woven through your set of strategic initiatives.

Berger: Wow, that’s such a good point. Such a good point. And I love what you said, that it doesn’t have to sound like it belongs on a Hallmark card. And when you think about how this is the whole overarching theme of the season of the podcast was operationalizing values. And so we’re looking at this from a manufacturing context. So I would go so far as to say it better not sound like it belongs on Hallmark card, because people working in a food manufacturing space aren’t going to be interested in it. It has to be something that they can relate to, right?

Berger: Absolutely. Absolutely.

Spencer: We got one more question. This is an overarching question that pertains really to the whole season. This person didn’t apply it to one episode in particular. And the question is, in talking about values, what suggestions do you have for taking those first steps to engage employees? This person wants to know how easily can I approach and engage employees for initiatives like sustainability? Is there a way to make this a bottom-up initiative?

Berger: There is a way to make it a bottom-up initiative. And I think what I have seen is more success. I’d probably begin with just reminding employees again and again that the company’s values are more than just words. Evaluate employees against the core values. And when it comes time to award stock, bonuses, raises … use the value statement as a metric. Even the decision to let someone go can be driven by values as well.

Spencer: Wow, I love that perspective.

Berger: Even after a company’s embedded its values into its system, it should promote those values at every turn. It’s been said that employees won’t truly believe a message until they’ve heard it repeated by executives upwards of seven times. So given the cynicism or surrounding values, these days, executives would do really well to repeat them every chance that they get.

Spencer: Definitely.

Berger: And just involve all employee levels when writing company values, and cultivate purpose amongst your employees. In other words, it’s more meaningful for us to understand purpose than process. We’re more motivated when we can grasp a company’s mission and when we feel like we’re an integral part of that mission. Value relationships in your organizations. Find ways to build a community that reflects your core values. If one of your core values is integrity, for example, you might prioritize open communication, honesty and empathy. If you’re a manager, action this: When you communicate with your teams, encourage collaboration based on a clear set of values. And as we talked about a few minutes ago, core values are not just a PR move. They’re not just something for the outside world that doesn’t match your company’s internal workings. They are the identity of your company and all employees can and should contribute to this identity. And finally, kind of a last thought, check and check in on your company values. One tool that works really well is an employee engagement survey. Living up to your company values is not going to happen overnight, so a tool like an employee engagement survey can really help you track how employee experience matches those values. And then as you move along in your values journey, you can make adjustments as you go to those values.

Spencer: That’s such good advice. And again, I just think that it’s something we kind of fail to consider. Because food manufacturing is all about the hard skills. And we need to remember to inject values into our everyday operations. And I think that it’s going to increase engagement: employee engagement, engagement with the community, engagement with the brand. I think a survey is a great way to sort of get your baseline as you begin to incorporate values into the manufacturing space. That’s such good advice, Rich.

Berger: Yeah, you’re exactly right. I think “baseline” is a great way to look at it. Develop that baseline, and then keep repeating those surveys so that you can continue to make adjustments in the journey as you go.

Spencer: Do you think that by repeating the survey, maybe doing it quarterly, just sort of re-asking the question to see where things have changed, what you’re doing well, and where you need to make some course correction? Do you think that actually communicates to the workforce that you’re sincere and authentic?

Berger: Yeah, absolutely. And it also drives home that these values are important to us.

Spencer: Yeah. Well, Rich, this has been so enlightening. And again, I think it’s been really great to think about values on all of these levels, from sustainability, to community involvement, to employee engagement, to protecting your brand and sustainability on behalf of your brand. These are all things that we need to make sure that we’re considering in food manufacturing, that we keep those values at the heart of what we do. So thank you so much for spending these five weeks with me, Rich, and having these important and really valuable conversations.

Berger: I have enjoyed it so much. I’ve learned a lot in the process. But it’s also been a great opportunity for us to have conversations that create change.

Spencer: Well listen, Rich, I’ve known you for several years now and I know that you are a very intelligent and talented engineer. I also know that you have a heart of gold. I just want to say that Kinders is lucky to have you, and I wish you and Kinders the most success.

