How company purpose helps grow companies, a case study
In this excerpt from her book "Reimagining Capitalism in a World on Fire" Rebecca Henderson tells the story of King Arthur Flour, a company that is selling a commodity product at a double digit growth rate.
"The way in which the combination of mission and the nature of work plays out in practice to support both architectural innovation and the generation of great jobs can be seen particularly clearly at King Arthur Flour (KAF), the oldest flour company in the United States. KAF’s best-selling product, the 5-pound bag of unbleached, all-purpose flour, is not a sexy product, and the market has been shrinking for years. Fewer and fewer people bake, and more and more flour is bought online, where brands often carry little weight.
"But KAF is thriving. Its customers love the company. KAF has over a million likes on Facebook and more than 576,000 followers on Instagram. (For comparison, General Mills, the current market leader with $3.9 billion in sales in "meals and baking," compared to KAF’s roughly $140 million, has about 85,000 likes on Facebook and 47,000 Instagram followers.) Sales are growing in the high single digits annually — an unheard of growth rate for a commodity product in a 200-year-old industry.
"KAF’s purpose is to 'to build community through baking,' and the three co-CEOs (!) have a very clear sense of just why and how home baking can make a difference in the world."
"This strategy is enabled by a deeply participative, fully empowered workforce that embraces it as a reason for working that extends far beyond a paycheck — and that makes it immensely difficult to imitate. KAF’s Vermont headquarters — now a major tourist attraction — includes a retail store, where visitors can watch baking demonstrations and sample baked goods (made with KAF products, of course) and a baking school, where hundreds of passionate bakers arrive to take classes from King Arthur’s master bakers.
King Arthur Flour's Instagram page has 576,000 followers. Market leader General Mills has 47,000.
"The company also offers online recipes and baking classes, and a fully staffed baking hotline, where customers can get answers to their baking questions from employees with thousands of hours of baking experience. Everyone is passionate about baking. Everyone goes the extra mile to help the company succeed. The latest financial results are shared with every employee, and everyone is offered training on how to read income statements and balance sheets. The company is very careful about the people it hires, and then equally careful about how they are treated."
Article: How a Strong Shared Sense of Purpose Can Help Companies Succeed