If ever a town needed a Penera Bread it's Galva, Illinois. They don't need it for the food, mind you. I'm sure the Garden of Eat In restaurant and Gus' Taco House keep the 2,600 or so resident of Galva fed in fine style. Rather, it is for the example of what a business leader can be. In that area, Galva is in short supply and Penera Bread – their founder Ron Shaich more specifically – is re-writing the book.
In a recent HBR post, Shaich wrote about the "notion of a conscious and long-term approach to value creation — when put into proper application — serves long-term shareholders extraordinarily well and has the capacity to favorably reshape the public’s perception of corporate America. It is built on the fundamental premise that every business has a deeper purpose than merely short-term profit maximization and, more importantly, a responsibility to all of its stakeholders (customers, employees, vendors, investors, community). With such a model, profit is merely the byproduct of delivering something that serves society and a broad range of stakeholders."
Shaich does more than talk, however. Penera expects to feed a million people this year in three 'pay what you can afford' restaurants. They started them up because Shaich thinks Panera has the unique ability to leverage their scale and food business know-how "to affect positive — heck, lasting — change in the communities in which it served." Shaich says, "We have to spend less time figuring out how to extract economic value from our stakeholders and more time creating what is valuable to them. Doing so is what ultimately creates long term value."
Galva needs Shaich and Penera because, without it the folks there might come to believe that All Feed Processing and Packaging represents what business leadership is like. If that happens, the whole town may join an Occupy Galva movement, leaving no one to help Gus at his taco joint.
I am fully in support of efforts to drastically reduce government regulation, but having Tim Anderson, CEO of All Feeds, out in front of the crusade sets the effort back by decades.
All Feeds seems to feel quite victimized by OSHA – so victimized as to have an OSHA page on their web site with the American flag upside down. As the father of an airborne soldier with two tours in Afghanistan and one in Iraq, anyone who puts the flag he risked his life to defend upside down for any reason is a jerk in my book, but these guys are particularly galling.
All Feeds is unhappy with the series of fines OSHA has levied against them – a half million bucks in 2009, another $167K in 2010, and $758,000 this year. Prior to the 2010 fines, "All-Feed Processing and Packaging had been inspected by OSHA nine times since 2000, resulting in a significant enforcement action on four occasions. The nine inspections led to citations for 42 serious, 15 willful, five repeat and 10 other-than-serious violations." Feeling quite the victim of OSHA harassment, a few months ago All Feed refused to let OSHA inspectors do their job and it took a court order and $500 a day in fines to force them to do so.
So what makes me so sure Anderson and All Feed are not the victims of harassing government over-reach? Well, in levying the half million dollar fine in 2009, Nick Walters - the OSHA guy - said, "We've seen stark evidence of the tragedy that can occur when uncontrolled dust ignites."
Sure enough, three months later the All Feeds plant exploded. Said Tim Anderson, "Ultimately, it was still set off by a dust explosion." – just like the OSHA guy warned. Said injured employee Dustin Williams, "I had just got to the door when the explosion knocked me on my butt and I just slid across the parking lot." The employees were laid off – twenty of them still are. Twenty familes without work is tough medicine in a town the size of Galva. (This in spite of Anderson's touching assertion that his "heart is heavy for our employees. We really consider them our primary reason for being here.")
Penera Bread just reported earnings – sales up, profits up, business growing. That profit, as Ron Shaich said, is merely the byproduct of delivering something that serves society and a broad range of stakeholders. I have no idea if All Feed made any money, but they made at least a million and a half less because of their opting to run the place in a manner that left employees, their families and the community up the creek.
It's 32 miles from All Feed to the nearest Panera Bread location in Moline. The management team might want to start holding their meetings there. They just might learn something about leadership, business and the value of their stakeholders – not to mention how to avoid millions of dollars in fines and legal costs.