Berger: Thank you, Joanie. That’s very nice of you to say. I appreciate it.

Spencer: Take care!

In this episode of the Troubleshooting Innovation podcast, engineering expert Rich Berger suggests how brands can innovate, even if they’re not consumer-facing. Hosted by Joanie Spencer, Commercial Baking editor-in-chief.

Sponsored by Shick Esteve.

 

Joanie Spencer: I’m excited to talk about this particular topic, because I know you’re going to have a lot to offer. The first thing that I want to ask you is, in the past few years, how have consumers expectations for immediate gratification impacted speed to market for new product development?

Rich Berger: Yeah, increasing speed to market obviously leads to numerous financial and non-financial benefits. I think the more agile we are in manufacturing, the more potential we have to boost our company’s top and bottom lines. In fact, flexible and even mobile customers and consumers demand it. The financial benefits are often directly measurable in our space and, I think, exceed the upfront costs of introducing speed-to-market approaches in manufacturing.

[Here are] some examples of the benefits of speed in manufacturing. First, companies that are built for speed, especially in the innovation space, often realize first mover advantages, right? They’re able to react more quickly to competitors’ moves or market shifts or consumers’ needs with their own product innovations. You also have lower development costs. Because as you streamline processes and limit iterations, it all of a sudden just opens up or releases financial and operational resources that can be redirected to other value-added activities. And then, of course, a larger market share. I mean, a product that gets to market early is likely to face initial competition. A quick introduction also gives a product more time to build market share before — or even if — it declines into, say, a commodity kind of a situation. I also think greater accuracy in our forecasting can be a very positive outcome of speed to market, because the time between product design and product release is shorter. So we may be more willing to greenlight trendy products that would otherwise be denied in those situations.

Spencer: What are some of the manufacturing implications that come with that speed, especially when you’re thinking about engineering and efficiency?

Berger: Yes, supporting speed to market used to be something to consider in the work that we do as an operator. Now, it’s integrated into really everything that we do. Adapting our manufacturing environment to further adapt to consumers’ ever-changing needs can really bring, I think, a competitive advantage. I can share a few experiences I’ve had that have been successful in getting products to market faster.

Spencer: Okay, let’s hear it.

Berger: First, it’d be take a hard look at the shop floor and consider updates [that get you up to the] standards and initiatives we refer to as manufacturing 4.0. And in that environment, success is not just upgrading the machines with sensors, so to speak. It’s emerging technologies, such as autonomous and self-optimizing robots; it’s additive manufacturing, that brings a ton of flexibility into what we do; or the industrial internet of things, which is really changing the manufacturing industry in a positive way.

We now have countless options in front of us, tons of tools to build smarter factories with better performance that can really catapult a manufacturer to the top of the market. The only thing to note is that sometimes these kinds of upgrades can result in capital expenditures that could be beyond a current scope, or a current appetite for investment. But that can be offset with the return that you enjoy through supporting speed to market.

I think there’s a human factor to all of this as well. Maximizing employee productivity is crucial for putting your company on the fast track. Even if your factory is equipped with very advanced process automation, it’s about stepping back and just understanding what are the workflows that are in front of you and the tasks that are being done. And how can you reallocate the human resources to tasks that add more value monitoring and refining? Your engineering or development teams can really be just half the battle. A thorough review of management and productivity tools — or for that matter, lack thereof — will uncover a number of stumbling blocks, which really brings us to sort of a third approach. And that’s what I refer to as sort of a single manufacturing platform.

Spencer: And what’s that?

Berger: Well, it’s maintaining a collection of business processes, productivity tools or even isolated systems that aren’t necessarily integrated. And that can become probably one of the biggest speed bumps, or speed-to-market bumps, that we can experience in manufacturing. Our data is the lifeblood of the business. And if the data doesn’t flow freely, amongst all of these different processes and systems, then the business won’t receive any momentum, in my opinion. So a platform that connects the business end-to-end — with development and engineering, sales, production, R&D — this level of integration not only boosts productivity, but it can significantly improve our time to market in order to achieve long-term results. That well-integrated platform with a number of connectors can certainly help us bring new innovations to market faster.

