Managing change in organizational settings

Ben & Jerry's Ice Cream

Company History

The two founders, Ben Cohen and Jerry Greenfield, became friends in 1963, while still in high school, and were resolute to making a commitment to their beliefs and their way of life. As such, they moved to a rural area in Vermont and incorporated an ice cream making company in December 1977. Their first shop was opened four months later and was an immediate success. Their company grew consistently throughout the 80s, melding their social beliefs to economical boost.

Key Management

Ben Cohen, one of the two founders of the company, is still the force that drives the company forward. His strategic vision and imagination is appreciated by everyone working with him. President and chief executive officer until 1989, he is currently leading the marketing and promotion actions. For Ben, the company's social mission still remains a top priority and objective, generally more important than the economic objective. In his opinion, the 5-to-1 rule and buying supplies from handicapped or homeless people are moral foundations from which the company should never derive.

Fred "Chico" Lager was named president and chief executive officer in 1989 and is currently sharing operations responsibilities with Charles Lacy. For him, the statement according to which the foremost objective of a company should be profit maximization is always true. In this sense, he has found it increasingly difficult to support and apply some of Ben's ideas, like the 5-to-1 ratio, and has argued that the company cannot stay competitive on this means alone and that it should adapt some of its principles to the market's requirements.

Charles Lacy became general manager in February 1989. His opinions are somewhat in-between Chico's and Ben's. While on one hand he believes in the company's social mission and supports many of Ben's idea, he realizes that some of the decisions he is about to take, including eventual changes to the 5-to-1 rule, will affect the company's future.

3. Competitive Situation

The company has produced top quality ice cream from the very beginning, which means that it belongs to the super premium ice cream market. In this market, competition is determined by "product quality, flavor differentiation and marketing." Indeed, research performed in the 80s showed that, in terms of ice cream, consumers highly valued quality over price. Following this trend, the ice cream industry was a boom during the 80s, however, in the late 80s and early 90s, the market slowed down. This trend was believed to continue into the 90s as well.

Ben & Jerry's most serious competitors were Haagen-Dazs and Frusen Gladje. Even if, for the time being, Ben & Jerry seemed to emerge with an increasingly large number of customers, competition in the 90s was expected to become more bitter and product innovation and better product management would become essential for the company's survival.

4. External Environment

There are no serious political or economical forces from the external environment that may influence the company's economic future. Indeed, the super premium ice cream market relies greatly on the customers' preferences and less on external forces.

5. Problem Identification

In my opinion, there is one large problem and several smaller issues deriving from this. In this particular case, the problem is indeed a strategic one and refers to the way the company will be able to conciliate the social mission and the social objective with the economic profit maximization objective. A clear example in this sense would be the 5-to-1 ratio, an issue that requires an immediate answer.

Indeed, as the past managers and CEOs have pointed out, the increasingly competitive market in which the company will be activating during the 90s will mean the necessity to hire professional and experience market. However, this would be hard to do when you are offering between 25% and 50% below market salaries and, even more so, minimal future financial gains or promotions.

6. 1) There are two core competences at Ben & Jerry: the social mission and the product management. The former is tending to become a strategic problem, as I have previously pointed out, because it tends to overshadow the economic mission of the company.

2) In my opinion, the company Ben has built is extremely strong, because it has a major asset many of the companies do not: a common idea. Indeed, as we have seen from the questionnaire scores, the company's social mission is understood and supported by an overwhelming majority of the employees. This is something few companies can boast and this makes me believe that the company has a unity that will make it survive into the competitive 90s.

3) It depends on how this social mission has been perceived by the consumers. Many companies have used such social campaigns in order to hide their real economic interest and attract customers. The "problem" with Ben & Jerry's social mission is that it is all for real and not a method to gain market share and new consumers. As such, it is hard to discern whether the social mission has been a boom or a bust for the company. To the degree to which it functioned during the 80s, it seemed to have worked fine. However, it is my opinion that the 90s will mean something else for the company and that it needs to clearly decide which of the two missions (social vs. economic) has the upper hand.

7. Possible solutions

In my opinion, there are only two alternative solutions in this case: either the company decides to remain on the trend set by Ben during the 80s and believe that the social mission of the company is primordial or it can decide to become a truly important player in the industry and reassess some of its "social" rules, here including the 5-to-1 rule.

If the company decides on the first alternative solution, it becomes quite obvious for me that it will not survive long in the 90s, especially if we look at this economic period of time retrospectively. Indeed, this was a highly competitive period and Ben & Jerry would lack exactly what would have been most needed: professional managers that could guide the firm during this time. It is hard to believe that, with what other companies had to offer, managers would choose Ben & Jerry, where no future pay increases were guaranteed.

On the other hand, the company had evolved well during the 80s and the social mission seemed to be the core to everything the company and the employees believed in. It could be held responsible for many of its successes and one can see no reason to change a strategy that functioned well until now.

The economic solution has the great advantage that it can actually make the company a huge name, perhaps even a market leader. With the proper economic management and with professional managers, it can fully lead into the 90s.

8. Optimal solution

In my opinion, the economic solution is to be preferred in this case. Again, as I have previously mentioned, I am evaluating this retrospectively and became assured that the company needed to evolve in order to succeed. The 80s had something glamorous about them and, additionally, the super premium ice cream market had been constantly on the rise. However, trends of slowing down had already become clear and I am not so sure the social mission would have the same positive impact.