By Michael Carmichael
December 4, 2008
Ten years ago Zingerman’s Deli in Ann Arbor was featured in Corp! It was also just beginning a vision for 2009. Their sales in 1998 were around $10.5 million, spread amongst the Deli itself, a new Bakehouse, a catering business and a mail-order operation. Today, as they are visioning for 2020 (pun intended), sales top $38 million, more than 600 full-time employees are continually learning about food, customers and commerce at ZingTrain, and nine businesses are part of the Zingerman’s Community of Business (ZCoB).
The 2020 Vision calls for more businesses being added, even more emphasis on local, sustainable food sources, and more people on board to help share in the American dream by being able to “buy houses, raise families and send their children to college.” Along the way, Zingerman’s intends to help customers and community alike.
“Zingerman’s,” says Paul Saginaw, “is driven to add benefits, not take them away.” But these are just the basics that Paul Saginaw reported on.
A Vision for Lansing
He would like to extend the visioning idea to Michigan’s government in Lansing. “A vision for the State would be active, not reactive. We’d love to see a large gathering of stakeholders in the state get together and say ‘Okay, here we are now, but let’s look out 10 or 20 years from now and say what would be a great future for us.’ Rather than identifying current problems and trying to come up with short-term solutions for them (which is depressing), the antidote to that is to envision a preferred future and talk about how do we get there,” Saginaw continues.
“In the discussion of how do we get there, all of your current problems come up out of the closet. But, rather than finger-pointing and blaming each other about why we’re in the condition we’re in, it’s so much more energizing to talk about what things are in place preventing us from getting where we want to be, and what things are in place to help us get there. We’d be glad to convene that group,” Saginaw explains. “We’re big believers in our state and we’ve been in this for 27 years - using our actions to improve things. Why not improve the state?” he wonders.
Think Local, Act Local
One of the actions Zingerman’s uses to improve things is buying locally. “Remember the Richard Scarry books for children?” Saginaw asks. “One showed what people do all day. The Baker bakes the bread. The Farmer gets a haircut and the Barber gets the money to buy the bread and then the Baker has the money to pay the Farmer. That’s really what we’re talking about. We buy from many local farmers. We’re very strong believers in the idea that if you want to have a strong, vibrant community you have to have a strong, vibrant local economy. That means looking closely at sourcing your food locally, your energy locally, your clothing locally, your housing locally.”
Saginaw extends the idea of sourcing locally to the financial community. “We don’t have a local stock market, but we do have local sources of money - local banks and credit unions where they either know you or know someone who knows you. They know what size risk they’re taking to loan money to you to start or grow a business or buy a home. It’s place-based lending. People put their money in the local bank and it’s then community dollars at work in the local community.”
He continues: “Our goal from the day we started was to create an extraordinary organization and be the best at what we are doing. Not necessarily the most profitable. What you get when you do that is long-term success. You’re not the most profitable or the biggest, but you build a good reputation or brand. You take significant action in your community to enhance the social, cultural and educational vitality of the community that we extract our profits from and then it works. People support us, and we support the community.” It sounds so simple when Saginaw says it.
Planning is not just a word at Zingerman’s, it’s a mantra. “We plan the upcoming year in great detail, with a lot of narrative about where revenues are coming from,” Saginaw continues. “We also look out at years two and three with ‘pretty close’ numbers. So, when 2006 came along we realized that we were coming to the end of our 2009 Vision and we needed to come up with a new Vision with all of our partners. 2020 sounded good and we liked the pun. We took a year to roll it out to the organization and adopt it. Basically, it’s reaffirming everything we set out to do in our first 15 years - grow by providing opportunity for ownership within the organization for the people who work here. In the new Vision we talk much more about buying locally and about sustainability and what we want to do at the end of the day is have our community be better off because we existed,” Saginaw explains.