Spencer: Okay, so I’m gonna ask you to take all of that knowledge that you just shared, and maybe step a little bit outside of your comfort zone with this next question. So sorry, but it’s sort of a chicken or egg question, which is more important, good branding, or innovative product development? And then which needs to happen first.

Berger: I’m glad you began that with “outside of my typical knowledge area,” but you know, I’ve had the benefit of being surrounded by really amazing brand managers in my career. So I’m in no ways a marketing expert, nor do I pretend to have deep knowledge in it.

Spencer: But, you know, that’s exactly why I asked the question is because of your experience. You’ve been part of these really big and powerful, good, strong brands, so I know you have some insight.

Berger: Well, the reason I’ve had the benefit of being surrounded by great brand managers is because many of the brand strategies really have to be supported by the supply chain. So I’m going to try and share a few of my own observations, for what it’s worth.

To your first question, I think branding and product innovation feed off of each other, to be honest with you. I think brand innovation that occurs before your competitors’ can allow for a larger sustainable competitive advantage and can be maintained over a much longer period of time by your brand. So I think innovating before your competitors. It rewards your brand loyal customers with the opportunity to be the first ones with the latest and greatest product on the market. And in turn, your loyalest customer becomes almost your own marketing outlet in a way.

Also being culturally relevant means that the brand is highly adaptable and flexible and “in the know.” So, creating branded products that relate to current trends is a great way to stay top of mind and create meaningful connections with the consumer. I’ve seen innovation, particularly in branding, expanding into new categories, and sort of refreshing those assets with updated contemporary styles, of course, which in turn re-engages customers and consumers. It also helps you stay relevant in a pretty fast-pace market. And then expanding those capabilities and offerings to attract a wider group of consumers really allows for incremental growth.

Lastly, I think that customer needs are pretty dynamic. And they’re ever-changing, probably more today than ever before. Being able to use key insights and translating those into our supply chain network, to better understand their needs, really allows us to see how we’re comparing to our competition, and helps us understand what the consumer wants, what the consumer values, where the value is, and helps the brand stay ahead of the curve.

Spencer: You know, I’m hearing a couple of themes throughout this season of the podcast. And one of them is that you have to have a lot of courage to be first out in the market. And you mentioned that with sustainability efforts, with talent development, and with product development and branding, too. So there’s such a level of courage there, because there’s a lot of risk in being first. But there’s also a lot of reward that can come with it if you do it correctly … and successfully.

Berger: Right. I think you summarized it well. And in fact, I think that approach really touched on a lot of things that we’ve talked about, even in the previous episodes through sustainability, community engagement and people. So yeah, that’s a really good point.

Spencer: And then the second thing I noticed is when you mentioned that need for understanding what the consumer wants, and being able to stay ahead of the competition. It just kind of reminds me what we’ve talked about with data. Having the data isn’t enough, you have to know what to do with it. So I can see that translating into the branding, and the product development as well, that it’s going to help manufacturers stay ahead of the curve.

Berger: And I would just add one more point to that, Joanie, and that is to take the time to understand what your competition is actually doing well. Right? In a way, it’s just recognizing a best practice that perhaps that you can attempt to adopt. But that goes beyond just the brand world. I mean, that even applies in the operations world. It’s understanding what are folks doing well in the manufacturing space. And how can you adopt some of those practices in what you do every day?

Spencer: Absolutely. Okay, so the next question is talking about from your experience, how can a brand be intrinsically intertwined with its operations?

Berger: To me, branding is about people. People build brands, people buy brands. The relationship, that sort of first glance, is a pretty simple one: Build a good brand and others will buy it. At the heart of that relationship is another group of people. And it’s that of the employees. It is the employees who enact the attributes of the brand and whose actions ultimately foster the customer experience. And again, that can be good. Or that can be bad. You know, that’s there’s a risk/reward there.

Spencer: Some say that your most important customer is your employee.

Berger: Right. The actions of your team should reinforce the promises a brand makes to its consumers. If wisely conducted, I think that this reinforcement breeds more success, awareness, sales, loyalty. Employees have, I think, the formidable task of demonstrating the brand by the actions that they take.

