I. Case Study.

Winning Minds: BEN COHEN (1951)

Corporate Social Responsibility

“At Ben & Jerry’s, we redefined the bottom line.”

Back in the 1970’s, a couple of ex-hippies unable to find decent jobs decided to start a business
making ice cream . . . because they like eating it. They had almost no money but hey, man, they were
having fun. As it turned out, they were also starting a business which would become known worldwide,
and which would show other businesses a new way to have fun at work and be socially responsible too.

Ben Cohen and Jerry Greenfield both grew up on Long Island, and met in high school gym class
where their shared lack of athletic talent gave them a bond that quickly turned into friendship. After
school, Greenfield went on to a pre-med course while Cohen dropped out of college altogether. This left
him unable to get a decent job. When Greenfield finished his course, he applied to 20 medical schools, all
of which rejected him.

The two apparent losers decided they might as well have fun, so they decided to set-up in business
together doing something they enjoyed. But what? Since they both loved ice cream, they enrolled on a
correspondence course on ice cream making. They both passed comfortably, so it looked like an ice cream
business would be easy.

They might have looked like a pair of daydreaming hippies (which they were) but they weren’t
stupid. They wanted to set-up somewhere warm, in a rural college town where there was no competition.
They couldn’t find a suitable location, however, so they decided that lack of competition was the most
important criteria and they settled on a town in Vermont called Burlington.

Ben & Jerry’s started out in 1978 in a run-down ex-petrol station with only a few thousand dollars
between them. However, as well as running an ice cream parlor, they decided to sell their ice creams to
other stores. Cohen was the salesman of the pair, and he persuaded stores to take the ice cream or return.
He knew that despite their lack of experience, assets or money, the one thing they did have was damn good
ice cream. He was right. From the start, Ben & Jerry’s ice cream was famously rich, high-fat and creamy,
and the flavors had bizarre names such as Cherry Garcia, Chunky Monkey and Phish Food. The stuff sold,
and Cohen and Greenfield were in business. Soon, they were distributing their ice cream all over New
England.

And then something extraordinary happened – extraordinarily lucky, although it didn’t seem at the
time. The luxury ice cream manufacturer Haagen-Dazs had just been bought by a company called
Pillsbury, a corporation whose symbol was a white mascot known as the doughboy. Pillsbury must have
realized how good Ben & Jerry’s ice cream was, because they told all their customers that they wouldn’t
allow them to stock Haagen-Dazs if they also sold Ben & Jerry’s.

The article was taken from the book Winning Minds: The Ultimate Book of Business Leadership by Ros Jay

Cohen and Greenfield were in danger of seeing their business go down the chute, and all their
hippie hackles were raised by this big corporation threatening them (and, in effect, their suppliers too). So
they sued. Not only did they sue, but they also launched a big campaign against Pillsbury tactics, using the
slogan, “What’s the doughboy afraid of?”. Suddenly, this small company had national exposure and
sympathy. The media attention put so much pressure on Pillsbury that they eventually capitulated. By
now, Ben & Jerry’s ice cream was so well known, it was being sold in stores and through franchises right
across the country. It has kept expanding ever since, going public in 1984.

But Cohen and Greenfield weren’t as happy as you might think. As the business grew, they felt
they were turning into exactly the kind of stereotypical businessmen they had always despised. There were
so despondent about this departure from their true ideals that they nearly sold the company. Cohen was
complaining about this predicament one day to a friend of his who said, “If you don’t like the way the
business is done, why don’t you change it?”

So that’s what they did. Cohen and Greenfield looked for ways to make their company more
socially responsible. And they came up with a new approach that suited their principles – still founded on
the ideals of the 1960’s – and made for good business too.

To begin with, Ben & Jerry’s had always looked after its employees. And as it grew, it found new
ways to do this. It set-up an evaluation system by which employees were asked to give an annual
evaluation of their supervisor, and gave them proper training in how and why they were doing this. They
included employees in developing benefits packages; when a group of employees commented on the lack
of day-care facilities and asked the company to help, management’s response was to set-up a worker
committee to decide how to set-up and run a day-care scheme.