Greening and Growing
“We want to have contributed in a positive way. So we talk much more about greening the organization. We want to be beyond compliance. We want to stretch ourselves out there. We want to improve our food, our service and our finances. We want to be sustainable as a business for the long haul. We have a lot of people who depend on us and we want to make sure we’re here for everybody,” Saginaw says as he continues to talk about the Zingerman’s vision for the future. A future which may very soon include a larger commitment to agriculture.
“We hoping to close on a 120-acre farm,” says Saginaw. “Right now we’re raising heirloom tomatoes, peppers, squash, herbs and potatoes on about four acres that belong to the managing partner of the Zingerman’s Roadhouse. What we’re planning on doing is setting up the new farm complete with a farm kitchen and go back to traditional methods of harvesting and preserving food. We’ll be using the results in our own venues and selling it on our retail shelves. We’re setting it up as a mini-entrepreneurial venture with Zingerman’s Roadhouse and hope to spin it out as a separate business in the future.”
Sustainability also plays into the vision for this venture. “We have enough waste oil from our fryers that we think we’ll be able to run the farm on bio-diesel. We’re getting a converter so that we can do that,” explains Saginaw. “We’re doing this because it’s the right thing to do. We want to be a model for how you can run a business this way and be successful. We’re not looking at unbridled growth, we’re looking at product development.”
Spreading the Knowledge
ZingTrain, the instructional arm of the Zingerman’s Community of Businesses, provides internal training as well as training to business people and entrepreneurs from across the country. Saginaw talks about a new course offering. “It’s called ‘Greens to Evergreens.’ We measure ourselves within the organization by what we call Code Greens and Code Reds. Code Reds are a complaint or something that should be done differently, a product that we should carry or a guest that has had a bad experience. Greens are compliments. So, turning Greens into Evergreens means taking the things you are doing well and doing them a lot better. You’re changing a transaction with a customer and transforming it into a meaningful interaction,” he says.
Transformation and adapting to change is something the Michigan economy could use in large doses. “We have another new class at ZingTrain called ‘Bottom Line Change,'” Saginaw continues. “It’s a systematic process for introducing change into an organization by inducing very early buy-in for that change. You spend a lot of time up front, rolling out your vision, explaining the compelling reasons why you want to make the change, figuring out who needs to know and how the change affects everybody by getting their input. We spend a lot of upfront time but the execution goes very quickly and you have much greater expectations for success.”
Saginaw on Community Responsibility
Zingerman’s belief in making a positive contribution goes well beyond its corporate doors. “We believe a business has to earn its right to do business in a community by being a good corporate citizen and neighbor. Conducting a business just for a higher profit is not necessarily the best thing for a community if it means cutting jobs or whatever just to maintain that profit,” Saginaw suggests. “So part of what we do is take action in the public sector, contributing to the health and vibrancy of our community - and that’s consistent with our basic vision: to share the Zingerman’s experience with as many people as we can, and that includes people who can’t afford to shop with us.”
How does it share that experience? “Years ago we started a hunger relief program called Food Gatherers, collecting food that might otherwise be given away or thrown out and redistributing it to agencies that are designated for feeding the hungry. It started out small but now distributes an average of six tons per day - recovering and distributing a pound of food for less than the price of a postage stamp. It’s also a part of the national Second Harvest program, so it coordinates with national food suppliers.”
Saginaw then talks about additional ways that Zingerman’s gives back to its greater community. “We give 10 percent of our profit each year back into the community, but that’s just money. Over the years we’ve become good at strategic planning, running meetings and events and providing leadership, so it’s not just money but social and intellectual capital that we can leverage to help the community. All businesses can do that, all people can do that,” he continues. “We all have resources of one sort or other and there are people and community organizations that have a dearth of those resources. We try and get out there in the community and help every way we can. It’s an honor to be able to do that,” Saginaw concludes.
And one might say that Michigan should be honored to have the likes of Paul Saginaw and Zingerman’s as part of its community.