Session Title: Leadership in Action: In Conversation with Honest Tea
Entrepreneurs should design their products from the start with sustainability in mind; it is easier to begin from a place of positive social and environmental impact and scale the products from there.
Health and wellness, environmental consciousness, and social responsibility are three of the biggest trends that are increasingly influencing consumers and channeling purchasing decisions for consumable products—harmonizing these priorities will set the new standard for doing business.
To shift the economy in a more sustainable direction, consumers need to support entrepreneurs who are able seize an opportunity to innovate and make change happen.
“Our society is not going in the right direction. I don’t think government will change the direction; nonprofits are important, but big corporations, with all due respect, will not lead us in new directions—to take us in a different direction it takes entrepreneurs to create the ideas and consumers to support it. ” —Seth Goldman, Honest Tea
“For every problem you face, ask a question: ‘how can I do it differently?’ It is really important that what you can’t do everywhere does not stop you from what you can do somewhere.” —Mats Lederhausen, BeCause
“Our growth path is driven by innovation, and innovation is driven by our mission.” —Seth Goldman, Honest Tea
Lederhausen opened the session by saying that Goldman’s story as co-founder of Honest Tea provides a unique opportunity for all practitioners to learn about a journey that combines staying true to your mission and values with staying commercially successful. Goldman then introduced himself as President and TeaEO of Honest Tea. He told the story of how he cofounded the company out of his home in 1998 with Barry Nalebuff of the Yale School of Management. Today, Honest Tea is the nation’s top-selling organic bottled tea and is carried in more than 100,000 outlets across the United States. In March 2011, Honest Tea was acquired by The Coca-Cola Company, creating a platform for national expansion and helping to further the reach and impact of Honest Tea’s mission. Ever since the enterprise was launched out of Goldman’s home, the company has been a mission-driven innovator. It launched the first organic bottled tea in 1999 and the first Fair Trade-certified bottled tea in 2003. Goldman described how all Honest Tea varieties are now organic and Fair Trade certified. The company continues to be recognized for its mission-driven leadership, commitment to transparency, and sustainability values.
The session continued with Goldman sharing key lessons and insights learned from building a mission-driven business in a profit-driven world. The conversation was based on his recently published book, Mission in a Bottle. Goldman described some of the different challenges he faced in trying to create a product that was socially responsible, environmentally friendly, and appealing to consumers. Honest Tea committed early on to create products that were organic, Fair Trade, and also packaged in recyclable materials. However, they ran into challenges in distribution and were not able to get their product beyond natural-foods stores and beyond the East Coast of the United States. By bringing in The Coca-Cola Company as a minority partner, the company was able to grow substantially over the years.
Following Goldman’s introductory remarks, the audience posed a series of questions on the challenges he faced as a start-up and the transition to a small company that is part of a larger multinational. An important theme guiding the conversation was democratizing organics—making lower-sugar, sustainably grown products available to more people. By partnering with a larger company, Goldman was able to scale his mission-driven product and improve distribution. Goldman emphasized the importance of keeping one’s own identity and organizational structure when partnering with larger multinationals, and continuing to embed the core values of the mission.
The discussion also revealed the importance of sustainability throughout the supply chain to maximize the business’s positive social and environmental impacts. For example, by ensuring that all ingredients are certified to be Fair Trade and organic, Honest Tea has embedded its sustainability values directly into the product. The company believes in staying connected to its ingredients and to the communities who produce them. They can thus generate greater impact by scaling their product, without having to change it. As a result, they are able to have a greater positive social impact by producing more.
Goldman mentioned that while there are always challenges to creating and scaling a mission-driven brand in a large corporation, it is still worth doing. Both Honest Tea and The Coca-Cola Company were able to benefit from the collaboration. Goldman highlighted that the most important impact Honest Tea has had by working with The Coca-Cola Company has been to change a large company from within.
For instance, five years ago, Coca-Cola was not producing any Fair Trade or certified organic products, nor did they have any investment funds screened for social issues. Honest Tea brought sustainability as well as health and nutrition issues into the company, and by building the Honest Tea brand, the company was able to make a broader change within Coca-Cola.
Overall, this lively conversation offered inspiring—and at times quirky—insights into the power of innovation and values to drive business-led change in society. In describing the journey of his small mission-driven brand, forming an unlikely partnership with a large multinational, Goldman said that optimism is a critical personal quality: “You can’t be in this space if you are pessimistic.” You could add ambition to the list, as well; Goldman said his next goal is to make Honest Tea the next billion-dollar brand under the Coca-Cola umbrella.