Cohen and Greenfield created teams of workers to design their own work procedures, and to
advise on the design of their new manufacturing and distribution plants. Job applicants had to be
interviewed by the team of employees as well as the supervisor, so they would feel involved, and have
stake in the new person’s success. And employees were offered a portfolio of benefits from which they
could choose, instead of a fixed package. So someone could opt out of the healthcare program and use the
saving to increase their childcare allowance, for example. For a long time, Ben & Jerry’s had a policy
limiting the salary of the highest-paid manager to no more than seven times the total salary (including
benefits) of the lowest paid employee. (They eventually had to abandon this when they brought in an
outside CEO).

Cohen and Greenfield had developed employee relations even the most dyed-in-the-wool hippie
could be proud of. And they wanted to do the same with their social policies. They believed in supporting
the local community, so they used only milk and cream from family run farms in Vermont, the company’s
home state – a policy which they still manage to apply. Since they also wanted to help disadvantaged
communities, they source suppliers in suitable areas. All the brownies in Ben & jerry’s Chocolate Fudge
Brownie Ice Cream come a New York inner city bakery.

Cohen and Greenfield also started the Ben & Jerry’s Foundation, through which the business
donates 7.5 percent of its ore-tax profits to good causes. That’s around four times the average level of
corporate giving. Ben & Jerry’s contribute to the community in numerous ways, usually with the emphasis
on helping people to help themselves. For example, the company will sometimes “donate” a store to a not-
for-profit organization in a disadvantaged area by waiving the franchise fees. Profits go to helping local
community action agencies. Employees sometimes even take cuts in pay to work at these stores because it
gives them a job they can really believe in.

By the early 1990’s Greenfield had pulled back from active management, and in 1995, Cohen
decided to step down as CEO, although he stayed actively involved as Chairman. The new CEO oversaw
the business expansion into new markets – especially in Europe – and new products such as sorbets and
frozen yoghurts. Cohen maintained his principles, arguing against selling into France as a protest against its
nuclear testing policies, and against making sorbets because it didn’t help the Vermont dairy industry. But
he had learned realism as well as idealism, and he allowed the majority view on the board to prevail.
 Ben & Jerry’s crazy hippie ideas weren’t so crazy after all. The company is now the most
profitable ice cream producer in the world, largely because of its high levels of employee involvement and
loyalty, and its sympathetic image as a socially responsible business. In April 2000, Ben & Jerry’s was
bought by Unilever for about $326 million, in a deal which Cohen had made sure would preserve its
integrity, and help expand its principles into Unilever as well.

Ben & Jerry’s would remain a separate though wholly owned subsidiary, with both Cohen and
Greenfield on the board. Unilever agreed to continue to put 7.5 percent of Ben & Jerry’s pre-tax profits
into a foundation, and to preserve jobs and continue to make ice cream in the same way. Unilever also
agreed to contribute $5 million to the foundation, to distribute $5 million to employees, and to create
another $5 million fund to help organizations in poor neighborhoods.

In the statement Cohen released when the deal was announced, he quoted lyrics of a song by the
Grateful Dead: “Once in a while you get shown the light in the strangest of places if you look at it right.”
A multi-billion dollar corporation was certainly the strangest of places for an anti-establishment maverick
like Cohen to find the light. But then, perhaps, it was he who showed them the light . . .

Questions: 100 points (will grade base on quality and depth of answer.)
1. How do you feel about the Ben & Jerry’s corporate social responsibility? As future
entrepreneurs, how would you demonstrate community involvement with your entrepreneurial
goals?

2. What are your thoughts on the Ben & Jerry’s commitment to their employees? Can you think of
other management practices than can exact employee loyalty, retention and efficiency?

3. What are other insights you realized from the case regarding entrepreneurship? Relate in your
business.