The Art of the Trade Off

What we need and what we want are very different things. Our needs and wants often drive our decisions in opposite directions. I may want a swanky office, but I don't need it. For the entrepreneur navigating the startup, or anybody navigating life, being clear about what you need should come first. When dealing with the trade offs that inevitably arise in a growing business, the better we understand our needs the less confused we will be about our decisions.

When I tell people I run a social enterprise with the actor Hugh Jackman and that we support fair trade and organic coffee farmers in the developing world, I am often met with heartfelt expressions of solidarity.

"What a great thing to do!" people say. "I ALWAYS buy fair trade coffee."

Given the enthusiasm and celebrity involvement, you'd think a high volume of sales for worthy, charitable products would be easy to achieve. Unfortunately, there is often a disparity between what consumers say they want and their final purchasing decision. Those of us involved in running social enterprises are familiar with the mixed messages of well-intentioned consumers. Studies show consumers will choose a socially responsible brand assuming the quality is the same as their current brand. While such studies are reassuring, the are not always reflected in your actual sales numbers. Disappointing sales can shatter genuinely idealistic entrepreneurs who assume substantial risk betting on enlightened consumers.

I've come to learn that the complexity consumer choice forces difficult choices on the social entrepreneur. We balance short-term and long-term concerns when shopping. Sometimes we can't afford the sustainable product option. We also do not turn off our own subjective preferences when we wander into the organic aisle. Basic consumer behavior can work for social entrepreneurs and against them. Many consumers, for example, bought our coffee because of Hugh's involvement and not because the product was fair trade. However, they continue to purchase the coffee because the product is excellent. Without meeting the expectation of quality, the social or celebrity aspect has limited appeal.

Every enterprise juggles trade offs. Social enterprises juggle trade offs under heightened scrutiny by owners, stakeholders and consumers. Should a social enterprise embrace a somewhat less sustainable model in order to immediately help farmers out of poverty, or should the organization remain focused on the long term? Poor farmers are anxious about their family's wellbeing and will often advocate for faster growth. Consumers who often don't, and can't be expected, to understand the reason for trade off's will push back against "compromises." Social businesses need to scale, and scaling often requires working with partners. What do you when you are a true pioneer and choices are limited to partners with different values?

Social Impact
Over many years, Hugh and I have both traveled to Ethiopia to meet with coffee farmers. Sustainability, deforestation, energy, and coffee production are closely interrelated. Clearing land for firewood ultimately erodes farmland and destroys coffee yields in the long term. Solving the energy question by finding an alternative power source was essential to ending a downward economic and environmental spiral for small farmers. Though burning livestock manure to generate clean methane initially seemed to solve the fuel problem, the practicality of implementing and maintaining complex methane digester systems in isolated rural areas proved problematic. Now highly efficient wood stoves are favored as a transitional technology. The pivot from radical to incremental change appears to be the right trade off in Ethiopia, for now.

On the distribution side, packaging and shipping challenges have forced other trade offs. Achieving broad distribution will help coffee farmers advance sustainable practices, but in many cases farmers cannot reach mass markets through existing channels. In many respects, consumerism and sustainability don't mix at this point. While certain options are improving, like recyclable k-cups, there is still much creative work to be done.

Consumerism and social responsibility are in the process of finding alignment and we have a long way to go, but I remain very optimistic. We need to meet the consumers where they are, educate them in ways they will be receptive to, and demonstrate that choosing wisely does not require dramatic change on their part.

In order to make changes, we must continue the ongoing debate and conversation about what kind of society we want. We must support charitable foundations and demonstrate the viability of social entrepreneurship. Over time we will create better options through better trade offs. I doubt, however, we will ever eliminate trade offs. For this reason, it is important the we keep striving toward perfect solutions, even if we never get there.