Manufacturing organizations tend to attract the attention of general managers, much in the same way airlines do. One only really notices them when they’re late, when ticket prices rise, or when there might be a catastrophe or an issue or a breakdown. When they’re operating smoothly, they’re almost invisible. Right? But lately, manufacturing is getting increasing attention from business managers who, only a few years ago, were preoccupied with marketing or financial matters. It’s kind of interesting how the manufacturing space has evolved in that way.

But back on employees, I just genuinely feel that engaged employees — and we’ve talked about engagement in, I think it was the last episode, Joanie — I think engaged employees build strong brands. So many companies focus on all their branding efforts; on marketing activities like advertising, campaigns, promotions, packaging; yet, one of the most powerful brand assets that a company has is your people. Regardless of what business you’re in, building a strong brand requires that all employees feel connected to that brand, that they understand their role in turning brand aspirations and company values into reality.

I mean, if you’re not inspiring your talent to be brand ambassadors, I think we’re missing out.

Spencer: That’s a really good point. What would you say are the biggest lessons that can be learned when a food manufacturer operationalizes its branding into the manufacturing space?

Berger: The one that comes top of mind would be safeguarding the brand, which is probably the majority of what we do in the manufacturing environment when it comes to brand awareness, and truly differentiating ourselves from the competition, protecting the brand. Really, if you think about it, it begins in the production environment. That’s where protecting the brand begins, really.

Spencer: How so?

Berger: For example, maintaining the highest level of quality possible, that happens in production, that happens in manufacturing, ensuring food safety and compliance. There’s not a lot that we could do in a R&D or innovation cycle, in terms of food safety and compliance, but in manufacturing and food production, we own a majority of that component.

Also, being a responsible operator, by integrating the planet and community in your performance pillars, that goes a long way at demonstrating your values and supporting the brand.

Spencer: I feel like everything that you’re saying … it’s like all of the episodes that we’ve done so far have sort of led up to supporting the brand, right?

Berger: For sure. It’s interesting, yeah. And just sort of a follow-on, I would say, creating a work environment that is safe. I always like to think about it as: Do everything that you can to return your employees home healthier than when they came to work.

And I’ll be the first to admit, I think about a safe work environment as: Let’s prevent a catastrophe. Right? Let’s protect our employees. But I think if we raise the bar even further, and we say, “No, let’s also think about it as how do we enhance the health of our employees,” there’s so many things that we can do right in food production and in manufacturing in that way. And just think that not only does it lead to a positive reputation, but you know, we’ve talked a little bit about the shortage of skills and knowledge, particularly around STEM skills and knowledge … that also leads to supporting an effort where people will want to come and work in that environment.

Lastly, I think brands can be an engine. They can be a conduit, so to speak, toward a more sustainable world. They should be ahead of the market and create products and services that are relevant while, at the same time, helping consumers live in a more sustainable manner. I think this creates a positive influence on both the environment and the communities in which we work, as well as generate dividends through growing demand. A sustainable brand also enhances a company’s reputation and secures future earnings through reduction of risk and maintaining the business over the long term. That’s sort of increasing the brand value.

Spencer: Yeah, and really giving it longevity and loyalty from consumers. I think that is a really good note to end on, Rich. I thought this was really interesting, because we don’t often talk about how the brand relates to the manufacturing process, so I really appreciate your insight. And this has been so fun to do this podcast with you.

Next week, we’re going to take on some listener questions. So we have gone through community involvement, sustainability, talent development, and how to innovate through and for a brand. So I am excited for next week when we take listener questions, which you can email to info@avantfoodmedia.com. Rich, thank you so much.

Berger: Thank you! And I’m excited about answering those questions as well. Joanie, as I think I mentioned on the first couple episodes, depending on how many questions come in, we may not be able to address all of them. But this conversation is really important to me. And if anyone has questions that perhaps we don’t address in the next episode, I will respond to all that we do receive, and I look forward to that.

Thank you. It’s been a great conversation with you and sharing this conversation with the industry. I’ve really enjoyed it, Joanie.