Dec 6, 2015

Artisans, keep it real and keep it afloat

When does artisan become corporate? This dilemma lies at the heart of many growth company stories.

Enterprises start as “authentic” ventures offering an alternative to the mainstream. What makes them special is their independence and personality — the idea that they sell distinctive goods with soul, unlike faceless multinationals. Lots of customers seem to like this narrative, especially when it comes to food and drink.

But for many successful artisan businesses, ambition tends to take over. Gradually what appeared to be the original authenticity gives way to scale. The start-up matures and needs to raise external finance to fund expansion. Money replaces craft as the overriding priority. And so the culture changes: the founder with integrity sells out or becomes a capitalist. Either way, it seems that the initial philosophy may have to be compromised in the pursuit of financial advancement.

Yet often this version of events is itself a fraud. Many artisan producers can’t satisfy demand, or make products with consistent quality, or deliver great service, or stay solvent. You are no use to your customers if you sell wonderful items but make a loss and go broke. Local suppliers frequently provide limited variety or bad value. The economies and efficiencies that can accompany a national business are undeniable — and sometimes they mean better quality.

Often we buy the image, not the reality. Innocent Drinksseems to be quirky and indie: in fact it is owned by Coca-Cola.The Fairtrade and organic chocolate brand Green & Black’s is owned by the food goliath Mondelez. The funky Teapigs is owned by Tetley, which is controlled by the Indian conglomerate Tata. And Unilever owns Ben & Jerry’s, the groovy ice-cream maker started by two guys who looked like hippies. Quite a few so-called craft spirits are distilled under contract by big companies: they are virtual producers, supplying only the name and marketing.

There are trade-offs when we buy such brands. We want convenience and availability, which means mass production, but we also approve of the apparently genuine nature of the products. They are cleverly packaged to satisfy both requirements without appearing too phoney. God forbid one would succumb to George W Bush’s perceptive insight: “You can fool some of the people all the time, and those are the ones you want to concentrate on.”

Lots of educated diners say they dislike “chain” restaurants, but plenty of locals cheered when we opened branches of Pizza Express all over the country in the 1990s, which is why the company did so well. Neighbourhood trattorias were often costly and served inferior meals — a lack of decent competition meant they could be lazy and unreliable. Eating out in Britain has improved significantly in the past 20 years, in part thanks to superior chains putting old-fashioned, unimaginative operators out of business — or forcing them to up their game.

Some have attacked the very concept of authenticity. As Peter York writes in his witty diatribe Authenticity is a Con: “I’m dead against authenticity, immediately suspicious of the word and its intentions. It is a word that reminds me of the fast one about to be pulled, the value to be added, the tosh about to be talked, the microconnoisseur at your elbow.”

He has a point. Many entrepreneurs display their artisanal credentials but are hopelessly uncommercial, or rely on charging extortionate prices because of the supposed provenance of their goods.

Others abuse the word artisan. Our Gail’s bakeries hand-make fresh bread, cakes and pastries, and never go near the Chorleywood bread process employed by the industrial bakers. Yet many rival retailers use frozen, machine-made products and call them “artisan”, “natural” and “freshly baked”. We hope our customers appreciate the difference in taste, and understand that not all bakeries are the same.

Companies can lose something special when the founder steps aside. Once their animating spirit has gone, the passion, vision and sense of heritage and detail dissipate. Rather than cultivating and promoting staff from within, external appointments are made. Outsourcing becomes more prevalent. The focus on lower- quality, cheaper suppliers becomes ever stronger. Neither Strada nor Giraffe (restaurant chains I co-founded or helped to develop) was the same once it had been swallowed up by a large company.

All businesses must strike a balance between the interests of the shareholders and customers. The former want to make an appropriate profit; the latter want to pay a fair price for items that deliver what is promised. Many entrepreneurs start a company with heroic intentions, but time and reality force accommodations.

Fierce competition, the need for external capital, responsibilities to staff, the urge to develop — these and other pressures mean their dreams are likely to be modified by practical concerns. Of course, every for-profit venture should serve its public, but it cannot stand still if it is to remain a going concern. It should evolve, adapting its economic model to the needs of the market and the constraints of its resources. Better to be a thriving semi-artisanal business than a dead authentic one.