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!