I talked with Gary at the Fortune Brainstorm Green meeting in Pasadena in April 2008: 

Glenn Croston: How is the organic food market changing agriculture? 

Gary Hirshberg: As a species we have been slow to understand how linear thinking doesn’t work in a cyclic world.  We have a tendency to bring same mistaken thinking to the problems that created the problem in the first place.  For example, harvesting bio-material and not putting anything back into the soil doesn’t work.  Soil is the only true equity that we can build. 

GC: How do you feel about the trend toward local food? 

GH: We have bought this mistaken idea that food miles are the holy grail.  When you take a factual look as opposed to assumptions, the answer can be surprising.  We [Stonyfield Farm] looked at organic dried milk powder from New Zealand, which was in surplus there and found it has 60% of the carbon footprint of fluid milk from closer to home.  Every farm was organic, so much of the energy expended in the fluid milk system is absent.  Organic local farms are great, but the short version of a long story is that we can’t the make the perfect the enemy of the good.   

And carbon is not the whole story.  If you focus just on carbon you might miss toxicity found in some foods that are not organic.  Large companies that are shrinking their carbon footprint using plastic might be missing toxicity problems.  It’s hard to find simple answers because we live in a multivariate world.  For every problem there is a solution that is obvious, and wrong.

 GC: What does it take to be a successful green entrepreneur and build a green business?     

GH: There are a couple of keys to be sure.

One is to resist the temptation to compete on price.  If you do you’re screwed.  You are selling authenticity.  When you reduce quality you have breached the relationship with the consumer.  Providing higher quality is the key to differentiate yourself.  Most commerce is done on cost reduction.  What works with green though is to improve quality, to build demand. 

Building a green business is never going to work by competing on cost alone, although  net margins are the same or better than competitors.  The difference is that green businesses spend less on A & P [Advertising and Promotion] by creating loyalty. 

Building green is not for the meek; you need to have strong vertebrate. 

Organic food as an industry is only 3.5% of total food.  If you are not increasing growth and velocity, take slotting fees.  Find a way to grow supply chain, the only way that you can do that is by maintaining reputation and quality.  Retailers say ‘Give me a deal, give me a promotion’.   Wal-Mart never pressures us on price.  They have been as honorable as anyone, maybe because they know that if my offering is not as good then it will reflect on them. 

And always believe in your mission, believe in your ethic, and don’t compromise it.  If you do, you lose your advantage.

Reward your supply chain, make sure they are partners.  Don’t let them become adversaries.   

Keep your books open to make sure employees see what is going on.  I went through risks with people.  Help them understand why we do the things we do.  They have to get why we have a zero tolerance on sacrificing quality.  My cost of goods are so high, I have to get to a different place, I have to get below the line. 

Going green improves retention and employee loyalty.  Pride and quality.  What do employees want?  1) wages, and 2) meaningful work.  To find the right chemistry, and get up to speed, it takes new employees six months to contribute.  Employers understand that the cost of losing a good person is incalculable, and see the value in making the change.  Everybody wants to do the right thing, if they can find a way to do it. 

GC: Will there come a time when organic agriculture will be the predominant way food is grown?

GH: It’s easy to predict that organic food will grow and become predominant.  Conventional food depletes the soil and resources, and organics are the opposite, putting carbon in soil. And the price of oil will drive this, raising the price of food grown with conventional methods.  It’s hard to say when it will happen, when organic will become the standard way of growing our food, but it will.